SM 203 FINAL EXAM

Describe the basic model of broadcast network television. How does the cable network television business model differ?

"Network - Advertisers - Audience" Cycle "Network - Advertisers plus Subscription Fees - Audience" Cycle make money by selling advertisements, works well when economy is good, but not in recession

What is "branded" apparel? What are the advantages to manufacturers when they "brand" their merchandise?

Apparel that visibly shows a company's logo ie. swoosh, polo player, block M Develop brand image and recognition, and reduce reliance on other's intellectual property

What are the various types of public facilities, and what is necessary for their effective functioning?

Arenas: Built to accommodate one (or more) prime sports tenant(s) or to lure a prime tenant to the facility; Intercollegiate facilities are financed by private donations, endowments, student fees, fundraising campaigns, and, in the case of public institutions, public grants; adjacent practice facilities for the primary tenants to increase event bookings Stadiums: Far fewer non-sport events can play in stadiums, primarily because stadiums are significantly larger than other venues and most other events cannot attract stadium-sized crowds; stadium managers have become increasingly effective in creating events for their venues that take advantage of all available spaces (e.g., parking lots for carnivals) Convention Centers: Built to lure conventions and business meetings to a particular municipality; publicly financed because the rents and fees they charge do not always cover costs; the economic impact through local spending during the convention or business meetings can be large University Venues: The market for university and college venues is generally dictated by the student population; universities tend to provide the venue with tenant teams as well as a certain amount of content through the university Metropolitan: Venues like these are generally referred to as a must play based on the size of the potential audience; often have large capacities, allowing for greater ticket sales; skilled labor in metropolitan venues is almost always unionized; ex. MSG or Staples Center Local Civic: Smaller capacity and are located in towns or small cities; provide the public with the desired event at the best time of the year to avoid undue competition with other events that may be occurring simultaneously

How has the proliferation of televised sporting events impacted the television industry?

As sports programming has gone up -> ratings have gone down (20% - 30%) Why has this occurred?: saturated market - audience is spread out (ESPN, Fox 1 Sports, BTN, NBC sports), change in demographics, fluctuation in interest

How has the proliferation of televised sporting events impacted the television industry? What are current and future trends for televised sport?

As sports programming has gone up -> ratings have gone down (20% - 30%) Why has this occurred?: saturated market - audience is spread out (ESPN, Fox 1 Sports, BTN, NBC sports), change in demographics, fluctuation in interest Current Future Trends: Subscription fees (cable model) Advertising revenue sharing (Broadcast model): Lower rights fees, and league & network share responsibility for promoting and marketing games Mobile integration Self production by: conferences, leagues, individual franchises/teams

How can sport facilities benefit the public ? Team Owners? Private Investors?

Benefits for the public sector-The value of a revitalized urban neighborhood anchored by the large number of visitors to a sports venue lies in capturing the taxes generated by the relocation of economic activity and leveraging adjacent real estate development. Benefits for teams -New facility to host games, concerts, and other entertainment shows-Improved technology, sight-lines, and overall fan experience-Enhanced revenue streams and thus greater competition for player talent within the league Benefits for private sector partners-The economic returns from anchoring a real estate development strategy lies in the financial gains from higher rents and prices for apartments, townhouses, condominiums, and office locations in the midst of a well-planned and exciting urban neighborhood

How do corporations benefit from sport sponsorship? What do sport organizations expect from corporations from these sponsorship agreements?How do corporations assess the effectiveness of their sport sponsorship?

Benefits: Exclusivity, "official" designations, rights to intellectual properties, advertising support, in-stadium signage and promotional announcements, access to tickets, and potential new business Expectations: Duties/Obligations of sponsors - Pay rights fees, multiyear commitments, advertising commitment, activation (3:1 spending ratio ->$3 in advertising/promotion, $1 in rights fees; real numbers are closer to 2:1), and sport entity promotional commitment Return on Investment (ROI): No exact formula for measuring ROI; Difficult to precisely determine impact of sponsorship -> consumer surveys, outsource to research companies

What are "designated market areas?" How can they be used in determining audiences for televised programs?

Designated market areas (DMA): currently about 211 DMAs; geographical areas all over the U.S. Nielsen "people meter" measures national and local DMA audiences

What are current trends and concerns associated with sport sponsorship?

Ethnic Marketing through sport sponsorship: globalization of sport and changing demographics of consumers Overcommercialization of sport sponsorship: everything is sponsored -> events are broken down to smaller units to allow exclusive sponsorship "Vices" and sport sponsorship: fighting negative perceptions of alcohol, gambling. tobacco

Describe the evolution of stadium and arena development in the United States, and the issues that municipalities and team owners had to address over time. How is the modern era of stadium and arena construction different than in the past?

Evolution and development: Gain in the popularity of modern sport, such as professional baseball and intercollegiate football, launched construction of stadiums; 1927 - Hockey owners followed the lead of baseball owners and built arenas to host their teams -> Basketball teams eventually joined this trend; Baseball-only stadiums were becoming obsolete during the 1960s; since 1990s there has been a trend towards one-purpose stadiums; Team owners could make a great deal of money by having their host city build their stadium rather than building it themselves Issues: Constraints of urban space limitations dictated the irregular sizes and shapes of the older ballparks; Needed to fill empty seats in arenas on non-hockey nights: Hosted boxing matches on some nights; Ice Capades put together to fill nights; Basketball enters arena picture, and arena owners earn revenue from two tenants; Some cities built shiny new "cookie-cutter" stadiums or arenas to keep sports teams enthusiastic about their hometowns; City leaders believed that publicly built stadiums were good investments and added to quality of life. Stadium and arenas more publicly built, "cookie-cutter" stadiums vs. irregular sizes and shapes of older ballparks, new stadiums and arenas needed to keep teams enthusiastic about their hometowns

What are the various ways in which corporations sponsor sports? How do these sponsorships provide promotional opportunities for corporations? How do these sponsorships provide promotional opportunities for corporations?

Facility sponsorship (naming rights, pouring rights) event sponsorship (College Bowl Games; McDonald's H.S. All-American Game; Buick Open) In-Venue Promotions: game-day give-aways (bobbleheads, thundersticks, etc.), theme days, continuity promotions (fans must attend multiple games to obtain product) In-Store Promotions: Premiums (inducements to buy a certain product/item), contests and sweepstakes, sampling (provide free samples of products -> frequently used with new products), POS/POP displays, and coupons (free standing inserts [FSI]) Cross-promotion: Sponsorship shared with other companies and/or subsidiaries; beneficial because -> share total cost of sponsorship, promote several product lines within same company, and weaker company can "piggyback" on stronger company Short-term consumption: - Greater brand recognition/awareness, broadening sales distribution channels, and getting new customers to sample product/service Short-term consumption: - Greater brand recognition/awareness, broadening sales distribution channels, and getting new customers to sample product/service

Why has much of our sport programming shifted from the broadcast networks to cable networks? trends in cable subscriptions? current challenges to the cable model of televised sporting events? how these trends will impact the future of televised sport?

Harder to survive on just advertising revenue (smaller audiences because so many broadcasts), improvement in technology (cable is widespread), don't rely just on advertising in cable network model, subscriber fees paid up front 74% of U.S households have subscriptions, 2/3 bundle their subscriptions with internet bundling challenges, mobile devices, audience fragmentation, new technologies live streaming, league/team/conference owned networks (generate both subscription and advertising money)

What are licensed products and how does licensing work? What are the various components involved in licensed goods?

Items of clothing or products bearing the name or logo of a popular collegiate or professional sport team Based on the notion that fans will purchase goods to draw them closer to their beloved organizations and athletes Licensor: owner of the intellectual property to be used Licensee: "borrower" of the intellectual property to be used Trademark and/or Service Mark: a trademark is a brand name; includes any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services. Federal registration of a mark: not mandatory; notice to the public of the registrant's claim of ownership of the mark; legal presumption of ownership nationwide; exclusive right to use the mark on or in connection with the goods/services listed in the registration Royalties: Fees paid by licensee to licensor for the right to use licensor's intellectual property; range from 4% to 20%, based on gross sales at wholesale cost (costs paid by retailer); apparel royalties range from 11% for on‐field items to 15% for player‐identified items How are licensing programs administered in professional sport leagues? Properties Division: for‐profit branch of the league Duties and Roles: approve licensees, police trademark infringement, distribute licensing revenues equally among league franchises, and usually handle marketing and sponsorship efforts as well Player Associations: operate their own licensing agreements related to the use of player likenesses and/or names -> Video games, trading cards, apparel, and collectibles

How does sport sponsorship differ from a sport licensing agreement?

Licensing = paying team/league to use intellectual properties on various products Sponsorship = paying teams/leagues to be associated with them; a commercial agreement between a company and sport body to enter into a joint venture to promote their mutual interests

Financing public facilities - private and combined

Private - used by many universities across the country through their athletic development and fundraising departments; Ways to gain private funding for a facility project include naming rights, food and beverage rights, luxury suites and premium seating, and advertising rights; Private donors to university athletic departments also will provide funding and have their names placed on the new facilities; Ross Athletic Campus Combined - public and private funding in order to build a new facility; Denver Broncos Stadium

How are licensing programs administered in professional sport leagues?

Properties Division: for‐profit branch of the league Duties and Roles: approve licensees, police trademark infringement, distribute licensing revenues equally among league franchises, and usually handle marketing and sponsorship efforts as well Player Associations: operate their own licensing agreements related to the use of player likenesses and/or names -> Video games, trading cards, apparel, and collectibles

What do measurements such as ratings, share, and "cume" tell us about the audience viewership (TV) or listenership (radio)? Why are these numbers important in the business of sport broadcasting?

Ratings: % of ALL TV households that are tuned in to the program Approx. 110 million Television households -> each rating point = 1% of TV households, national, certain DMAs, and single DMA Share: % of TV households watching television who were tuned in to the program; share is always larger than ratings -> smaller denominator "Cume": total number of listeners/viewers over a specified period of time (season, week, event) Tell us who liked programs, how many people in a certain household are watching particular programs, and also how many people tuned in over a specific amount of time Allows sport broadcasters to evaluate their programs -> whether to cut them, improve them, have them more often, is it worth it to broadcast, etc.

Describe some of the current issues associated with the design, construction, and operation of today's stadiums and arenas.

Security - Crowd Management Plan: Categorizing the type of event; knowing surrounding facilities and/or environment; being aware of team or school rivalries, threats of violence, the crowd size and seating configuration; having an existing emergency plan, and using security personnel and ushers. Includes bag checks, pat downs, and metal detectors are now normal, regular functions in day-to-day security operations, physical barriers to entry, surveillance technology, and an increase in security personnel presence Sustainability - Public facilities consume more energy per square foot than any other retail industry -> the facility management industry is working to build green buildings, create "green management teams," reduce waste, cut energy usage and pollution, and implement recycling programs Americans with Disabilities Act - To prevent discrimination against qualified people with disabilities in employment, public services, transportation, public accommodations, and telecommunications services; updated in 2011 with a number of changes directly applicable to stadiums and arenas Requires new facilities to be accessible to people with disabilities including concession areas, public telephones, restrooms, parking areas, drop-off and pick-up areas, entrances and exits, water coolers, visual alarms, and signs

How are licensing programs administered in collegiate sports?

Some larger Div‐I schools administer their own licensing activities -> retain a greater portion of sales revenues, and overhead costs to operate program Other FBS and FCS schools outsource licensing activities to independent companies -> Collegiate Licensing Company (owned by IMG College) represents over 200 colleges/universities, bowl games, conference, NCAA, and Heisman Trophy Also to Licensing Resource Group (LRG) Colleges and Universities pay a portion of royalties (about 50%) to CLC or LRG for their services -> no overhead or financial risk for university, but less revenue from sales Apparel accounts for about 62% of sales with biggest growth trend in the "women's" category EA Sports NCAA football accounts for most the non‐ apparel sales

Why Cities Subsidize Sports

Sports facilities are thought to improve the local economy in four ways: - Building a facility creates construction jobs. - People who attend games or work for the team generate new spending in the community, expanding local employment. - Team attracts tourists/companies to the host city. - New spending has a "multiplier effect" as increased local income causes still more new spending and job creation. •Overstatement of the benefits of stadiums - Building a stadium is good for the local economy only if a stadium is the most productive way to make capital investments and use its workers - New sport facility: Extremely small effect on economic activity and employment - Sport facilities attract neither tourists nor new industry - A professional sport team creates a "public good"

Why do cities subsidize sport facilities? What are the potential benefits of subsidizing sport facilities?

Sports facilities are thought to improve the local economy in four ways: 1. Building a facility creates construction jobs. 2. People who attend games or work for the team generate new spending in the community, expanding local employment. 3. Team attracts tourists/companies to the host city. 4. New spending has a "multiplier effect" as increased local income causes still more new spending and job creation.

What are current issues related to the licensing of sport products?

Trademark infringement: estimated to be $200 billion annually Manufacturer and Licensee Conduct: global sourcing, low wages, unsafe working conditions

What are the different types of events that are used to make facilities profitable or sustainable?

sports, family events (Disney, Nickelodeon, and Sesame Street shows; also ice shows), concerts, trade shows (multi-day events; mainly convention centers), religious events, convocations (graduations), and seasonal events (tours, holiday shows)

how media industry has responded to growing trends in live streaming sporting events? What is the future of media coverage for live sporting events?

twitter and amazon paid tons of money for NFL rights.

What are issues that must be considered relative to the marketing of facilities?

• Account for location of venue, culture of community, and production of events. • Internet has allowed easier booking of events. • Using online tools, the manager can quickly react to inquiries for available dates and can establish a routing for a program or show. • Saturated markets with several venues in the local vicinity. • Local economy will be driving force for ticket sales. • Task: Keep financial risks low and profit margins high • Copromotional Model: Facility and promoters split the risk and revenue • Rental Agreements: Promoters pay specified amount up front and other costs covered by promoter • Majority shows brought by outside companies - Live Nation, AEG Live, Feld Entertainment • Facilities generate revenues from tickets, luxury suites and club seating, concessions, parking, sponsorships, and rentals. • Primary expenses are mortgage and rent, maintenance and repairs, utilities, taxes, marketing and sales, personnel, and insurance (Ammon, Southall, & Nagel, 2010). • Ticket sales represent significant percentage of revenues. • Ticket Rebate: Surcharge on ticket that goes to facility. • Ancillary Revenue: Sale of food, beverage, parking, fees, and sponsorships. • Marketing Fund: Profits from other shows put aside to invest in future programs

Facility Financing

• Federal government allows state and local governments to issue tax-exempt bonds- Tax exemption lowers interest on debt and thus reduces the amount that cities and teams must pay for a stadium • Public vs. Private financing- PPP's more common today • Building public assembly facilities means other services have to be neglected

Facility Financing Mechanisms: Bonds

• Money to build facilities is usually obtained by issuing bonds- Promise by the borrower to pay back the lender a specified amount of money, with interest, within a specified period of time • General obligation bonds- Backed by the local government's ability to raise taxes to pay off the debt (safe) • Revenue bonds- Backed specifically by the facility's ability to generate revenues (risky)

Facility Financing Mechanisms: Taxes

• Property taxes- Paid by homeowners, who are often long-term residents of a city • Occupational tax- Anyone who works in the community. More likely to pass in vote • Hospitality tax- Forces visitors to pay directly for the facility • General sales tax- Affects both local residents and out-of-town visitors

Why Do Sport Team Owners Want New Facilities?

• Rising Costs of Athlete Salaries • Competition for Consumer Entertainment $$ • Changing Patterns of Sport Consumption A single sport venue can... - Attract 1 million+ visits each year - Help change the location of economic activity within a region - Serve as an anchor for enhanced development - Help revitalize downtown area - Encourage downtown development and residency -Slow decentralization - Help enhance nearby property values

What Is Place Making?

• a multi-faceted approach to the planning, design and management of public spaces• capitalizes on a local community's assets, inspiration, and potential, with the intention of creating public spaces that promote people's health, happiness, and well being