SM 203 Unit 3 Exam

Describe the basic model of broadcast network television.

"Network - Advertisers - Audience" Cycle

How does the cable network television business model differ?

"Network - Advertisers plus Subscription Fees - Audience" Cycle

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

*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)

How do corporations benefit from sport sponsorship? What do sport organizations expect from corporations from these sponsorship agreements?

*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

Financing public facilities - bonds

*Bonds*: Issued to obtain money to build facilities (most common way of doing so); promise by borrower to pay back lender a specified amount of money, with interest, within specified time period Tax-exempt bonds used by government entities are available in two types, general obligation (backed by the local government's ability to raise taxes to pay off the debt) and non guaranteed; AT&T Stadium - Dallas Two types of taxable bonds issued by private entities: private-placement bonds and asset-backed bonds; both types of bonds are sold by the team, but private- placement bonds provide a lien on all future revenues generated by the team, whereas asset-backed bonds are secured through specific assets; Pepsi Center - Denver

What are the various types of public facilities, and what is necessary for their effective functioning? - Convention Centers and University Venues

*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

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.

*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 nonhockey 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.

Financing public facilities - taxes

*Hard taxes* - include taxes on local income, real estate, personal property, and general sales, and often require voter approval because the burden of payment becomes that of the public *Soft taxes* - include added taxes to car rentals, taxis, hotels/motels, restaurants, "sin" (alcohol, tobacco, gambling, etc.), and players (additional tax imposed on visiting professional athletes), and affects a much smaller portion of taxpayers, making it easier to levy

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

What are the various components involved in licensed goods?

*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

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

*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 did Roone Arledge (Monday Night Football) revolutionize the way we view sport?

*Pete Rozelle* and *Roone Arledge* responsible for growth of sports broadcasting *Pete Rozelle* Created 1st "pooled" network contract -> based on "league think", ruled in violation of antitrust law Persuaded Congress to pass the Sports Broadcasting Act (1961) -> granted football, basketball, baseball & hockey antitrust immunity from the pooled sale of broadcast rights *Roone Arledge* An innovative anthology series, ABC's Wide World of Sports, debuted; Monday Night Football

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.

How do corporations assess the effectiveness of their sport sponsorship?

*Return on Investment (ROI)*: No exact formula for measuring ROI; Difficult to precisely determine impact of sponsorship -> consumer surveys, outsource to research companies

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 do these sponsorships provide promotional opportunities for corporations?

*Short-term consumption*: - Greater brand recognition/awareness, broadening sales distribution channels, and getting new customers to sample product/service

Financing public facilities - TIF

*TIF*: tax-increment financing Available in a specific square mileage of land around the facility (usually an urban area that has been identified for renewal or redevelopment) where the tax base is frozen and any additional taxes added are used to repay the TIF bonds

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

How or why might designated market areas be important to both networks and potential advertisers?

...

What were some the innovations and practices that made Monday Night Football such a success? How do we see the influence of these practices in other sport broadcasts today?

Added "entertainment" to sport broadcast: technical component, and "human" component First sports programming series shown during primetime Revolutionizing telecasts of sports by including close-up shots of cheerleaders, school bands, the crowd, and players and coaches on the sidelines Have ex-players and broadcast journalists work together on-air

What is "branded" apparel?

Apparel that visibly shows a company's logo ie. swoosh, polo player, block M

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

Why are tennis and golf televised despite their consistently low ratings?

Because of the affluent consumers that typically watch tennis and golf

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

Develop brand image and recognition, and reduce reliance on other's intellectual property

What are the various ways in which corporations sponsor sports?

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

What strengths and weaknesses associated with the various methods for financing public facilities?

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; Building public assembly facilities meant other services had to be neglected. *Look up in the book*

Why has much of our sport programming shifted from the broadcast networks to cable networks?

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

What are licensed products and how does licensing work?

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

How has logo redesign and expansion contributed to the licensed sporting goods industry?

More licensed products of all types, and changes in team colors and images -> leads to sale of new merchandise

What are the economic realities of publicly subsidized facilities?

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." - No recent facility appears to have earned anything approaching a reasonable return on investment.

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 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.

How is the modern era of stadium and arena construction different than in the past?

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

Discuss the basic issues that need to be determined when deciding to broadcast a sports event, or to continue broadcasting a sports event.

What would it cost me to do it and who would watch it

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)

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

• 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.

What are issues that must be considered relative to the marketing of facilities? - Revenues and Expenses

• 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

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

• 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