LGST 207 Midterm Flashcards

Question

Jackie Robinson decision

Answer 1

When Branch Rickey signed him, needed to weigh factor that whites may stop going to games. But also taps into a whole new market of black people and new supply of talent to improve the game

Answer 2

Requires equal funding as a whole (individual sports can be different as long as total sum the same) for men and women sports by Universities (in order to receive federal funding)

Answer 3

Sports have grown much more diverse. Title IX requires equal funding for men and women sports in college. Jackie Robinson breaking the color barrier was huge for the MLB and allowed it to tap into a whole new market of fans and players. NFL and NBA are engraining themselves in social issues, which could become a serious problem unless agreements can be reached to not alienate the fans. People see sports as a place to get away from social issues, and Kaepernick intertwined them

Answer 4

Media rights is number 1 (risen to the top recently) with long term deals, then gate receipts, sponsorship (which will continue to grow as more opportunities are created)< and then merchandise/licensing

Answer 5

Media, fans, leagues, brands, clubs, and players all interact in a complex way to create sports as we love them.

Answer 6

Media rights have become increasingly important and influential in a league's revenue. Also, sports are massive globally and nationally and have grown faster than GDP's. There is a complex ecosystem that explains how the different factors (media, fans, leagues, brands, clubs, and players via agents) interact in sports

Answer 7

When they are the highest level of play in the sport, highest demand for the product. Integrity, authenticity, legacy all help

Answer 8

NFL has the most profit by far. MLB is second, much more revenue than NBA but just a little bit more profit, and the NBA has more profitable teams. NHL is a distant fourth.

Answer 9

There are a lot of different leagues in the US and the world. In the US, the NFL is king in terms of profit, revenue, and viewership

Answer 10

Gate receipts, luxury seating premiums, media rights (local and national), sponsorships (local and national), advertising, stadium naming rights, other stadium-related opportunities, licensing (local and national), concessions, parking

Answer 11

People going to the stadium, buying tickets to see the team play.

Answer 12

NFL most expensive because of lack of supply (16 games) and high demand. MLB has cheapest average because it has so many games. Within each sport, big market/historic teams have the highest average ticket price while newer teams in smaller markets in the south and sunbelt have the lowest

Answer 13

Charging different prices for the same seat depending on who the opponent is. Set these prices before the season begins and remains the same. Allows for teams to take advantage of supply and demand, not just the secondary market

Answer 14

Movement of ticket prices once the season is underway, driven by the shifts in supply and demand and/or a desire to change purchase behavior. For example, charge more to see LeBron score his 30,000th point

Answer 15

Gives season ticket holders a jersey with a chip in it that gives them discounts at retail and concessions. Allows for the team to gain valuable data about the consumer and resulted in more season ticket sales and money spent.

Answer 16

Club east and suites have become huge for teams, huge new source of revenue with new stadiums

Answer 17

Biggest source of revenue. NFL the biggest, then the NBA. Long term deals. Local broadcasting deals for MLB, NBA, NHL. Long term ensures certainty

Answer 18

Local and national. Teams get local sponsors in the 75 or 150 mile radius, can't overlap with another team. Big markets benefit from sponsorship revenue

Answer 19

Local and national. Revenue generated by the sale of licensed products in the home stadium, team-owned retail outlets, and on team website is local revenue Revenue generated by sale of licensed products in all other locations is captured by the league and treated as national revenue

Answer 20

Advertising, stadium naming deals, other stadium stuff (PSL, restaurants, etc.), concessions, parking

Answer 21

Player salary, staff salary, team and game related, general and administrative, marketing, player development, facility (stadium and practice facility), debt service

Answer 22

Teams and leagues generate revenue in a variety of ways. The four biggest are media rights, sponsorships, licensing (merchandise), and gate receipts.

Answer 23

Leagues make money from media rights, sponsorships, licensing, international efforts, league-controlled events (draft, playoffs) Leagues make money in the same way teams do, revenue sharing splits it up (see lecture 9)

Answer 24

NFL national revenue: national TV, radio, media deals. DirecTV, Sirius XM, NFL Network NFL local: suites, club seats, local sponsors, Home gate (60%), visitor gate (40%)

Answer 25

Not much data is available, but for what is, we see that revenue sharing is big in baseball, especially for the Pirates. Make profit just because of that. Panthers in 2011 go 1-15 in an un-capped, un-floored season. Make profit and get to draft Cam Newton. If you’re going to be bad, be really bad

Answer 26

Baseball Advanced Media. MLB Digital Entity. Pioneers in delivering the product. Sold to Disney recently

Answer 27

MLB lets teams keep 2/3 of their local TV revenue and put 1/3 of it in a pool that goes to each team

Answer 28

Not much financial data for teams is available. We see the same dominant revenue sources (TV, gate receipts, sponsorship, licensing) as well as revenue sharing are important for teams.

Answer 29

Blend of priorities make sports unique. Winning or profits? Owner's financial capacity and willingness to commit resources. League infrastructure and rules (salary cap, revenue sharing, etc.)--> context in which you operate and what the league allows you to do is important, club's endowed assets (stadium, situation, brand value), emotional attachment, brand loyalty, limited financial disclosure, high profile nature and labor costs are so big

Answer 30

Teams invest in players, academies, talent acquisition, and stadiums. Results in a better team performance, more stars, and fan loyalty This generates revenue thru. media revenue, talent sale, commercial revenue, and ticketing revenue

Answer 31

Sports are unique int hat owners have many different business priorities. There is sometimes a competing priority between winning or profits that owners must juggle

Answer 32

Pre/post-game events, player meet and greets, and seating based on social interests are more important to millennials and are willing to spend extra for these memorable experiences

Answer 33

While Americans still love sports, millennial viewership and fandom is down. This could potentially be a problem, as millennials are the future and typically the 18-34 demographic is the group that spends the most. Additionally, we see the importance of season ticket holders on spending. Also, youth programs are important in getting the youth involved and developing life long fans.

Answer 34

Oh no, they are down. But still very dominant in comparison to TV as a whole, which are way down. 23% of national TV advertising spending was on live sports but live sports accounts for only 1.4% of all TV programming Sports were 88/top 100 most viewed TV programs in 2016, compared to 14/top 100 in 2005. Only of the non sports were presidential debates, award shows, post SB program, and 2 NCIS shows.

Answer 35

``` Cost of attending live events Declining youth sports participation Cord-cutting TV Cheating Hassle of attending live events Live experience improvement Rising cost of attendance Burst of media rights fee bubble Safety and security concerns Effects of technological advances Pro sports image issues (cheating) Also, social issues (this data is from 2014, old) ```

Answer 36

High ticket and food/beverage prices, traffic, drunkenness, parking, lack of wifi Inflated ticket prices and total cost of attendance + unappealing at game experience with little innovation + enhanced at home experience = problem?

Answer 37

Not as interested. They like the at-home experience, so many other things to do with their time.

Answer 38

Address/remove social issues Youth sports—> grassroots marketing efforts that educate and inform the under under-25 market as to what’s in it for them Player-fan interactions Safety issues in pros and among youth Rule clarification VR—> marketing channels that are age and interest specific and relevant Miking players Pace of play/game length Promos Replay reform Competitive analysis of your marketplace and begin to understand what is perceived a cool and in the moment and why that is the case Examine venues and determine what need to do to attract younger fans and hold their interest

Answer 39

Trying to replicate the at-home experience at the game or try to differentiate?

Answer 40

TV viewership down and interest seems to be fading a fit. Is this a problem? Depends how you look at it. TV viewership as a whole is down and sports had been immune but not immune anymore. Need to do something to keep youth participation and allow for the young generation of fans to stay involved in the sport. Need to make marketing efforts to get kids playing your sport, address pace of play issues, make it interesting for kids to watch.

Answer 41

Amount of revenues earned by members of a professional sports league that are shared by all league teams regardless of the teams’ contributions to the generation of these revenues

Answer 42

Sports started in US as individual businesses, but Hulbert's NL made it one league. But in this league, each team essentially operated separately despite the centralized league office. Controversial because seen as socialist, anti-American. Bill Veeck, Branch Rickey, Lamar Hunt

Answer 43

St. Louis Browns owner proposes to split TV revenue. Dodgers owner responds saying he is a communist, but Veeck wants this so poor clubs can compete

Answer 44

Signed Jackie to the Dodgers Also started spring training and minor league as farm system Also proposed Continental League, split TV revenue

Answer 45

Founded the AFL, pool and split their TV revenue

Answer 46

Pete Rozzell is inspired by the AFL, brings up "League Think." Teams used to have their own TV deals, but forms the Sports Broadcasting Act with Congress in 1961 that allows for the NFL to act together and have their own TV deal--> some teams are harmed by this but helps the league as a whole

Answer 47

Which streams are national and local? How to distribute shared revenue? What to do with new revenues? (NBA jersey sponsor for ex.)

Answer 48

Think of revenue sharing as a tax—> tax distorts economic incentives. How can a league enforce revenue sharing while still providing incentives for teams to make money AND compete at their highest level?

Answer 49

1. Accounting--> what should be split> Gross revenues or net? 2. Equity--> What is a fair revenue split? 3. Economic Efficiency--> How to share revenues and still incentivize owners to pursue profits, winning teams, and long-term league health without destroying economic incentives?

Answer 50

Disproportionately taxing the profitable franchises will address the uneven distribution of profits in all leagues. But, should tax costs instead of revenues as we want to increase profitability. Taxing revenues disincentives owners from growing revenues and ultimately is self-destructive Taxing costs provides no such disincentive, encouraging owners to control their spending Could also tax incremental costs (luxury tax), or losing teams

Answer 51

Independent owner action initiated to increase the wealth of the individual club at the expense of the overall league welfare. For example, undermine the league by making their own marketing agreements—> Jerry Jones with the Cowboys made his own deals for sponsorship

Answer 52

Revenue sharing creates incentives for a lack of effort amongst teams, who can free-ride the efforts of other teams. For example fielding uncompetitive teams and undermonetizing those club revenues that are shared with other teams.

Answer 53

NHL and MLB negotiate revenue sharing in the CBA. NFL and NBA owners decide by themselves

Answer 54

Ultimately, while individual teams compose the league, they all need one another in order to be effective and create demand for the product. As a result, revenue sharing is necessary so that each team can be put on a more equal playing field, allowing for more competitive games and more demand for the product. Sharking is a problem because it undermines the league and shirking is also bad because you profit only because of revenue sharing. I suggest removing shirking by requiring a minimum salary in baseball.

Answer 55

one team dominating the top position for an extended period of time (dynasties) and/or being at the bottom of the league for a long time

Answer 56

For the product to have demand. Do this by having competitive balance. People want uncertainty, they don't want a pre-determined outcome

Answer 57

game (Any given Sunday), seasonal (Is this the year?), multi-seasonal (Worst to first) Such uncertainty is what fuels demand—> why would I want to watch if I already know the outcome?

Answer 58

Local market—> different population and preference, willingness to act on differences in fan tastes, player tastes, winning and uncertainty Biggest factor in imbalance is market size—> revenue sharing will only be effective when trying to maximize wins, not profits.

Answer 59

reverse-order draft, salary caps and floors, luxury taxes, relegation and promotion, revenue sharing Salary cap is important--> league think Problem with reverse-order draft is tanking and one player can't necessarily single handily improve a team (Browns)

Answer 60

William Hulbert’s NL has it in 1879 to keep player on the same team Challenged in 1922 Federal Baseball Case, but MLB ruled non-interstate commerce. Exemption to allow to keep this. Not challenged until Kurt Flood, challenges 50 years later, didn’t overturn until Peter Seitz. He was an arbitrator in Messersmith & McNally—> allows for free agency and the salary cap

Answer 61

NFL has hard cap and floor, franchise tags NBA has soft cap, Larry Bird exemption to re-sign player on own team, Derrick Rose rule allows for you to move up in contract you can get if certain accolades. Kevin Durant inspired a rule to keep him with the Thunder—> get more if stay with original team NHL has hard cap and floor, guaranteed contracts MLB has luxury tax, no floor. Huge disparity in payroll

Answer 62

Need competitive balance to create demand for your product. Many ways to do this, including revenue sharing, salary cap, reverse-order draft, relegation and promotion. Each league is different in how they do this, but it is necessary in order to diminish the market effects and allow for the leagues to work as one body together.

Answer 63

Revenue and revenue multiples have grown dramatically Partially because of the national TV deals going way up 1998—> FOX enters as a fourth network for 3 packages, results in TV deals going way up Stadium situation, team affinity, brand value, fan base demographics very important in franchise valuations Started with Donald Sterling selling the Clippers in 2014. Market way up from then on. Supply of teams is so small, demand is high, so great value Recently, value has gone way up across four major leagues, higher growth than the DOW

Answer 64

Sine 1988, 138 new stadiums in big 5 leagues (crazy! out of 148 or so) Referendums for taxpayer money for new stadiums are approved at a crazy high rate, and of those not approved, teams don’t relocate but do something else (privately fund)

Answer 65

Franchise valuations have grown rapidly recently because of new TV deals and a lack of supply of franchises despite high demand. Also, stadiums have become increasingly privately funded and a ton of them have gotten built recently. Almost every referendum gets passed for public funding.

Answer 66

Players want to be together to create power for them as a group. Owners like them because can’t be sued on Anti-Trust Laws

Answer 67

Creates a system of laws and guidelines that govern the relationship between management and the union Tough and bitter negotiations and little sympathy from the public because already making millions Discuss season duration, talent distribution, compensation mechanisms, conditions of employment, workplace integrity, grievances, employee revenue distribution in the NHL and MLB

Answer 68

individual athletes negotiate their salaries rather than having the union do it for them. Loyal fans to the players makes the players irreplaceable during a strike

Answer 69

MLBPA founded in 1954, Marvin Miller made it prominent in 1966 First strike in 1972 and lockout the following year Most strikes about free agency and arbitration Cancel 1994 World Series because of a strike—> injunction makes them start next season under previous CBA after getting into the season and no deal being reached

Answer 70

NFL—> NFLPA founded in 1956 and decertify in 1988 so NFL can be sued on anti-trust

Answer 71

People are willing to pay so there is demand for the sport, and the players deserve to split the revenue the way they do However, NFL contracts not being guaranteed seems unfair for the players And the NBA structure seems to be a bit too high. TV deal too big makes cap too big and creates super teams because can afford multiple super stars. Should give X amount of revenue to players association as a whole and have cap only like 80% of what it is

Answer 72

``` CBA Internal Factors (Skill, position, experience, injury history, drawing power, sport) External Factors (Competitor league, free agency, MLB salary arbitration, salary caps, luxury taxes, reserve system) ```

Answer 73

Unions are needed to create the CBA that governs the rules of the league and how players are compensated in relation to the league’s revenue. Players are paid a lot, but not too much except in the NBA where the revenue is ridiculously high because of a new TV deal that was over-market price. Should give some of that revenue to the NBAPA as a flat fee and rest as cap. NFL not guaranteed, should be.