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Sport and the Economy

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Aaron Clark

on 8 November 2011

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Transcript of Sport and the Economy

Emergence and Growth of Commercial Sports Commercialization and Changes in Sports The Organization of Professional Sports in North America The Organization of Amateur Athletes in North America Legal Status and Incomes of Athletes in Commercial Sports Professional Athletes Amateur Athletes Class Relations and Commercial Sports The Creation of Spectator Interest Economic Factors and Globaliztion of Commercial Sports Internal Structure and Goals of Sports Orientations of Athletes, Coaches, and Sponsors The People and Organizations That Control Sports The Owners of Sport Teams Team Owners and Sport Leagues as Cartels Team Owners and Public Assistance Sources of Income for Team Owners
•When sports are commercialized, athletes are entertainers. This includes big time college football and basketball and Professional teams alike.
Question: What is the legal status of the athlete-entertainers who work in professional and “amateur” sports? How are they rewarded for their work?
• Legal Status: Team sports
Way back when (before the 1980's)
Used to have little or no legal power to control their careers.
Basically, players were bought and sold like property.
This is called a reserve system or a set of practices that enabled team owners to reserve the labor of athletes for themselves and control the movement of athletes from team to team.
Owners could maintain low salaries and near-total control over the athlete’s participation.
Owner’s debate that a reserve system is needed to maintain competitive balance between teams in their leagues. If athletes could play with any team the wealthiest owners in the biggest cities and TV markets would buy all the good athletes and prevent teams in smaller cities and TV markets from being winners.
Now-a-days (Since the 1980's)
Court rulings gave pro-athletes the right to become free agents, allowing some players whose contracts have expired to seek contracts with other teams that bid for their services.
As a result of the free agent system, salaries began to skyrocket because teams were competing for players and negotiated new Collective Bargaining Agreements (CBAs) with player unions.
Labor negotiations and players’ strikes in pro team sports have focused primarily on issues of freedom and control over careers, rather than money, though money has been an issue too.
Collective Bargain Agreements (CBAs) usually negotiate the following:

Where league revenue’s go to, and how much
Teams sharing revenues
Salary Limits for rookies
Salary cap, or maximum salary allowed for team
Salary floor, minimum salary allowed for team
Conditions of an existing or proposed contract
Changes in the rules of the game
Legal Status: Individual sports
The legal status of Pro athletes in individual sports varies greatly from sport to sport and even from athlete to athlete.
Legal status depends on what athletes must do to train and qualify for competitions.
Few athletes can afford to pay for all the training needed to develop pro-level skills in a sport. They don’t have the knowledge or connections to meet the formal requirements to become an official competitor in their sport, which may include:
having a recognized agent or manager (as in boxing),
being formally accepted by other participants (as in racing),
obtaining membership in a pro organization (as in bowling, golf,
and tennis)
or gaining a special invitation (as in pro track and field meets).
For example: Many boxers come from low-income backgrounds, lacking the resources to develop high-level boxing skills and arrange official bouts with other boxers. They must have trainers, managers, and sponsors, and the support of these people always comes with conditions that are written in a formal contract
Legal Status: Team Sports Income: Team Sports Legal Status: Individual Sports Income: Individual Sports How do individual pro athletes control their careers then?
They join organizations to support their rights and enable them to control some of the conditions under which they compete. Examples include
•the Professional Golf Association (PGA)
•Association of Tennis Professionals (ATP)
•Professional Rodeo Cowboys Association (PRCA)
In most cases, being a pro athlete in team sports continues to be a seasonal job with few benefits and little or no career security.
The big salaries for a few players drive up the average for the entire league. Mega salaries did not even exist before the 1980’s. This can be attributed to
Changes in legal status and the rights of players, namely adopting the free agency system.
Increased revenues, especially through the sale of media rights.
As with team sports, publicity is given to the highest-paid athletes in individual sports.
Besides sponsorships, tournament prize money is the only source of income for pro athletes who compete in individual sports.
Just attending a tournament has many expenses itself, such as airfare, hotels, food, and transportation. What about the cost of coaches, managers, and various support people? Most athletes in individual sports are not big money winners and find it difficult to meet these basic expenses.
Legal Status Income Amateur athletes have little control over their sport participation. Their sports are regulated by organizations that set rules under which training and competition may occur. This is particularly evident in U.S. intercollegiate sports.
Even in revenue-producing college sports, athletes have few rights and no formal means of filing complaints when they’ve been treated unfairly or denied the right to play their sports.
The athletes are not allowed to share the revenues that they may generate and have no control over how their skills, names, and images can be used by the university or NCAA.
Example: when college athletes become local or national celebrities, they have no way to benefit from the status that they’ve earned. They cannot endorse products or be paid when universities use their identities and images to promote events and sell merchandise.
It is difficult for amateur athletes to lobby for changes
Challenging a university or the NCAA would be expensive and would take time
Forming an athletes’ association would make it possible to bargain for rights, but bring together athletes from many campuses would require resources.
Some athletes have adjusted to their dependency and powerlessness and would be difficult to recruit.
Amateur athletes generate money through their performances, but they cannot directly benefit financially from participating in sports.
Example: A football or basketball player from a low-income family can bring fame and fortune to a university for one to four years and not receive more than basic expenses for tuition, room, meals, books, and other necessities.
The unfairness of this situation promotes under-the-table forms of compensation.
Amateur sports don't have owners, but they do have commercial sponsors and governing bodies that control events and athletes. Generally, the sponsors are corporations interested in using amateur sports for publicity and advertising purposes. The governing bodies of amateur sports operate on a nonprofit basis, althought they use revenues from events to maintain their organizations and exert control over amateur sports. All amateur sport organizations share an interest in two things:
controlling the athletes in their sports
controlling the money generated from sponsorships and competitive events. Corporations sponsor only sports that foster their interests, and economic conditions influence their ability and willingness to maintain sponsorship. Need To entertain a Mass Audience
Low Need to entertain: Aesthetic Orientations
Emphasis on
Beauty and Pleasure of movement
Ability/mastery of technical Skills
Willingness to explore limits
Commitment to staying active and involved as a participant
High need to Entertain: Heroic Orientation
Emphasis on
Danger and Excitement of movement
Style/ mastery of dramatic expression
Willingness to go beyond limits
Commitment to victory and success of the team and Sponsor
Nascar is struggling with this right now. They have great older drivers that are faster and better racers then a lot of new people but they are kind of boring. Sponsors want young/new drivers to be their spokesmen and they don’t necessarily care if they are not the best drivers.
Ice Skaters.
When sports become to commercialized the athletes of these sports lose control. The control shifts to those that provide the resources (money) for the sport to operate. It doesn’t end up mattering if athletes are getting put into danger; it is all about making money. Owners of sports teams
• Most individuals who own minor league sports teams don’t make much money and they are happy to break even.
• Major Men’s professional sports teams in the US range in value from 100 Million dollars to about 1.5 billion dollars. These teams are run more like corporations than sports teams.
• Major sponsorships with questionable products such as alcohol, tobacco, and junk food, sponsor these teams because it makes their product look better. People tie in all the good things about sports to this product even though it might not even be healthy for you.
Team Owners and Sports leagues as Cartels
•Cartel- a centralized organizing group that coordinates the actions of a collection of people or businesses.
•Each league has its own cartel comprised of the team owners.
They use the cartel to control inter-team competition for players, fans media revenues, and sale of merchandise.
They also use it to eliminate competition from others who might form their own league or sports teams.
They collect money from new teams that want to join their league and a certain amount of the teams profit for a set amount of years.

•Team owners view on Stadium Subsidies
A stadium and pro team creates jobs; those who hold the jobs spend money and pay taxes in the city so that everyone benefits
Stadium constructions infuses money into the local economy this money is spent over and over as it circulates, generating tax revenues in the process
The team attracts businesses to the city and this increases local revenues
The team attracts regional and national media attention, which boosts tourism and contributes to overall economic development
The team creates positive psychic and social benefits, boosting social unity and feelings of pride and well-being in the local population
•Independent research found
Most stadiums even though they create jobs they are just part time and minimum wage. Also most employees don’t live in the city in which they work.
Most companies that design and build the stadiums are not local
The majority of businesses that stadiums attract are restaurant and entertainment franchises. They end up putting local businesses out of business
It may boost tourism for people who are coming to see the games but it may also force others to stay away to avoid all the people
Feelings of fans often vary with the success of a team
1. Gate receipts
2. Media Revenues
3. Stadium Revenues
4. Licensing Fees
5. Merchandise sales
Commercial sports are organized and played for profit. their success depends on gate receipts concessions, sponsorships, the sale of media broadcasting rights and other revenue streams associated with sports images and personalities Commercial sports grow and prosper best under five social and economic conditions
1st they are prevalent in market economies where material rewards are highly valed by athletes, team owners, event sponsors, and spectators
2nd they usually exist in societies that has large, populated cities with lots of potential spectators.
3rd transportation and communications technologies must exist for sponsors to make money.
4th require large amounts of capital (money or credit) to bulid and can be played and watched
5th material status symbols: including their names, autographs, images, and merchandise, team names and logos ( when people express their identities through clothing, other possessions, and their associations with status symbols and celebrities, they will spend money on sports that have meaning in their social sports)
-Sport spectators are likely to be plentiful in societies where there’s a general quest for excitement.
The Quest for Excitement
When social life is highly controlled and organized. To mange this tension norms and rules in sports must be loose enough to allow exciting action, but not so loose that they permit uncontrolled violence or other forms of destructive deviance. When norms and rules are too constraining, sports are boring and people lose interest.
Youth sport programs and spectator interest
Spectator interest often is initiated during childhood sport experiences. When organized youth sport programs emphasize skills, competiton, and success participants are likely to grow up wanting to watch elite athletes. For young people who continue to play sports, watching elite athletes provides them with models for playing and improving skills
Media coverage and spectator interest
Media promote the commercialization of sports by publicizing and covering events in ways that sustain spectator interest. TV increases spectator access to events and athletes worldwide and provides unique representations of sports
-Commercial sports are now global in scope. Globalization has occurred because. (1) those who control, sponsor, and promote sports seek new ways to expand markets and maximize profits and (2) transnational corporations use sports as vehicles for introducing their products and services around the world.
Sport Organizations look for Global Markets
The desire for global expansion was the main reason why the NBA allowed its players to compose the so-called Dream Team that played in the 1992 Olympics. The global media attention received by Michael Jordan, Magic Johnson and other players provided the NBA with millions of dollars
Coporations Use Sports as Vehicles for Global Expansion
Because certain sports capture the attention, emotions of so many people worldwide, corporations are eager to sponsor them. Corporations need symbols of success and productivity that they can use as “marketing hooks” for products and as representations of their images. For example, people around the world still associate Michael Jordan with the “Air Jordan” trademark copyrighted by nike; and many people now assume a connection between the Olympics and both McDonalds and Coca-Cola
-Commercialization influences the internal structure and goals of new developed sports, but it has less influence on long-established sports. The internal structure and goals of new sports, but it is the primary one. It is apparent in indoor soccer, indoor lacrosse, arena football, beach volleyball roller hockey, and commercial.
Changes in commercialized spectator sports usually do one or more of these six things. (1) speed up the action, (2) increase scoring, (3) balance competition, (4) maximize drama, (5) heighten attachment to players and teams, and (6) provide “commercial time-outs”.
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