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Sports Management Ch 10

Five North American major professional men’s leagues
MLB, NFL, NHL, NBA, and MLS
number of teams at the major league level
149
only women’s “major” pro league
WNBA
Number of North American minor league teams
800
First Professional Team
1869 – Cincinnati Red Stockings
North America’s first professional sport league
1876 – National League
National League
Included bylaws for limits on franchise movement, club territorial rights, and mechanism for expulsion of a club
Corporate governance model
Owners act as the board of directors, and the commissioner acts as the chief executive officer
Leagues are structured as
an umbrella organization for franchises to cooperate in business while competing on playing field
League
handles rule making and rule enforcement
Trend for emerging leagues to be established as
single entities to avoid antitrust liability and to create centralized fiscal control (e.g., MLS, WNBA)
Initially sport team ownership
a hobby for the wealthy
Today sport team ownership
run like a business and not a hobby
Except for NFL, most ownership
diversified (several people) because of the costs of purchasing and operating a team
For NFL ownership
Family or individual ownership is still the norm because of enhanced degree of revenue sharing
A growing trend is for owners to challenge league control over
shared revenue streams
Examples of owners gaining control of marketing revenue from logos, trademarks and sponsorships
Cowboys and Yankees
Example of owner working to maximize revenues
Boston Red Sox and Fenway Sports Group
5 Ownership rules
*Permission to own sports franchise granted by ownership committee of league
•League imposes restrictions on ownership, including limit on number of franchise rights granted (number of teams) and restrictions on franchise location
•Leagues may also impose eligibility restrictions for franchise ownership
-NFL bans corporate and public ownership
•Franchise and territorial rights are granted with ownership
•Use of team colors, name, and logo are granted with ownership
First commissioner of a pro sport league
1920 – MLB Judge Kennesaw Mountain Landis
commissioner’s powers
Granted authority to investigate and impose penalties when individuals involved with the sport are suspected of acting against the best interests of the game
Players’ associations use collective bargaining
limit commissioner’s powers
established first players’ association in 1885
John Montgomery Ward
players association was created to
Fight reserve system, salary caps, and practice of selling players without the players’ receiving a share of profits, Also negotiate with owners.
200 players organized a revolt that
led to organization of the Players League
formed 1952
MLBPA
the 1952 MLBPA
Dominated by management and negotiations limited to pensions and insurance
In 1966 Marvin Miller
organized players as true labor union by convincing all players that each of them was essential to game revenues
In 1957
NHL tried to unionize
Labor relations did not play major role in professional sports until
growing fan interest and increased TV and sponsorship revenues transformed leagues. (1960s)
Once players unionize
collective bargaining must occur before league management can change hours, wages, or terms and conditions of employment
When the collective bargaining process reaches an impasse
the players can go on strike or owners can “lock out” players
Strikes and lockouts are far more disruptive in professional sports than in other industries because
lack of replacement players
Birth of PGA
Objectives are to grow golf interest, elevate standards of golf professionals, establish a relief fund, and hold meetings and tournaments (1916)
PGA tournament players broke away from the larger membership to form
Tournament Players Division (PGA Tour) – 1960s
franchise values for major league clubs
hundreds of millions of dollars
Franchise free agency
Team owners threaten to move teams if their demands for new stadiums, renovations to existing stadiums, or better lease agreements are not met
Example of revenue generation
Boston Red Sox, who are maximizing revenue potential in every inch of Fenway Park (LA Dodgers also)
contrast between large and small broadcast markets
Forcing some teams to focus on efficiency (Oakland A’s) and use a system that uses less common statistics, wise drafting, and drafting of players who are “signable”
All professional sport leagues adopt restrictive practices (drafts, reserve systems, salary caps, free agent restrictions, and free agent compensation)
to provide financial stability and competitive balance between their teams
anticompetitive
league restrictive practices are often challenged under antitrust law
Representation of minorities in sport management
should match representation on the field
2003: All leagues showed lower averages in management and coaching positions
women
2003: NBA, NHL, and MLB had improvements in
race categories
NBA: First African American majority owner
Bob Johnson (Charlotte Bobcats)
MLB: First minority owner was Mexican American
Arte Moreno (Anaheim Angels)
WNBA: Representation of women has declined in every category except
professional administrator and player
General manager
In charge of all player personnel decisions; Traditionally former player or coach, but as position has become more complex individuals with graduate degrees have become desirable
Team Front Office Personnel
Entry level tends to be in sales, marketing, community relations, and media/public relations with low starting salaries
Tour Personnel
positions range from commissioner to marketer to special events coordinator
Sports Agents
coordinate business and financial affairs
Sports Agencies
marketing, management, finance, accounting, operations, and so on
Salary Caps
Intended to create parity among teams by limiting how much a team can spend on its players’ salaries
Caps can also require teams to have spending minimums
low-revenue teams are prevented from cutting their payrolls to stay competitive
Professional sports are becoming globalized
drafting and signing of players from other nations and the movement of marketing efforts into those countries
NBA seeks to move full force into
China
Women’s Professional Sport Leagues
WNBA and NPF

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