2008 presentation on the basics as they relate to the business of sports

2. If we do everything right this year and win
again, we probably will be able to break even.
And I’ll tell you this much: I didn’t buy this
team to break even.
-Minnesota Twins Owner Carl Pohlad, 1992.

3.  Read Fort Ch. 2 p. 13-20
 Answer Worksheet Q#2
 Continue working on anthology
09/13/08

4. • Economics
• Scarcity
• Opportunity Cost
• Comparative Analysis
• The Law of Supply/ Demand
• Elasticity
• Utility

5. -Jeremy Jacobs (Sporting News, 1992)

6.  Players
› Greedy & lucky?
 Owners
› Greedy & manipulative?
 Teams
› Raise prices so the fans take on the burden?
09/13/08

7. • TSN 100- only 10% of the most
powerful people in sports are players.
• Owner behavior- stadiums, admission
prices, TV rights, player negotiations.
• Teams that spend the most have the
better chance of winning- why?

8.  Fans pay to see them perform/play
› They produce the product
 Compensation should be based on the
revenues they are generating
 Careers are short, so their salaries
should be high
 Few have true POWER!
09/13/08

9.  How is player pay, just like pay for, a
non-sports/athletic job?
 How does fan envy play into everything?
09/13/08

10. -Gary Cavalli, ABL Co-founder on shutting
down a franchise (AP, NY, 8/26/98)

11.  Independent legal entities
› Free to make/ lose money depending how
they operate
 Abide by league agreements
› Including modifications from Player’s Union
in Collective Bargaining Agreements
 Want the best team to make $$$
› Players, front office employees, coaches
 Player’s can use agents to negotiate
individual contracts
09/13/08

12.  Why do teams/owners that spend the
most, generally win the most?
› Is this true at DI? DIII?
 Do owners have any incentive to
misrepresent the economic welfare
generated for them by team ownership?
Remember their relationships with:
› Players
› Fans
› State & local government officials
09/13/08

13. Why study the sport
enterprise? Reason #1
 Sports is big business.
 Over $10 billion in public money has
been spent in the last 15 years just on
new stadiums and arenas.
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14. Why study the sport
enterprise? Reason #2
 Sports has cultural importance far
beyond its economic significance
 Pro-sport industry ~ same size as
cardboard box industry
› Nobody talks about boxes around the water
cooler on Monday
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15. Why study the sport
enterprise? Reason #3
 Sports is a laboratory for social
experiments
› Discrimination/Integration
› Women’s Rights
› Pay for performance/ contracts
› Public finance/Urban economics
› Demand for tickets
› Competitive balance
› Revenue sharing
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