Ch 10. Professional Sports Flashcards
What are the two forms of professional sports government?
corporate governance model and single-entity model
What is a corporate governance model?
when the owners act like a board of directors and the Commissioner acts like the CEO
What power does a Commissioner usually have?
- approve player contracts
- disciplinary matters
- rule making
- dispute resolution
Who was the first commissioner?
Judge Kennesaw Mountain Landis in 1920 for baseball
Why did baseball create a commissioner?
the Black Sox Scandal
What is the most common example of a single-entity model?
Major League Soccer
What does a single-entity model mean?
investing in the league as a single entity then operating a club locally
What does the single-entity model promote?
avoiding antitrust liability and creating centralized fiscal control
What is made centrally for a single-entity model?
player compensation and personnel decisions
What do leagues look for when considering a new franchise?
financial resources, community commitment, commitment to sport, government relations, and the character of potential owners
What does revenue sharing do?
allow most teams to be owned by families or individuals
What is the maximum number of owners for an NFL team?
25 (1 large owner and 24 smaller owners)
Who holds 30% of an NFL team?
one control executive
What does the NFL prohibit and what is the exception?
prohibits corporate ownership and public ownership but the Green Bay Packers is the exception
What did franchise ownership prohibit?
cross-ownership until 1997
What is allowed in cross-ownership?
an owner cannot own more than one NFL team but can own an NFL team and another team or just other teams
Who worked to change the cross-ownership ban?
Wayne Huizenga and Paul Allen
How does NBA ownership work?
requires the team owner to hold at least 15% of the equity value of the franchise
What rule was adopted in 2015 regarding NBA ownership?
the “Jay-Z rule” that limited the number of team owners to 25 and required cat to hold a minimum of 1% (roughly a few million)
What does MLB ownership state?
- must have a designated control executive
- no minimum equity threshold
- no limit on number of limited partners
- search ownership structure is subject to league approval
What does the NHL ownership state?
- no minimum equity threshold
- no limit on number of limited partners
- each ownership structure is subject to league approval
How do professional teams make their money?
- sale of media rights
- premium seating
- merchandise
- ticket sales
- sponsorships
How do professional leagues make money?
- national TV and radio contracts
- licensing
- sponsorships
What are the two most important factors used in determining a franchise’s value?
degree of revenue sharing and stability of the league’s labor situation
What happened in 1960s regarding labor relations?
player unions gauged a foothold in professional sports
What happened in 1970s regarding labor relations?
professional sports transformed into a traditional business model
How are players working conditions negotiated?
into a Collective Bargaining Agreement (CBA)
In a collective bargaining agreement negotiation, what normally happens when the two sides reach and impasse?
players can strike (not show up to practice) and owners can “lockout” players (send a player home when arriving to the facility)
