LGST 207 Midterm 2 Flashcards
First televised sporting event
Princeton v. Columbia 1939 baseball game.
NY Times criticized baseball on TV–> criticism has followed sports on TV since the beginning
Relationship between TV and sports at the beginning
TV needed sports, as sports helped increase TV demand, as people bought TV’s to see their teams play
Broadcast TV Business Model
Deliver an audience to advertisers, receive money from advertisers for doing so
National networks provide schedule of programming (entertainment, national news, sports) and local affiliate affiliates with the network and airs their local shows and syndicated shows
Big difference with cable is the lack of a cable subscription necessary, although retransmission fees help the broadcast channel receive a small amount from the cable companies
Network Rights Fee Model
Network pays sports leagues annually in long term contracts to air their games. Sells advertising to recoup investment
Why does a good rating matter
More viewers results in advertisers willing to pay more, so the value of the property increases with good viewership
Sports Importance to Broadcast (FOX example)
FOX Gets the NFL, the NFL helps it be a successful network by:
- Promoting the other shows on FOX
- Affiliates compete to switch to FOX to be able to air the local football team
- Advertisers bundle their ads, advertise on other FOX programming, results in more ad revenue
Broadcast Overview
Broadcast TV is the traditional TV model with no cable subscription necessary to watch these channels. The network makes money through advertising. Sports programming is often beneficial for a network in getting good affiliates and good ratings for its other programming
Cable TV Revenue
Dual revenue streams (monthly subscriber fees and advertising revenue)
Subscriber fees
Channels sell their content to MSOs (Comcast, Time Warner, Fios…) at a wholesale price and the MSO sells the channels to the consumer at a higher retail price
Affiliate fees for each channel vary based on demand (ESPN the highest)
Satellite TV
Similar to cable but stresses the choice and quality and focuses on sports
Cable TV Overview
Cable TV came onto the scene in the 1980s with ESPN and cable news networks, but seems to be falling after an incredible rise due to cord-cutting. The cable model is a boom to channels as they get revenue from affiliate fees as well as ad revenue. This has put a financial burden on the consumer who have to pay high cable bills.
Digital Media
Direct subscriptions that deliver a highly targeted audience to advertisers for a fee (Netflix, Twitter, Hulu, Amazon Video)
Increased presence as it is popular with millennials
Rating, Share, Sweep
Rating is percent of households watching a given program
Share is percent of households using their TV watching a given program
Sweeps are Feb, May, July, Nov (2,5,7,11)
Sports on TV summary
TV as a whole is down, and sports down too, but sports and TV need each other and are important to one another
Every major move by a league is based on TV repercussions and the national/regional sales of TV rights are essential for league success
Also sports are helpful so affiliates want the network
Why do sports mesh well with TV
Need to watch games live (no DVR), high levels of engagement and passion, fairly predictable ratings, gives advertisers a direct pipeline to middle class and more wealthy consumers, specifically allowing great access to highly desirable 18-34 year-old men
Why have media rights gone up recently
More networks and platforms bidding for the package, live sports bring high ratings and reach young men better than anything else, more finely target audiences, TV everywhere multi-platform concept gives properties more rights to sell.
However, could be a bubble with such a sharp increase and so many cord cutters and people who don’t use cable
I think it will keep going up as digital players make more aggressive bids
Is Sports Broadcasting Worth the Cost?
Huge rights fees, and networks are losing money from sports alone. However, seen as an investment to help get the channel affiliates (broadcast) or subscribers (cable). Also major promoter for the network’s non-sports programming.
Factors ESPN Considers in Acquiring Content
New deal or renewal Strategic value Length of contract (as long as possible) Across all platforms Driver ratings (reach X time spent viewing) Strengthen brand Volume of content (highlights) Time of year Price
RSN
Regional sports network that MLB, NBA, and NHL teams play on. Traditionally owned by cable and media companies (Fox, Comcast) but some teams have taken over their own RSN’s
Why do teams take over their own RSN
Additional revenue stream, cuts out the middle man and gets the advertising directly, also creates and enhances asset value of the franchise
Additionally, standalone properties not subject to revenue sharing
So, helpful in making more money and growing exposure
Media Big Picture
Ever since sports began on TV, there has been criticism. In the beginning, TV needed sports to increase TV’s demand. Broadcast TV is the traditional TV model where networks make money through advertising. Networks like sports to get good affiliates and good ratings/promotional opportunities for its other programming. Cable TV has a dual revenue stream, with subscriber fees and advertising revenue. As a whole, TV is down, but sports and TV need each other. Every decision a league makes involves TV repercussions, and TV is needed to promote a brand. They go hand-in-hand, as sports survives the DVR epidemic and is the last form of must-watch TV left. As more channels and opportunities to consume content are created, there has been an increase in media rights. This is also because live sports bring ratings from a young audience that other programming cannot do. While channels don’t make money off of sports individually, they are used to help promote their other programming and channels have seen great results from having sports. RSN’s are becoming increasingly important with more teams launching their own RSN’s to take out the middle man.
NBA’s Goal of Emerging Technology
Experiment with unproven digital technology to shape fan experience in the future (not profit today, but get a headline and wants to be seen as innovative)
Partnership with the emerging technology companies and associate themselves with them. Promoting their brand across a variety of platforms to change the consumption of their product.
How NBA Uses Emerging Technology
Finding scale on new platforms:
- Augmented reality (part of smartphone that doesn’t require an extra device like VR, NBA Pop-a-shot or Snapchat foam finger)
- Voice (get player voice and all-star voting on Alexa
- Chatbots (audience has high willingness to purchase stuff thru chatbot)
Current status of emerging technology in NBA
Mostly entertainment not profit, but with right business model and technology, profit and value will come
NBA Emerging Tech Big Picture
The NBA is experimenting with new technologies to help promote fan engagement. They are focusing on augmented reality, voice, and chatbots. While they are not profitable yet and mostly seen as entertainment in their current states, with the right business model and with technology, profit and value will come. Also, it allows for young people and the new platforms to partner with the NBA and want to promote the brand.
Major Sport
Highest level of competition, legacy/history, biggest media deal in the sport, seminal event, authenticity, integrity
What it means for an emerging league to be successful
Not necessarily wins or profits, but meeting the goal that the league sets
Need to pay to be on TV rather than being paid
Categories of Niche/Emerging League
Minor league
Major League (but niche sport)
Indoor league (of major sport)
Women’s league
Minor League
Not the top level of competition in the sport
Meant for player development, entertainment, and grassroots marketing
Major League (Niche Sport)
Top level of competition in a sport with a large number of recreational participants but not on the same level as the four major ones. Major League Lax
Indoor League
Indoor variation of popular outdoor sports
Less talented athletes
Modified playing rules
Ex: Arena Football
Women’s League
Women only version of the sport
Revenue of Emerging Leagues
Main difference is the smaller scale of everything and the lack of significant (or any) media rights
Still getting gate receipts and concessions, and build brand off of that until can convince for broadcast revenue and sponsorship
Sponsorship–allow conservation of league resources, league gets exposure via sponsor’s activation. Not as much money though
—>Similar to major leagues but on a much smaller scale. Big difference is broadcast revenue, as media rights are significantly smaller, as not nearly as many people want to watch niche and emerging leagues. They mostly rely on gate receipts and concessions to build the brand.
Expenses of Emerging Leagues
Same as regular leagues (salaries, stadiums, operations, staff costs)
Emerging Leagues Low Salaries Because:
insufficient revenues, lack of unionization by athletes mostly, single-entity league structure for some of them results in less money being received by players
Single entity structure–> Work for the league, not competing for players, so lower salary
Emerging League is Successful Way 1
Audience appeal:
interesting to watch and play (helpful if audience is familiar with sport from having played it). Transcendent athletes helpful
Emerging League is Successful Way 2
Media/TV Presence:
Provides exposure needed to grow interest and attendance (can increase sponsorship rates and facility driven revenues)
Opportunity exists because of the expansion of cable TV
Emerging League is Successful Way 3
Deep Pocketed Ownership:
Need to be able to fund the team and afford everything
Emerging League is Successful Way 4
Located in Appropriate Markets:
Not necessarily the biggest, but pick where specific sport would do the best
Emerging League is Successful Way 5
Strong Leadership:
People at the top need to be able to handle problems and lead well to solve potential problems
When is an Emerging League a Failure?
When league thinks they are the best, competes for the best players and spends way too much money on a few old, washed up former stars, but the league is clearly not the best, so not enough demand, and then can’t sustain their player costs. (Seen with the XFL)
When enter a market that cannot sustain a competitor league (XFL)
Instead, should admit not the best level of the sport and try from there
Thoughts from looking at examples of emerging leagues. Comment on WNBA
Competitor leagues respond to problems in established league and make their own league not have these problems, but it is hard to replicate existing sports without having the best talent in the new league. Lack of a market
Also, note: WNBA backed by the NBA and be on NBC and get NBA sponsors, allows for it to stay in business. Beats the ABL (even though ABL had better players) as ABL couldn’t sustain the costs and didn’t have the NBA backing.
Big Picture of Emerging Leagues
Major leagues have the highest level of competition with some sort of legacy and authenticity in the league. Emerging and niche leagues exist in the form of minor leagues, major league but niche sport, indoor league, and women’s league. These leagues all have different goals, but they are successful if they can meet their goals, which is not necessarily wins or profits. Revenues are same categories as major leagues, but on a much smaller scale. The biggest difference is broadcast revenue, as this is so important for major leagues and significantly smaller for niche and emerging leagues. They mostly rely on gate receipts and concessions to build the brand. Expenses are the same but much smaller salaries because of the lack of revenue. To be successful, these leagues must have an audience appeal, media presence, rich ownership, be located in the appropriate markets, and have strong leadership. They are failures when they spend way too much money on players at the beginning. From the examples, we see it is hard for such leagues to be successful because they lack the talent and demand that major leagues have.
Sponsorship
Use of certain rights associated with a property to achieve certain marketing objectives (gain the rights to use team property for a specific thing)
Includes intellectual property, lease of real property, efficient media purchase, brand marketing platform (leverage other marketing assets)
Licensing
Renting or leasing of an intangible asset to extend a trademark or character onto products of a completely different nature
Line of consumer products, maximize revenue strategy, part of brand strategy, extends consumer engagement beyond game consumption
Sponsorship vs. Licensing
Licensing involves using the intellectual property of the team, player, or league and selling the product and giving the licensor a royalty
Sponsorship is more affiliating your brand with a property to achieve marketing objectives
Licensee
Brands (Nike, Rawlings, etc…)
Licensor
Leagues, teams in local markets, players
Intellectual property
Category of property that includes intangible creations of the human intellect (copyrights, patents, trademarks)
Trademarks
Recognize sign, design, or expressions which identifies products or services different from other. Can’t use the trademark unless sponsor or licensee
Likeness
Right of someone to control the commercial use of his name, image, likeness, or other pieces of you critical to you
Sponsorship Status
Huge industry and growing incredibly rapidly (faster than ads and promotion)
Most of sponsorship money goes toward sports (little bit for concerts and other events)
Property Strategy and Objective
Property refers to the league, team, conference, etc.
Objective is to maximize revenue and access the partners marketing (Ex: NBA partners with McDonald’s, allows for All Star voting at restaurants, allows for the league to be brought into the restaurant)
Strategy is: brand management, enhance customer experience, inventory creation and conversion, deliver marketing solution
What Does the Property Sell (What do the Yankees give a sponsor that would be enticing for the sponsor)
Literal:
Rights, assets, inventory sold in a sponsorship
Marks, signage, media, activity (MasterCard Monday–tickets, cause) player integration, category and exclusivity
Also:
Audience–size and demographic
Affinity–Brand equity transfer
Association–official status
Brand Exposure–Signage and/or naming rights
Ad media–RSN ads, print, radio, digital
Hospitality–Luxury suites/tickets
Exclusivity–Maximize Revenue
What Does the Sponsor Buy
Audience–reach
Affinity–property appeal (feel good about the property, so feel good about the sponsor)
Association with the property
Brand Exposure–Gross revenue points (GRPs) show how much of an impact the ad makes, how many people it reaches
Ad Media–GRPs
Data–Targeted digital marketing (online activity)
Hospitality–relationships
Exclusivity–No Clutter
Why do brands want to sponsor sports
Reach and learn about a target market (who are they, where are they, and what do they like to do) Affinity transfer (build a brand thru positive association--if you see company X sponsors your team, more likely to have positive thoughts about the company and buy their product) Efficient media buy (Easy to buy and efficient because across multiple platforms and reaches many eyes)
Marketing Objectives
Develop brand loyalty Increase awareness Defend position Change image Drive traffic Brand introduction Define value Hospitality (suites to host clients at the US Open, boxes at stadiums, etc)
Ex: MasterCard Monday–MasterCard Objectives:
Discount on tickets when bought with a MasterCard on a Monday. Do this because:
Platform for building business (new accounts, increased usage, increased acceptance)
Enhance brand image and awareness
Shift brand preference
Encourage member participation
What it costs brand to sponsor
Rights fee Media commitment Premium commitment In-kind value Activation (2:1) Return on investment measurement
Risks of a brand to sponsor
Sponsorship is no longer novel
Noise–fragmenetation, levels, inventory
Exposure
Ambush marketing (non-official sponsors advertising similar thing or on the networks)
Golf Sponsorship
Usually event sells the title sponsor, but Diamond Resorts built their own event
Big Picture of Sponsorship and Licensing
Sponsorship is the use of certain rights associated with a property to achieve certain marketing objectives. Licensing is renting an intangible asset to extend a trademark onto products of a completely different nature (Nike is a licensee of the NFL, gains the rights to use their logo and trademark on their apparel). Licensing involves using the intellectual property of the team, player, or league and selling the product and giving the licensor a royalty. Sponsorship is more affiliating your brand with a property to achieve marketing objectives. Sports sponsorship is doing well recently as there is a big opportunity out there for companies to advertise themselves through sports, as the young demographic watches. Leagues and teams want to maximize their revenue and they do this through creating inventory that can be sponsored. They sell their audience, affinity, association, brand exposure, ad media, hospitality, and exclusivity. Sponsors buy these. They buy to reach and learn about a target market and have positive affinity transfer. Sponsors face risks in that it is not novel and there is uncertainty about exposure.
Starwood Preferred Guest (SPG)
Loyalty program that rewards people for staying at Starwood hotels. They can redeem the points for prizes that include sports. As such, Starwood has sports partnerships to facilitate the prize redemption
Disproportionate profit from the ones who spent the most
Main Goals of SPG
- Acquisition (Get people onto the SPG platform)
- Engagement (Getting people engaged with SPG, especially when not staying at the hotel)
- Retention (Getting people to continue staying at Starwood and using SPG points
- -> Ultimate goal is to get more people to stay in their hotels and develop loyalty with these people so only stay at Starwood branded hotels
MLB Sheraton Partnership
- In hotel activation—> MLB TV for free, customized baseball food by location
- Digital exposure—> MLB website with schedule calendar option to book Sheraton rooms in the city where the game is
- Experiences thru SPG—> first pitch of World Series, etc.
Big Picture of SPG
Starwood uses their SPG program to market their product and try to get people to only stay at Starwood hotels. Using various partnerships, they want to give people a reason to stay at Starwood and incentivize them to do so
NFLPA Core Services
- Licensing (Separate from the league)
- Marketing Strategy (Looks out for the sponsors, thru the NFL and the NFL pays fee to the NFLPA)
- Player Activation (Player appearances in public)
NFLPA Licensing General Thoughts
Group licensing (player signs rights over to the NFLPA, 100% participation) Companies gain the rights to the player's intellectual property Mostly with the NFL, but when separate they have the player wear a shirt that looks like the jersey but without the logo
Fanatics
Positioned so it responds and capitalizes on hot market situations. Can make apparel much quicker than Nike, sends it over quickly, takes advantage of such hot market situations
NFLPA Revenue from Licensing
Royalties–
Some stuff is collective and others individual
More collective things (jerseys, t-shirts) divided equally between players
One player gets the majority for something like a bobblehead of themselves with rest going into the pool that is divided equally
Separate deals the player negotiates themselves for extra endorsements (Madden cover)
MLBPA and NBAPA fully split their revenue between players except the separate deals like NBA 2K Cover
Other Stuff NFLPA Does
Help grow the players (Amazon Video driving with players to games, videos of players talking about their college)
Also, NFLPA partnering with smaller companies and NFLPA takes equity in their company and they get to use players’ likeness
Big Picture of NFLPA Licensing
The NFLPA works to promote its players and make extra money for the players. They do this through licensing, marketing, and player activation. The NFLPA uses group licensing to sell the rights to their players name and likeness to different companies. The NFLPA and the players make money from these items being sold and they are mainly split evenly between the players. For more individual things, the player gets the majority of the money and for separate deals the players gets the entire money.
Public Relations
Managing how a brand is perceived by the general public
Goal is to protect the brand and have good, positive news flowing about the brand
Need patience (not instant gratification) when handling PR
Constant marketing, social media are now parts of mult-faced strategic approach to fix bad PR (after United dragged guy off plane, lot of marketing needed to fix image)
Problem with PR
Doesn’t flow directly to the bottomline, but still need it as very important, as news stories about companies majorly impact how brands are perceived
Big Picture of PR
PR is an underestimated and under respected element of marketing that is necessary in order to have a positive perception of a brand, especially after bad events take place. PR works to build brand loyalty during good times and mitigate damages when bad stuff happens.
How to tell if advertisements work
Need custom market research, as hard to isolate the impact of a single endeavor otherwise:
Own research, on site interviewing, blind experimental data, tracking study to measure perceptions on brands
Quantitative (number data) and qualitative (why) supplement each other
Need to plan efficiently and implement well (define business need, assess existing secondary research and do their own research int he field to find out how well the ads are doing)
Measure: Identify audience, identify brand perception before and after an action, measure correlations, determine connection between the property and sponsors, measure effectiveness of sponsor.
Big Picture of Market Research
Half of ad spending is wasted, and the traditional measures of determining which half this is is very tough to do. As such, Last and other market research experts work with companies to design their own experiments to see how their marketing efforts are going
6 Important Things for a New League
- League Ops—> Game operations (on-court stuff—> scheduling, playing equipment, game presentation), travel
- Player Matters—> Marketing appearances, training camp, player acquisitions
- Communications—> PR, Broadcast regulations
- Team Marketing—> Sponsorship, marketing, how to deal with infringements, community relations
- Tickets—> Setting prices, parameters. Dynamic pricing
- Team Administration—> Owners, discipline, arenas
G League
Important to the NBA as a developmental league, practice new technology and develop players in the league
E-Sports
Competitive gaming that generates an audience
Demographics are very young and viewership for marquee events are very high
30% of the viewers don’t watch sports, so different market
Need the right game to be successful (The right game will allow the players to showcase their ability and be fun to watch)
NBA 2K league will probably fail, as the difference between the best player and the average isn’t nearly as big as in other successful games where athletes have unique skills that make them so much better at gaming than average person.
Big Picture of E-Sports and Developing Leagues
League operations, player matters, communications, team marketing, tickets, and team administration are the 6 most important things for a new league to handle. These are pretty similar to major leagues except for the lack of a major media component. E-Sports is a growing industry that targets young fans, and the right game is needed to be successful. Such successful games are very successful.
Nascar
Sanctioning body with different holding companies owning the tracks
Pioneer in marketing with Winston cigarettes sponsoring their cup series since 1972, new sponsor now
France Family, Richard Petty, Humpy Wheeler
France Family—> Owns Nascar
Richard Petty—> The King, dominant Nascar driver
Humpy Wheeler—> Famous promoter with Charlotte Motor Speedway
Nascar Team Business Model
Each race team funds and builds their cars
Revenue for teams:
Sponsorship
Prize money
Share of the merchandise (fanatics pays 25% of gross in royalties to teams, track, and Nascar)
Drivers get the revenue from the teams, not guaranteed and must rely on prize money and sponsors. Big difference from Big 4 leagues
Nascar Business Model
Nascar is a sanctioning body, so they make and enforce the rules
Also meant to promote the sport
Makes media deals—> Tracks get 65%, Teams 25%, and Nascar 10%
Centralized media deal, so same FOX/NBC deal regardless of the track
Revenue for Nascar: Sanctioning Fees (Track operator pays Nascar) Track Fees (Share of gate) Team charters (Teams pay to have a charter to be able to race)
Nascar Audience
Perception is red-necks in the south
Nascar tries to say they are more educated and richer from big cities to sell to sponsors, but seems to be manipulating the data
Fans are very, very loyal to sponsors, which helps attract them (feel like they are all in this together with the sponsors)
Nascar Problems
Retired drivers Sponsors out Ratings down Team value down Attendance way down
Dover problems
Only 2 races and attendance way down, may not be worth it to keep race there
When considering if it is worth it, consider the potential revenue from having the race at a different site and whether that could be more profitable
Big Picture of Nascar
Nascar functions as a sanctioning body with separate companies owning the race tracks. They were pioneers in marketing by having the title sponsor in the Nascar series name. Nascar makes money through centralized media deals, fees paid by the tracks, and fees paid by the teams. While leagues also make money through their media deals, they don’t function as sanctioning bodies. Instead, they put on the events and the teams essentially own the league, while in Nascar they are separate entities. Nascar also sees teams making money through sponsorship, prize money, and merchandise. This is similar to how teams make money in sports, except for a lack of a local media deal, and they are competing against a lot more teams at once. Nascar faces declining attendance and sponsors leaving, which is not good. Another key difference is how the players (teams in Nascar really) are essentially independent contractors, rather than in the Big 4 leagues where they are employees of the team. So, there is more of a risk in earning money, and they must sell individual sponsors and rely on prize money.
PGA Tour
Put the events on
Non-profit entity (profits to charity)
Sanctioning body, Competitive contests
Create and maximize playing and financial opportunities for the players
Players are entrepreneurs who need to get tour cards to play on the PGA
Media deals with CBS, NBC, Golf Channel
Prize money is way up because of Tiger
Sanctioning/Scheduling for golf
Gets title and official sponsors
Owns some courses (TPC courses)
International growth and rich, educated fans
PGA Event Owner
Individual venues put on the PGA Tour events, but not owned by the PGA
Non-profit
Title and local sponsors
Gate
Hospitality
Merchandise and food/beverage
Club wants the events there for promotion of the course (elevates the course)
Expenses of the Event Owner
Infrastructure Prize money Merchandise and food and beverage cost Staff Volunteers
PGA of America
Promote enjoyment of golf and contribute to its growth by servicing golf pros, consumers, and the golf industry (trade association of club pro’s)
PGA Championship and the Ryder Cup
USGA
US National governing body —> grow the game in the US
Rules of golf, course care and research and development (type of grass to use)
Handicap system
US Open, US Women’s and Senior Open, US Amateur events
Other Majors
R&A—> The Open
Masters—> Augusta National Golf Club puts on the Masters
LPGA
Women’s non-profit sanctioning body Create and maximize playing and financial opportunities for the players Much more global Women’s empowerment Client entertainment/hospitality Customized content creation Executive women’s golf association—> use golf for business and networking Shan-Shan-Fang is best women’s golfer
Big Picture of Golf
The PGA Tour functions similar to Nascar in that they are a sanctioning body that gets individual courses to put on and run the events. The event owner operates the events and they make money from gate, media, merchandise and need to pay for the infrastructure, prize money, staff, and cost of goods sold. The PGA of America and USGA are also there to promote golf in the US. The LPGA is the woman’s tour and is similar to the PGA except that it is much more international. Golf is different from the major sports in that the players are essentially entrepreneurs who only get paid based on how they do in the event (in addition to sponsorship) rather than being paid on a salary as part of a team. Furthermore, the PGA Tour doesn’t put on its own events, but the individual events run themselves under the PGA Tour umbrella, similar to what we see in Nascar.
ATP
Men’s worldwide tour, makes rankings. Owns Tennis Channel
WTA
Women’s tennis tour founded by Billie Jean King, different tournaments
USTA
US National governing body—> promote and develop the sport’s growth on every level in the US
700K members organizing and hosting grassroots to the US Open
Community tennis
Diversity and Inclusion
Officiating
Player development
USTA sections
Puts on a bunch of events, including US Open
Tennis Names to know
John McEnroe, Jimmy Connors were top tennis players (both American) in 70s and 80s
Martina Navratilova and Chris Evert (American darling) best women players
Big Picture of Tennis
Tennis is similar to golf in having a men’s and women’s tour and majors. It is different from the major sports in the same way the other ones are, in that there are individual events, the players aren’t on salaries but are independent, etc
First College Sporting Event
First college sport was a crew race in 1852 between Yale and Harvard
Neutral site in New Hampshire because a railroad company sponsored it and wanted people to use their tracks to get to the race
NCAA
Unincorporated, voluntary, private
College presidents responded to deaths in football by starting the NCAA in 1905 (named the IAA and renamed NCAA in 1910)
FBS (best football teams), FCS, Div I w/o football, Div II, Div III
NCAA and School Objectives
Main NCAA Goal:
Maintain college athletics as an integral part of the educational program and the athlete as an integral part of the student body and, by so doing, retain a clear line of demarcation between intercollegiate athletics and progressional sports.
Objectives of the Institute of Higher Learning (School):
Student morale
Community relations
Build awareness —> Institutional profile
Development (fundraise)
Practically: Revenue, brand, application growth, alumni engagement and donations
Div I Goals:
Strive for regional and national prominence
Sponsor at the highest feasible level the spectator-oriented, income-producing sports of football and men’s basketball
Strive to finance their athletics programs from revenues generated by the program itself
Div II and III goals
Serve participants and encourage broad participation rather than spectators or general public (doesn’t mention revenue)
Title IX
Requires equal funding and equal participation across men and women college sports (must comply to get federal funding)
Have seen women participation up but men teams down (can’t just add a new men’s team without also adding men)
NCAA Revenue
NCAA has about $1B in revenue
Mostly (90%) from NCAA men’s basketball tournament (rights fee, sponsor, gate)
NCAA isn’t involved in FBS football—> CFP does football
CBS sells ads for NCAA tourney
NCAA Expenses
Distributions to schools
Pays power 5 the most, then progressively less money as worse
Other factors in determining how much each school gets: # of sports, # of scholarships, performance in NCAA men’s basketball tournament
Not for competitive balance like in pro sports, but NCAA as a whole to fairly distribute revenue to schools
Also, pays for tournaments
Conferences
More like pro leagues
Schedule
Makes pooled TV deals
Does NOT license (schools do their own individual licensing)
Rules: Power over members, run events, they decide distribution of revenue amongst the member schools (revenue sharing)
Conference rules can’t be less restrictive than NCAA (but can be more restrictive—> Ivy no scholarships but can’t have more than what NCAA says)
Conference networks are owned by a combination of national network (ESPN, Fox) and the conference
Longhorn Network owned by Texas, ESPN operates
Conference Revenue:
Network/cable television contracts, NCAA distributions, conference network, sponsorships, football championship game, men’s basketball tournament, football bowl and CFP game participation by member school
Why do schools switch conferences
Make more money
Better scheduling
Opportunity to participate in a championship (better participation)
School Revenue
Revenue generated by athletics department and allocated from institution. Generated revenue sources: Ticket sales NCAA and conference distribution Alumni Contributions Third party support Concessions Broadcast rights Royalties / advertising / sponsorship Sports camps Endowment / investment income
Allocated revenue sources: Allocated support: Student activity fees Direct government support Direct institutional support Indirect institutional support
Proportion of allocated revenues is growing.
Most schools don’t make money, but about half the power 5 schools make money off basketball and football
Not nearly as profitable as pro sports
School Expenses
School pays in upkeep of capital costs (stadium, facilities)
Football stadium capacity is biggest expense
Also pays for scholarships
Pays to put on the games
College Marketing and Media
IMG College and Learfield—> marketing and media rights of 210 Division I schools:
–Guarantees a school certain level of revenue
–Gets rights to promote the school through a variety of different platforms:
Radio broadcasts of live events;
Tv and other coaches shows;
Select tv broadcasts
Live events and delayed broadcasts;
Internet rights to GoTide.com;
Print and game programs;
Endorsement rights for coaches (including appearances, commercials, and use of images);
Signage in the stadiums and arenas;
Pouring rights; and concessions
Licensing
Universities capture their own licensing entirely (don’t share with other schools, entirely their own)
IMG licensing products to companies, Alabama gets its revenue from its own merchandise
Indirect Impact of Athletics on Colleges
Small schools who experience success see increased applications, enrollment, revenue after success and allows for new facilities and licensed product sales
Also see more alumni donations
UCONN Women’s Basketball Own Deal???
Would have to consider the new TV deal they could get just for women’s basketball and if there is a market and how they would schedule game. Not being in conference, could have better schedule, more appealing, make more revenue, but is there a market for this?
Big Picture of College Sports
Unlike in pro sports, college athletes can’t be paid. The NCAA is a private organization to help grow and govern college sports. Division I is about making money while Division II and III serve the participants. Title IX requires equal participation and funding for men and women programs. This has resulted in less profitable opportunities, as other sports don’t generate nearly as much revenue as men’s basketball and football. Most of the NCAA’s revenue comes from the men’s basketball tournament, as is it not involved in football. Their expenses include distributions to the schools and paying for the tournaments. The NCAA is similar to leagues in that they run postseason tournaments, but they are not very involved during the season. That falls more on the conferences, who are very similar to pro leagues. The main difference is that rather than a pooled licensing deal, each school does their own licensing. While conferences are similar to leagues in that they get the media money, they don’t get the licensing money, as that goes straight to the schools. The schools get revenue from ticket sales, as well as from the NCAA and their conference. College marketing and licensing are done through IMG mostly, who the school hires to guarantee them a certain level of revenue. While athletics in isolation are not profitable except for the upper tier, they are helpful for the smaller schools who experience success, in that they can promote the school and allow for increased applications.
Bobby Sharma
E Sports, Development Leagues
Jon Last
Market research
Steve Scebelo
NFLPA Licensing
Steve Griffith
Sports PR
Dana Rosenberg
SPG Marketing
Scott Stanchak
NBA Digital Media
