SPORTS FINANCE AND MANAGEMENT
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SPORTS FINANCE
AND MANAGEMENT
Real Estate, Media, and the New
Business of Sport
Jason A. Winfree, Mark S. Rosentraub, Brian
M.
Mills,
and
Mackenzie
P.
Zondlak
Challenges Facing Sports Managers Today
Every
business
is challenged
to
keep
pace
with
increasingly
dynamic
and
rapidly
shifting
market
conditions.
These are just some of the examples of how every business must
adopt
and
adapt
to
emerging
technologies
and
customer
preferences.
businesses and their managers must
(1) adapt their
financing
and
management
skills
to
meet
consumers’
expectations;
(2)
identify
new
revenue
streams
and
opportunities;
(3)
carefully
evalu-ate the profitable potential of these new revenue streams,
products,
and
methods of delivery; and
(4) respond to the expanding range of choices made available by the Internet.
Those businesses and managers that
are
unable to innovate and adapt to the real-
time age of the Internet and
the
various
other
demands
of
consumers
for
enhanced
experiences
will
be
less financially
successful.
Change Number 1: Ownership Models
In
the
past,
individuals,
families,
and
partnerships
were
the
dominant
forms
of ownership models.
Teams
are now often part of a conglomerate that, at its
center,
could
be
a
media,
entertainment,
food
services,
or
real
estate
business.
The
team then becomes an integral part
of the “empire” and the owner lever- ages the unique value
of sport and the
team’s
identity for the benefit
of
the
conglomerate.
Another
business
institution
has
also
become
part
of
sport
world:
hedge
funds.
Foreign
investors
have
also
bought
teams.
Change Number 2: Sport, Entertainment
Complexes, and Real Estate Development
Enhancing
revenues
and
the
value
of
a
franchise
is
the
top
priority for
professional staff on the business side of a team’s operations.
The
quality
of
the
at-home
experience
for
fans
since
the
advent
of
large-
sized HD televisions has meant that new and unique experiences must
exist
at
a venue to attract fans.
The popularity of sport has made it possible to build new
urban
neighborhoods
complete
with
residential,
entertainment,
and
commercial
properties
anchored
by
arenas,
ballparks,
and
football
stadiums.
Change Number 3: Young Fans and Their
Loyalties
The need to focus on new experiences at venues or in adjoining
neighbor-
hoods
has
also
been
driven
by
the
spectacular
increase
in
the
popularity
of
fantasy
teams.
Change Number 4: A New Media World
There
has
been
a
decline
in
attendance
at
college
football
games
and
for
some professional teams.
When attendance declines, it is probably more
related
to
the quality of the fan experience in or near a venue than a
team’s performance.
What is also evident, however, is that communications and
the
media
are
now
among
the
most
important
revenue
streams
for
teams.
Sport
has
become
synonymous
with
media
exposure
and
that
connection
has
con-
tributed to the escalating value of
teams.
Understanding
the
sport
business
in
real
time
requires an
appreciation for how quickly the dynamics of the
relationship
between sport and television, and sport and the
Internet, has changed. In turn,
these
changes
have
had
and
will
continue
to
have
profound
economic consequences for
teams, leagues, and
universities.
Change
Number
5:
The
Real
Estate
Management Issues within
Venues
Change Number 6: League Policies
majority
of
these conflicts arise
due to the
sim
ple
fact that some teams operate
in
large markets, while others
serve
fans
in
much smaller metropolitan areas.
Further, certain markets
are
much wealthier than others.
San
Francisco–San Jose region
Jacksonville
or
even metropolitan Atlanta.
The resulting unequal distribution of wealth provides teams in the larger
and wealthier regions with the potential to earn more money than those
in smaller areas.
Those differences may give incentives for a variety of league policies.
Salary caps divide the financial pie between owners and players, but
managers also need to understand how and why a salary cap could lead to
lower revenues for both players
and
owners.
Change Number 7: The Globalization of
Sports
The
sport
business has
gone
global.
The
existence
of
the
Olympics and the worldwide appeal of soccer, tennis,
golf, racing, gymnastics,
ice
skating,
ice
hockey,
basketball,
skiing,
and
rugby.
What
has
changed
is
the ways in which the North American sport leagues
are interacting with
the
rest
of
the
world
and
the
extensive
televised
presence
of
England’s
Premier
League matches in North
America.
FIFA’s World Cup and
the
European Championship are some of the most
valuable tournaments
and
many of those players do not compete in the
Olympics.
Change Number 8: Teams and
Public/Private Partnerships
Increased public investment
in
sport
venues
reached
its
zenith
in
the
1990s.
Each
time
one
of
these
public/ private
partnerships
was
created,
there
was
opposition
from
some
taxpayers and
voters
There are ways to build effective partnerships producing
financial
benefits
for
teams
and
cities.
Those
professionals
preparing
for
careers
in
sport
finance
and
management
must
be
able
to
advance
a
team’s
interests
while
also
ensuring
that
real
economic
benefits
exist
for
the
public
sector.
Change Number 9: The Landscape of
Collegiate Sport and NCAA
An extraordinary set of changes
in
college
sport.
At
one
level,
the
most
successful
athletic
conferences,
several
individual universities, and the NCAA itself are generating a
substantial amount of money from media contracts, ticket sales,
donors, and tournaments.
At another level, some student–athletes believe they are not
being
fairly
compensated
for
the
revenues
they
produce
while
college
coaches
and
athletic directors earn salaries that eclipse those
earned by most if not all faculty
members
and
university
presidents.
The
NCAA
argues
that
amateur status is needed to maintain a
level of parity
Questions? Thoughts?
This book delves into the intersection of real estate, media, and sports management, providing insights on the evolving landscape of the sports business industry. It discusses the impact of media on sports finance and management, as well as the role of real estate in shaping the new dynamics of the sports world. Written by Jason A. Winfree, Mark S. Rosentraub, Brian M. Mills, and Mackenzie P. Zondlak, this publication offers a comprehensive look at the complex relationships between these key sectors.
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Presentation Transcript
SPORTS FINANCE AND MANAGEMENT Real Estate, Media, and the New Business of Sport Jason A. Winfree, Mark S. Rosentraub, Brian M. Mills, and Mackenzie P. Zondlak
Chapter 1 Redefining the Sport Business Industry
Challenges Facing Sports Managers Today Every business is challenged to keep pace with increasingly dynamic and rapidly shifting market conditions. These are just some of the examples of how every business must adopt and adapt to emerging technologies and customer preferences. businesses and their managers must (1) adapt their financing and management skills to meet consumers expectations; (2) identify new revenue streams and opportunities; (3) carefully evalu-ate the profitable potential of these new revenue streams, products, and methods of delivery; and (4) respond to the expanding range of choices made available by the Internet. Those businesses and managers that are unable to innovate and adapt to the real- time age of the Internet and the various other demands of consumers for enhanced experiences will be less financially successful.
Change Number 1: Ownership Models In the past, individuals, families, and partnerships were the dominant forms of ownership models. Teams are now often part of a conglomerate that, at its center, could be a media, entertainment, food services, or real estate business. The team then becomes an integral part of the empire and the owner lever- ages the unique value of sport and the team s identity for the benefit of the conglomerate. Another business institution has also become part of sport world: hedge funds. Foreign investors have also bought teams.
Change Number 2: Sport, Entertainment Complexes, and Real Estate Development Enhancing revenues and the value of a franchise is the top priority for professional staff on the business side of a team s operations. The quality of the at-home experience for fans since the advent of large- sized HD televisions has meant that new and unique experiences must exist at a venue to attract fans. The popularity of sport has made it possible to build new urban neighborhoods complete with residential, entertainment, and commercial properties anchored by arenas, ballparks, and football stadiums.
Change Number 3: Young Fans and Their Loyalties The need to focus on new experiences at venues or in adjoining neighbor- hoods has also been driven by the spectacular increase in the popularity of fantasy teams.
Change Number 4: A New Media World There has been a decline in attendance at college football games and for some professional teams. When attendance declines, it is probably more related to the quality of the fan experience in or near a venue than a team s performance. What is also evident, however, is that communications and the media are now among the most important revenue streams for teams. Sport has become synonymous with media exposure and that connection has con- tributed to the escalating value of teams. Understanding the sport business in real time requires an appreciation for how quickly the dynamics of the relationship between sport and television, and sport and the Internet, has changed. In turn, these changes have had and will continue to have profound economic consequences for teams, leagues, and universities.
Change Number 5: The Real Estate Management Issues within Venues
Change Number 6: League Policies majority of these conflicts arise due to the simple fact that some teams operate in large markets, while others serve fans in much smaller metropolitan areas. Further, certain markets are much wealthier than others. San Francisco San Jose region Jacksonville or even metropolitan Atlanta. The resulting unequal distribution of wealth provides teams in the larger and wealthier regions with the potential to earn more money than those in smaller areas. Those differences may give incentives for a variety of league policies. Salary caps divide the financial pie between owners and players, but managers also need to understand how and why a salary cap could lead to lower revenues for both players and owners.
Change Number 7: The Globalization of Sports The sport business has gone global. The existence of the Olympics and the worldwide appeal of soccer, tennis, golf, racing, gymnastics, ice skating, ice hockey, basketball, skiing, and rugby. What has changed is the ways in which the North American sport leagues are interacting with the rest of the world and the extensive televised presence of England s Premier League matches in North America. FIFA s World Cup and the European Championship are some of the most valuable tournaments and many of those players do not compete in the Olympics.
Change Number 8: Teams and Public/Private Partnerships Increased public investment in sport venues reached its zenith in the 1990s. Each time one of these public/ private partnerships was created, there was opposition from some taxpayers and voters There are ways to build effective partnerships producing financial benefits for teams and cities. Those professionals preparing for careers in sport finance and management must be able to advance a team s interests while also ensuring that real economic benefits exist for the public sector.
Change Number 9: The Landscape of Collegiate Sport and NCAA An extraordinary set of changes in college sport. At one level, the most successful athletic conferences, several individual universities, and the NCAA itself are generating a substantial amount of money from media contracts, ticket sales, donors, and tournaments. At another level, some student athletes believe they are not being fairly compensated for the revenues they produce while college coaches and athletic directors earn salaries that eclipse those earned by most if not all faculty members and university presidents. The NCAA argues that amateur status is needed to maintain a level of parity
