CONTENTS

Preface xix

PART I: CONTINGENCY, FRAMEWORK FOR STRATEGIC

SPORTS MARKETING 1

CHAPTER 1 Emergence of Sports Marketing 2

What Is Sports Marketing? 3

Understanding the Sports Industry 4

Sport as Entertainment 4

A Marketing Orientation 5

Growth of the Sports Industry 6

Spotlight on International Sports Marketing Can Man U Score in America? 9

The Structure of the SportS Industry 11

The Consumers ofSport I2

The Sports Product 16

Different Types of Sports Products 17

The Multidimensional Nature of the Sports Product 22

Producers and Intermediaries 23

Sports Marketing Hall of Fame Mark McCormack 26

Basic Marketing Principles and Processes Applied to Sport 27

The Sports Marketing Mix 27

The Exchange Process 28

The Strategic Sports Marketing Process 29

Canadiens Targeting Younger Fans with a New Club 30

Summary 30

Key Terms 31

Review Questions 32

Exercises 32

Internet Exercises 32

Endnotes 32

CHAPTER 2 Contingency Framework for Strategic Sports Marketing 34

Globetrotters Dribble Out a New Marketing Plan 35

Contingency Framework for Strategic Sports Marketing 36

Contingency Approaches 37

Strategic Sports Marketing Process: The Heart of the Contingency Framework 39

Planning Phase 40

Understanding Consumers' Needs 40

Market Selection Decisions 40

Spotlight on International Sports Marketing Major League Baseball International: Segmenting

the Market Based on Where People Live 41

Marketing Mix Decisions 45

ix

• X Contents
Implementation Phase 48

Organizing 49

Leadership and Interaction 49

Resource Acquisition and AI/ocation 50

Coordinating and Timing ofActivities 50

Information Management 51

Control Phase 51

Measuring Results 51

Revolving Sponsors a Big Part of Sports 52

Spotlight on Sports Marketing Ethics Move Toward Athletic Reform Long Overdue 56

Summary 57

Key Terms ·58

Review Questions 58

Exercises 58

Internet Exercises 59

Endnotes 59
CRA
CHAPTER 3 External and Internal Contingencies 60

External Contingencies 60

Competition 61

Technology 62

Cultural and Social Trends 67

Physical Environment 68

Political, Legal, and Regulatory Environment 69

Demographics 71

The Economy 72

Monitoring the External Contingencies 73

Internal Contingencies 75

Vision and Mission 75

Organizational Objectives and Marketing Goals 76

Organizational Strategies 78

Organizational Culture 82

Assessing the Internal and External Contingencies: SWOT Analysis 83

Spotlight on Sports Marketing Ethics Sports Offers a Human Timeout from the Inhumanity 84

Summary 86

Key Terms 87

Review Questions 87

Exercises 87

Internet Exercises 88

Endnotes 88

Case: Part I 90

C1
PART II: PLANNING FOR MARKET SELECTION DECISIONS 93

CHAPTER 4 Research Tools for Understanding Sports Consumers 94

Marketing Research in Action: The Albany River Rats 95

Research Budgets Increase as Leagues Seek Growth 96

The Marketing Research Process 98

Defining the Problem or Opportunity 98

Understanding the Value of Sponsorship 100

CONTINGENCY FRAMEWORK
FOR STRATEGIC SPORTS
MARKETING

I '

 WHA1

EMERGENCE OF SPORTS
MARKETING
After completing this chapter, you should be able to:

• Define sports marketing and discuss how the sports industry is related to the entertainment
industry.
• Describe a marketing orientation and how the sports industry can use a marketing orientation.
Examine the growth of the sports industry.
• Discuss the simplified model of the consumer-supplier relationship in the sports industry.
• Explain the different types of sports consumers.
• Define sports products and discuss the various types of sports products.
• Understand the different producers and intermediaries in the simplified model of the
consumer-supplier relationship in the sports industry.
• Discuss the elements in the sports marketing mix.
• Explain the exchange process and why it is important to sports marketers.
• Outline the elements of the strategic sports marketing process.

ary is a typical "soccer mom." At the moment, she is trying to determine how to
M persuade the local dry cleaner to provide uniforms for her daughter's Catholic
Youth Organization soccer team .
George is the president of the local Chamber of Commerce. The 10-year plan
for the metropolitan area calls for developing four new sporting events that will
draw local support while providing national visibility for this growing metropoli­
tan area.
Sam is an events coordinator for the 10cailOK road race, which is an annual fund
raiser for fighting lung disease. He is faced with the difficult task of trying to deter­
mine how much to charge for the event to maximize participation and proceeds for
charity.
Ramiz is the Athletic Director for State U. In recent years, the men 's basketball
team has done welJ in postseason play, therefore, ESPN has offered to broadcast
several games this season. Unfortunately, three of the games will have to be played at
10 P.M. local time to accommodate the broadcaster's schedule. Ramiz is concerned
about the effect this will have on season ticket holders because two of the games are on
weeknights. He knows that the last athletic director was fired because the local fans
and boosters believed that he was not sensitive to their concerns.
2
 CHAPTER 1 Emergence of Sports Marketing 3

WHAT IS SPORTS MARKETING?

Many people mistakenly think of sports marketing as promotions or sports agents say­
ing, "Show me the money." As the previous examples show, sports marketing is more
complex and dynamic. Sports marketing is "the specific application of marketing prin­
ciples and processes to sport products and to the marketing of nonsports products
through association with sport."
Mary, the soccer mom, is trying to secure a sponsorship; that is, she needs to con­
vince the local dry cleaner that they will enjoy a benefit by associating their service
(dry cleaning) with a kid's soccer team.
As president of the Chamber of Commerce, George needs to determine which
sports products ,will best satisfy his local customers' needs for sports entertainment
while marketing the city to a larger and remote audience. I

In marketing terms, Sam is trying to decide on the best pricing strategy for his
sporting event.
Finally, Ramiz is faced with the challenge of balancing the needs of two market
segments for his team's products. As you can see, each marketing challenge is complex
and requires careful planning.
To succeed in sports marketing one needs to understand both the sports industry
and the specific application of marketing principles and processes to sports contexts.
In the next section, we introduce you to the sports industry. Throughout this book , we
continue to elaborate on ways in which the unique characteristics of this industry com­
plicate strategic marketing decisions. After discussing the sports industry, we review
basic marketing principles and processes with an emphasis on how these principles and
processes must be adapted to the sports context.

Coca Cola's stadium signage

is just one example of sports
marketing.
Source: Used by permission of
The Coca Cola Company.
 4 PART I Contingency Framework for Strategic Sports Marketing

UNDERSTANDING THE SPORTS INDUSTRY

SPORT AS ENTERTAINMENT

Webster's defines sport as " a source of diversion or a physical activity engaged in for
pleasure." Sport takes us away from our daily routine and gives us pleasure.
Interestingly, "entertainment" is also defined as something diverting or engaging.
Regardless of whether we are watching a new movie , listening to a concert, or attend­
ing an equally stirring performance by ShaquiJIe O'Neal, we are being entertained .
Most consumers view movies, plays, theatre, opera, or concerts as closely related
forms of entertainment. Yet, for many of us, sport is different. One important way in which
sport differs from other common entertainment forms is that sport is spontaneous. A play
has a script and a concert has a program, but the action that entertains us in sport is spon­
taneous and uncontrolled by those who participate in the event. When we go to a comedic
movie, we expect to laugh, and when we go to a horror movie, we expect to be scared even
before we pay our money. But the emotions we may feel when watching a sporting event
are hard to determine. If it is a close contest and our team wins, we may feel excitement
and joy. But if it is a boring event and our team loses, the entertainment benefit we receive
is quite different. Because of its spontaneous nature, sport producers face a host of chal­
lenges that are different than those faced by most entertainment providers.
Nonetheless, successful sport organizations realize the threat of competition from
other forms of entertainment. They have broadened the scope of their businesses, seeing
themselves as providing "entertainment." The emphasis on promotional events and sta­
dium attractions that surround athletic events is evidence of this emerging entertainment
orientation. Consider the NBA All-Star Game. What used to be a simple competition
between the best players of the Western Conference and the best players of the Eastern
Conference has turned into an entertainment extravaganza. The event (not just a game
anymore) lasts four days and includes slam-dunk contests, a rookie game, concerts, 3-point
shooting competition and plenty of other events designed to promote the NBA.I In 1982,
the league created a separate division, NBA Entertainment, to focus on NBA-centered
TV and movie programming. NBA TV has created qrginatprogramming featuring shows
like NBA Player Nation, Real Playoffs,1nsiders, Virtual GM, and Hardwood Classics. As
Alan Brew, a corporate identity specialist at Addison, a branding and communication firm
states, "The line between sport and entertainment has become nearly nonexistent."z
Underscoring the notion of sport as entertainment is Richard Alder, president of
the Atlanta Knights of the International Hockey League (IHL), who states that "This
is a league for the masses and not the classes. [Minor league hockey] is entertainment
with the ice as the stage. The NHL is the coat and tie league. We're not. They're the
Mercedes, the best hockey league in the world . We 're the Chevrolet. Of course, more
people drive Chevys." Coincidentally, Alder worked for 16 years as a vice president of
marketing for the Ringling Brother and Barnum & Bailey Circus. 3 Additional exam­
ples of the relationship between sports and entertainment abound .
After originally trying to compete head to head against ESPN, the Fox Sports
Network wants to position its product as a more entertainment-based alternative. With
its hit show, The Best Damn Sports Show leading the way, Fox has six more sports enter­
tainment shows under development. Similarly, comedians have become a mainstay on
NFL pregame shows. For example, Jimmy Kimmell (of the Man Show fame) does seg­
ments on Fox NFL Sunday and George Lopez appears on HBO's Inside the NFL. ESPN
has also started to create original programming with movies and a dramatic series.
Of course, one the most highly visible examples of"sporttainment" is the WWE or
World Wrestling Entertainment. For the past two decades, the WWE has managed to
build a billion dollar empire that maintains the highest rated cable show and has also
 CHAPTER 1 Emergence of Sports Marketing 5
produced No.1 box office films, No. 1 NY Times bestselling books, and CDs as high as
No. 2 on the Billboard charts. Vince McMahon, the founder and chairmen has been
called the P. T. Barnum of our time.
Organizations that have not recognized how sport and entertainment relate are
said to suffer from marketing myopia. Coined by Theodore Levitt, marketing myopia is
described as the practice of defining a business in terms of goods and services rather
than in terms of the benefits sought by customers. Sports organizations can eliminate
marketing myopia by focusing on meeting the needs of consumers rather than on
producing and selling sports products.

A MARKETING ORIENTATION

The emphasis on satisfying consumers ' wants and needs is everywhere in today 's
marketplace. Most successful organizations concentrate on understanding the con­
sumer and providing a sports product that meets consumers' needs while achieving the
organization 's objectives. This way of doing business is called a marketing orientation.
Marketing-oriented organizations practice the marketing concept that organiza­
tional goals and objectives will be reached if customer needs are satisfied. Organizations
employing a marketing orientation focus on understanding customer preferences and
meeting these preferences through the coordinated use of marketing. An organization
is marketing oriented when it engages in the following activities.4
• intelJigence generation-analyzing and anticipating consumer demand, monitor­
ing the external environment, and coordinating the data collected
• intelJigence dissemination-sharing the information gathered in the intelligence
stage
• responsiveness-acting on the information gathered to make market decisions
such as designing new products and services and developing promotions that
appeal to consumers
Using the previous criteria (intelligence gathering, intelligence dissemination, and
. (responsiveness); one study examined the marketing orientation of minor league base­
ball franchises. s Results of the study indicate that minor league baseball franchises do
not have a marketing orientation and that they need to become more consumer focused.
Although the study suggests that minor league baseball franchises have not moved
toward a marketing orientation, some sports organizations realize that profitability is
based on adopting this business philosophy. One organization that has attempted to
apply a marketing orientation is the LPGA (Ladies Professional Golf Association).
The LPGA's effort to make the fans a priority is being led by Commission Ty Votaw.
Recently, Votow laid out a five year business plan designed to increase the tour's visibil­
ity and grow the tour. In order to do so, Votaw created a "fan first" initiative that has
a relatively simple, but important, premise: if fans are able to find a conn~ction with the
players then they will begin or continue to support the tour. To create that connection,
Votaw is asking players to adopt the five points of celebrity-performance, relevance,
joy and passion, appearance, an<;i approachability.
Nancy Lopez, a longtime tour veteran, stated that "there are so many sports vying
for the attention of fans . .. we. need to to do what we can to make them go see the
LPGA. Whether the LPGA's marketing orientation is successful in the long term
remains to be seen, but in the short run it seems to be working. Attendance has
increased by 10 percent in 2003 , TV viewership is up 22 percent on cable and 29 percent
on broadcast, the average purse has more than doubled and total prize money has
grown some 87 percent in the same time span. All these factors are positive indicators
that the marketing orientation is paying dividends. 6
• 6 PART I Contingency Framework for Strategic Sports Marketing
GROWTH OF THE SPORTS INDUSTRY

Sport has become one of the most important and universal institutions in our society. It
is estimated that the sports industry generates approximately $200 billion dollars a
year. As shown in Figure 1.1, this total is based on a number of diverse areas within the
industry including gambling, advertising, sponsorships, etc. As ESPN founder Bill
Rasmussen points out, "The games are better, and well the athletes are just amazing
and it all happens 24 hours a day. America's sports fans are insatiable.,,7 For better or
worse, sports are everywhere. The size of sport and sports industry can be measured in
different ways. Let us look at the industry in terms of attendance, media coverage,
employment, and the global market.

ATTENDANCE
Not only does sport spawn legions of "soccer moms and dads " who faithfully
attend youth sport events, but also for the past several years, fans have been flocking
to major league sports in record numbers. The NFL experienced a record-setting year
in paid attendance with 17.6 million fans watching in 2002 for an average attendance
of 66,100. In addition, 90 percent of NFL games sold out last year in time to lift TV
blackouts, which was the highest percentage ever. The 2002 to 2003 season produced a
small attendance decrease (0.6 percent) at NBA games with an average of 16,887 fans
enjoying the action. However, the league is poised to rebound on the shoulders on
rookie LeBron James. After a poor showing in 2002 because of the labor strife, atten­
dance for Major League Baseball finished down 0.4 percent in 2003 . The commis­
sioner's office attribues part of the slide to the poor economy, the war in Iraq, and
other uncontrollable factors like the SARS scare in Toronto. 8 Even with a soft econ­
omy, NHL attendance nearly matched that of the NBA in 2002-2003 and was sub­
stantially higher than a decade ago. Similar to the other leagues, paid attendance fell
about 1 percent league-wide, but overall attendance was still close to an all-time high.

MEDIA COVERAGE
Although millions of Americans attend sporting events each year, even more of us
watch sports on network and cable television or listen to sports on the radio. For exam­
ple, while 67,603 fans were in attendance at Super Bowl XXXVII in San Diego, an
estimated 41 percent of the country was watching on TV. 9 Likewise, some 171 million
people watched NBC coverage of the Summer Olympic Games from Sydney,
Australia;10 however, this number is minimal compared with the estimated 7 billion
people who watched worldwide. ESPN, the original sports-only network launched in
1979, reaches 87 million homes with 4,900 hours of live, original sports programming,
and ESPN2 reaches 85 million viewersY
Traditional networks are trying to keep pace with the demand for sports
programming. The four major networks devote in excess of 2,000 hours to sports pro­
gramming annually and a family with cable has access to 86,000 hours of sports TV. NBC
spent a record $2.3 billion to secure the broadcast and cable rights for the Olympic Games
in 2004,2006, and 2008. In addition, NBC paid $1.27 billion to televise the Olympics in
2000 and 2002. Recently, NBC extended its stronghold on the Olympics by winning the
broadcast rights to the 2010 and 2012 Games for $2.2 billion. Add to this the four-year
deal worth $2.64 billion paid by NBC and Turner Sports to televise NBA contests or the
$18 billion paid by the networks to the NFL, and you can see the value of sports to the
league and the networks. 12 These numbers show no signs of slowing down in the future. In
1999, CBS agreed to pay $11 billion for a six-year contract with the NCAA.
The huge demand for sports broadcasting has led to the introduction of more
sport-specific channels. New sports networks such as the College Sports Television
(www.cstv.com). Blackbelt TV, the Tennis Channel, and the Women's Sports Network
7

8 PART I Contingency Framework for Strategic Sports Marketing

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soccer.
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are emerging because of consumer demand. This practice of "narrowcasting," reaching
manager if
very specific audiences, seems to be the future of sports media.
over Euro
In addition to traditional sports media, new media such as the Internet and
years with
pay-per-view cable television are growing in popularity. Satellite stations, such as times for tt
DIRECTV, allow spectators to subscribe to a series of sporting events and playa play." Add:
more active role in customizing the programming they want to see. For example, ager in No
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out-of-market (i.e., not local) regular season NHL games per week for just $139. Such t
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EMPLOYMENT traded clul
Another way to explore the size of the sports industry is to look at the number of million in J
people the industry employs. The Sports Market Place Registry, an industry directory, this year 01
To spi[
has more than 24,000 listings for sports people and organizations. 13 A USA Today
mary sourc
report estimates that there are upward of 4.5 million sports-related jobs in marketing,
Rupert MUI
entrepreneurship, administration, representation, and media. 14 Some estimates range
sells everytl
as high as 6 million jobs. In addition to the United States, the United Kingdom employs scarves_It r
some 400,000 people in their $6 billion a year sports industry. IS Consider all the jobs that beams
that are created because of sports-related activities such as building and staffing a new subscribers
stadium. The Sports Business Directory lists 13 career areas in sport. These include days a wee)
event suppliers, event management and marketing, sports media, sports sponsorship, consumer I
athlete services, sports commissions, sports lawyers, manufacturers and distribution, auction bus
facilities and facility suppliers, teams, leagues, college athletics, and finance.
The number of people working directly and indirectly in sports will continue to
grow as sports marketing grows. Sports marketing creates a diverse workforce from the

.-------~ 1LYJ ,lroiIl SPOTLIGHT ON INTERNATIONAL SPORTS MARKETING
Can Man U Score in America?
On match day, the devout begin to congregate on
Chester Road in Manchester, about a 15-minute walk
from their cathedral. The road takes them past man y
shrines: There is Bishop 's Blaize, a local pub where sup­
porters chant from the Ma nchester United hymnal
30 minutes before game time. At the corner of Chester
and Sir Matt Busby Way (so named for an inspirational
coach of the past), the faithful take a left and pass a giant
mural featuring the faces of legendary team members
such as George Best and Eric Cantona. Finally, the pro­
cessional winds over some railroad tracks to one of the
most hallowed grounds in soccer: Old Trafford, home
to the 125-year-old Manchester United Red Devils foot­
ball club.
The veneration of Manchester United is hardly
restricted to a gritty British city, however. Man U is the
true prophet of football , or soccer, to a devoted world­
wide following of 53 million fans, according to polls done
for the club by researcher MORL In fact , it is the most
popular team in the world-making the New York
Yankees, Dallas Cowboys, and Los Angeles Lakers seem
bush league by comparison. And it has leveraged its hold
on its fans into a global business that spreads far beyond
soccer.
Maggie English, a 43-year-old customer-services
manager in London, is one of them. "I have traveled all
over Europe to support them ," she says. " I went eight
years without missing a game. I went to Turkey three
times for the day and Russia once for the day to see them
play." Adds Graham May, 39, a building-contracts man­
ager in North Manchester: " I would be a millionaire if
I hadn't spent so much on football ."
Such true believers help explain how Man U turns
such a handsome profit: In fiscal 2002 , the publicly
traded club kicked out $50.3 million in profits on $230
million in revenues, and it expects to generate revenues
this year of $260 million , club officials say.
To spin that much cash ,Man U goes far beyond its pri­
mary sources-ticket sales and a lucrative TV deal with
Rupert Murdoch's British Sky Broadcasting Group PLC.lt
sells everything from Man U coffee mugs to bedsheets and
scarves. It runs its own subscription-TV service, Manu.TV,
that beams game highlights and player interviews to 75,000
subscribers over four channels airing six hours a day, seven
days a week . It sells its own credit cards, home mortgages,
consumer loans, and insurance policies. It runs an online
auction business similar to eBay Inc. and is opening a string
CHAPTER 1 Emergence of Sports Marketing 9
I I]J:- --------,
of Red Cafe restaurants from Singapore to Manchester.
Says Marketing Director Peter Draper: "We are trying to
package loyalty and affinity."
In July, Man U will take another big step to expand its
global following when it takes its star-studded show to the
United States for four largely sold-out exhibition matches
in Seattle, Los Angeles, Philadelphia, and New York. The
club's aim is twofold: to penetrate America 's $15 billion
annual professional sports market and to persuade Wall
Street to invest in a growing global brand_"This is about
the long-term development of the marketplace," says Peter
F. Kenyon, CEO of Manchester United PLC.
That may be easier said than done. First, Man U may
have to make the trip without its biggest star, golden­
haired midfielder and tabloid idol David Beckham , who
has led the team to 8 English Premier League champi­
onships in the past 11 years. Rumors have swirled for
months that Beckham will move to another European
club, which would bring Man U a transfer fee in the $50
million range. Indeed , on June 10, the club announced
that it had reached agreement with Barcelona-a deal
Beckham promptly vetoed. But some such deal may
soon take place, with Real Madrid and A.C. Milan
thought to be among the contenders.
Even if Beckham makes the U.S. tour, it's hardly
clear that Americans are read y to embrace pro soccer.
True, 28 million Americans play the game. The U.S.
Men's National Team reached the quarterfinals of the
2002 World Cup, the U.S. Women 's National Team con­
tinues to dominate competitions and attract crowds, and
the United States will play host to the Women 's World
Cup this fall. Americans are even flocking to see Bend Ie
Like Beckham, a film about a young Englishwoman of
Indian descent who wants to play professionally.
But beyond those successes, soccer struggles to gain
a foothold in the crowded American sports market. Even
though Major League Soccer, the top professional league
here, has been making steady attendance gains, the 10­
team league still loses money and has not yet attracted a
broad fan base. Skeptics abound. " I think soccer in the
United States is a participation sport and not a spectator
sport," says Craig Tartasky, president of Vertical Sports
Marketing, a Bethesda (MD) conSUltancy.
While in the United States, Man U officials will be
trying to capitalize on the curiosity factor. Finance direc­
tor Nick Humby will head to Wall Street to try to interest
investors in the club's business model-one that combines
(Continued)
 10 PART I Contingency Framework for Strategic Sports Marketing

(Co ntinued)

a winning tradition with shrewd stewardship of the Man U
brand. With its US. sponsors, Man U wiD be running soc­
cer clinics in cities where it plays exhibition matches-and
trying to squeeze as much publicity out of the US. media
as possible.
Wall Street may well listen, because Man U's busi­
ness acumen is on par with Beckham's uncanny ability
to curve a free kick around an opposing wall of players
into a corner of the goal. The debt-free club used its own
cash to build a 67,700-seat stadium that sells out every
match. " We always invest at a level we can afford," says
Humby. Management also insists on rigorous financial
discipline that limits players' salaries to 50 percent of
revenues, compared wi th the 70 percent or even 100 per­
cent at some other English teams. Man U's willingness
to let Beckham go, while it may alienate some fans,
reflects the team's iron rule that no player must loom
larger than the team as a whole. Coach Sir Alex
Ferguson, apparently irritated by Beckham 's glamour­
boy lifestyle-his wife, Victoria, is a former Spice Girl­
benched him in several games this spring. And the huge
transfer fee would buy Man U other stars; experts say
the team has its eye on Brazilian striker Ronaldinho.
Man U also prospers because its popularity has
attracted big multinational consumer companies. Nike
Inc. last year agreed to pay $450 million over 13 years
to design and supply new clothing and equipment and
take over Man U's entire merchandising business, giv­
ing it more global punch. "The scale that we brought
was unattainable for them," says Nike co-President
Charlie Denson. Man U is also teaming up with other
iconic brands, such as Pepsi and Budweiser.
But will the club's popularity rub off in the United
States? It counts about 4 million hard-core US. fans,
according to MORI, but it will need millions more to
make that backing financially meaningful. The stakes are
high, since Man U is already approaching saturation in
Europe and Asia. "No soccer team has penetrated the
US. market , and Man U needs to do so," says Jeffrey
Bliss, president of Javelin Group, a sports-marketing
consultant in Alexandria , Va.
Certainly a big U.S. splash could lay the ground­
work for more growth. But it may be a long time before
Man U generates US. adherents like Chris Mann, a 57­
year-old English factory worker who plans to catch a
pair of the US. games. "Man U is my life ," he says. "We
call it the religion. We call Old Trafford the cathedral.
You have to go worship the team." Now, the question is
whether the prophet of football can spread the word to
those soccer heathens in America.

Man U's Money Machine

TOlal Revenue 2002: $230 million
Ticket sales: 39 %

Primarily home games at 67,700-seat stadium at Old Trafford, the biggest in England. Every game sells out.

Media: 36%

Sale of live TV rights for English Premier League games and European and English cup matches. Two-thirds comes

from EPL and English cup TV rights, the rest from European cup.

Commercial: 18%

Income from key sponsorships such as Nike and Vodafone and Man U's emerging financial-services business.

Merchandising: 7%

Royalties from merchandise sales, with Beckham paraphernalia especially hot.

Source: Stanley Holmes, Heidi Dawley, and Gerry Khermouch. Business Week, June 2003, No. 38, p. 108.
http://www.businessweek.comlindex.html.

players who create the competition, to the photographers who shoot the competition
(see Appendix A for a discussion of careers in sports marketing) .

GLOBAL MARKETS
Not only is the sports industry growing in the United States, but it is also growing
globally. As the previous spotlight on international sports marketing discusses,
 CHAPTER 1 Emergence of Sports Marketing 11 .
Manchester United is a premier example of a powerful global sports organization
that continues to grow.
:ars
lnd THE STRUCTURE OF THE SPORTS INDUSTRY
~lV­
There are many ways to discuss the structure of the sports industry. We can look at
~ht
the industry from an organizational perspective. In other words, we can understand
:nt
some things about the sports industry by studying the different types of organiza­
ler
tions that populate the sports industry such as local recreation commissions,
~d national youth sports leagues, intercollegiate athletic programs, professional teams,
lS, and sanctioning bodies. These organizations use sports marketing to help them
to achieve their various organizational goals. For example, agencies such as the
-e United States Olympic Committee (USOC) use marketing to secure the funding
n necessary to train and enter American athletes into the Olympic Games and Pan
e American games.
y The traditional organizational perspective, however, is not as helpful to potential
g sports marketers as a consumer perspective. When we examine the structure of the
sports industry from a consumer perspective, the complexity of this industry and
challenge to sports marketers becomes obvious. Figure 1.2 shows a simplified model
of the consumer-supplier relationship. The sports industry consists of three major
elements: consumers of sport, the sports products that they consume, and the suppli­
ers of the sport product. In the next sections, we explore each of these elements in
greater detail.

RGURE 1.2 Simplified Model of the Consumer-5upplier Relationship in the Sports Industry

Consumers Products Producers and Intermediaries

Spectators Events Ownership
Participants Sporting goods Sanctioning bodies
Corporate or Business Personal training Sponsors
for sport Media
Sports information Agents
Equipment manufacturers

Sports marketing fills the stands.

12 PART I Contingency Framework for Strategic Sports Marketing
THE CONSUMERS OF SPORT

The sports industry exists to satisfy the needs of three distinct types of consumers:
spectators, participants, and sponsors.

THE SPECTATOR AS CONSUMER

If the sporting event is the heart of the sports industry, then the spectator is the
blood that keeps it pumping. Spectators are consumers who derive their benefit from
the observation of the event. The sports industry, as we know it, would not exist without
spectators. Spectators observe the sporting event in two broad ways: they attend the
event, or they experience the event via one of several sports broadcast media.
Spectator consumers are also of two types. Some are individuals, whereas others
are corporations. As shown in Figure 1.3, there are two broad types of consumers:
individual consumers and corporate consumers. Similarly, there are two broad ways in
which consumers can become spectators: in person or via the media. This creates four
distinct consumer groups. Individuals can attend events in person by purchasing single
event tickets or series (season) tickets. Not only do individuals attend sporting events,
but so too do corporations. Today, stadium luxury boxes and conference rooms
are designed specifically with the corporate consumer in mind. Many corporate con­
sumers can purchase special blocks of tickets to sporting events. At times, there may
be a tension between corporate consumers' and individual consumers' needs. Many
believe that corporate consumers, able to pay large sums of money for their tickets,
are pushing out the individual consumer and raising ticket prices.
Both individual spectators and corporations can also watch the event via a
media source. The corporate consumer in this case is not purchasing the event for its
own viewing, but, rather, acting as an intermediary to bring the spectacle to the end
user groups or audience. For example, CBS (the corporate consumer) purchases the
right to televise the Masters Golf Tournament. CBS then controls how and when the
event is experienced by millions of individual spectators who comprise the televi­
sion audience.

RGURE 1.3 Classification of Spectators

In Person Mediated

Individual

Corporate
 CHAPTER 1 Emergence of Sports Marketing 13 .
Historically, the focus of the sports industry and sports marketers was on the spec­
tator attending the event. The needs of the consumer at the event were catered to first,
~rs:
with little emphasis on the viewing or listening audience. Due to the power of the
corporate consumer, the focus has changed to pleasing the media broadcasting
the sporting event to spectators in remote locations. Many season ticket holders are
dismayed each year when they discover that the starting time for events has been
he
)m altered to fit the ESPN schedule. Because high ratings for broadcasted sporting events
translates into bre a thtaking deals for the rights to collegiate and professional sports,
JUt
he those who .p resent Sporting events are increasingly willing to accommodate the needs
of the media at the expense of the on-site fan. The money associated with satisfying the
~rs
needs of the media is breathtaking. For example, in 1997, the NFL signed a contract
rs: with a major teleVision network for nearly $18 billion dollars. 16 Less than a month
later, the players also reaped the benefits of this contract by having the salary cap
III
ur raised to slightly oVer $75 million in 2003 . Identifying and understanding the different
types of spectator consumption is a key consideration for sports marketers when
~le
designing a marketing strategy.
ts,
ns
THE PARTICIPANT AS CONSUMER
n­
ly In addition to Watching sports, more people are becoming active participants in a
ly variety of sports at a variety of competitive levelsY Table 1.1 shows "frequent" partic­
ts, ipation in sports fitness and outdoor activities. As the number of participants grows, the
need for sports In.arketing expertise in these areas also increases.
a As you can See, there are two broad classifications of sports participants: those
ts that participate in unorganized sports and those that participate in organized sports.
d
e
e

Fantasy sports blurring the line

between spectator and
participant.
Source: Reproduced with
permission of YAHOO' Inc.
• 14 PART I Contingency Framework for Strategic Sports Marketing

TABLE 1.1 Frequent Participants (in millions of people)

Fitness (exercise with equipment) Number of Participants

Free Weights (100+ days/year) 15,826,000
Treadmill (100+ days/year) 11 ,266,000
Weight/Resistance Machines (100+ days/year) 9,354,000
Fitness (nonequipment)
Fitness Walking (100+ days/year) 17,160,000
Stretching (100+ days/year) 16,749,000
Running/Jogging (100+ days/year) 10,485,000
Team sports
Basketball (25+ days/year) 16,982,000
Soccer (25+ days/year) 7,783,000
Softball (25+ days/year) 5,438,000
Racquet sports
Tennis (25+ days/year) 3,954,000
Table Tennis (25+ days/year) 2,355,000
Racquetball (25+ days/year) 1,054,000
Outdoor activities
Fishing (15+ days/year) 15,561 ,000
Camping (15+ days/year) 10,220,000
Hiking (15+ days/year) 8,181 ,000
Winter sports
Downhill Skiing (15+ days/year) 1,385,000
Snowboarding (15+ days/year) 985,000
Snowmobiling (15+ days/year) 704,000
Water sports
Jet Skiing (15+ days/year) 1,589,000
Water Skiing (15+ days/year) 1,240,000
Sailing (15+ days/year) 927 ,000
Extreme sports
Inline Skating (25+ days/year) 6,854,000
Skateboarding (52+ days/year) 3,442,000
Mountain Biking (25+ days/year) 1,732,000
Noncompetitive sports
Recreational Walking (52+ days/year) 40,085,000
Recreational Swimming (52+ days/year) 15,427,000
Recreational Biking (52+ days/year) 14,785 ,000
Recreational sports
Billiards/Pool (25+ days/year) 9,582,000
Golf (25+ days/year) 8,301,000
Bowling (25+ days/year) 8,246,000
Source: SGMA/American Sports Data, Inc. Used by permission of SGMA International.
www.sgma.com.
 CHAPTER 1 Emergence of Sports Marketing 15 .

I UNORGANIZED SPORT PARTICIPANTS/ORGANIZED

SPORT PARTICIPANTS

Amateur
Youth recreational instructional
Youth recreational elite
Schools
In tercollegia te
Professional
Minor/Secondary
Major
Unorganized sports are the sporting activities people engage in that are not
sanctioned or controlled by some external authority. Kids playing a pick-up game of bas­
ketball , teenagers skateboarding, or people playing street roller hockey, as well as fitness
runners, joggers, and walkers are only a few of the types of sporting activities that mil­
lions of people participate in each day. The number of people who participate in unorga­
nized sports is difficult to estimate. We can see how large this market is by looking at the
unorganized sport of home fitness. In 2002, Americans spent nearly $4 billion on exercise
equipment. 18 We can see that the size of the market for unorganized sports is huge, and
there are many opportunities for sports marketers to serve the needs of these consumers.
Organized sporting events refer to sporting competitions that are sanctioned and
controlled by an authority such as a league, association, or sanctioning body. There are
two types of participants in organized events: amateur and professional.
Amateur sporting events refer to sporting competitions for athletes who do not
receive compensation for playing the sport. Amateur competitions include recreational
youth sports at the instructional and elite (also known as "select") levels, high school
sports controlled at the state level through leagues, intercollegiate sports (NCAA
Division 1-3, NAIA, and NJCAA) , and adult community-based recreational sports.
Professional sports are also commonly classified by minor league or major league status.
SPONSORS AS CONSUMER
Other equally important consumers in sports marketing are the many business
organizations that choose to sponsor sports. In sports sponsorship, the consumer
(in most cases, a business) is exchanging money or product for the right to associate
its name or product with a sporting event. The decision to sponsor a sport is complex.
The sponsor must not only decide on what sport(s) to sponsor, but must also consider
what level of competition (recreational through professional) to sponsor. They must
choose whether to sponsor events, teams, leagues, or individual athletes.

Un organized sports participation also interests sports marketers.