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 Policies on Deferred Salaries
The Challenge of Multi-year Contracts
FUTURE VALUE
ANNUITIES AND PERPETUITIES
FUTURE VALUE OF AN ANNUITY
SIDEBAR 4.C The greatest deal in sports?
LIQUIDITY
PRESENT VALUE
PRESENT VALUE OF AN ANNUITY
INTERIM YEAR COMPOUNDING
SIDEBAR 4.D William andrews wants his money now
USING A SPREADSHEET TO CALCULATE TIME VALUE OF MONEY
Present Value Function
Future Value Function
Payments Function
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEMS
CASE ANALYSIS
REFERENCES

PART II
FINANCIAL MANAGEMENT

5
Introduction to Financial Management
Key Concepts
INTRODUCTION
ECONOMIC PRINCIPLES
Demand, Scarcity, Surplus, and Price
SIDEBAR 5.A Kansas City’s Sprint Center still waiting for permanent tenant
Microeconomics versus Macroeconomics
Wealth Maximization/Profits
SIDEBAR 5.B Entrepreneurs changing the sport business landscape
BUSINESS TYPES
Government-Operated Organizations
Community-Owned Entities
Non-Profits
SIDEBAR 5.C NFL changes its tax-exempt status
Sole Proprietorships
Partnerships
SIDEBAR 5.D Al Davis as raiders general partner
SIDEBAR 5.E What type of owner do fans want?
Subchapter S Corporations
Limited Liability Corporations and Limited Liability Partnerships
Subchapter C Corporations
STOCK MARKETS
Professional Sport Franchises
Athletes Selling Their “Own” Stock
SIDEBAR 5.F What is the Dow Jones?
GOVERNMENT INFLUENCE ON THE BUSINESS ENVIRONMENT
Monetary Policy and the Federal Reserve
SIDEBAR 5.G What is the impact of an interest rate change?

8
 SIDEBAR 5.H What is quantitative easing?
Fiscal Policy
SIDEBAR 5.I Phil Mickelson’s golfing success and tax liability
SIDEBAR 5.J Glat and fair taxes: New ways to collect taxes?
SIDEBAR 5.K Bill Veeck tax interpretation changes sport finance
SIDEBAR 5.L The Tennessee jock tax
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEMES
CASE ANALYSIS
REFERENCES

6
Budgeting
Key Concepts
INTRODUCTION
WHAT IS A BUDGET?
RELATION OF PLANNING AND FORECASTING TO BUDGETING
Planning
Forecasting
BUDGET PREPARATION
Timing and Budgets
Keys to Successful Budgeting
Best Practices in Budgeting
APPROACHES TO BUDGETING
Incremental Budgeting
Program Planning Budgeting System
Zero-Based Budgeting
Modified Zero-Based Budgeting
Budgets within Budgets
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEMS
CASE ANALYSIS
REFERENCES

7
Debt and Equity Financing
Key Concepts
INTRODUCTION
REQUIRED RATE OF RETURN
Factors Influencing the Required Rate of Return
Calculating the Required Rate of Return
SIDEBAR 7.A The bond market saw the recession coming
EQUITY
Types of Equity Financing
Stocks
SIDEBAR 7.B Finally … a byte from apple
DEBT
Bonds
SIDEBAR 7.C When can debt transform into equity?
Loans
Trade Credit
Bankruptcy

9
TRADE-OFFS OF EQUITY FINANCING
SIDEBAR 7.D Manchester United goes public
Advantages of Publicly Traded Equity Financing
Disadvantages of Publicly Traded Equity Financing
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEMS
CASE ANALYSIS
REFERENCES

8
Capital Budgeting
Key Concepts
INTRODUCTION
DEFINING CAPITAL BUDGETING
SIDEBAR 8.A Capital expenditures and the Americans with Disabilities Act
THE PROCESS OF CAPITAL BUDGETING
Determine the Initial Cost of the Project
Determine the Incremental Cash Flow of the Project
Select the Capital Budgeting Method
BOX: Using technology to calculate NPV
SIDEBAR 8.B Ballpark villages and arena districts
Conduct a Post-audit Analysis
SIDEBAR 8.C Montreal’s Olympic Stadium
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEMS
CASE ANALYSIS
REFERENCES

PART III
APPLICATION OF FINANCIAL MANAGEMENT IN SPORT

9
Facility Financing
Key Concepts
INTRODUCTION
REASONS FOR BUILDING NEW SPORT FACILITIES
Teams and Owners
Leagues
Fans
Cities and Geographic Regions
HISTORICAL PHASES OF FACILITY FINANCING: PUBLIC FINANCING
Phase 1
Phase 2
Phase 3
Historical Analysis of Construction Costs
SIDEBAR 9.A Choice of an inflation index matters
SIDEBAR 9.B What’s in a name? Money
Changes in Financing Methods
PUBLIC FINANCING
Public Financing Principles
Public Financing Sources and Techniques

10
 SIDEBAR 9.C If the public pays more for the stadium, will tickets be cheaper?
SIDEBAR 9.D Tax-exempt auction-rate bonds can backfire
Calculating Public Payments for Stadium Financing
PRIVATE FINANCING
Private Return on New Facilities
Private Financing Sources and Techniques
PUBLIC/PRIVATE PARTNERSHIPS
Goals of Public versus Private Parties
SIDEBAR 9.E Where do we start? The mayor knows
Public Policy Issues and Public/Private Partnerships
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEM
CASE ANALYSIS
APPENDIX 9.A Sources of financing for stadiums and arenas
REFERENCES

10
Valuation
Key Concepts
INTRODUCTION
FAIR MARKET VALUE
ADJUSTMENTS TO VALUE
Controlling Interest
SIDEBAR 10.A Measuring controlling and minority interest stock prices
Synergistic Premium
Marketability Discount
APPROACHES TO VALUING AN ASSET
Market Approach
SIDEBAR 10.B The value of MLB teams: Take annual revenue and quadruple it!
SIDEBAR 10.C Price-to-earnings ratios are volatile for sports teams
SIDEBAR 10.D Sponsorship valuation … it’s all about the comps
Income Approach
SIDEBAR 10.E What discount rate would provide NfSP investors with their required return?
SIDEBAR 10.F What’s amalie arena worth?
Cost Approach
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEMS
CASE ANALYSIS
APPENDIX 10.A Proof of the calculation of the NPV of the terminal value
REFERENCES

11
Feasibility Studies
Key Concepts
INTRODUCTION
FEASIBILITY STUDIES DEFINED
Phases of a Feasibility Study
Parts of a Feasibility Study
MARKET DEMAND
Individual Ticket Demand
SIDEBAR 11.A Luxury suite prices: What drives them?
Corporate Demand

11
 BOX: Primary research on corporate demand
Event Activity
SIDEBAR 11.B Kansas city … BBQ, jazz, and basketball?
Facility Specifications and Operating Estimates
Results of Market Demand Analysis
FINANCING
LOCATION, CONSTRUCTION COSTS, AND ENGINEERING
FEASIBILITY STUDIES FOR RECREATION FACILITIES
CONCLUSION
CONCEPT CHECK
CASE ANALYSIS
REFERENCES

12
Economic Impact Analysis
Key Concepts
INTRODUCTION
SETTING THE PARAMETERS
Geographic Area of Impact
Spending
METHODOLOGIES FOR MEASURING EVENT ECONOMIC BENEFITS
Spending Methodologies
Fiscal (or Tax) Impact Methodology
MEASURING EVENT COSTS
ECONOMIC IMPACT OF A LOCAL TEAM
SIDEBAR 12.A Where do visitors spend their money?
ECONOMIC IMPACT OF A SPORT FACILITY
COMMON MISTAKES IN ESTIMATING ECONOMIC IMPACT
Causes of Underestimating
SIDEBAR 12.B Smaller teams, smaller communities = greater economic impact
SIDEBAR 12.C Vacationing at home
SIDEBAR 12.D Psychic impact
Causes of Overestimating
SIDEBAR 12.E The further they travel, the more they spend
CONCLUSION
CONCEPT CHECK
CASE ANALYSIS
REFERENCE

PART IV
FINANCIAL ATTRIBUTES OF SELECT SPORT INDUSTRY SEGMENTS

13
Public Sector Sport
Key Concepts
INTRODUCTION
FINANCIAL MANAGEMENT TRENDS IN PUBLIC SECTOR SPORT
SIDEBAR 13.A frisco, Texas: School district, community, and professional sport partnerships
SOURCES OF FUNDS
Public Sources of Funds
SIDEBAR 13.B Pay-as-you-go financing for the Blythewood Baseball and Softball League fields
SIDEBAR 13.C Bond financing for the city of fenton, Missouri
Private Sources of Funds

12
COLLABORATIVE FINANCING
Joint Use Agreements
Public/Private Partnerships
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEMS
CASE ANALYSIS
REFERENCES

14
College Athletics
Key Concepts
INTRODUCTION
FINANCIAL STATUS OF INTERCOLLEGIATE ATHLETICS
The Race to Build New Athletic Facilities
The Race to Change NCAA Divisions
Other Races to Be Won
SIDEBAR 14.A University of Alabama-Birmingham football: The cost of on-field success
FINANCIAL OPERATIONS
National Collegiate Athletic Association
Conferences
Schools
SIDEBAR 14.B Financial turnaround for an intercollegiate athletic program
SIDEBAR 14.C A deeper look at athletic department budgets
ATHLETIC DEPARTMENT FUNDRAISING
The Capital Campaign
Annual Giving Programs
SIDEBAR 14.D Intra-university development issues
ENDOWMENT FUNDAMENTALS
CONCLUSION
CASE ANALYSIS
CONCEPT CHECK
PRACTICE PROBLEMS
APPENDIX 14.A Top-20 cost-of-attendance budget increases 2015–2016
REFERENCES

15
Professional Sport
Key concepts
INTRODUCTION
LEAGUE STRUCTURES
Franchisee/Franchisor Structure
SIDEBAR 15.A Beyond the Big 4
SIDEBAR 15.B Pete Rozelle and “league think”
Single-Entity Structure
OWNERSHIP RULES AND POLICIES AND LEAGUE FINANCES
New Ownership
SIDEBAR 15.C NASCAR
SIDEBAR 15.D Japanese professional baseball problems beginning to change?
SIDEBAR 15.E Long-term family ownership to end in professional sports?
Debt
Expansion
SIDEBAR 15.F The future of women’s professional basketball in the United States
Territorial Rights

13
COMPETITIVE BALANCE
SIDEBAR 15.G Competing leagues
Player Drafts
SIDEBAR 15.H NBA draft lottery
Salary Slotting
SIDEBAR 15.I Did the Houston Astros exploit the new MLB draft slotting system?
Free Agency
SIDEBAR 15.J Curt Flood versus MLB
Player Salary Negotiations
SIDEBAR 15.K MLB collusion
SIDEBAR 15.L What is the cost of a win?
Luxury Tax
Revenue Sharing
SIDEBAR 15.M À la carte pricing to doom financial future of sports?
SIDEBAR 15.N Fixing free riding with a relegation system in European soccer
SIDEBAR 15.O Does the global game need more revenue sharing?
EMERGING REVENUE SOURCES
Luxury Seating
Seat Licenses
Ticket Reselling
Variable Ticket Pricing
Fantasy Sports and Gambling
Securitization
CONCLUSION
CONCEPT CHECK
PRACTICE PROBLEMS
CASE ANALYSIS
REFERENCES

A
APPENDIX
TIME VALUE OF MONEY TABLES

Glossary
Index

14
 PREFACE

T he business of sport has changed dramatically since the first edition of Financial Management in the
Sport Industry was published, and this second edition reflects the impact of these changes on financial
management within the industry. Adopters of the first edition expressed positive feedback regarding its
content, and they also provided important ideas where material could be updated and new information could
be introduced.
I [Matt Brown] had been teaching sport finance for several years when the need for this text became
apparent. During my time at Ohio University, the graduate and undergraduate sports administration programs
evolved as they prepared to move into the College of Business. In addition, as students became grounded in
introductory accounting, economics, and finance courses, it became apparent that there was a need for a text
that truly explored financial management in the sport industry. At the time, most sport finance texts focused
on revenue generation in sport, with little focus on financial management. Feedback from students and their
quest for new knowledge moved us to write the first edition of this book.
In the sport industry, the need for understanding finance and the importance of sound financial management
has continued. Over the past decades, through periods of financial growth and even turmoil, the industry has
grown tremendously—the estimate of its growth and current value vary depending on the source, but we all
agree it is large and expanding. Concurrent with the growth, the need to better prepare students to assume
managerial roles in sport organizations has also grown. This need is underscored by the movement of several
renowned sport management programs into business schools and the creation of specialized sport
management MBAs. As mentioned above, we believe that change is also needed in books devoted to sport
finance; they need to focus on revenue acquisition and also address basic financial management concepts in
sport. In this book, we go even further to discuss how finance works in the sport industry.
Part I, Finance Basics, introduces sport finance and basic financial concepts and explains the tools and
techniques of financial quantification using industry examples. Topics covered in this section include the
analysis of financial statements and ratios, risk, and time value of money. In Chapter 2 we use the financial
statements of Under Armour as a basis for discussing balance sheets, income statements, and statements of
cash flow, and we revisit these financial statements when discussing and calculating financial ratios. Chapter
3 relates risk to revenue sharing models used in North American sport leagues. In Chapter 4, the time value of
money is explored using examples such as deferred salary issues related to major league sports teams.
Part II covers the foundations of financial management—the decisions within sport organizations to ensure
wealth maximization. Budgeting, debt and equity financing, and capital budgeting are addressed, using
examples from the sport industry. This part segues between traditional texts on the fundamentals of financial
management and a text on these fundamentals as applied to the sport industry. Here we go beyond simply
providing examples in a sport context to discussing how finance actually works in the sport industry. For
example, we address how a team uses debt and equity financing and why one method over the other may be
selected. We also explain the importance of capital budgeting when planning for a new facility, such as
upgrading the field in a university football stadium and constructing a community swimming pool.
Part III of this book applies financial management concepts to the industry through the examination of
facility financing, valuation, feasibility studies, and economic impact. Much of this section is written based on
our past consulting experiences with industry partners, including several professional teams, various sport
leagues, and several municipalities. Finally, Part IV examines financial management in three sectors of the
industry: public sector sport, collegiate athletics, and professional sport. We provide an in-depth analysis of
the mechanics of financial management within each of these sport sectors.
This book is designed so that it can be used in either an upper level undergraduate or a graduate course in a
sport management program. Students do not need a previous background in finance to grasp the material. Part
I, Finance Basics, provides the needed introduction to financial concepts. After reading the chapters in Part I,
students will be prepared for material in the remaining sections.
The text can also be used by students in business schools in an upper-level finance course or students in an
MBA/Sport Management program. Chapters 1 and 5 through 15 can be used for an in-depth study of sport

15
finance. Part II, Financial Management, contains material that would be covered in a Principles of Financial
Management course at either the undergraduate or first-year MBA level. However, the topics in these chapters
are addressed from the sport industry’s perspective, addressing what works and what doesn’t work. Part III,
Application of Financial Management in Sport, and Part IV, Financial Attributes of Select Sport Industry
Segments, should be completely new material for most readers, providing a detailed view of financial
management in those segments.

16
NEW TO THIS EDITION

T his edition includes new and revised material reflecting a broad spectrum of changes in sport finance.
These discussions cover changes in college athletic finance (O’Bannon v. NCAA, cost of attendance, new
television right packages); current venue financing methods; the financial impact of new collective bargaining
agreements on players, teams, and leagues; new revenue sources in professional sports and college athletics
(such as the development of entertainment districts, public-private partnerships, and sale of luxury suites and
their pricing); and additional emphasis on sport outside college and professional sport (high school,
recreational sport, entrepreneurial sport ventures).
This edition also reflects the increasingly global nature of sport. For example, new sidebars cover the effect
of differing national income tax rates on players and teams in European professional soccer leagues and the
NFL, and the impact of competition for players by the Russian Premier League on the WNBA’s salary
structure. Other changes include:
■ Current industry examples used throughout to help make the principles of financial management
applicable to sport.
■ A primer on accounting principles to help students interpret financial statements.
■ A valuation case study assignment that takes students step-by-step through a valuation using both income
and market approaches.
■ A new stadium feasibility analysis focused on efforts by the Oakland Raiders to get a new stadium.

17
SPECIAL FEATURES

I n an effort to make this text useful and to facilitate understanding of financial management topics, the
following features are included:

Case Studies. When teaching sport finance, we have found that the case-based method is one of the best
means to help students learn the material. Each chapter contains a current case on a relevant topic followed by
questions to help students understand how financial management concepts have been or should have been
applied in the given situation. These cases and questions invite in-depth analysis and discussion of selected
topics.

Sidebars. Throughout the text, sidebars provide additional high-interest context. Often, explaining a financial
management concept is not quite enough for readers unfamiliar with finance to grasp a new concept. To
reinforce the understanding and the application of concepts to the sport industry, sidebars offer additional
examples, with a broad range of topics. These include, for example, the financial turnaround of an NCAA
Division I athletic program; the use of stadium districts to generate additional revenue for a team; the
formation of school district, community, and professional sport partnerships to benefit sport at all levels; the
financial practices of selected international sport organizations; the use of deferred contracts in professional
sport; and the development of various professional women’s leagues over the past 20 years.

Concept Checks and Practice Problems. The concept check questions found at the ends of chapters emphasize
key concepts and aid in the review of chapter material. Further, the practice problem sections reinforce the use
of numerous financial management tools and formulas in the sport industry.

Glossary of Key Concepts. Key concepts are boldfaced and defined when they first appear in the text. They
also appear in a glossary at the end of the text. Since financial concepts discussed in one chapter often apply
to several chapters and topics in the text, the glossary will be helpful when readers need to review a concept
presented earlier.

It is our hope that this book continues to help readers better understand financial management in the sport
industry. We thank the instructors and students who encouraged us as we revised the book to meet the needs
of today’s sport finance students.

18
 ACKNOWLEDGMENTS

A ll of us wish to thank those who reviewed this book in various stages and offered suggestions for its
improvement. Their input helped us to make this a better book. These individuals are as follows. For this
edition: Stephen Dittmore, University of Arkansas; Marion Hambrick, University of Louisville; Michael
Hutchinson, The University of Memphis; Sloane Milstein, Texas A&M University; Emily Must, Metropolitan
State University of Denver; Jeffry Noble, Wichita State University; Seheon “Jack” Oh, New York University;
Andrea Pent, Neumann University; Larry Prober, Rider University; Kathy Pryor, Ecclesia College; Janice
Robinson, Durham College; Eric Schwarz, Victoria University, Melbourne, Australia; Narcissus Shambare,
College of Saint Mary; Brian P. Soebbing, Temple University; Emily Sparvero, The University of Texas at
Austin; and Lonni Wilson, Keiser University. And for the previous edition: Jan Bell, St. Thomas University;
Joris Drayer, Temple University; Dianna Gray, University of Northern Colorado; Daniel F. Mahony,
Winthrop University; Joel Maxcy, Drexel University; J. Christopher McGrath, Georgetown University; John
Miller, Troy University; Michael Mondello, University of South Florida; Stephen Shapiro, Old Dominion
University; Robert Taylor, California University of Pennsylvania; Nathan Tomasini, Virginia Commonwealth
University; Galen Trail, Seattle University; Sharianne Walker, Western New England University; and Jason
Winfree, University of Idaho.

I first wish to thank those students who initially pushed me to develop a better finance course and better
materials, particularly the Ohio graduate and undergraduate classes of 1999 through 2005. I especially want to
thank my graduate and undergraduate students at South Carolina, who provided feedback on the first edition
and also suggested changes needed for the second edition.
Next, this project would not have been possible without my coauthors, Dan, Mark, and Chad. It has been
great writing with you over the years. I appreciate the quality of your work and most importantly your
friendship. As usual, completing this project took longer than anticipated, given job and university changes.
Thanks for sticking with the project and seeing it through to completion.
To my friends and colleagues at Ohio and South Carolina, thank you for your friendship and support. Andy
Kreutzer, Doc Higgins, Tom Regan, and Frank Roach have been great mentors, and they have helped shape
and influence the sport industry.
To my wife, Becky, and sons Jake and Luke, thanks for letting me sneak away to complete this manuscript.
Your support at home is truly appreciated.
Finally, Colette Kelly at Holcomb Hathaway, Publishers has been extremely patient with us. Her edits,
comments, and work on early drafts were insightful and made significant improvements to the text. Colette,
Gay Pauley, Sally Scott, and the rest of the Holcomb Hathaway staff have been great to work with, and we
appreciate all they have done to help us make this edition the best it can be. I am glad that my friendship with
Packianathan Chelladurai (Chella) and his relationship with Holcomb Hathaway made this all possible.
MTB

M any people were involved, either directly or indirectly, in helping develop this book and its content. The
reason for writing this book is, of course, because of the enthusiastic students who want to understand all
there is to know about managing sport organizations. My thanks to those students who read the first edition
and provided feedback.
I want to thank my wife and partner, Heather, for helping me think about the best ways to explain some of
the complex ideas, but more importantly for her patience and encouragement. I also want to thank my two
wonderful boys, Aidan and Lucas, for understanding that I also had homework like them (this book) that
needed my best efforts. It seems that both boys love sport as much as I do.
The team at Holcomb Hathaway, especially Colette Kelly and Gay Pauley, have been very supportive and
have provided us with excellent insight, ideas, and editing. They also found very helpful reviewers who
provided important insights. Additionally, Michel Desbordes at the University of Paris–Sud was a kind host
during my summer sabbatical, allowing me to make great progress in a creative environment.

19
 The most satisfying part of this has been my work with my coauthors, Matt, Mark, and Chad. I want to
thank them for having me be a part of this team once again. My friendships with each of them have been the
most important and long-lasting outcome of these editions. Thank you all for your excellent work.
DAR

I would first like to thank my family and close friends, who have provided continual support for this project
and many others. There would have been no way to complete a second edition without my loved ones
providing the time needed to focus on writing and editing. My wife Leslie has been especially patient once the
initial shock dissipated after I told her we planned to work on a second edition. I am hopeful my wonderful
children, Annie and Canton, will someday understand how much excitement the challenge of seeking
knowledge to write a book can provide. It is my goal that they both someday find a passion for something in
the same way that I have found a passion for the sport industry. I am also extremely thankful that my parents
—who have never been sport fans—both tolerated and encouraged my passion to continually learn about
something I love. Hopefully, they can find room on their shelf for this edition among all the non-sport books
that they have read over their lifetimes.
I was extremely fortunate to work with esteemed coauthors on this book and other projects. Matt, Dan, and
Chad consistently challenge me to think and inspire me to see what can be accomplished. What is particularly
rewarding is that we genuinely enjoy spending time together talking about sport, business, and, most
importantly, life. It is a wonderful blessing to work with close friends I respect. My colleagues in the Sport
and Entertainment Management Department at the University of South Carolina have also provided consistent
support as I worked odd hours at “the end of the hall.” It is a blessing to be able to come to work with people
who are not only dedicated professionals but also wonderful friends. The students I have had the privilege to
teach throughout my career have provided an outlet for my (sometimes) crazy ideas. I hope that I have been
able to teach them as much as they have taught me. Colette Kelly and the staff at Holcomb Hathaway
remained patient throughout our endeavors, and for that I will be forever grateful.
MSN

I would like to thank all those involved in publishing this book. Colette Kelly and the staff at Holcomb
Hathaway were excellent to work with. Thanks as well to the many reviewers who provided excellent advice
on how to improve the text.
Thank you to all of my students and colleagues, both past and present. Because of you, coming to work
each morning is a pleasure. Helping our students grow, learn, and chase after their dreams of working in the
sport industry is an incredibly rewarding profession.
Thanks also to my wonderful family—to my wife Kerry for being so supportive and for being such a
terrific partner and mother, and to our children, Andy, Luke, and Abby, who bring a smile to my face each
and every day. I look forward to continuing to share my love of sport with you in the years to come.
Finally, thank you to Matt, Dan, and Mark for including me in this project. I appreciate both your
collaboration and your friendship immensely.

CDM

20
 ABOUT THE AUTHORS

M atthew T. (Matt) Brown is the chair and an associate professor in the Department of Sport and
Entertainment Management at the University of South Carolina. He teaches graduate and undergraduate sport
finance courses and researches in the areas of sport finance and sport business. His current research focus is
on tax practices and the impact of tax policy on professional sport leagues. Brown’s research has led to
publications in the Journal of Sport Management, Sport Marketing Quarterly, Entertainment and Sport Law
Journal, International Journal of Sport Finance, and Sport Management Review. In addition, he has presented
at more than 70 national and international conferences.
Brown has been a consultant for a variety of organizations in the sport and tourism industries. His clients
have included Patriots Point, the Center for Exhibition Industry Research, the International Association of
Venue Managers, minor league hockey teams, minor league baseball teams, the Ohio Golf Course Owners
Association, and the State of South Carolina. He currently serves as a consultant for the Lexington County
Blowfish, a wood bat baseball team in the Coastal Plain League. In addition to his work with the Blowfish,
Brown has served as the chief financial officer of the Southern Ohio Copperheads and treasurer of the Board
of Directors of the Southern Ohio Collegiate Baseball Club. He also has served as the treasurer of the North
American Society for Sport Management. In 2003, Brown was named the Jefferson College Alumnus of the
Year.
Brown received his doctorate in sport administration from the University of Northern Colorado. Prior to
joining the faculty at the University of South Carolina, he was a faculty member in the Sports Administration
and Facility Management program at Ohio University. His primary teaching responsibilities were in the dual-
degree MBA/MSA graduate program, where he taught sport finance and research methods courses to first and
second-year MBA students.

D aniel Rascher teaches and publishes research on sports business topics and consults to the sports
industry. He specializes in economics and finance and, more specifically, in industrial organization, antitrust,
mediations and arbitrations, valuation, economic impact, market readiness, feasibility research, marketing
research, damage analysis, strategy, and labor issues in the sport industry. Rascher founded SportsEconomics
to enable sport enterprises to capitalize on the sport industry’s transition from hobby status to multibillion
dollar industry. As founder and president of SportsEconomics, LLC, partner at OSKR, LLC, and former
principal at LECG, LLC, Rascher’s clients have included organizations involved in the NBA, NFL, MLB,
NHL, NCAA, NASCAR, MLS, PGA, sporting goods and apparel, professional boxing, mixed martial arts,
minor league baseball, NHRA, AHL, Formula One racing, Indy Car racing, American Le Mans racing,
Premier League Football (soccer), professional cycling, endurance sports, IPL, media, ticketing, IHRSA,
music, as well as sports commissions, local and state government, convention and visitors bureaus, tourism
businesses, entrepreneurs, and B2B enterprises.
Rascher received his Ph.D. in Economics from the University of California at Berkeley. He is Director of
Academic Programs and professor in the Sport Management Program at the University of San Francisco,
where he also teaches courses in sports economics and finance and research methods. He has also taught at
Northwestern University, the IE Business School in Madrid, and the University of Massachusetts (Amherst).
He has authored articles for academic and professional journals, book chapters, and a textbook in the sport
management and economics fields, has been interviewed hundreds of times by the media on various aspects of
the business of sports, and has given more than 50 presentations at professional and academic conferences.
Rascher has served on the editorial boards of Case Studies in Sport Management, Journal of Sport
Management, Sport Management Review, International Journal of Sport Finance, International Journal of
Sport Management and Marketing, and the Journal of the Quantitative Analysis of Sports. He has been named
Research Fellow of NASSM. He is also certified as a valuation analyst (CVA) by the National Association of
Certified Valuators and Analysts.
Rascher has testified as an expert witness in federal and state courts, in arbitration proceedings, and
provided public testimony numerous times to state and local governments.

21
M ark S. Nagel became a faculty member in the Department of Sport and Entertainment Management at
the University of South Carolina in 2006. He now serves as the Associate Director of the College Sport
Research Institute there. Prior to joining USC, he was the director of the graduate sport management program
at Georgia State University. At Georgia State he was responsible for all aspects of the sport management
program including recruiting and advising students, developing and scheduling courses, identifying and
supervising adjunct faculty, and maintaining alumni and sport business relationships. Nagel has also
previously worked in sport management programs at the University of West Georgia and San Jose State
University. He currently serves as an adjunct faculty member at the University of San Francisco and St.
Mary’s College, where he teaches summer courses in sport administration.
Nagel received his doctorate from the University of Northern Colorado. He has authored and co-authored
numerous articles in refereed journals such as the Journal of Sport Management, Sport Marketing Quarterly,
Entertainment and Sport Law Journal, International Journal of Sport Finance, and Sport Management
Review. He coauthored the books Introduction to Sport Management: Theory and Practice and Sport Facility
Management. In addition, he has written numerous academic book chapters and given dozens of research
presentations. Nagel was named Research Fellow of the North American Society for Sport Management and
served as treasurer for NASSM and the Sport and Recreation Law Association. Nagel has also worked as a
consultant for a variety of sport and tourism organizations.
Before pursuing a career in academia, Nagel worked in various areas of sport management, primarily in
athletic coaching and administration as well as campus recreation. During his years as an assistant coach of
the women’s basketball team at the University of San Francisco, he helped lead the team to three NCAA
Tournament appearances and a spot in the 1996 Sweet 16.

C had D. McEvoy is a professor and chair of the Department of Kinesiology and Physical Education at
Northern Illinois University, having previously been a sport management professor at Illinois State University
and Syracuse University. Prior to pursuing a career in academia, McEvoy worked in marketing and fund
raising in intercollegiate athletics at Iowa State University and Western Michigan University. He has
conducted research projects for clients at various levels of sport, including professional sport, intercollegiate
athletics, Olympic sport, and sports agency organizations.
McEvoy holds a doctoral degree from the University of Northern Colorado, a master’s degree from the
University of Massachusetts, and a bachelor’s degree from Iowa State University, each in sport
management/administration. His research interests focus on revenue generation and ticket pricing in
commercialized spectator sport settings. McEvoy has published articles in journals including the Journal of
Sport Management, Sport Management Review, Sport Marketing Quarterly, and International Journal of
Sport Management and Marketing. His research has been featured in numerous media stories and interviews
including The Wall Street Journal, SportsIllustrated.com , ESPN.com , Chicago Tribune, Philadelphia
Inquirer, and Atlanta Journal-Constitution. McEvoy appeared as a panelist before the prestigious Knight
Commission on Intercollegiate Athletics in 2008, and he serves as the founding editor of the journal Case
Studies in Sport Management, having previously served as the co-editor of the Journal of Issues in
Intercollegiate Athletics. McEvoy served as president of the Sport Marketing Association for 2015–2016.

22
PART I
Finance Basics

1 Introduction to Sport Finance

2 Analyzing Financial Statements and Ratios

3 Risk

4 Time Value of Money

23
Introduction to Sport Finance 1

24
KEY CONCEPTS
capital markerts
debt financing
distributed club ownership model
economic cycle
economic depression
economic growth
equity financing
finance
finacial management
gift finacing
government finacing
gross domestic product (GDP)
gross domestic sport procuct (GDSP)
investments
money markets
multiple owners/private investment syndicate model
multiple owners/publicly traded corporation model
North American Industry Classiffication System (NAICS)
retained earnings
Sherman Antitrust Act
single-entity structure
single owner/private investor model
sustainability
wealth maximization

25
Introduction
Why is an understanding of financial management important? Consider the example of the construction of a
new stadium or arena. This area of sport finance is often in the news because a new stadium or arena directly
impacts local residents, businesses, and government. Here are a few examples:

■ Levi’s Stadium, home of the San Francisco 49ers, opened in 2014 at a cost of $1.2 billion. The venue seats
68,500 and offers 165 luxury suites and 8,500 club seats. The stadium has several environmentally friendly
features, including a green roof atop the luxury suite tower and three solar bridges with several hundred
solar panels.
■ The City of Columbia, South Carolina, is paying approximately $29 million to build Spirit
Communications Ballpark to bring Minor League Baseball back to the state’s capital. The $35 million
ballpark will open in 2016 and seat 8,000 for baseball games and 14,000 for concerts. The city is using
revenues from its hospitality tax to pay off bonds used to finance the new stadium’s construction. The
Savannah Sand Gnats announced in 2015 that they would relocate to Columbia for the 2016 season.
Hardball Capital, the team’s owner and manager of the stadium, will contribute approximately $6 million
toward construction costs.
■ In 2008, the New York Yankees replaced old Yankee Stadium, built for $2.5 million in 1923, with new
Yankee Stadium. The $1.3 billion stadium opened in 2009, with top seats selling for $2,500 per seat, per
game.
■ Emirates Stadium, which opened in London in 2006, is the third largest stadium in England and seats
60,000. Home to Arsenal of the English Premiere League, the £470 million ($869.6 million) venue was
privately financed by the club, primarily via a £260 million senior loan from a stadium facilities banking
group. This group of banks included the Royal Bank of Scotland, Bank of Ireland, Allied Irish Banks PLC,
and others. The loan was for 14 years.
■ For the Minnesota Twins, a new stadium meant access to previously unavailable revenue. The Twins
shared the Hubert H. Humphrey Metrodome with the Minnesota Vikings. The facility was poorly designed,
not only for watching a baseball game but also for generating baseball revenue. The Twins received almost
nothing from luxury suite rentals; rather, the money from luxury suite sales went to the Vikings. The City
of Minneapolis kept a portion of revenue generated from parking, concessions, and in-stadium advertising.
In their new ballpark, Target Field, the Twins have kept almost all revenue, including revenue from naming
rights, premium seats, and luxury suites. The average ticket price for a premium seat when the stadium
opened was approximately $52 per game. A membership fee of $1,000 to $2,000 was also charged to
premium seat ticket holders for access to the exclusive club areas within the stadium (Roberts & Murr,
2008).
■ Texas A&M University is expanding and renovating Kyle Field, its football stadium, in a $450 million
project. More than 20,000 seats are being added, bringing the stadium’s capacity to more than 102,000 and
making Kyle Field the largest stadium in the Southeastern Conference (SEC).
■ MetLife Stadium, home of the New York Giants and the New York Jets of the National Football League
(NFL), opened in 2010, replacing Giants Stadium (The Meadowlands), which opened in 1976. The $1.6
billion stadium was named by Billboard Magazine as the highest-grossing stadium in the world in 2014
(Oliver, 2015). In addition to being the home of two NFL teams, the venue held a variety of non-NFL
events, including concerts and soccer games. For the 2014 season, the stadium grossed more than $71
million.

These examples represent the revenue side of constructing new venues—the large price tags of which put
them in the news. But what about other financial management issues related to a facility’s construction, for
example, how the revenue is shared and how ongoing operating expenses will be met? To consider these
issues and how they can impact a community, let’s look at the Indianapolis Colts. Lucas Oil Stadium, the
replacement to the RCA Dome, immediately generated new revenue for the Colts after the team moved into
its new home; however, none of the new stadium-generated revenue went to the Capital Improvement Board
(CIB). The CIB is the governmental entity that operates the stadium and manages its debt service—the cash
required over a specific time period for repayment of the principal and interest on the debt (“Indy Wrestles,”
2009).
The $675 million stadium was paid for through a municipal bond issue backed primarily by a 1% tax
increase on prepared food in nine counties surrounding Indianapolis. However, the revenue generated through
the increased tax covers only the facility’s debt service. No funds were made available for the operation of the

26
facility. With the tax revenue allotted for debt service and stadium revenue going to the Colts, the CIB has
been operating the stadium at a $20 million annual deficit (“Indy Wrestles”). As a result of poor financial
management—specifically plans and forecasts relating to the operating costs of the new stadium—state
officials had to act. The citizens of the metropolitan area likely will be required to pay for the stadium’s
operating costs through some form of tax increase.
As the above examples show, the revenue generated in these new venues attracts a large amount of media
attention. However, financial management issues related to the construction and operation of the venues are
often ignored, overlooked, or perhaps not understood. When this happens, as in the case of Indianapolis, the
importance of understanding financial management becomes clear.
In this chapter, we will introduce you to key concepts in finance, many of which will be discussed in
greater depth in later chapters. You may encounter terms with which you are unfamiliar. To gain a working
knowledge of these terms, refer to the Glossary at the end of the book.

27
WHAT IS FINANCE?

F inance, the science of fund management, includes application of concepts from accounting, economics,
and statistics. Within the world of finance, there are three interrelated sectors: (1) money and capital markets,
(2) investments, and (3) financial management (Brigham & Houston, 2012). Money markets are markets for
highly liquid, short-term securities; capital markets are markets for intermediate or long-term debt, as well as
corporate stock. Hence, the money and capital markets sector includes securities markets such as the New
York Stock Exchange and the Chicago Mercantile Exchange. Investment banking falls within this sector as
well, as do insurance and mutual fund management.
As opposed to this first sector, the focus of the investments sector is on security choices made by individual
and institutional investors as they build portfolios. Merrill Lynch and Edward Jones are companies operating
within this sector.
The financial management sector involves decisions within firms regarding the acquisition or use of funds,
usually with the goal or outcome of wealth maximization, or maximizing the overall value of the firm. To
achieve wealth maximization, the finance department forecasts future revenues and plans future expenses. In
sport, this may include calculating cash flow increases resulting from a move to a new facility (as shown in
the chapter introduction) and determining how much the organization can increase player payroll as a result of
the forecast. The finance department also performs a portion of the control function of management. Through
coordination with other departments in the organization, the finance department pursues efficiency of
operation and resource utilization. The finance department makes investment and financing decisions,
working with financial markets and investment firms when necessary. The type of debt financing to be used
when constructing a new stadium is one example of these decisions.
A firm in the sport industry may be structured as a for-profit, not-for-profit, or governmental entity. For-
profit sport enterprises have many commonalities with other types of for-profit business. Hence, the financial
management of a sport organization is often quite similar to the financial management of organizations in
other industries. These commonalities include value creation, or increasing the value of a firm over time, and
revenue growth. However, there are areas of difference. One major difference is the diverse objectives of firm
owners within sport (Foster, Greyser, & Walsh, 2005). Although sport organizations usually compete for
wealth maximization, an owner in professional sport might not be interested in this goal. Rather, the owner
may be more interested in winning championships or in seeking celebrity status by being one of a select few
professional sport franchise owners. Another goal of the owner may be to protect a community asset. The
differing objectives of owners can harm the competitive balance in a league, particularly in terms of winning
championships. For example, an extremely wealthy owner with a willingness to incur losses over several
seasons can create an imbalance in competition. As a result, at the beginning of a season, only a few teams
may have a realistic chance of winning a championship. Leagues have reacted by implementing salary
constraints, revenue sharing, and other similar mechanisms that create both competition between franchises on
the field and cooperation regarding financial management off the field.

28
FIVE WAYS TO FINANCE THE OPERATION OF A SPORT ORGANIZATION

W hether an owner’s objective is wealth maximization or winning and whether the sport organization is
for-profit, not-for-profit, or governmental, a manager in the sport industry will encounter five methods used to
finance the organization (see Exhibit 1.1). These include three methods typically used by for-profit companies
to finance their operations: debt, equity, and reinvestment of retained earnings. In sport, two additional
financing methods are often available: government funding and gifts. Examples of each will be seen
throughout this text. A brief introduction to each is presented here.

Debt
When an organization borrows money that must be repaid over a period of time, usually with interest, debt
financing is being used. Typically in sport, teams issue bonds or borrow from lending institutions (or in some
instances their league) to finance operations through debt. The New York Yankees financed the new Yankee
Stadium in this way. The team borrowed $105 million from a group of banks, including Goldman Sachs, to
pay for cost overruns. The team also borrowed more than $1.2 billion through the tax-exempt and taxable
bond markets (Kaplan, 2009). Debt financing may be either short-term or long-term; short-term debt
obligations are those repaid in less than one year, and long-term obligations are those repaid in more than one
year. A key point of financing operations with debt is that the lender does not gain an ownership interest in the
organization. The sport organization’s obligation is limited to the repayment of the debt.

EXHIBIT 1.1 Methods used to finance sport organizations.

METHOD DEFINITION EXAMPLE

Debt Borrowing money that must be repaid over time, usually Construction of Yankee
with interest Stadium
Equity Exchanging a share or portion of ownership of the Green Bay Packers’
organization for money renovation of Lambeau
Field
Retained Reinvestment of prior earnings Packers Franchise
earnings Preservation Fund
Government Funding provided by federal, state, or municipal sources, Tax-backed bonds issued by
including land use, tax abatements, direct stadium fi the City of Arlington, TX to
nancing, state and municipal appropriations, and support AT&T Stadium
infrastructure improvements
Gift Charitable donations, either cash or in-kind Donations totaling $85.4
million to Texas A&M with
most money going toward
Kyle Field

Equity
In contrast to debt financing, in equity financing, the owners exchange a share or portion of their ownership
for money. The organization, therefore, obtains funds for operations without incurring debt and without
having to repay a specific amount of money at a given time. A drawback is that ownership interest will be
diluted and the original owners may lose control as additional investors are added. Stephen M. Ross used
equity financing to raise capital after he purchased the Miami Dolphins in 2009. He sold minority interests in
the team to several partners, including singers Marc Anthony and Gloria Estefan (Talalay, 2009). Few sport
organizations issue stock, a common form of equity financing outside the sport industry. One of the few, the
Green Bay Packers, used $143 million of stock proceeds to help finance the renovation of Lambeau Field
(“History of Green Bay Packers,” 2015).
Two reasons account for the fact that professional team sport organizations do not typically issue stock to
raise equity capital. One reason is that little can remain hidden when a company is publicly traded. To comply

29
with Securities and Exchange Commission (SEC) regulations, publicly traded organizations must file annual
reports detailing the accounting activities of the organization. A team that claims financial hardship in seeking
public funding for a new stadium may have difficulty convincing the municipality of the need if financial
reports reveal significant positive cash flow. A second reason is that teams that issue stock must answer to
their shareholders. Stockholder demands for profitability might run counter to the goal of winning on the field
(for example, the team might be unable to acquire a player at the trading deadline because of the near-term
financial loss that would result from the acquisition). Concern over public ownership is so great that the NFL
does not allow its teams to be publicly owned. The league instituted a ban on public ownership in 1960
(Florio, 2011).
As noted above, the Green Bay Packers are an exception to the norm and the NFL rule. To keep the
franchise from leaving Green Bay, Wisconsin, the team went public in 1923, and today the Packers continue
to be exempt from the NFL’s prohibition on issuing shares. However, unlike those of a typical publicly traded
company, the Packers’ shares do not appreciate in value and are not traded on a stock exchange.
Despite sport organizations’ reluctance to use equity financing, teams in leagues other than the NFL have
raised significant amounts of capital by doing so. The Cleveland Indians raised $60 million through the team’s
initial public offering (IPO) in 1998. The Florida Panthers, Boston Celtics, Vancouver Canucks, and Colorado
Avalanche all have used equity financing. Today, however, these teams are privately held (Kaplan, 1999).

Retained Earnings
In addition to financing through debt and equity, organizations can finance operations or the acquisition of
assets through the reinvestment of prior earnings. The portion of earnings that a firm saves in order to fund
operations or acquire assets is termed retained earnings. The reinvestment of retained earnings is generally
considered a type of equity financing, as this financing method is often used by publicly traded companies,
when they choose to reinvest earnings rather than pay them to shareholders as dividends. However, in sport,
financing through the reinvestment of retained earnings should be considered separately from equity
financing, because organizations in the industry—with the exception of sporting goods manufacturers and
retail stores—are typically privately held. Although earnings may be distributed to team owners, in sport they
are often used to finance the acquisition of players, improve operations, or make other investments.
The Green Bay Packers reinvest retained earnings to maintain a competitive and successful football
operation and to preserve the franchise and its traditions. However, because the franchise is owned by its
shareholders and not a single, wealthy individual, the organization is at a disadvantage when reacting to
business challenges. A wealthy owner is able to use personal funds to infuse cash into a sport organization.
One method that the Packers use to overcome this disadvantage is the Packers Franchise Preservation Fund.
By providing liquidity, the fund is intended to improve the sustain-ability of the corporation and franchise. In
2013, the fund totaled $127.5 million and is a part of the team’s corporate reserve fund. At the end of the 2013
fiscal year, the corporate reserve fund totaled $254 million (Walker, 2013).

Government Funding
In the sport industry, it is common for private organizations, such as professional sports teams, to receive
funding from governmental sources. In addition, public high schools and universities typically receive a
portion of their financing through direct or indirect government funding, and this funding may support sport
programs at these schools. For all sport organizations, government financing may be provided by federal,
state, or municipal sources and may include land use, tax abatements, direct stadium financing, state and
municipal appropriations, and infrastructure improvements. During the 2012 season, 64 major-league teams
played in stadiums and arenas built with tax-free municipal debt (Kuriloff & Preston, 2012). Exhibit 1.2
provides examples of direct stadium financing from government sources.

Gifts
Gift financing includes charitable donations, either cash or in-kind, made to an organization. Gift financing is
a primary source of operating and investing income for major collegiate sports programs. It is also a
supplemental source for minor college programs and non-profit sport organizations. According to Wolverton
and Kambhampati (2015), colleges received $1.26 billion in athletic department donations during 2014. Of
this total, the top 20 athletic departments received over $700 million, with Texas A&M collecting the most of
any department. See Exhibit 1.3 for athletic donations to the universities in the Southeastern Conference.

EXHIBIT 1.2 Select tax-backed stadium/arena bond issues.

30
 STADIUM/ARENA ISSUER SECURITY
AT&T Stadium City of Arlington, Texas Sales tax, hotel tax, rental car tax
Camden Yards Maryland Sports Authority State appropriation
US Cellular Field Illinois Sports Authority Hotel tax, state appropriation
Great American Ballpark Hamilton County, Ohio Sales tax
Cleveland Browns City of Cleveland, Ohio City appropriation
Stadium
Comerica Park Detroit/Wayne County Stadium Hotel tax, car rental tax
Authority
University of Phoenix Arizona Sports and Tourism Hotel tax, car rental tax, jock tax,
Stadium Authority sales tax
Toyota Center Houston-Harris County Sports Hotel tax, car rental tax
Authority
Marlins Park Miami Dade County Hotel tax, tourism tax, county
appropriations
Target Field Hennepin County Sales tax
Amway Center City of Orlando, Florida Hotel tax, city appropriations

Source: UBS Wealth Management Research (2012).

EXHIBIT 1.3 2014 Southeastern Conference athletic department donations (cash only).

SCHOOL TOTAL DONATIONS MAJOR GIFTS ANNUAL GIVING OTHER

Alabama $45,881,118 $15,818,729 $30,062,389 $0
Arkansas $26,750,000 $4,800,000 $21,300,000 $650,000
Auburn $37,500,000 $9,000,000 $26,700,000 $1,800,000
Florida $47,939,603 $12,721,864 $35,217,739 $0
Georgia $34,054,000 $5,660,000 $28,474,000 $0
Kentucky $24,808,367 $6,109,026 $18,699,340 $0
LSU $34,100,000 $10,600,000 $23,500,000 $0
Mississippi State $25,910,094 $9,095,428 $13,738,184 $3,076,482
Missouri $14,720,000 $2,010,000 $10,100,000 $2,610,000
Ole Miss $26,200,000 $5,700,000 $14,700,000 $5,800,000
South Carolina $31,500,000 $6,200,000 $13,600,000 $11,700,000
Tennessee $33,466,660 $9,556,160 $22,780,285 $1,130,215
Texas A&M $85,379,483 $51,868,435 $28,000,000 $5,511,048
Vanderbilt $10,400,000 $5,300,000 $5,100,000 $0

Average $34,186,380 $11,031,403 $20,855,138 $2,299,839

31
Source: 2014 SEC Development Survey.

EXHIBIT 1.4 Top athletic department endowments in the SEC (2014).

INSTITUTION ENDOWMENT
Texas A&M $70,000,000
Vanderbilt $64,300,000
Georgia $63,487,245
Florida $47,000,000
Tennessee $36,380,429
Alabama $30,740,818
Missouri $29,760,000
Kentucky $18,498,823
LSU $10,900,000
Auburn $10,000,000
Mississippi State $8,972,749
South Carolina $5,752,138

Arkansas* $3,100,000
Ole Miss $3,100,000
*Not including monies in university foundation

Source: 2014 SEC Development Survey.

College athletic programs use revenue from gifts to offset the rising costs of collegiate sport, build or
renovate facilities, and increase endowments; Duke University, for example, raises approximately $17 million
each year for athletic scholarships. Other institutions use gift financing to offset losses in institutional
(government) financing resulting from cuts in state government funds to colleges and universities. Most
institutions are also seeking to increase their athletic department endowments (see Exhibit 1.4). Duke hopes to
increase its endowment by $260 million to endow its scholarship costs fully. Stanford University’s athletic
endowment is worth between $450 million and $500 million and pays out at a 5.5% rate each year (Cohen,
2013).

32
OVERVIEW OF THE INDUSTRY

T he sport industry is large and diverse. This makes classifying the industry and measuring its size and
scope difficult. Further, how sport is defined affects estimates of industry size. For example,
PricewaterhouseCoopers (PwC) estimated that the global sports industry was a £95 billion ($150.7 billion)
industry in 2015 (Cave, 2015), whereas Plunkett Research (2015) estimated the value to be $1.5 trillion, or ten
times as large. Why is there such a difference in estimates? PwC and Plunkett Research are likely using two
different definitions of the sport industry.
In the United States, federal agencies use the North American Industry Classification System (NAICS),
developed by the U.S. Census Bureau, to measure and track the business economy. Each business is classified
as part of a larger industry. However, the sport industry is not classified as an industry in the NAICS. Instead,
the sport industry as it is commonly conceived is scattered across at least 12 different industries in the NAICS
(see Exhibit 1.5). The largest grouping of sport businesses is within the Arts, Entertainment, and Recreation
segment (NAICS 71).

EXHIBIT 1.5 NAICS codes for sport businesses.

CODE INDUSTRY SUBINDUSTRY SPORT

BUSINESS
TYPES
237 Construction Heavy and Civil Engineering Field
Construction Construction
315 Manufacturing Apparel Knitting Mills Sport Apparel
335 Manufacturing Electrical Equipment, Appliance, Stadium
and Component Manufacturing Lighting
339 Manufacturing Miscellaneous Manufacturing Sporting Goods
Manufacturing
423 Wholesale Trade Merchant Wholesalers, Durable Sporting Goods
Goods Wholesale
424 Wholesale Trade Merchant Wholesalers, Nondurable Sportswear
Goods
451 Retail Trade Sporting Goods, Hobby, Book, and Sporting Goods
Music Stores
453 Retail Trade Miscellaneous Store Retailers Used Sporting
Goods
515 Information Broadcasting (except Internet) Sports
Television
516 Information Internet Sport Internet
Sites
532 Real Estate and Rental Leasing Rental and Leasing Services Sports
Equipment
Rental
561 Administrative and Support and Waste Administrative and Support Ticketing
Management and Remediation Services Services
611 Educational Services Educational Services Sport and
Recreation
Instruction

621 Health Care and Social Assistance Ambulatory Health Care Services Sports Physical

33
 711 Arts, Entertainment, and Recreation Performing Arts, Spectator Sports, Spectator
and Related Industries Sports
712 Arts, Entertainment, and Recreation Museums, Historical Sites, and Halls of Fame
Similar Institutions
713 Arts, Entertainment, and Recreation Amusement, Gambling, and Recreation and
Recreation Industries Club Sports
722 Accommodation and Food Services Food Services and Drinking Places Concessions
811 Other Services (except Public Repair and Maintenance Sport
Administration) Equipment
Repair
813 Other Services (except Public Religious, Grantmaking, Civic, Leagues and
Administration) Professional, and Similar Governing
Organizations Bodies

Source: www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2012.

The Arts, Entertainment, and Recreation segment is described as follows by the U.S. Department of
Labor’s Bureau of Labor Statistics (BLS). This segment employs a large number of seasonal and part-time
workers. Those employed in the industry tend to be younger than employees in other industries, and wages are
relatively low. As of 2012, the BLS forecast for the industry as a whole was promising. Barring new
recessionary trends, rising incomes and increasing leisure time over the next ten years should lead to an
increase in demand in this sector, with employment growing 9.7% by 2022 (“Industry-occupation matrix
data,” 2012). Almost all leisure-time activities, other than watching movies, are included in this industry
sector.
The BLS classifies this sector into three large subsectors: live performances or events; historical, cultural,
or educational exhibits; and recreation or leisure activities. The live performances or events subsector includes
professional sports, commercial sport clubs, sport promotion companies and agencies, and dog and horse
racing facilities. Privately owned museums, such as the National Baseball Hall of Fame and Museum, are
found in the subsection for historical, cultural, or educational exhibits. The recreation and leisure activities
subsector includes golf courses, fitness facilities, bowling centers, and health clubs. The BLS further divides
the subsectors of the Arts, Entertainment, and Recreation segment, assigning NAICS codes to smaller
divisions. Exhibit 1.6 lists the codes for spectator and recreational sport divisions. These subsectors range
from sport teams and clubs to bowling centers and marinas.

EXHIBIT 1.6 Sport-related business divisions within NAICS Code 71: Arts, Entertainment, and
Recreation.

NAICS CODE DEFINITION

711211 Sports Teams and Clubs
711212 Racetracks
711219 Other Spectator Sports
711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities
711320 Promoters of Performing Arts, Sports, and Similar Events without Facilities
711410 Agents and Managers for Artists, Athletes, Entertainers, and Other Public Figures
712110 Museums
713910 Golf Courses and Country Clubs
713920 Skiing Facilities

34
 713930 Marinas
713940 Fitness and Recreational Sports Centers
713950 Bowling Centers
713990 All Other Amusement and Recreation Industries

Source: www.census.gov/cgi-bin/sssd/naics/naicsrch.

35
Another random document with
no related content on Scribd:
 DANCE ON STILTS AT THE GIRLS’ UNYAGO, NIUCHI

Newala, too, suffers from the distance of its water-supply—at least

the Newala of to-day does; there was once another Newala in a lovely
valley at the foot of the plateau. I visited it and found scarcely a trace
of houses, only a Christian cemetery, with the graves of several
missionaries and their converts, remaining as a monument of its
former glories. But the surroundings are wonderfully beautiful. A
thick grove of splendid mango-trees closes in the weather-worn
crosses and headstones; behind them, combining the useful and the
agreeable, is a whole plantation of lemon-trees covered with ripe
fruit; not the small African kind, but a much larger and also juicier
imported variety, which drops into the hands of the passing traveller,
without calling for any exertion on his part. Old Newala is now under
the jurisdiction of the native pastor, Daudi, at Chingulungulu, who,
as I am on very friendly terms with him, allows me, as a matter of
course, the use of this lemon-grove during my stay at Newala.
 FEET MUTILATED BY THE RAVAGES OF THE “JIGGER”
(Sarcopsylla penetrans)

The water-supply of New Newala is in the bottom of the valley,

some 1,600 feet lower down. The way is not only long and fatiguing,
but the water, when we get it, is thoroughly bad. We are suffering not
only from this, but from the fact that the arrangements at Newala are
nothing short of luxurious. We have a separate kitchen—a hut built
against the boma palisade on the right of the baraza, the interior of
which is not visible from our usual position. Our two cooks were not
long in finding this out, and they consequently do—or rather neglect
to do—what they please. In any case they do not seem to be very
particular about the boiling of our drinking-water—at least I can
attribute to no other cause certain attacks of a dysenteric nature,
from which both Knudsen and I have suffered for some time. If a
man like Omari has to be left unwatched for a moment, he is capable
of anything. Besides this complaint, we are inconvenienced by the
state of our nails, which have become as hard as glass, and crack on
the slightest provocation, and I have the additional infliction of
pimples all over me. As if all this were not enough, we have also, for
the last week been waging war against the jigger, who has found his
Eldorado in the hot sand of the Makonde plateau. Our men are seen
all day long—whenever their chronic colds and the dysentery likewise
raging among them permit—occupied in removing this scourge of
Africa from their feet and trying to prevent the disastrous
consequences of its presence. It is quite common to see natives of
this place with one or two toes missing; many have lost all their toes,
or even the whole front part of the foot, so that a well-formed leg
ends in a shapeless stump. These ravages are caused by the female of
Sarcopsylla penetrans, which bores its way under the skin and there
develops an egg-sac the size of a pea. In all books on the subject, it is
stated that one’s attention is called to the presence of this parasite by
an intolerable itching. This agrees very well with my experience, so
far as the softer parts of the sole, the spaces between and under the
toes, and the side of the foot are concerned, but if the creature
penetrates through the harder parts of the heel or ball of the foot, it
may escape even the most careful search till it has reached maturity.
Then there is no time to be lost, if the horrible ulceration, of which
we see cases by the dozen every day, is to be prevented. It is much
easier, by the way, to discover the insect on the white skin of a
European than on that of a native, on which the dark speck scarcely
shows. The four or five jiggers which, in spite of the fact that I
constantly wore high laced boots, chose my feet to settle in, were
taken out for me by the all-accomplished Knudsen, after which I
thought it advisable to wash out the cavities with corrosive
sublimate. The natives have a different sort of disinfectant—they fill
the hole with scraped roots. In a tiny Makua village on the slope of
the plateau south of Newala, we saw an old woman who had filled all
the spaces under her toe-nails with powdered roots by way of
prophylactic treatment. What will be the result, if any, who can say?
The rest of the many trifling ills which trouble our existence are
really more comic than serious. In the absence of anything else to
smoke, Knudsen and I at last opened a box of cigars procured from
the Indian store-keeper at Lindi, and tried them, with the most
distressing results. Whether they contain opium or some other
narcotic, neither of us can say, but after the tenth puff we were both
“off,” three-quarters stupefied and unspeakably wretched. Slowly we
recovered—and what happened next? Half-an-hour later we were
once more smoking these poisonous concoctions—so insatiable is the
craving for tobacco in the tropics.
Even my present attacks of fever scarcely deserve to be taken
seriously. I have had no less than three here at Newala, all of which
have run their course in an incredibly short time. In the early
afternoon, I am busy with my old natives, asking questions and
making notes. The strong midday coffee has stimulated my spirits to
an extraordinary degree, the brain is active and vigorous, and work
progresses rapidly, while a pleasant warmth pervades the whole
body. Suddenly this gives place to a violent chill, forcing me to put on
my overcoat, though it is only half-past three and the afternoon sun
is at its hottest. Now the brain no longer works with such acuteness
and logical precision; more especially does it fail me in trying to
establish the syntax of the difficult Makua language on which I have
ventured, as if I had not enough to do without it. Under the
circumstances it seems advisable to take my temperature, and I do
so, to save trouble, without leaving my seat, and while going on with
my work. On examination, I find it to be 101·48°. My tutors are
abruptly dismissed and my bed set up in the baraza; a few minutes
later I am in it and treating myself internally with hot water and
lemon-juice.
Three hours later, the thermometer marks nearly 104°, and I make
them carry me back into the tent, bed and all, as I am now perspiring
heavily, and exposure to the cold wind just beginning to blow might
mean a fatal chill. I lie still for a little while, and then find, to my
great relief, that the temperature is not rising, but rather falling. This
is about 7.30 p.m. At 8 p.m. I find, to my unbounded astonishment,
that it has fallen below 98·6°, and I feel perfectly well. I read for an
hour or two, and could very well enjoy a smoke, if I had the
wherewithal—Indian cigars being out of the question.
Having no medical training, I am at a loss to account for this state
of things. It is impossible that these transitory attacks of high fever
should be malarial; it seems more probable that they are due to a
kind of sunstroke. On consulting my note-book, I become more and
more inclined to think this is the case, for these attacks regularly
follow extreme fatigue and long exposure to strong sunshine. They at
least have the advantage of being only short interruptions to my
work, as on the following morning I am always quite fresh and fit.
My treasure of a cook is suffering from an enormous hydrocele which
makes it difficult for him to get up, and Moritz is obliged to keep in
the dark on account of his inflamed eyes. Knudsen’s cook, a raw boy
from somewhere in the bush, knows still less of cooking than Omari;
consequently Nils Knudsen himself has been promoted to the vacant
post. Finding that we had come to the end of our supplies, he began
by sending to Chingulungulu for the four sucking-pigs which we had
bought from Matola and temporarily left in his charge; and when
they came up, neatly packed in a large crate, he callously slaughtered
the biggest of them. The first joint we were thoughtless enough to
entrust for roasting to Knudsen’s mshenzi cook, and it was
consequently uneatable; but we made the rest of the animal into a
jelly which we ate with great relish after weeks of underfeeding,
consuming incredible helpings of it at both midday and evening
meals. The only drawback is a certain want of variety in the tinned
vegetables. Dr. Jäger, to whom the Geographical Commission
entrusted the provisioning of the expeditions—mine as well as his
own—because he had more time on his hands than the rest of us,
seems to have laid in a huge stock of Teltow turnips,[46] an article of
food which is all very well for occasional use, but which quickly palls
when set before one every day; and we seem to have no other tins
left. There is no help for it—we must put up with the turnips; but I
am certain that, once I am home again, I shall not touch them for ten
years to come.
Amid all these minor evils, which, after all, go to make up the
genuine flavour of Africa, there is at least one cheering touch:
Knudsen has, with the dexterity of a skilled mechanic, repaired my 9
× 12 cm. camera, at least so far that I can use it with a little care.
How, in the absence of finger-nails, he was able to accomplish such a
ticklish piece of work, having no tool but a clumsy screw-driver for
taking to pieces and putting together again the complicated
mechanism of the instantaneous shutter, is still a mystery to me; but
he did it successfully. The loss of his finger-nails shows him in a light
contrasting curiously enough with the intelligence evinced by the
above operation; though, after all, it is scarcely surprising after his
ten years’ residence in the bush. One day, at Lindi, he had occasion
to wash a dog, which must have been in need of very thorough
cleansing, for the bottle handed to our friend for the purpose had an
extremely strong smell. Having performed his task in the most
conscientious manner, he perceived with some surprise that the dog
did not appear much the better for it, and was further surprised by
finding his own nails ulcerating away in the course of the next few
days. “How was I to know that carbolic acid has to be diluted?” he
mutters indignantly, from time to time, with a troubled gaze at his
mutilated finger-tips.
 Since we came to Newala we have been making excursions in all
directions through the surrounding country, in accordance with old
habit, and also because the akida Sefu did not get together the tribal
elders from whom I wanted information so speedily as he had
promised. There is, however, no harm done, as, even if seen only
from the outside, the country and people are interesting enough.
The Makonde plateau is like a large rectangular table rounded off
at the corners. Measured from the Indian Ocean to Newala, it is
about seventy-five miles long, and between the Rovuma and the
Lukuledi it averages fifty miles in breadth, so that its superficial area
is about two-thirds of that of the kingdom of Saxony. The surface,
however, is not level, but uniformly inclined from its south-western
edge to the ocean. From the upper edge, on which Newala lies, the
eye ranges for many miles east and north-east, without encountering
any obstacle, over the Makonde bush. It is a green sea, from which
here and there thick clouds of smoke rise, to show that it, too, is
inhabited by men who carry on their tillage like so many other
primitive peoples, by cutting down and burning the bush, and
manuring with the ashes. Even in the radiant light of a tropical day
such a fire is a grand sight.
Much less effective is the impression produced just now by the
great western plain as seen from the edge of the plateau. As often as
time permits, I stroll along this edge, sometimes in one direction,
sometimes in another, in the hope of finding the air clear enough to
let me enjoy the view; but I have always been disappointed.
Wherever one looks, clouds of smoke rise from the burning bush,
and the air is full of smoke and vapour. It is a pity, for under more
favourable circumstances the panorama of the whole country up to
the distant Majeje hills must be truly magnificent. It is of little use
taking photographs now, and an outline sketch gives a very poor idea
of the scenery. In one of these excursions I went out of my way to
make a personal attempt on the Makonde bush. The present edge of
the plateau is the result of a far-reaching process of destruction
through erosion and denudation. The Makonde strata are
everywhere cut into by ravines, which, though short, are hundreds of
yards in depth. In consequence of the loose stratification of these
beds, not only are the walls of these ravines nearly vertical, but their
upper end is closed by an equally steep escarpment, so that the
western edge of the Makonde plateau is hemmed in by a series of
deep, basin-like valleys. In order to get from one side of such a ravine
to the other, I cut my way through the bush with a dozen of my men.
It was a very open part, with more grass than scrub, but even so the
short stretch of less than two hundred yards was very hard work; at
the end of it the men’s calicoes were in rags and they themselves
bleeding from hundreds of scratches, while even our strong khaki
suits had not escaped scatheless.

NATIVE PATH THROUGH THE MAKONDE BUSH, NEAR

MAHUTA

I see increasing reason to believe that the view formed some time
back as to the origin of the Makonde bush is the correct one. I have
no doubt that it is not a natural product, but the result of human
occupation. Those parts of the high country where man—as a very
slight amount of practice enables the eye to perceive at once—has not
yet penetrated with axe and hoe, are still occupied by a splendid
timber forest quite able to sustain a comparison with our mixed
forests in Germany. But wherever man has once built his hut or tilled
his field, this horrible bush springs up. Every phase of this process
may be seen in the course of a couple of hours’ walk along the main
road. From the bush to right or left, one hears the sound of the axe—
not from one spot only, but from several directions at once. A few
steps further on, we can see what is taking place. The brush has been
cut down and piled up in heaps to the height of a yard or more,
between which the trunks of the large trees stand up like the last
pillars of a magnificent ruined building. These, too, present a
melancholy spectacle: the destructive Makonde have ringed them—
cut a broad strip of bark all round to ensure their dying off—and also
piled up pyramids of brush round them. Father and son, mother and
son-in-law, are chopping away perseveringly in the background—too
busy, almost, to look round at the white stranger, who usually excites
so much interest. If you pass by the same place a week later, the piles
of brushwood have disappeared and a thick layer of ashes has taken
the place of the green forest. The large trees stretch their
smouldering trunks and branches in dumb accusation to heaven—if
they have not already fallen and been more or less reduced to ashes,
perhaps only showing as a white stripe on the dark ground.
This work of destruction is carried out by the Makonde alike on the
virgin forest and on the bush which has sprung up on sites already
cultivated and deserted. In the second case they are saved the trouble
of burning the large trees, these being entirely absent in the
secondary bush.
After burning this piece of forest ground and loosening it with the
hoe, the native sows his corn and plants his vegetables. All over the
country, he goes in for bed-culture, which requires, and, in fact,
receives, the most careful attention. Weeds are nowhere tolerated in
the south of German East Africa. The crops may fail on the plains,
where droughts are frequent, but never on the plateau with its
abundant rains and heavy dews. Its fortunate inhabitants even have
the satisfaction of seeing the proud Wayao and Wamakua working
for them as labourers, driven by hunger to serve where they were
accustomed to rule.
But the light, sandy soil is soon exhausted, and would yield no
harvest the second year if cultivated twice running. This fact has
been familiar to the native for ages; consequently he provides in
time, and, while his crop is growing, prepares the next plot with axe
and firebrand. Next year he plants this with his various crops and
lets the first piece lie fallow. For a short time it remains waste and
desolate; then nature steps in to repair the destruction wrought by
man; a thousand new growths spring out of the exhausted soil, and
even the old stumps put forth fresh shoots. Next year the new growth
is up to one’s knees, and in a few years more it is that terrible,
impenetrable bush, which maintains its position till the black
occupier of the land has made the round of all the available sites and
come back to his starting point.
The Makonde are, body and soul, so to speak, one with this bush.
According to my Yao informants, indeed, their name means nothing
else but “bush people.” Their own tradition says that they have been
settled up here for a very long time, but to my surprise they laid great
stress on an original immigration. Their old homes were in the
south-east, near Mikindani and the mouth of the Rovuma, whence
their peaceful forefathers were driven by the continual raids of the
Sakalavas from Madagascar and the warlike Shirazis[47] of the coast,
to take refuge on the almost inaccessible plateau. I have studied
African ethnology for twenty years, but the fact that changes of
population in this apparently quiet and peaceable corner of the earth
could have been occasioned by outside enterprises taking place on
the high seas, was completely new to me. It is, no doubt, however,
correct.
The charming tribal legend of the Makonde—besides informing us
of other interesting matters—explains why they have to live in the
thickest of the bush and a long way from the edge of the plateau,
instead of making their permanent homes beside the purling brooks
and springs of the low country.
“The place where the tribe originated is Mahuta, on the southern
side of the plateau towards the Rovuma, where of old time there was
nothing but thick bush. Out of this bush came a man who never
washed himself or shaved his head, and who ate and drank but little.
He went out and made a human figure from the wood of a tree
growing in the open country, which he took home to his abode in the
bush and there set it upright. In the night this image came to life and
was a woman. The man and woman went down together to the
Rovuma to wash themselves. Here the woman gave birth to a still-
born child. They left that place and passed over the high land into the
valley of the Mbemkuru, where the woman had another child, which
was also born dead. Then they returned to the high bush country of
Mahuta, where the third child was born, which lived and grew up. In
course of time, the couple had many more children, and called
themselves Wamatanda. These were the ancestral stock of the
Makonde, also called Wamakonde,[48] i.e., aborigines. Their
forefather, the man from the bush, gave his children the command to
bury their dead upright, in memory of the mother of their race who
was cut out of wood and awoke to life when standing upright. He also
warned them against settling in the valleys and near large streams,
for sickness and death dwelt there. They were to make it a rule to
have their huts at least an hour’s walk from the nearest watering-
place; then their children would thrive and escape illness.”
The explanation of the name Makonde given by my informants is
somewhat different from that contained in the above legend, which I
extract from a little book (small, but packed with information), by
Pater Adams, entitled Lindi und sein Hinterland. Otherwise, my
results agree exactly with the statements of the legend. Washing?
Hapana—there is no such thing. Why should they do so? As it is, the
supply of water scarcely suffices for cooking and drinking; other
people do not wash, so why should the Makonde distinguish himself
by such needless eccentricity? As for shaving the head, the short,
woolly crop scarcely needs it,[49] so the second ancestral precept is
likewise easy enough to follow. Beyond this, however, there is
nothing ridiculous in the ancestor’s advice. I have obtained from
various local artists a fairly large number of figures carved in wood,
ranging from fifteen to twenty-three inches in height, and
representing women belonging to the great group of the Mavia,
Makonde, and Matambwe tribes. The carving is remarkably well
done and renders the female type with great accuracy, especially the
keloid ornamentation, to be described later on. As to the object and
meaning of their works the sculptors either could or (more probably)
would tell me nothing, and I was forced to content myself with the
scanty information vouchsafed by one man, who said that the figures
were merely intended to represent the nembo—the artificial
deformations of pelele, ear-discs, and keloids. The legend recorded
by Pater Adams places these figures in a new light. They must surely
be more than mere dolls; and we may even venture to assume that
they are—though the majority of present-day Makonde are probably
unaware of the fact—representations of the tribal ancestress.
 The references in the legend to the descent from Mahuta to the
Rovuma, and to a journey across the highlands into the Mbekuru
valley, undoubtedly indicate the previous history of the tribe, the
travels of the ancestral pair typifying the migrations of their
descendants. The descent to the neighbouring Rovuma valley, with
its extraordinary fertility and great abundance of game, is intelligible
at a glance—but the crossing of the Lukuledi depression, the ascent
to the Rondo Plateau and the descent to the Mbemkuru, also lie
within the bounds of probability, for all these districts have exactly
the same character as the extreme south. Now, however, comes a
point of especial interest for our bacteriological age. The primitive
Makonde did not enjoy their lives in the marshy river-valleys.
Disease raged among them, and many died. It was only after they
had returned to their original home near Mahuta, that the health
conditions of these people improved. We are very apt to think of the
African as a stupid person whose ignorance of nature is only equalled
by his fear of it, and who looks on all mishaps as caused by evil
spirits and malignant natural powers. It is much more correct to
assume in this case that the people very early learnt to distinguish
districts infested with malaria from those where it is absent.
This knowledge is crystallized in the
ancestral warning against settling in the
valleys and near the great waters, the
dwelling-places of disease and death. At the
same time, for security against the hostile
Mavia south of the Rovuma, it was enacted
that every settlement must be not less than a
certain distance from the southern edge of the
plateau. Such in fact is their mode of life at the
present day. It is not such a bad one, and
certainly they are both safer and more
comfortable than the Makua, the recent
intruders from the south, who have made USUAL METHOD OF
good their footing on the western edge of the CLOSING HUT-DOOR
plateau, extending over a fairly wide belt of
country. Neither Makua nor Makonde show in their dwellings
anything of the size and comeliness of the Yao houses in the plain,
especially at Masasi, Chingulungulu and Zuza’s. Jumbe Chauro, a
Makonde hamlet not far from Newala, on the road to Mahuta, is the
most important settlement of the tribe I have yet seen, and has fairly
spacious huts. But how slovenly is their construction compared with
the palatial residences of the elephant-hunters living in the plain.
The roofs are still more untidy than in the general run of huts during
the dry season, the walls show here and there the scanty beginnings
or the lamentable remains of the mud plastering, and the interior is a
veritable dog-kennel; dirt, dust and disorder everywhere. A few huts
only show any attempt at division into rooms, and this consists
merely of very roughly-made bamboo partitions. In one point alone
have I noticed any indication of progress—in the method of fastening
the door. Houses all over the south are secured in a simple but
ingenious manner. The door consists of a set of stout pieces of wood
or bamboo, tied with bark-string to two cross-pieces, and moving in
two grooves round one of the door-posts, so as to open inwards. If
the owner wishes to leave home, he takes two logs as thick as a man’s
upper arm and about a yard long. One of these is placed obliquely
against the middle of the door from the inside, so as to form an angle
of from 60° to 75° with the ground. He then places the second piece
horizontally across the first, pressing it downward with all his might.
It is kept in place by two strong posts planted in the ground a few
inches inside the door. This fastening is absolutely safe, but of course
cannot be applied to both doors at once, otherwise how could the
owner leave or enter his house? I have not yet succeeded in finding
out how the back door is fastened.

MAKONDE LOCK AND KEY AT JUMBE CHAURO

 This is the general way of closing a house. The Makonde at Jumbe
Chauro, however, have a much more complicated, solid and original
one. Here, too, the door is as already described, except that there is
only one post on the inside, standing by itself about six inches from
one side of the doorway. Opposite this post is a hole in the wall just
large enough to admit a man’s arm. The door is closed inside by a
large wooden bolt passing through a hole in this post and pressing
with its free end against the door. The other end has three holes into
which fit three pegs running in vertical grooves inside the post. The
door is opened with a wooden key about a foot long, somewhat
curved and sloped off at the butt; the other end has three pegs
corresponding to the holes, in the bolt, so that, when it is thrust
through the hole in the wall and inserted into the rectangular
opening in the post, the pegs can be lifted and the bolt drawn out.[50]

MODE OF INSERTING THE KEY

With no small pride first one householder and then a second

showed me on the spot the action of this greatest invention of the
Makonde Highlands. To both with an admiring exclamation of
“Vizuri sana!” (“Very fine!”). I expressed the wish to take back these
marvels with me to Ulaya, to show the Wazungu what clever fellows
the Makonde are. Scarcely five minutes after my return to camp at
Newala, the two men came up sweating under the weight of two
heavy logs which they laid down at my feet, handing over at the same
time the keys of the fallen fortress. Arguing, logically enough, that if
the key was wanted, the lock would be wanted with it, they had taken
their axes and chopped down the posts—as it never occurred to them
to dig them out of the ground and so bring them intact. Thus I have
two badly damaged specimens, and the owners, instead of praise,
come in for a blowing-up.
The Makua huts in the environs of Newala are especially
miserable; their more than slovenly construction reminds one of the
temporary erections of the Makua at Hatia’s, though the people here
have not been concerned in a war. It must therefore be due to
congenital idleness, or else to the absence of a powerful chief. Even
the baraza at Mlipa’s, a short hour’s walk south-east of Newala,
shares in this general neglect. While public buildings in this country
are usually looked after more or less carefully, this is in evident
danger of being blown over by the first strong easterly gale. The only
attractive object in this whole district is the grave of the late chief
Mlipa. I visited it in the morning, while the sun was still trying with
partial success to break through the rolling mists, and the circular
grove of tall euphorbias, which, with a broken pot, is all that marks
the old king’s resting-place, impressed one with a touch of pathos.
Even my very materially-minded carriers seemed to feel something
of the sort, for instead of their usual ribald songs, they chanted
solemnly, as we marched on through the dense green of the Makonde
bush:—
 “We shall arrive with the great master; we stand in a row and have
no fear about getting our food and our money from the Serkali (the
Government). We are not afraid; we are going along with the great
master, the lion; we are going down to the coast and back.”
With regard to the characteristic features of the various tribes here
on the western edge of the plateau, I can arrive at no other
conclusion than the one already come to in the plain, viz., that it is
impossible for anyone but a trained anthropologist to assign any
given individual at once to his proper tribe. In fact, I think that even
an anthropological specialist, after the most careful examination,
might find it a difficult task to decide. The whole congeries of peoples
collected in the region bounded on the west by the great Central
African rift, Tanganyika and Nyasa, and on the east by the Indian
Ocean, are closely related to each other—some of their languages are
only distinguished from one another as dialects of the same speech,
and no doubt all the tribes present the same shape of skull and
structure of skeleton. Thus, surely, there can be no very striking
differences in outward appearance.
 Even did such exist, I should have no time
to concern myself with them, for day after day,
I have to see or hear, as the case may be—in
any case to grasp and record—an
extraordinary number of ethnographic
phenomena. I am almost disposed to think it
fortunate that some departments of inquiry, at
least, are barred by external circumstances.
Chief among these is the subject of iron-
working. We are apt to think of Africa as a
country where iron ore is everywhere, so to
speak, to be picked up by the roadside, and
where it would be quite surprising if the
inhabitants had not learnt to smelt the
material ready to their hand. In fact, the
knowledge of this art ranges all over the
continent, from the Kabyles in the north to the
Kafirs in the south. Here between the Rovuma
and the Lukuledi the conditions are not so
favourable. According to the statements of the
Makonde, neither ironstone nor any other
form of iron ore is known to them. They have
not therefore advanced to the art of smelting
the metal, but have hitherto bought all their
THE ANCESTRESS OF
THE MAKONDE
iron implements from neighbouring tribes.
Even in the plain the inhabitants are not much
better off. Only one man now living is said to
understand the art of smelting iron. This old fundi lives close to
Huwe, that isolated, steep-sided block of granite which rises out of
the green solitude between Masasi and Chingulungulu, and whose
jagged and splintered top meets the traveller’s eye everywhere. While
still at Masasi I wished to see this man at work, but was told that,
frightened by the rising, he had retired across the Rovuma, though
he would soon return. All subsequent inquiries as to whether the
fundi had come back met with the genuine African answer, “Bado”
(“Not yet”).
 BRAZIER

Some consolation was afforded me by a brassfounder, whom I

came across in the bush near Akundonde’s. This man is the favourite
of women, and therefore no doubt of the gods; he welds the glittering
brass rods purchased at the coast into those massive, heavy rings
which, on the wrists and ankles of the local fair ones, continually give
me fresh food for admiration. Like every decent master-craftsman he
had all his tools with him, consisting of a pair of bellows, three
crucibles and a hammer—nothing more, apparently. He was quite
willing to show his skill, and in a twinkling had fixed his bellows on
the ground. They are simply two goat-skins, taken off whole, the four
legs being closed by knots, while the upper opening, intended to
admit the air, is kept stretched by two pieces of wood. At the lower
end of the skin a smaller opening is left into which a wooden tube is
stuck. The fundi has quickly borrowed a heap of wood-embers from
the nearest hut; he then fixes the free ends of the two tubes into an
earthen pipe, and clamps them to the ground by means of a bent
piece of wood. Now he fills one of his small clay crucibles, the dross
on which shows that they have been long in use, with the yellow
material, places it in the midst of the embers, which, at present are
only faintly glimmering, and begins his work. In quick alternation
the smith’s two hands move up and down with the open ends of the
bellows; as he raises his hand he holds the slit wide open, so as to let
the air enter the skin bag unhindered. In pressing it down he closes
the bag, and the air puffs through the bamboo tube and clay pipe into
the fire, which quickly burns up. The smith, however, does not keep
on with this work, but beckons to another man, who relieves him at
the bellows, while he takes some more tools out of a large skin pouch
carried on his back. I look on in wonder as, with a smooth round
stick about the thickness of a finger, he bores a few vertical holes into
the clean sand of the soil. This should not be difficult, yet the man
seems to be taking great pains over it. Then he fastens down to the
ground, with a couple of wooden clamps, a neat little trough made by
splitting a joint of bamboo in half, so that the ends are closed by the
two knots. At last the yellow metal has attained the right consistency,
and the fundi lifts the crucible from the fire by means of two sticks
split at the end to serve as tongs. A short swift turn to the left—a
tilting of the crucible—and the molten brass, hissing and giving forth
clouds of smoke, flows first into the bamboo mould and then into the
holes in the ground.
The technique of this backwoods craftsman may not be very far
advanced, but it cannot be denied that he knows how to obtain an
adequate result by the simplest means. The ladies of highest rank in
this country—that is to say, those who can afford it, wear two kinds
of these massive brass rings, one cylindrical, the other semicircular
in section. The latter are cast in the most ingenious way in the
bamboo mould, the former in the circular hole in the sand. It is quite
a simple matter for the fundi to fit these bars to the limbs of his fair
customers; with a few light strokes of his hammer he bends the
pliable brass round arm or ankle without further inconvenience to
the wearer.
SHAPING THE POT

SMOOTHING WITH MAIZE-COB

CUTTING THE EDGE

 FINISHING THE BOTTOM

LAST SMOOTHING BEFORE

BURNING

FIRING THE BRUSH-PILE

 LIGHTING THE FARTHER SIDE OF
THE PILE

TURNING THE RED-HOT VESSEL

NYASA WOMAN MAKING POTS AT MASASI

Pottery is an art which must always and everywhere excite the
interest of the student, just because it is so intimately connected with
the development of human culture, and because its relics are one of
the principal factors in the reconstruction of our own condition in
prehistoric times. I shall always remember with pleasure the two or
three afternoons at Masasi when Salim Matola’s mother, a slightly-
built, graceful, pleasant-looking woman, explained to me with
touching patience, by means of concrete illustrations, the ceramic art
of her people. The only implements for this primitive process were a
lump of clay in her left hand, and in the right a calabash containing
the following valuables: the fragment of a maize-cob stripped of all
its grains, a smooth, oval pebble, about the size of a pigeon’s egg, a
few chips of gourd-shell, a bamboo splinter about the length of one’s
hand, a small shell, and a bunch of some herb resembling spinach.
 Nothing more. The woman scraped with the
shell a round, shallow hole in the soft, fine
sand of the soil, and, when an active young
girl had filled the calabash with water for her,
she began to knead the clay. As if by magic it
gradually assumed the shape of a rough but
already well-shaped vessel, which only wanted
a little touching up with the instruments
before mentioned. I looked out with the
MAKUA WOMAN closest attention for any indication of the use
MAKING A POT. of the potter’s wheel, in however rudimentary
SHOWS THE a form, but no—hapana (there is none). The
BEGINNINGS OF THE embryo pot stood firmly in its little
POTTER’S WHEEL
depression, and the woman walked round it in
a stooping posture, whether she was removing
small stones or similar foreign bodies with the maize-cob, smoothing
the inner or outer surface with the splinter of bamboo, or later, after
letting it dry for a day, pricking in the ornamentation with a pointed
bit of gourd-shell, or working out the bottom, or cutting the edge
with a sharp bamboo knife, or giving the last touches to the finished
vessel. This occupation of the women is infinitely toilsome, but it is
without doubt an accurate reproduction of the process in use among
our ancestors of the Neolithic and Bronze ages.
There is no doubt that the invention of pottery, an item in human
progress whose importance cannot be over-estimated, is due to
women. Rough, coarse and unfeeling, the men of the horde range
over the countryside. When the united cunning of the hunters has
succeeded in killing the game; not one of them thinks of carrying
home the spoil. A bright fire, kindled by a vigorous wielding of the
drill, is crackling beside them; the animal has been cleaned and cut
up secundum artem, and, after a slight singeing, will soon disappear
under their sharp teeth; no one all this time giving a single thought
to wife or child.
To what shifts, on the other hand, the primitive wife, and still more
the primitive mother, was put! Not even prehistoric stomachs could
endure an unvarying diet of raw food. Something or other suggested
the beneficial effect of hot water on the majority of approved but
indigestible dishes. Perhaps a neighbour had tried holding the hard
roots or tubers over the fire in a calabash filled with water—or maybe
an ostrich-egg-shell, or a hastily improvised vessel of bark. They
became much softer and more palatable than they had previously
been; but, unfortunately, the vessel could not stand the fire and got
charred on the outside. That can be remedied, thought our
ancestress, and plastered a layer of wet clay round a similar vessel.
This is an improvement; the cooking utensil remains uninjured, but
the heat of the fire has shrunk it, so that it is loose in its shell. The
next step is to detach it, so, with a firm grip and a jerk, shell and
kernel are separated, and pottery is invented. Perhaps, however, the
discovery which led to an intelligent use of the burnt-clay shell, was
made in a slightly different way. Ostrich-eggs and calabashes are not
to be found in every part of the world, but everywhere mankind has
arrived at the art of making baskets out of pliant materials, such as
bark, bast, strips of palm-leaf, supple twigs, etc. Our inventor has no
water-tight vessel provided by nature. “Never mind, let us line the
basket with clay.” This answers the purpose, but alas! the basket gets
burnt over the blazing fire, the woman watches the process of
cooking with increasing uneasiness, fearing a leak, but no leak
appears. The food, done to a turn, is eaten with peculiar relish; and
the cooking-vessel is examined, half in curiosity, half in satisfaction
at the result. The plastic clay is now hard as stone, and at the same
time looks exceedingly well, for the neat plaiting of the burnt basket
is traced all over it in a pretty pattern. Thus, simultaneously with
pottery, its ornamentation was invented.
Primitive woman has another claim to respect. It was the man,
roving abroad, who invented the art of producing fire at will, but the
woman, unable to imitate him in this, has been a Vestal from the
earliest times. Nothing gives so much trouble as the keeping alight of
the smouldering brand, and, above all, when all the men are absent
from the camp. Heavy rain-clouds gather, already the first large
drops are falling, the first gusts of the storm rage over the plain. The
little flame, a greater anxiety to the woman than her own children,
flickers unsteadily in the blast. What is to be done? A sudden thought
occurs to her, and in an instant she has constructed a primitive hut
out of strips of bark, to protect the flame against rain and wind.
This, or something very like it, was the way in which the principle
of the house was discovered; and even the most hardened misogynist
cannot fairly refuse a woman the credit of it. The protection of the
hearth-fire from the weather is the germ from which the human
dwelling was evolved. Men had little, if any share, in this forward
step, and that only at a late stage. Even at the present day, the
plastering of the housewall with clay and the manufacture of pottery
are exclusively the women’s business. These are two very significant
survivals. Our European kitchen-garden, too, is originally a woman’s
invention, and the hoe, the primitive instrument of agriculture, is,
characteristically enough, still used in this department. But the
noblest achievement which we owe to the other sex is unquestionably
the art of cookery. Roasting alone—the oldest process—is one for
which men took the hint (a very obvious one) from nature. It must
have been suggested by the scorched carcase of some animal
overtaken by the destructive forest-fires. But boiling—the process of
improving organic substances by the help of water heated to boiling-
point—is a much later discovery. It is so recent that it has not even
yet penetrated to all parts of the world. The Polynesians understand
how to steam food, that is, to cook it, neatly wrapped in leaves, in a
hole in the earth between hot stones, the air being excluded, and
(sometimes) a few drops of water sprinkled on the stones; but they
do not understand boiling.
To come back from this digression, we find that the slender Nyasa
woman has, after once more carefully examining the finished pot,
put it aside in the shade to dry. On the following day she sends me
word by her son, Salim Matola, who is always on hand, that she is
going to do the burning, and, on coming out of my house, I find her
already hard at work. She has spread on the ground a layer of very
dry sticks, about as thick as one’s thumb, has laid the pot (now of a
yellowish-grey colour) on them, and is piling brushwood round it.
My faithful Pesa mbili, the mnyampara, who has been standing by,
most obligingly, with a lighted stick, now hands it to her. Both of
them, blowing steadily, light the pile on the lee side, and, when the
flame begins to catch, on the weather side also. Soon the whole is in a
blaze, but the dry fuel is quickly consumed and the fire dies down, so
that we see the red-hot vessel rising from the ashes. The woman
turns it continually with a long stick, sometimes one way and
sometimes another, so that it may be evenly heated all over. In
twenty minutes she rolls it out of the ash-heap, takes up the bundle
of spinach, which has been lying for two days in a jar of water, and
sprinkles the red-hot clay with it. The places where the drops fall are
marked by black spots on the uniform reddish-brown surface. With a
sigh of relief, and with visible satisfaction, the woman rises to an
erect position; she is standing just in a line between me and the fire,
from which a cloud of smoke is just rising: I press the ball of my
camera, the shutter clicks—the apotheosis is achieved! Like a
priestess, representative of her inventive sex, the graceful woman
stands: at her feet the hearth-fire she has given us beside her the
invention she has devised for us, in the background the home she has
built for us.
At Newala, also, I have had the manufacture of pottery carried on
in my presence. Technically the process is better than that already
described, for here we find the beginnings of the potter’s wheel,
which does not seem to exist in the plains; at least I have seen
nothing of the sort. The artist, a frightfully stupid Makua woman, did
not make a depression in the ground to receive the pot she was about
to shape, but used instead a large potsherd. Otherwise, she went to
work in much the same way as Salim’s mother, except that she saved
herself the trouble of walking round and round her work by squatting
at her ease and letting the pot and potsherd rotate round her; this is
surely the first step towards a machine. But it does not follow that
the pot was improved by the process. It is true that it was beautifully
rounded and presented a very creditable appearance when finished,
but the numerous large and small vessels which I have seen, and, in
part, collected, in the “less advanced” districts, are no less so. We
moderns imagine that instruments of precision are necessary to
produce excellent results. Go to the prehistoric collections of our
museums and look at the pots, urns and bowls of our ancestors in the
dim ages of the past, and you will at once perceive your error.
MAKING LONGITUDINAL CUT IN
BARK

DRAWING THE BARK OFF THE LOG

REMOVING THE OUTER BARK

 BEATING THE BARK

WORKING THE BARK-CLOTH AFTER BEATING, TO MAKE IT

SOFT

MANUFACTURE OF BARK-CLOTH AT NEWALA

To-day, nearly the whole population of German East Africa is
clothed in imported calico. This was not always the case; even now in
some parts of the north dressed skins are still the prevailing wear,
and in the north-western districts—east and north of Lake
Tanganyika—lies a zone where bark-cloth has not yet been
superseded. Probably not many generations have passed since such
bark fabrics and kilts of skins were the only clothing even in the
south. Even to-day, large quantities of this bright-red or drab
material are still to be found; but if we wish to see it, we must look in
the granaries and on the drying stages inside the native huts, where
it serves less ambitious uses as wrappings for those seeds and fruits
which require to be packed with special care. The salt produced at
Masasi, too, is packed for transport to a distance in large sheets of
bark-cloth. Wherever I found it in any degree possible, I studied the
process of making this cloth. The native requisitioned for the
purpose arrived, carrying a log between two and three yards long and
as thick as his thigh, and nothing else except a curiously-shaped
mallet and the usual long, sharp and pointed knife which all men and
boys wear in a belt at their backs without a sheath—horribile dictu!
[51]
Silently he squats down before me, and with two rapid cuts has
drawn a couple of circles round the log some two yards apart, and
slits the bark lengthwise between them with the point of his knife.
With evident care, he then scrapes off the outer rind all round the
log, so that in a quarter of an hour the inner red layer of the bark
shows up brightly-coloured between the two untouched ends. With
some trouble and much caution, he now loosens the bark at one end,
and opens the cylinder. He then stands up, takes hold of the free
edge with both hands, and turning it inside out, slowly but steadily
pulls it off in one piece. Now comes the troublesome work of
scraping all superfluous particles of outer bark from the outside of
the long, narrow piece of material, while the inner side is carefully
scrutinised for defective spots. At last it is ready for beating. Having
signalled to a friend, who immediately places a bowl of water beside
him, the artificer damps his sheet of bark all over, seizes his mallet,
lays one end of the stuff on the smoothest spot of the log, and
hammers away slowly but continuously. “Very simple!” I think to
myself. “Why, I could do that, too!”—but I am forced to change my
opinions a little later on; for the beating is quite an art, if the fabric is
not to be beaten to pieces. To prevent the breaking of the fibres, the
stuff is several times folded across, so as to interpose several
thicknesses between the mallet and the block. At last the required
state is reached, and the fundi seizes the sheet, still folded, by both
ends, and wrings it out, or calls an assistant to take one end while he
holds the other. The cloth produced in this way is not nearly so fine
and uniform in texture as the famous Uganda bark-cloth, but it is
quite soft, and, above all, cheap.
Now, too, I examine the mallet. My craftsman has been using the
simpler but better form of this implement, a conical block of some
hard wood, its base—the striking surface—being scored across and
across with more or less deeply-cut grooves, and the handle stuck
into a hole in the middle. The other and earlier form of mallet is
shaped in the same way, but the head is fastened by an ingenious
network of bark strips into the split bamboo serving as a handle. The
observation so often made, that ancient customs persist longest in
connection with religious ceremonies and in the life of children, here
finds confirmation. As we shall soon see, bark-cloth is still worn
during the unyago,[52] having been prepared with special solemn
ceremonies; and many a mother, if she has no other garment handy,
will still put her little one into a kilt of bark-cloth, which, after all,
looks better, besides being more in keeping with its African
surroundings, than the ridiculous bit of print from Ulaya.
MAKUA WOMEN