The Business of Sport

Objectives
• Understand the economic structure of professional sport in North
America.

• Understand the dynamic between owners and players.

• Understand the dynamics of race, ethnicity and gender in the

business of sport.

• Explore the implications of mega-events in society.

 Certains false ideas about sport
• Accessible
• Unifying
• Egalitarian
• Democratic
• Humanist
• Sain
• Sport = Health
• Altruistic
• Inclusion
• Peace
• Positive image
 The Emergence of Professional
Sport
Certains factors contributed to the emergence of
professional sport in North America

• Urbanization

• Industrialization

• More free time – to play, to consume

 The Structure of Sport

Closed Leagues: Open Leagues:

Executives have complete control over the
amount of franchises in the the association.
They decide who the owners are and where
franchises are located.
New teams enter and leave the association
based, more often than not, on merit. If a team
does not perform, it can be sent to an inferior
association, and vice-versa.

A kind of monopoly on the sport.

The Structure of Sport
The Structure of Sport
Member of the administrative
council. By election, becomes
the league’s commissioner.

Imposes the rules and the structure of the league.

 The Structure of Sport
Professional leagues in North America form a joint production.
The goal is to sell and ensure the functioning of a joint product,
in the case of the NFL, the product is football. This means that
no one person has the monopoly on the league. The reason for
this is for the league to work, for the product to work, there
needs to be competition. No competition, no results, no money.

Two things that the league must ensure:

• The uncertainty of the result.

• Balanced competition.
 The Structure of Sport
The structure of the administrative council has often
been compared to a cartel.

Several people each have the monopoly in the

enterprise.

How?

Territorial Control.

241km radius.
 The Structure of Sport
The professional leagues in North America have a monopsony.

This means that one buyer has complete control on the market.

You want to play professional football, you go to the NFL (or CFL)

Hockey? NHL

Baseball? MLB

You do not want to play for any of these leagues? Play in your
backyard.
 The Structure of Sport
To control the market and to keep things competitive,
leagues have two things in place: the draft and the
salary cap.

A team can decide to spend beyond the salary cap, but

if they do, they must pay a luxury tax to the league.

There are two reasons for the salary cap:

• According to owners: Keep the competition balanced.
• According to sociologists: Entrench a power relation in
the league. Ensure that the players don’t make too
much money while continuing to produce a good
product.
How to make money?
How to make money?
The stadium…a mirror of society
How to make money?
How to make money?
 Spending for a stadium
A city must pay a certain amount for the building of a stadium.
Where does the money come from?

How to remediate:

• Taxes on alcohol and tobacco.

• A tourist taxe (extra fees in hotels for example).
• Taxes on tickets for the event (extra fees)
• Charge more for certain things in the stadium or arena. Ever
have a beer at a hockey game?
The Olympic Games
 The Olympic Games…
Three things happen when building this kind of infrastructure:

• It’s very expensive. This « water cube » cost $140 millions.

It’s where the aquatic events were held in Beijing.

• Most of the time, as it is for the cube, it remains vacant one

the Games are over. So, that’s $140 million for a 16 day
festival, on average.

• Most importantly, the building of some infrastructures force

people out of their homes. For example, in Rio de Janeiro,
60000 people lost their homes when they built the stadium.
The International Olympic
Committee
 Selling the Olympic Games to a
population
• The Games will create amazing infrastructures that
will beautify the city and will be available to the
population afterwards. Often false. Infrastructures are
left empty and are left to rot causing immense damage on
the environment.

• There will be an increase in tourism. Yes, tourism will

increase for the Games, but do you think tourists don’t go to
Paris outside of the Olympic Game period? Also, studies show
that citizens often leave their homes for the duration of the
Games to get away from the noise and traffic. So, it ends up
being the same.

• Games bring international recognition. Look at where

the Games were held. No one heard of London before they
had the Games? Or Tokyo? They already have international
recognition.
The World Cup
See you Thursday!