SB

The World of Sports and Its Business Ecosystem

Introduction

  • Sport fulfils multiple societal roles: elite paid performance, entertainment, community bonding, physical & mental health, personal development.
  • The chapter/book maps the global business ecosystem behind these roles and flags areas of stakeholder tension.

2.1 Rich Diversity Across Sports Around the Globe

  • Two illustrative global popularity rankings
    • SportsShow 2019 – 15 criteria (e.g., global fan base, TV deals, gender equality). Top–10: 1-Soccer, 2-Cricket, 3-Basketball, 4-Field Hockey, 5-Tennis, 6-Volleyball, 7-Table Tennis, 8-Baseball, =9-Rugby, =9-American Football, 10-Golf.
    • TOTALSPORTEK 2016 – 13 criteria (e.g., social-media presence, regional dominance). 1-Soccer, 2-Basketball, 3-Cricket … to 26-Horse Racing.
  • Key take-aways:
    1. Popularity varies geographically (e.g., Soccer global vs. Cricket clustered).
    2. Mix of team & individual sports.
    3. Infrastructure-light (Volleyball) vs. infrastructure-heavy (Ice Hockey, Skiing).
    4. Purely human performance (Swimming) vs. human-plus-machine/animal (MotoGP, Horse Racing).

2.2 Sports Business Ecosystem & Key Stakeholders

Stakeholders (Exhibit 2.2) include Fans, Cities & Communities + Participants at the centre, surrounded by 12 major groups:

  1. Leagues, Federations, Associations
    • Exist at global (FIFA, FIBA), national (EPL, NFL), collegiate (NCAA), junior (Pop Warner) levels.
    • Decide rules, equipment, integrity protocols; enforcement stricter in pro than amateur.
  2. Clubs & Teams
    • Fan-engagement engine. Examples: Manchester United, Dallas Cowboys, Ferrari F1.
  3. Players, Coaches, GMs, Agents, Players’ Associations
    • Media focus; contracts balance winning, branding, compensation.
    • Rise of analytics startups capturing on-field data; collective bargaining common.
  4. Events
    • Mega (Olympics, World Cups, Super Bowl) & niche (Tough Mudder, charity runs).
  5. Facilities, Arenas, Stadiums
    • Mega-venues: Wembley (≈82{,}000), US college stadia (>100{,}000), Indy Speedway (>200{,}000).
    • Tech-laden builds >\$1\text{ billion} (Chase Center 2019; Allegiant Stadium 2020).
  6. Health & Sports Medicine Bodies
    • Work across participation spectrum; elite focus on availability, peak ability, mental health.
    • Dual track of legitimate & illegitimate (doping) enhancements.
  7. Apparel & Equipment Providers
    • Spectrum: ball-only (soccer) to >\$200\text{ m} team budgets (F1).
    • Brand endorsements – Nike, Under Armour, Callaway; retailers—Fanatics, Sports Direct.
    • UEFA 2019–20: Nike partnered with 9 clubs, Adidas 8, Puma 4, Macron 3, New Balance 2.
  8. Media Content & Distribution
    • Media payments critical: NFL ≈40\% revenue; EPL ≈57\%; IOC ≈66\%.
    • Evolution from broadcast ➔ cable ➔ OTT (DAZN), streaming, Twitch for esports.
    • Tech: in-car cameras, advanced graphics; high-school recruiting videos now multimedia.
  9. Branding, Marketing & Sponsorship
    • Branding touches every stakeholder; corporate sponsors leverage fan affinity (e.g., NASCAR loyalty).
  10. Ticketing
    • Platforms (Ticketmaster, AXS) implement dynamic pricing, paperless entry.
    • Criticisms: service-fee levels, data-privacy concerns.
  11. Sports Advisory / Service Companies
    • AEG, CAA, IMG, Wasserman provide venue ops, athlete rep, marketing, IT (IBM, SAP), banking & law.
  12. Government, NGOs, Regulatory, Sports-Law Bodies
    • Public funding to boost health & pride; event hosting; facility builds.
    • Regulation: combat-sport safety, anti-doping (WADA), match-fixing prevention.

2.3 Fans, Cities & Communities

  • Fans are heterogeneous (Exhibit 2.4):
    • Diehards: overall-sport, local-team, single-sport.
    • General Sport & Entertainment Fans: weigh sport vs. non-sport options.
    • Business Fans: corporate/networking & analytics junkies.
    • Social Fans: family outings, socialising.
    • Occasional Fans: bandwagon, star-struck, freeloaders.
    • Fringe Fans: minimal engagement.
  • Goal of practitioners: move people “up the ladder” toward higher passion → higher economic spend.

2.4 Professional vs. Amateur Sport

  • Spectrum, not binary.
    • Pro = athletes paid; Amateur = no direct athlete compensation.
  • Grey zones: US college sports—multi-billion industry yet athletes still (mostly) unpaid; pressure mounting.
  • Historical shift: Rugby Union turned professional in 1995; Olympic Games allowed pros from 1988 onward.
  • Management implications: differing rules, governance tensions, funding bases.

2.5 Players as Pivotal Stakeholder in Professional Sports

  • Largest cost in team sports = salaries.
  • Exhibit 2.5: Player-to-revenue ratios 40\%–60\% across 9 top leagues (NFL, MLB, NBA, NHL & Big-5 European soccer) 2011–2018.
  • Labour relations volatile: lockouts (owner-initiated) & strikes (player-initiated).
  • Optimal relationship: grow the pie first, then divide in a way “uncomfortably comfortable” for both sides.

2.6 Management in Sport vs. Other Industries

10 Areas of Commonality

  1. Leadership & strategy.
  2. Value creation and sharing.
  3. Revenue growth obsession.
  4. Asset-base broadening (YES Network equity, real-estate projects).
  5. Product innovation (second-screen apps).
  6. Creative contracting (Champions-League bonuses, non-guaranteed NFL deals).
  7. Quality imperative (NFL broadcast production).
  8. Branding (Roger Federer 10-yr \$300\text{ m} UNIQLO deal).
  9. Fans/customers as core.
  10. Globalisation.

10 Areas of Differentiation

  1. Winning on-field is central & binary (only one champ).
  2. Owner objectives widely varied (profit, trophies, profile).
  3. “Fishbowl” media scrutiny—executives & families in spotlight.
  4. Supporting the weakest (draft orders, parachute payments).
  5. Handicapping the strongest (revenue sharing, salary caps; unlike antitrust fines).
  6. League revenue pools & allocation formulas (EPL 50\% equal share; NFL >57\% national rev.).
  7. Athletes as public business assets; fantasy & betting amplify.
  8. Managing the “badly behaved” athlete/executive.
  9. Limited financial disclosures (private clubs, except Packers & some UK clubs).
  10. Sport-entertainment cocktail (cheerleaders, halftime shows, Hollywood hires).

2.7 Growing Global Dimensions of the Business of Sports

Leagues & Federations

  • ATP/WTA stage season-finals abroad; NFL increases London fixtures.

Clubs/Teams

  • International Champions Cup (since 2013) – 12 elite clubs, 17 cities across 3 continents in 2019; paid appearance fees; brand-building tour.

Players, Coaches & Agents

  • EPL >60\% foreign players; 8 European leagues >50\% foreign (UEFA 2017).
  • NBA opening-night 2018: 108 internationals from 42 nations; Canada 11, Australia 9, France 9.
  • Top-25 rankings (July 2019):
    • Men’s Golf: 14/25 USA; 8 nations.
    • Women’s Golf: 11/25 Korea; 10 nations.
    • Tennis Top-25 genders each feature 18 different countries.

Events

  • Tough Mudder (US 2010 ➔ Canada, UK, AUS, GER; bought by Spartan Race 2020).
  • Formula 1 adds Bahrain 2004, China 2004, Singapore 2008, etc.

Facilities & Construction

  • Global stadium boom; specialist firms (Populous, HKS) win projects worldwide; tech-integration key bidding edge.

Health & Medicine

  • Knowledge flows cross-border; anti-doping demands IOC/WADA/NADA coordination.

Apparel & Equipment

  • Nike 2019 revenues \$39.1\text{ b}: North America 43\%, EMEA 26\%, China 17\%, APLA 14\%.
  • Under Armour replicating US-heavy to global shift.

Media & Distribution

  • EPL & NBA pursue global carriage; NBA’s 2007 “Yao vs Yi” reportedly drew >200\text{ m} Chinese viewers.
  • YouTube live cricket streams reach diaspora audiences.

Branding & Sponsorship

  • IOC “TOP” partners 13 (Alibaba, Toyota, Samsung …) – >50\% non-US HQ.
  • Global athlete-brands transcend sport popularity (Jordan, Beckham, Ronaldo).

Government / NGO / Regulatory

  • Match-fixing & betting enforcement require multi-nation policing & banking cooperation.
  • Example: alleged fixing around 2010 FIFA World Cup – internal report “on balance of probabilities, yes”.

Case Insight – Abu Dhabi (Box 2.2)

  • Etihad Airways launched 2003, huge aircraft order.
  • Sport investments: Man City buy 2008; payroll rose from £54\text{ m} (2008) to £233\text{ m} (2013).
  • £400\text{ m} Etihad sponsorship 2011; club trophies: EPL 2012, 2014, 2018, 2019.
  • City Football Group stakes: NYCFC (MLS), Melbourne City (A-League), Yokohama F-Marinos, +500\text{ m} 2019 equity sale of 10\%$$ stake.

2.8 Summary / Managerial Implications

  • Decisions sit within a multi-stakeholder web; ripple effects inevitable.
  • Ecosystem awareness enhances opportunity capture & tension management.
  • Globalisation, technology, branding & regulation are cross-cutting forces shaping future sports-business decisions.
  • Central managerial mantra: align stakeholder incentives, grow total value, share it sustainably.