SBD/3/Sponsorships Advertising Marketing


     For the first time, FINANCIAL WORLD dedicated an entire
issue to the state of the sports industry.  The annual FW issue
on the franchise values is due out in May.  In this issue, FW
attempts "to explain exactly how the industry has changed and
what is behind that change."  Some of the industry segments
examined: Labor, Hockey, Arena Football, Boxing, Tennis, Golf,
Sailing, Soccer, Horse Racing, Gambling, Satellite TV, Fan
Demographics, Stadiums, Auto Racing, Pro Wrestling and College
Sports.  Excerpts follow:
     INDUSTRY EVALUATION:  In the opening piece, Michael Ozanian
examines "sports as software" -- the growing trend to use sports
as a way to build revenues indirectly, through cable TV,
merchandise, advertising, etc.  This trend explains why franchise
values "have soared during the past few years even though profits
have fallen."  Ozanian writes, "Sports is not simply another big
business.  It is one of the fastest-growing industries in the
U.S., and it is intertwined with virtually every aspect of the
economy -- from media and apparel to food and advertising."  Some
stats:   TV rights fees for the four major sports more than
doubled to $1.5B in '93 from $704M in '88 -- an annualized rate
of 17%.  The annualized rate of nominal GDP growth over the same
period: 5.3%. Spending by U.S. & Canadian companies to sponsor
events increased 15%/year to $2.4B in '93 from $1.2B in '88.
Retail sales of licensed merchandise for the four major sports
hit $8.7B in '93, versus $2B in '88.
     LABOR:  In a piece headlined "Adam Smith faces off against
Karl Marx," Ozanian and Stephen Taub explain how the owners of
major sports teams and their players "shuffle between capitalism
and Communism as a matter of convenience.  The result:  strikes,
lockouts and angry fans."  Their suggestions for sports' labor
problems:  let all players become free agents as soon as their
contracts end; no salary cap but also no set minimum salaries, no
salary arbitration, no player drafts and allow franchises to
     HOCKEY:  In an examination of the NHL's finances, Stephen
Taub explains how the growth of players' salaries has slowed each
year since '91 while the league  "revenues are about to explode.
So what's the problem?"  Taub notes that potentially before the
year 2000, 11 new arenas will open increasing each of those
team's revenue streams. "If the league had just made the
emotionally difficult decision to permit the weakest links to
move their franchises, the sport would have been in very solid
shape to make serious money and build its value as we head into
the next century."  In a separate piece, Jason Starr examines the
Sharks' marketing success, including a pending movie project.
     DEMOGRAPHICS:  Targeting the female audience is the focus of
this piece by Brooke Grabarek.  Noting the advent of more figure
skating on TV, Grabarek concludes: "Given the favorable trend of
female viewership and strong advertising support, it's a sure bet
that there will continue to be greater diversity of televised
     STADIUMS: Under the subhead, "Sports franchises are giving
local taxpayers sleepless nights," Andrew Osterland examines the
explosion of new facilities. "Why are these enormously expensive
new venues so critical to a franchise's financial success?  The
answer is simple: With media revenues leveling off and player
salaries rising, increased stadium income is the easiest way for
owners to stay ahead."   ARENA FOOTBALL:  Anthony Baldo profiles
the success of the League crediting it in part to AFL operating
as a single entity, without separate franchise owners.  AFL
Commissioner James Drucker predicts team values will "skyrocket"
to between $10-20M within three years.
     TENNIS:  Ever since SPORTS ILLUSTRATED "plastered 'Is Tennis
Dying?' on its cover last May, there has been endless banter
about the game's imminent demise," writes Gregory David.  But
David notes the men's game is "far from needing life support."
As for women's tennis, it "could use a bit more help."  David
concludes: "You can't help but remember what the Nancy Kerrigan
comeback story did for figure skating.  Hold the tennis
obituaries for a while."
     SOCCER:  Nick Gilber examines the pros and cons of starting
Major League Soccer, from the success of the '94 World Cup to the
unsuccessful NASL of the '80s.  Gilbert notes that both
McDonald's and Anheuser-Busch are in discussions about becoming
sponsors of Major League Soccer (FINANCIAL WORLD, 2/14 issue).
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