The Business of Sports

Abstract

Introduction As fans, we are most interested in the action on the field or in the arena because that is where the excitement takes place. We crave “the thrill of victory and the agony of defeat,” as ABC's Wide World of Sports television program put it. But sports is a big business that has some interesting economic characteristics. Sports businesses take many forms depending on the segment of the industry. Sports franchises in the professional leagues are athletic teams on the field, but they are businesses off the field, selling tickets, food and drinks, logoed apparel, parking, souvenirs, and broadcast rights. In individual sports, such as bowling, golf, tennis, and track, the athletes have their own businesses in a very real sense; they are sole proprietors with profits and losses based on earnings or winning, and expenses of many kinds. Athletes need facilities – bowling alleys, tennis courts, golf courses, arenas, ballparks, and tracks – and these are also businesses in their own right. Similarly, athletes need equipment – balls, bats, helmets, shoes, uniforms – and equipment manufacturers are obviously businesses. Advertisers, broadcasters, concessionaires, sports agents, and apparel manufacturers are all involved in some aspect of the business of sports. Amateur sports are also big businesses. The National Collegiate Athletic Association (NCAA) members manage substantial athletic budgets and must make business decisions on a daily basis. These decisions include hiring and firing coaches, picking corporate sponsors, investing in new or expanded training facilities, adding or deleting a sport, and pricing tickets, among many other things. On a smaller scale, high school athletic directors, recreational league directors, local Little League organizers, and the like are in the same boat.