ISSUE: The Sports Business

The Sports Business

By Joe Lapointe

Is it a bubble about to burst?

Executive Summary

If the U.S. sports business has two mainstays, they are the National Football League and ESPN, the dominant league and pre-eminent television network in a $60 billion industry. Yet both are facing serious challenges, with the NFL confronting a drop in television ratings and ESPN grappling with a decline in subscribers as fans find alternate ways to watch their favorite sports. Some observers view these trends as warning signs that the decades-long expansion of sports’ popularity – and profitability – is about to end. Others disagree, saying the industry can adapt to changing fan preferences and remain prosperous because of strong interest in its basic product.

Here are some of the key takeaways:

  • The advent of smartphones and streaming services has cost ESPN more than 12 million subscribers and $1 billion in lost revenue in the past six years.

  • The NFL suffered an 8 percent decline in its television viewership last season and is cutting down on the number of in-game commercials in response.

  • The fraught relationship between sports and gambling will enter a new phase when a pro hockey team moves into Las Vegas in 2017 and an NFL franchise follows suit by 2019.

Looks like you do not have access to this content.

Please login or find out how to gain access.

Resources for Further Study

Bibliography

Books

Miller, James Andrew, and Tom Shales, “Those Guys Have All the Fun: Inside the World of ESPN,” Little, Brown, 2011. Two veteran journalists trace the growth of the cable television sports network ESPN from its founding in 1979 through its rise to riches and influence.

Sperber, Murray, “Shake Down the Thunder: The Creation of Notre Dame Football,” Henry Holt and Company, 1993. A college professor with access to legendary coach Knute Rockne’s papers traces the formation of an amateur sports dynasty of prestige, profit and power.

Steinberg, Leigh, with Michael Arkush, “The Agent: My 40-Year Career Making Deals and Changing the Game,” Thomas Dunne Books, 2014. The one-time superagent of sports – and the model for the movie “Jerry Maguire” – recounts his path-breaking career as the negotiator for first-round draft choices in the National Football League.

Zimbalist, Andrew, “Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup,” Brookings Institution Press, 2016. In an updated paperback version of one of his many books, a longtime sports industry contrarian explores the risks and broken promises involved when cities or nations host major global sports events.

Articles

Bonesteel, Matt, “In surprise move, Supreme Court says it will take on New Jersey sports-betting case,” The Washington Post, June 27, 2017, http://tinyurl.com/ybplvmt4. The high court accepts a case that could change how the United States treats sports gambling, especially bets on individual games at casinos and racetracks.

Gillette, Felix, “The NFL Was a Sure Thing for TV Networks. Until Now,” Bloomberg.com, Nov. 3, 2016, http://tinyurl.com/y9blr7qa. A prominent business news organization examines the many reasons for the National Football League’s surprising TV ratings slump in the 2016 season.

Gonzalez, Roger, “Report: USA, CONCACAF want 2026 World Cup bid confirmed by FIFA soon,” CBSSports.com, April 11, 2017, http://tinyurl.com/yahur4nw. The United States, Canada and Mexico ask for an early decision on their joint bid to host the 2026 World Cup Soccer finals.

Ourand, John, “Taking the pulse of ESPN,” Sports Business Journal, June 26, 2017, http://tinyurl.com/yafapbrt. A publication that covers the business of sports looks closely at the challenges facing the top cable sports network as “cord-cutters” turn away from cable and toward digital delivery.

Saracevic, Al, “Warriors reveal long-term Chase Center season-ticket plan,” San Francisco Chronicle, July 19, 2017, http://tinyurl.com/y6vnzooh. The NBA champions will finance their new arena in part with 30-year “loans” from season-ticket holders.

White, Gordon S. Jr., “N.C.A.A. Telecast Rights on Football Struck Down,” The New York Times, Sept. 16, 1982, http://tinyurl.com/y8dm4ce6. In a pivotal court case, a federal judge declared the NCAA “a classic cartel” for restricting the television rights of its member schools.

Reports and Studies

Bushnell, Henry, “Ranking the potential 2026 World Cup host cities and stadiums, from 1 to 49,” Yahoo News, Aug. 18, 2017, http://tinyurl.com/yb83vz44. A journalist offers a wide-ranging look at possible venues for the 2026 World Cup if it is played in North America.

Good, Andrew, “When it comes to women in sports, TV news tunes out,” USC News, June 5, 2015, http://tinyurl.com/hcl7llw. A study of TV coverage shows little change in reporting of women’s sports over the previous 25 years.

Parker, Clifton B., “Sports stadiums do not generate significant local economic growth, Stanford expert says,” Stanford News, July 30, 2015, http://tinyurl.com/y9tz3lo7. An economist offers a skeptical look at the theory that new stadiums bring economic benefits to the surrounding area.

Yanity, Molly, “Sports Journalism Programs Rise, But Can They Take the High Road?” MediaShift, Sept. 2, 2014, http://tinyurl.com/yc3j6232. A think tank reports on how journalism schools teach sports coverage in a changing media environment.

The Next Step

Daily Fantasy and Betting

Conway, Tyler, “Ex-MLB Commissioner Fay Vincent Says Sports Gambling Likely to Be Legalized Soon,” Bleacher Report, Aug. 4, 2017, https://tinyurl.com/y8bhrgze. Major League Baseball’s former commissioner says sports franchises are becoming more expensive because owners know that the inevitable legalization of sports gambling will lead to an influx of cash into their leagues.

Kirkham, Chris, and Ezequiel Minaya, “DraftKings, FanDuel Call Off Merger,” The Wall Street Journal, July 13, 2017, https://tinyurl.com/ycnd2g67. Daily fantasy sports companies DraftKings and FanDuel called off their proposed merger after the Federal Trade Commission filed an antitrust lawsuit to block it.

Purdum, David, and Ryan Rodenberg, “Future of sports betting: the marketplace,” ESPN, May 4, 2017, https://tinyurl.com/jfznvzv. Whether or not sports betting is widely legalized in the United States, emerging technologies will revolutionize how bets are placed – meaning Google, Microsoft, Sony and other tech companies may become major players.

Growth of Major League Soccer

Belson, Ken, “As Appetite for Soccer in U.S. Grows, So Does M.L.S.,” The New York Times, Aug. 8, 2017, https://tinyurl.com/y8u6rxm2. Major League Soccer is booming, with plans to add six teams by 2020 at an expansion fee of $150 million per team. But critics say the dizzying pace of expansion has compromised the quality of play.

deMause, Neil, “Is MLS A Ponzi Scheme?” Deadspin, Aug. 4, 2017, https://tinyurl.com/ydej2g7o. Major League Soccer is expanding rapidly, but its TV ratings and business model suggest it cannot earn enough to be profitable, cannot compete internationally and may be a bubble that eventually will burst.

Smith, Chris, “How Heineken Is Taking Over North American Soccer,” Forbes, Aug. 16, 2017, https://tinyurl.com/yccjx7tx. Since becoming Major League Soccer’s official beer in 2014, Heineken has invested heavily in the league based on its conviction that the U.S. soccer market has huge growth potential.

Sports Journalism

“Boston Sports Journal Launches With Subscription-Based Platform,” CBS Boston, July 24, 2017, https://tinyurl.com/yassufdj. Inspired by a venture created in Pittsburgh three years ago, a former sportswriter started a subscription-based website for Boston sports fans that aims to appeal to those outside the city.

Brustein, Joshua, “As ESPN Falters, Sports Startup Chases Fans Tired of ‘Old Fluff’,” Bloomberg Businessweek, July 24, 2017, https://tinyurl.com/yc96kqrr. New online sports venture The Athletic, which targets fans displeased with local coverage of their favorite teams and is seeking to expand to new cities, recently raised almost $6 million to hire laid-off writers from companies such as ESPN, Fox Sports and Sports Illustrated.

Thompson, Derek, “ESPN Is Not Doomed,” The Atlantic, May 1, 2017, https://tinyurl.com/ycsb9qn2. ESPN remains profitable and has increased its global workforce, but the ever-increasing cost of the rights to air live sporting events and the decline of cable TV bundles mean it can no longer rely on its old business model.

Streaming Services

Abbruzzese, Jason, “Sports fans finally have a streaming TV bundle, but you’d better love soccer,” Mashable, July 20, 2017, https://tinyurl.com/y98uu5vu. Internet streaming service FuboTV, which found success by offering sports fans soccer content and its own livestreaming technology, is looking to expand its reach abroad.

Perez, Sarah, “What we know about CBS’s upcoming streaming service for sports,” TechCrunch, Aug. 8, 2017, https://tinyurl.com/ybgugyu7. CBS announced it will launch a live 24/7 streaming site for sports by the end of the year, similar to its live streaming news site CBSN. But it gave no details on pricing or content.

Snider, Mike, “Turner shoots for soccer success with Champions League on new streaming service,” USA Today, Aug. 17, 2017, https://tinyurl.com/y7rkuvxs. Turner Sports will start its own subscription streaming service for Champions League and Europa League soccer games after signing a three-year deal to broadcast those matches in English in 2018.

Organizations

Big East Conference
655 Third Ave., New York, NY 10017
1-646-663-3444
FAX: 1-646-838-8304
http://www.bigeast.com/staff.aspx
Headquartered in New York, the Big East Conference includes 10 schools and has a basketball-focused heritage.

Columbia University School of Professional Studies
203 Lewishon Hall, 2970 Broadway, MC 4119, New York, NY 10027
1-212-854-9666
http://sps.columbia.edu/sports-management
Columbia says its masters degree program in sports management “trains professionals in all sectors of the sports industry by teaching management skills with a global, analytics and digital focus.”

ESPN
ESPN Plaza, 935 Middle Street, Bristol, CT 06010
1-860-766-2000
http://www.corporateofficeheadquarters.com/2012/10/espn-corporate-office-headquarters.html
A multinational, multimedia sports entertainment company with a portfolio of sports assets that includes more than 50 business entities. The company is 80 percent owned by ABC, an indirect subsidiary of the Walt Disney Company.

Fantasy Sports Trade Association
22 N. Carroll Street, Madison, WI 53703
1-608-310-7540
https://fsta.site-ym.com/
info@fsta.org
The organization calls itself “the most comprehensive resource for and the official association of the fantasy sports industry.”

National Football League
280 Park Ave., 15th Floor, New York, NY 10017
1-212-450-2000
http://www.corporateofficeheadquarters.com/2012/09/nfl-corporate-office-headquarters.html
The U.S. professional football league, with 32 teams.

Sports Business Daily/Global/Journal
120 W. Morehead St., Suite 120, Charlotte, NC 28202
1-704-973-1400
FAX: 704-973-1401
http://www.sportsbusinessdaily.com/Daily/About/Editorial-Mission.aspx
Sports Business Daily has provided real-time industry news since 1994, concentrating on sports in the United States. Sports Business Global, also a daily, focuses on the world. Sports Business Journal, in addition to appearing online, is a weekly printed publication.

University of Michigan Center for Sport Management
1402 Washington Heights, Ann Arbor, MI 48109-2013
1-734-615-1710
www.kines.umich.edu/research/mcsm
Kines.ousa@umich.edu
The program says it “strives to be the preeminent center for researching sport industry organizations and disseminating knowledge concerning the practice of sport management.”

DOI: 10.1177/237455680326.n1