All Articles Tagged "business of sports"
We all know that sports is big business but you’d be surprised to know that when it comes to the teams that generate the most profits worldwide, basketball doesn’t even make the top ten. Forbes recently compiled a list of the 50 most valuable sports teams in the country, and the top teams are dominated by football here in the United States and across the pond in Europe (we refer to their version of football as “soccer”). What is less surprising is that Black athletes fuel these powerhouse companies and are integral to the brands of each of these teams.
15. Denver Broncos
Value: $1.05 billion
Owner: Patrick Bowlen
Tags:business of sports
By Steven Barboza
The Pittsburgh Pirates may be losing on the baseball diamond, but they’re winning where it really counts: at the bottom line.
Talk about the weird complexities of sports economics. The losingest team in pro sports — a team that hasn’t so much as whiffed a winning season in nearly two decades — ends up smelling like roses when it comes to making money.
The Pittsburgh Pirates, perennially at or near the bottom of MLB standings, has earned a profit of tens of millions of dollars in recent years, proving that sometimes it pays handsomely to walk off the ball field wondering what it feels like to win a game.
The Pirates had 18 losing seasons in 18 seasons, the longest losing streak in the history of the four major professional sports leagues.
But from 2007 to 2010, the team made $34.8 million in profit, even with a 197-288 record during that span. Financial records, leaked to the press, revealed that the Pirates spent $23.1 million on player development, which compares favorably with other teams, such as the Tampa Bay Rays ($21.9 million), the Los Angeles Angels ($16.3 million) and the Seattle Mariners ($15.5 million).
But the Pirates spent less than other major league teams on salaries — the team places 27th out of 30 teams with a team salary of $45.6 million this year. In contrast, the New York Yankees’ salary is $196.8 million, and the Angels’ is $139 million, three times that of the Pirates.
Still, the Pirates have managed to make a bigger profit from losing than the Angels have made from winning. In 2008, the Pirates had a $51 million payroll and placed last in the NL Central. But because the team received a revenue sharing payout of $39 million, it made $14.4 million in profit. In contrast, the Angels won 100 games, placed first in the AL West — and yet made a profit of only $7 million; meanwhile the Rays played in the World Series, but made a net income of just $4 million.
To gauge LeBron James’ rising star power across the NBA landscape, all you need to know is that during the same week the near triple-double averaging, two-time MVP led the resurgent Miami Heat to their first playoff round triumph since 2005 his impact still continues to be more profoundly felt in other parts of the hoops universe.
That far, far, far away, out-of-sight, out-of-LBJ’s mind land would be Cleveland, the banks of Lake Erie, a mere stone’s throw from the uber humble origins of one King James. Indeed, to say that things have shifted just a bit economically across all of Ohio over the last nine months or so would be akin to saying the Cavaliers simply didn’t rate as contenders this season.For no matter how you calculate it—in terms of wins and losses or dollars and cents — the change has been revolutionary.
Even the most modest of financial estimates, those relegated to simply what James’ departure has meant to the city’s downturn area, peg the downturn at the high end of $50 million. And the Cavs…need we go on?
Though there are some that might argue there’s never really been another one like the free-wheeling, tunnel visioned 6-8, 250 pound James, there exists a snapshot of how one comes to a way of life many Northeasterners are now begrudgingly casting eyes upon. In 1998, Michael Jordan led Chicago to its sixth NBA title before walking away from the game and essentially taking a fine measure of the city’s high life along with him.
Within five years of MJ’s exit, attendance was down by more than 5,000 a game and the slump was in full swing.“Fans fill up restaurants. They go to bars after the games. They spend a lot of money,” said Jerry Hausman, an economics professor at MIT who studied Jordan’s effect on the NBA and noted a similar scene took place soon after Hakeem Olajuwon walked away from Houston after back-to-back titles ending in 1995. In state taxes alone, Hausman estimates that the local government will lose upwards of $1 million with James departure.
(Wall Street Journal) — If the history of basketball ended with the 20th century, New York’s eminence in the sport would be undeniable. Not only were the Knickerbockers a flagship franchise in the National Basketball Association, but the city was home to the two most successful teams of touring professionals in the early years of pro basketball, the Original Celtics and the Renaissance Five. In Madison Square Garden, New York provided the first grand stage for big-time college competition, hosting doubleheaders among nationally ranked teams and the oldest postseason championship tournament, the NIT, while earning a reputation as basketball’s Mecca. Beyond those contributions, New York nurtured so many residents to stardom they could support an entire wing in the Basketball Hall of Fame.
(Crain’s) — The prospect of lockouts in both professional basketball and football next year could hit New York City businesses with hefty penalties, players and experts warn. The head of the National Basketball Players Association said this week there’s a 99% chance of a lockout next fall, and the president of the National Football League Players Association sent letters to the mayor, governor and governor-elect asking for help in averting the potential cancellation of the 2011 season over a labor dispute.
(Salon) — A year has passed since the infamous crash that started it all, and Woods appears ready to re-enter the marketing game. A survey within the last month to test Woods’ appeal produced “very powerful, positive, positive results,” his longtime agent, Mark Steinberg, said, adding that he’s already engaged in “several constructive conversations.” “We are a society of second chances. That’s been proven over the years,” Steinberg said. “He’s not going to be in any deal until he looks the company in the eye and has a serious conversation with them. ‘How are you going to live your life? We want to be part of the redemption, rehabilitation. Are you serious about that?’ And he knows that. He’s comfortable with it. And he’s going to do that.”
(Businessweek) — On July 8 the Akron kid, now a global celebrity, announced on prime-time national television: “I’m going to take my talents to South Beach and join the Miami Heat.” Gilbert learned the news at the same time as the rest of the world. To call it a loss is to underestimate its financial magnitude and the personal nature of the rejection. It was a cuckolding. Gilbert began writing what became the most famous e-mail in sports history—421 furious words in the incongruously cheerful comic sans font, peppered with caps and addressed to “Cleveland, All of Northeast Ohio and Cleveland Cavaliers Supporters Wherever You May Be Tonight.” He opened: “As you now know, our former hero, who grew up in the very region that he deserted this evening, is no longer a Cleveland Cavalier.” “Narcissistic” and “cowardly” were on his list of adjectives. “Some people think they should get to heaven and NOT have to die to get there. Sorry, but that’s simply not how it works.” He guaranteed the Cavs would win a championship before the departed hero did, adding, “You can take it to the bank.”
(New York Times) — Investors from the United States believe they have found an exotic new prospect: Latin American baseball players, some as young as 13 and many from impoverished families. Recognizing that major league teams are offering multimillion-dollar contracts to some teenage prospects, the investors are either financing upstart Dominican trainers, known as buscones, or building their own academies. In exchange, the investors are guaranteed significant returns — sometimes as much as 50 percent of their players’ bonuses — when they sign with major league teams. Agents in the United States typically receive 5 percent.