Professional Sport

Professional Sports in America

History of Professional Sports in America

• Most notable early professional athlete was Jim Thorpe – won gold medals in pentathlon and decathlon in 1912 – Stripped of medals due to playing semipro baseball

• Baseball was the first team sport to employ professionals – The National League was formed by William Hulbert in 1876

• The National Hockey League formed in 1917

History of Professional Sports in America (cont.) • In 1921, the National Football League formed • The National Basketball League formed in 1937 and merged with the Basketball Association of America in 1949 to form the National Basketball Association

Identification of the Professional Sport Governing Bodies • The four major professional sport leagues are MLB, NBA, NFL, and NHL. – Each league operates a number of team franchises in major cities and metropolitan areas around the U.S. and Canada

• Major League Soccer (MLS) falls outside the “big four” category – MLS is not an association of franchises but a single business entity – Team owners are shareholders in the league

• Many of the smaller professional leagues include Olympics sports: track and field, lacrosse, golf, and tennis

History of Women in Professional Sports • The emergence of women as major sports figures began with individual sports during the Olympic Games • Women’s professional team sports have faced many difficulties in sustaining themselves – During WWII, the All-American Girl’s Professional Baseball League formed to provide entertainment, but after the war it ceased to exist

• After the 1999 Women’s World Cup in soccer, a professional league formed, but failed after three seasons

History of Women in Professional Sports (cont.) • In 1997, the WNBA formed, but the collegiate game is more popular than the professional game for women • Female sports professionals within individual sports (golf, bowling, etc.) have a much longer history than those within team sports • Even though, thanks to Title IX, more women are playing sports, it is difficult for women’s professional sports teams to survive

Management of Pro Sports • The sport industry is a unique subset of the business world, demanding a unique set of management qualifications • The management philosophy for professional sports has evolved over the years in an attempt to improve its performance

Management of Pro Sports • Five aspects of professional sport distinguish it from other industries: – organizational structure – governance – the concept of economic interdependence – substance control policies – the role of the electronic media

Organizational Structure • Every professional sport has its own structure and system of governance. The structure and system of governance for each professional sport, normally denoted to as the league office, typically involves the following: – League commissioner – Board of governors or committee structure composed of the team owners – A central administrative unit that negotiates contracts and agreements on behalf of the league and assumes responsibility for scheduling, licensing, and other functions

Organizational Structure (cont.) • The big four are all “bottom-up” organizations • The General Manager (GM) is similar to the head of any business organization; he/she must make sure that the separate levels function well individually and cooperatively. Like the coach on the field, the GM off the field must institute a game plan and see that each team member follows it.

Governance • The job of the league office is not to “run” the league but to implement resolutions made by the owners • League offices exist as a headquarters for a number of reasons. The working relationships between teams in a league are conducted according to provisions of league constitutions and bylaws. • The league offices also have to deal with player– owners disputes. – Prior to the start of the 2011 NFL season, NFL Commissioner Roger Goodell worked with NFL owners and the NFLPA on settling the NFL lockout which ran from March 11 to August 5, 2011 (ESPN.com, 2011)

Economic Interdependence • Interdependence refers to conditions where one team’s performance is contingent upon how someone else performs. • One important feature of professional sports is the interdependence between the players, the team, and the league. This interdependence helps make professional team sports wildly successful. • The economic success of each professional sports franchise is dependent on the quality of sports competition throughout the league and the economic strength and stability of other league members

Economic Interdependence (cont.) • Professional sports teams function together collectively; some teams (small and large market) sacrifice the potential for higher revenue in the interest of league stability. – For example, some small market teams in the NFL may generate a great deal of revenue from merchandising, often out-earning large market teams. The Green Bay Packers and Pittsburgh Steelers were the top two sellers of NFL licensed merchandise in 2011 (Bailey, 2011). This money, however, is pooled and shared equally among all 32 NFL teams.

Drug Testing Policies • One unique characteristic of the big four (MLB, NHL, NBA, NFL) professional sport organizations in America is the individual drug testing policies of each sport • Drug policies, however, are not uniform for all professional sports. – Typically, each CBA explains the policy regarding drug testing and lists banned drugs, potential violations and corresponding penalties, privacy policies, and rights of appeal.

• Other professional sports (e.g., track and field and soccer) conform to the World Anti-Doping Agency (WADA) code, which is enforced in the U.S. by the United States Anti-Doping Agency (USADA)

Drug Testing Policies of Professional Sports Leagues in America Sports Policies Leagues  Pre-employment: administered to free agent players NFL     

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MLB

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MLS

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WWE

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Annual: all players will be tested at least once per league year. Such testing will occur at training camp Preseason/regular season: each week during the preseason and regular season, 10 players on each team will be tested. Postseason: 10 players on every club in the playoffs will be tested periodically as long as the club is in the postseason Off-season: players under contract who are not subject to reasonable cause may be tested during the off-season up to 6 times Reasonable cause testing: any player that tests positive for a prohibited substance including in college or at the combine will be subject to ongoing reasonable cause testing

Random testing: a player shall be required to undergo testing for Prohibited Substances at any time, without prior notice to the player, no more than 4 times each season. In season testing: each player will be tested within five days of reporting to spring training, and all players will be selected for an additional unannounced test on a randomly selected date. Additional random testing: an additional 1200 tests shall be conducted of randomly selected players at unannounced times Every team has an in-person orientation session on the program Following the orientation session, every player is subject to up to 3 no-notice tests from the start of training camp through the end of the regular season. NHL’s testing for teams goes like this: 10 teams are subject to 1 nonotice test, 10 teams are subject to 2 no-notice tests, and 10 teams are subject to 3 no-notice tests. They adopted the WADA list of banned substances in order to have a stricter policy. Also, many players compete internationally in which they would already have to adhere to the WADA standards. Players are subject to year round testing with no notice. There is no limit as to how many times a player can be tested. There is 1 test minimum. Reasonable suspicion: WWE may require talent to submit to a test or tests including, without limitation, urine, blood, saliva, hair, and/or breath tests. Random testing: WWE talent will be subject to an unannounced testing at any time. This testing is designed to result in talent being tested a minimum of 4 times annually. Follow-up Testing: WWE talent who tests positive is subject to mandatory unannounced follow-up testing for a 12 month period

Drug Testing Sanctions of Professional Sports Leagues in America Sport Sanctions Leagues NFL • 1st offense: 4 game suspension without pay (this includes post-season play, if there are not 4 games left in the Club’s season, the penalty will carry to the next season) • 2nd offense: 8 game suspension without pay (this includes post-season play, if there are not 8 games left in the Club’s season, the penalty will carry to the next season) • 3rd offense: 1 year suspension without pay, during this time the player may not participate in team activities, use the Club’s facilities or have contact with any club officials (the player may petition the Commissioner for reinstatement after 12 months) NBA • Testing positive for amphetamine and its analogs, cocaine, LSD, opiates or PCP, players are dismissed and disqualified from the NBA. • If a player tests positive for steroids, • 1st offense: the player will be suspended for 10 games and will be required to enter the program (treatment). • 2nd offense: 25 game suspension and the player’s re-entry into program • 3rd offense: 1 year suspension and the player’s re-entry into program • 4th offense: the player shall be immediately dismissed and disqualified from any association with the NBA • If a player tests positive for Marijuana: • 1st offense: player must enter program • 2nd offense: $25,000 fine and player’s re-entry into program • 3rd offense: 5 game suspension and player’s re-entry into program • Any subsequent violation: the player shall be suspended for 5 games longer than his immediately preceding suspension MLB • If a player tests positive for PED’s • 1st offense: 50-game suspension • 2nd offense: 100-game suspension • 3rd offense: permanent suspension (player may apply after a minimum period of two years for reinstatement). • All suspensions are without pay. • There are other penalties for using other prohibited substances like cocaine, marijuana, etc. NHL • 1st offense: 20 game suspension without pay and referral to a substance abuse program (evaluation, education, and possible treatment) • 2nd offense: 60 game suspension without pay • 3rd offense: permanent suspension (the player is eligible for reinstatement after 2 years) MLS • 1st offense: minimum suspension of 2 years • 2nd offense: permanent suspension

Role of Electronic Media • After Congress passed the Sports Broadcasting Action in 1961, the relationship between the media and professional sports changed dramatically. All four of the major sports have had television contracts with at least one of the “big four" U.S. broadcast television networks (CBS, FOX, NBC, and ABC).

Role of Electronic Media (cont.) • Professional sport has several unique characteristics. – Sport is an ephemeral (short-lived) product. Viewers are primarily interested in only live broadcasts. – Substitution is difficult. A viewer who wants to see a given sporting event or team is unlikely to be satisfied with coverage of another sporting event. – TV networks are signing longer term exclusive contracts that reduce the accessibility for other entities to benefit from live events.

Key Legislation Impacting Labor– Management Relations • The court system in the United States has recognized the special characteristics of professional sports leagues and has enacted key legislation protecting these unique organizations

Key Legislation Impacting Labor– Management Relations • There are a variety of federal statutes that impact professional sport leagues and teams – 1. Antitrust Legislation – 2. Labor Relations Law – 3. Agency Law – 4. Intellectual Property Law – 5. Sports Broadcasting Act – 6. Professional and Amateur Sports Protection Act

Major Revenue Sources • Unlike commercial business, which is normally valued on cash flow and assets, professional sport franchises are valued on their revenues • The primary revenue sources for professional sport teams include – – – – – – – –

media contracts gate receipts concessions and restaurant rights licensing and merchandising revenues naming rights parking fees public financing for stadiums sponsorship packages

Professional Sport Issues • Gambling – Professional sports leagues in America have worked hard to keep their sports free of gambling. Each league has faced challenges in dealing with accusations of players gambling on professional sports.

• Violence – Professional sports organizations like the NBA have worked diligently to maintain a reputation of clean, violence-free sport. Recent league action demonstrates that certain offfield conduct is indeed a consideration of team and league evaluation as evidenced by discipline of players.

Professional Sports Issues (cont.) • Employment Diversity – Diversity is critically important to professional sport organizations in America. It is a cultural and organizational imperative around dignity, respect, inclusion, and opportunity.

• Ownership Restrictions – All four major leagues have strict rules regarding who may own a team, and they also place restrictions on the types of other activities the owners may engage in. To avoid any perception of being in a conflict of interest, the major leagues normally do not allow anyone to own a stake in more than one franchise.

Professional Sports Issues (cont.) • Broadcasting Issues – Internet rights, siphoning, home taping, domestic and international piracy of satellite transmissions, blackouts, handheld pagers, and satellite distribution

• Labor Disputes – Labor disputes have impacted every major professional sport in America, often costing players and owners large sums of money. In 2011, the NFL and NBA both experienced work stoppages and lockouts.

• Globalization