THE BUSINESS OF SPORTS AND ENTERTAINMENT Teacher Edition For the 2014-15 School Year THE BUSINESS OF SPORTS & ENTERTAINMENT 2014-15 EDITION 2014-15 Membership Edition This digital publication is an updated and enhanced version of the free textbook available online and is available only to SCC members. The information contained in this version of the publication contains information current as of August, 2014. The 2014-15 edition marks the third version containing interactive elements. Please remember that the interactive links will take you to content that SCC does not control so it may be possible that some links are broken or no longer exist. Copyright © 2014 by Sports Career Consulting, LLC. All rights reserved. Reproduction or use of any portion of this publication by any mechanical, electronic, or other means is prohibited without written permission of Sports Career Consulting, LLC. PAGE 2 OF 360 INTRODUCTION THE BUSINESS OF SPORTS & ENTERTAINMENT 2014-15 EDITION PREFACE One of the greatest values of an “elective” course like sports and entertainment marketing is its ability to transform the classroom into a dynamic atmosphere where progressive “new age” learning can take place while reinforcing the same academic standards students learn within the confines of a generic business or marketing class. The examples used to support each lesson resonate on a different level for students thanks to course content that most students take a genuine interest in. Unfortunately, many instructors today wishing to integrate elective studies into the classroom face the inevitable challenge of being handcuffed by severe budget constraints. Sports Career Consulting, LLC (SCC) understands the current budget crises and is empathetic to the needs of the school system. And, while we’re all certainly advocates for the adoption of current, up-to-date and effective class resources, the realist in us knows that isn’t always an option. This publication is available to teachers to help ease some of those pressures. Today the business and marketing world has evolved into a multi-dimensional work- in- progress for companies around the globe. Sports and entertainment companies are no exception. From the NBA and Nike to Paramount Pictures and Geffen Records, organizations pay a premium to remain ahead of the curve in a world of evolving technologies and shifts in trends within the industry. This publication is designed to share those practices with you, and ultimately, your students. Please note, this publication is not meant to replace the use of any existing textbook, nor is it the goal to be sole provider of instructional material for your class. SCC believes you should find a resource that offers the best fit for your teaching style. Just as important, as you know, is to continually search out other supplemental resources for your course. At SCC, we are confidant you will find our program to be an excellent resource for all business or marketing classes in your quest to provide the best classroom experience possible for your students. So, whether your school offers a sports and entertainment specific marketing class or a general business class with this topic area as a medium for introducing the basic principles of marketing, we believe you’ll find this and other SCC resources to be a cutting edge provider for enhancing the classroom experience for you and your students. Enjoy! Chris Lindauer, President, Sports Career Consulting PAGE 3 OF 360 INTRODUCTION THE BUSINESS OF SPORTS & ENTERTAINMENT 2014-15 EDITION ACKNOWLEDGEMENTS There are so many people I’d like to thank for their constant support and encouragement. It would take another lengthy publication altogether to mention everyone who deserves credit in one form or another. To all of the industry professionals who have offered guidance, contributions and continued support, hopefully the progression of this class will continue to help shape an exceptional next generation of sports and entertainment business leaders. Without your efforts, providing top notch education programs for America’s high schools would not be possible. Thanks to everyone who has for shared their wisdom, insight, advice, time and support. I sincerely hope the material we are providing our schools makes an impact in guiding the next generation of successful industry professionals. Thanks for making the sports and entertainment industry a great place to work and play! I would also like to thank all of our existing members from around the country...thanks for helping us grow! Last but certainly not least, I’d like to give extra special thanks to: My many friends and wonderful family, you know who you are. Tom Garrity, for opening the door. Dan Thompson, for showing the way. Gordon Nicholson, for continued support, ideas and help developing content. Dr. Bruce Herbert, for assistance in creating some fantastic case studies. Mom and Dad, for everything. Especially my wife Kim, for her trust and continued belief in me, and my two wonderful daughters for all the inspiration a father could ever ask for. PAGE 4 OF 360 INTRODUCTION THE BUSINESS OF SPORTS & ENTERTAINMENT 2013-14 EDITION Unit 1: The History of SEM Overview Unit one provides students with an understanding of the evolution of sports and entertainment as it relates to business. Identifying industry “pioneers” and important milestones will assist students in the comprehension of how the sports and entertainment industry has become the multi-billion dollar industry it is today. * TEACHER’S NOTE * One way to kick off the start of your sports and entertainment class is to play the “Introducing SEM” PowerPoint game included in your ERC unit one folder. It provides a mechanism for shifting student perspectives from thinking about sports and entertainment as simply a form of entertainment to the notion that there are financial implications and business motives behind much of what they consume from an entertainment standpoint. The game helps set the tone for the remainder of the class. Objectives 1) Define the acronym SEM 2) Identify factors that contributed to the growth of the sports and entertainment industry 3) Understand the concept of “fandom” and its importance to the business of sports and entertainment 4) Discuss the impact specific individuals had on the evolution of the industry 5) Recognize specific milestones relevant to industry growth 6) Define media 7) Understand the importance of media (broadcast) rights Lessons Lesson 1.1 Genesis of Sports & Entertainment Marketing Lesson 1.2 Factors Contributing to Industry Growth Lesson 1.3 Media Impact on Industry Growth Lesson 1.4 Industry Pioneers Lesson 1.5 Important Milestones in SEM History Lesson 1.6 Where Are We Now? Key Terms Fandom Media Media (Broadcast) Rights SEM Superfan PAGE 5 OF 360 UNIT 1: THE HISTORY OF SPORTS & ENTERTAINMENT THE BUSINESS OF SPORTS & ENTERTAINMENT 2014-15 EDITION Lesson 1.1 Genesis of Sports and Entertainment Marketing A. The origins of sports and entertainment marketing (SEM) 1. What is SEM? a. SEM is the acronym for sports and entertainment marketing 2. Sports and entertainment marketing is a relatively new player in a field of multi-billion dollar industries. a. Forms of sports marketing started as early as 1858 (first known athletic event to charge admission took place at a baseball game) b. Entertainment as we know it today (movies, radio, television, music) exploded from 1900 on, and as technology improved, so did the products being offered i. Silent movies progressed to sound, and radio eventually expanded to television; ii. Vinyl records evolved into tape and CD and today’s digital formats c. The 1900’s also brought the advent of carnivals, amusement parks, and theme parks which evolved from (but did not completely replace) fairs, circuses and festivals 3. Many events have influenced the industry’s transition from leisure activity to big business a. Evolved as fan support grew with willingness to spend discretionary income b. Emergence of radio and television offered more opportunity for consumption of sports and entertainment products c. Corporations began to see the benefit with sports and entertainment affiliations, resulting in a marketing and sponsorship boom d. Celebrity endorsements and naming rights deals became common industry practice e. Advancement of technologies making it easier to consume sports and entertainment while more sports and entertainment properties are introduced 4. Size and scope of the sports industry a. The sports business industry is one of the largest and fastest growing industries in the United States b. Research conducted in 2014 by Plunkett Research estimates the overall size of the entire sports industry in the U.S. is around $485 billion (global, the sports industry is estimated to be around $1.5 trillion) 1 c. Comparatively: i. More than twice the size of the auto repair services and parking industries 2 ii. Larger than such industries as insurance carriers and legal services 2 PAGE 6 OF 360 UNIT 2: WHAT IS SEM? THE BUSINESS OF SPORTS & ENTERTAINMENT 2014-15 EDITION 5. Sports industry revenue breakdown (in 2014) 3 a. $44.1 billion in sales of U.S. sporting goods equipment by retailers b. $34.3 billion in racetracks, sports teams and other spectator sports c. $23.5 billion in revenues for the “Big 4” U.S. sports leagues i. NFL, MLB, NBA, NHL d. $22.4 billion in revenue in fitness and recreation centers e. $913 million in NCAA sports revenue f. $828 million in NASCAR revenue g. $495 million in MLS revenue * TEACHER’S NOTE * Click here to watch a video from Plunkett Research on the current state of the sports industry. The video provides a very broad introduction to the business of sports. Click here to watch a video from Plunkett Research on the current state of the entertainment and media industry. The video provides a very broad introduction to the business of entertainment.