The Business of Sports

Prepared by:Mukesh Rathi(10810036)Nishant(10810039)Pranjal Srivastava(10810044)

Topics

Top earning sports stars Most valuable sports teams Sponsorship BCCI IPL and related issues ICC Cricket World Cup CWG Delhi Beijing Olympics Betting in sports How betting works? Should gambling or betting be made legal? Sports management

Top Earning Sports Stars

Tiger Woods Sport: Golf Income: $105 million Has won 14 major golf

championships and 65 PGA tour events.

In 2000 he signed a 5-year $105 million contract with Nike

Woods' company Tiger Woods Design creates golf courses around the world

Top Earning Sports Stars

Floyd Mayweather Sport: boxing Income: $65 million His May fight against

Shane Mosley netted 1.4 million pay-per-view buys, the second-most lucrative non-heavyweight bout ever.

Top Earning Sports Stars

Kobe Bryant Sport: basketball Income: $48 million Five-time NBA champ has

the bestselling jersey in Asia, Europe and the U.S.

Most Valuable Sports TeamsI. Manchester United Sport: Football Value: $1.83 billion Revenue: $459 million The Red Devils lay claim to having 333 million followers and

139 million core fans worldwide

II. Dallas Cowboys Sport: American Football Value: $1.65 billion Revenue: $280 million New stadium landed NCAA Men's Final Four, NBA All-

Star Game and Super Bowl.

Most Valuable Sports TeamsIII. New York Yankees Sport: Baseball Value: $1.6 billion Revenue: $441 million Leveraged most valuable brand in sports to create rich

cable network and venue hospitality business.

Source: Forbes

Sponsorship (The FA Premier League Case)

Source: Branding, sponsorship and commerce in football, Department of Sociology, University of Leicester, UK

Competition Sponsor

One who is the title Sponsor of the Competition.

Promotion with advertisements in the stadium, on TV.

Barclays-FA Deal worth GBP 65m for 3 years

Broadcast Sponsor

One who has the right to broadcast the Competition on TV or the Internet.

Different for different regions

Earns from the sponsors. Sky Sports paid

GBP1.314 bn for 92 games(Times UK)

Shirt Sponsor

Main Sponsor of a team in the competition

In most cases, different from the competition sponsor

Aon-Manchester United deal is worth GBP 80 million for 4 yrs (Times UK)

Kit Sponsor

• The providers of the players kit

• Earn from Replica kits• Nike-Manchester United

deal for 13 yrs. Is worth GBP 302.9 million (BBC News)

Football Championships and Jersey Sponsors' Stock Prices: An Empirical Investigation-Michael Hanke and Michael Kirchler

Defeats show a significantly negative impact on the jersey suppliers‘ stock returns

Positive impact after matches where both teams have the same jersey supplier

Higher importance to knockout games

• The richest body in world cricket.• One of the richest and most influential

sporting concern in the World.• A net worth of more than US $1.5 billion

as in 2006.• Of all the 10 full members

of ICC (International Cricket Committee), BCCI contributes almost 70% of ICC’s expenses on cricket.  

Revenue generated by BCCI

Mumbai Indians: $111.9million (Rs 447.6 crore) Royal Challengers Bangalore: $111.6 million (Rs 446.4 crore) Deccan Chargers: $107 million (Rs 428.04 crore) Chennai Super Kings: $91 million (Rs 364 crore) Delhi Daredevils: $84 million (Rs 336 crore) Kings XI Punjab: $76 million (Rs 304 crore) Kolkata Knight Riders: $75.09 million (Rs 300.4 crore) Rajasthan Royals: $67 million (Rs 268 crore) Sahara Adventure Sports (Pune): $370 m(Rs 1702 crore) Rendezvous Sports World (Kochi): $333 m(Rs 1533 crore) 

Some facts and figures about IPL

The auction of these eight franchisees fetched approximately US $724 million

for BCCI. It earned another $700m from the Pune and Kochi Teams in the 4th

edition of IPL.

Global broadcasting rights for the entire IPL Twenty20 tournaments till 2017 has

been secured by World Sport Group (WSG) at a cost of US $1.026 billion.

Top teams such as Chennai Super Kings, Mumbai Indians and Delhi Daredevils

have commanded an average of Rs 25 crore a year for the lead sponsorship

slot, and Rs 4-10 crore for associate sponsorship slots.

The number of people watching IPL matches on television in India went up 17%

to 143 million for the third season last year compared with 122 million in the

2009 edition.

Categories of Sponsors in IPL

Official Multiplex Sponsor – Q-Cinema Title Sponsor – Emirates Principal Sponsor - TVS Apparel Sponsor – Reebok Team Partner – ACC Official games for challenge partner – USL Performance & protection partner – Gulf Oil Official Chewing Gum – Wrigley’s

IPL – Business of Brands

Brand IPL

The latest Brand Finance study pegs the IPL's worth at $3.67 billion, down from a

peak of $4.13 billion a year ago.

Aircel has signed the most expensive sponsorship deal in the Indian Premier

League (IPL) with Chennai Super Kings.

It paid more than 85 crore to renew its sponsorship contract with the Chennai team

for three years.

The deal beats two-wheeler maker Hero Honda's estimated 75-crore deal to

sponsor Sachin Tendulkar-led Mumbai Indians for three years.

The IPL organizers have this year allowed teams to sport different sponsors' logos

for home and away matches. So, local companies can sponsor teams in the area

of their operation.

ICC Cricket World Cup

Brand Sachin vs Brand Dhoni

Talent management Group, which manages Sachin’s brands peg his earnings now at Rs 50 crore (Rs 500 million) a year.

Coke, it is understood, is paying Tendulkar Rs 20 crore for a three-year deal. That’s more than what Dhoni is getting from PepsiCo.

Dhoni signed a Rs 26 crore endorsement contract with Vijay Mallya’s UB Group, making him the highest paid sportsperson for a single endorsement deal in the country.

Both Tendulkar and Dhoni get paid as much as Rs 5 crore per endorsement, which is set to rise to over Rs 7 crore this year.

Sachin is endorsing 15 brands at present, compared to Dhoni’s 24.

CWG – Delhi 2010

India promised to provide US$100,000 to each participating

country, along with air tickets, boarding, lodging and

transport.

The initial total budget estimated by the Indian Olympic

Association in 2003 for hosting the Games

was 1,620 crore (US$359.64 million). 

In 2010, however, the official total budget soon escalated

to an estimated 11,500 crore (US$2.55 billion), a figure

which excluded non-sports-related infrastructure

development.

Business Today magazine estimated that the Games

cost 60,000 crore (US$13.32 billion).

Beijing Olympics 2008

The Beijing Organizing Committee for the Olympic Games reported

that total spending on the games was "generally as much as that

of the Athens 2004 Olympic Games", which was about $15 billion.

Other sources, however, estimated that approximately $40 billion

had been spent on the Games – making it the most expensive

Olympic Games by a wide margin.

The centerpiece of the 2008 Summer Olympics was the Beijing

National Stadium, nicknamed "The Bird's Nest“ which alone cost

around $500m.

Betting in sports

Sports betting is the activity of predicting sports results and placing a wager on the outcome. It is illegal in India and throughout most of US but common in European countries.

In Indian cricket alone, conservative estimates for the year 2007 put the turnover of the illegal industry at Rs.10,000 crore (more than $2 billion) per annum.

In the recently concluded ICC CWC 2011, total betting estimates stood at more than Rs.5,000 billion(source: www.sportzpower.com).

How betting works?

Types of odds

• Fractional odds(UK format) - Ratio of the amount won to the stake

• Decimal odds(European format) - Ratio of the full payout to the stake in a decimal format

• Money line odds(US format)

How does an oddsmaker decide the odds?

Setting the odds is a matter of intense research, carefully cultivated contacts, years of experience and plain old intuition. An oddsmaker's reputation is based on his accuracy, and he has many variables to consider when determining the odds:

• The teams' performances this season, in prior seasons, in last week's game, and against each other

• The playing surface • Home field advantage • The weather forecast • Injuries, especially those of star players • Team morale • Events in the personal lives of the players

Online betting industry

A number of websites offer online betting

Should betting or gambling be made legal in India?

Worldwide, gambling is an important source of economic activity and also of employment.

The gambling industry comes under the 'leisure' part of the travel and transportation industry. It includes sports betting, lottery, Bingo, casino, poker, horseracing and other games that might end up making or losing money for those who play it.

Should betting or gambling be made legal in India?

According to H2 Gambling Capital, May 2010, the global e-gambling (gambling on the Internet) market is worth over $30 billion.

In terms of output and employment, in the UK the gambling industry contributes significantly. In 2008, gambling was responsible for 3 billion pounds ($4.65 billion) in gross value-added terms and helped create 40,700 equivalent jobs.

The total economic impact of the betting industry, in terms of direct and indirect influence, is to the tune of 6 billion pounds ($9.3 billion) and it also supports over 100,000 jobs in British economy.

In Europe, countries such as France and Italy are in the process of drafting laws that would allow online gambling.

Should betting or gambling be made legal in India?

South-East Asian nations like Singapore and Thailand which have much smaller number of tourist spots compared to India are able to attract more international tourists and tourism-related revenue than India owing to this very aspect.

But such a practice needs to be well regulated and it requires local and national laws to be amended suitably.

Sports Management

Sports Management is an inter - disciplinary field and

comprises in itself, the elements of economics, accounting, marketing, psychology, law and communications. The profession of Sports Management involves three elements - events, sportspersons (celebrities as also newcomers) and infrastructure.

Sports Management(contd.) A Sports Manager creates and markets events and

sportspersons and manages all those activities that transform a sportsperson into a brand. For example, a Sports Manager associated with tennis star Sania Mirza works towards packaging and marketing her as a brand.

This is done by the proper media interaction of the athlete, thereby maximizing his or her commercial benefits. Another example is that of the marketing strategy adopted by ESPN for the promotion of hockey, by the introduction of the Premier Hockey League.

Sports Management(contd.)

In today's world, sports is a serious business with the adoption of sophisticated and complex operations of sports programmes.

In fact, sports is one area where a lot of money is being pumped in and sports is considered to be a big business activity that generates a lot of revenue. Cricket is the most popular sport in India and is worth thousands of crores.

Sports Management(contd.) Professionally successful teams from different sports

activities, and similarly successful individual players rake in a lot of money by the way of match fees, tournament prize money, advertisements, contracts, etc. A sportsperson or a team needs skillful marketing in order to reap the maximum profits.

Coupled with the busy schedule of training and matches, it has become necessary for sportspersons to employ agents or managers for themselves.

Corporate organizations handling sports

With the growth of competition in the packaging and presentation of sports events, it has now become the practice to rope in professional corporate bodies to stage and manage major sporting events - national as well as international.

• College Sports Management• 21st Century• Game Plan• World Sport Group• Glob Sport• IMG• Nimbus Sport

Earnings of sports agents

Source:

www.sportsmanagementworldwide.com

Earnings of sports agents(contd)

Athlete’s yearly salary

Sport Low High Agent Advisor Commission

National Football League

$ 225,000 $ 20,000,000 $ 6,750 - $ 600,000

Arena Football League

$ 28,000 $ 240,000 $ 840 - $ 9,600

Canadian Football League

$ 75,000 $ 275,000 $ 3,000 - $ 11,000

National Basketball Association

$ 385,000 $ 28,000,000 $ 15,400 - $ 1,120,000

European Basketball $ 6,000 $ 1,000,000 $ 240 - $ 40,000

Major League Baseball

$ 300,000 $ 22,000,000 $ 12,000 - $ 880,000

National Hockey League

$ 350,000 $ 10,000,000 $ 14,000 - $ 400,000

European Soccer $ 45,000 $ 7,800,000 $ 1,800 - $ 312,000

Thank you