Economics of Sport Essay Example for Free

Economics of Sport hear1. IntroductionThis report volition overview and discuss how stakeholders in schoolmaster sports can jump as a good deal as they want out of the sport, without too much interestingness from the political relation. It lead withal cover rough of the purposes of political science-intervention and what they should do to keep up the belligerent proportion intact for the unites. There will be examples and discussions drawn from companys and leagues in the europiuman Soccer and too disagreements between how sports leagues on either ramps of the Atlantic ocean works in this matter. The importance of keeping stakeholders happy is the key to on-pitch success. Stakeholders in sport ar e realbody involved with sport participants (players/athletes), fans, giving medication bodies, financial investors and communities at large.1.1 BackgroundSince the early stages of the discussion and the involvement of the economics side of the field of sports, Nae le (1964) set maestro sports leagues as a different animal than any other competitive manufacturing in the world we know today. The main focus for professional sport leagues is to provide and compromise teams to a highly competitive level where they can produce and sell sporting events to the public (Fort Quirk, 1992). Similar individual teams crystalize up a professional sports league, that alone relies to gain the maximum of economic benefits as possible era relying on the opportunity to compete against other teams to produce their outputs the outcome will be games for the fans to enjoy. Without an organised structure of games and tables, the competitive output would not exist for sports leagues or its fans.Naele (1964) also claims that there is one main difference between a typical competitive business industry and the sports industry. He says that a normal industry gains the roughly economic and capital benefits epoch it faces the least amount of competition as possibl e. Simply put, the businesses argon seeking to be the unless supplier to the securities industry to become the market leader and in that focus earn money. This is not a preferred position for any professional sports league or team, while they rely on other teams and leagues to produce a product of outcome to touch on a sustainable business out of it.1.2 Why do clubs either focus on winning or maximising profits?Models often purposed to discuss how sports leagues t fetch up to behave are primarily the g al unitedlyery if club owners either aims for maximise profits (El-Hodiri Quirk, 1971) or wins (Ksenne, 2000). It is seen that the North American major sports leagues and the European leagues supports the assumptions that clubs uses a trade-off point of profit and wins (Atkinson, Stanley, Tschirhart, 1988). The most optimal for leagues and clubs should be to aim towards finding a model that balances the charge sum of profit and wins (Dietl, Grossmann, Lang, 2011). Theref or we sometimes see teams and leagues that work after gaining profit and economic benefits for survival, and on the other side we see the teams and leagues that works towards winning as their main goal and business objective. slightly owners of team are even willing to lose or invest money to build a winning team in the long run (Fort Quirk 2005).1.3 Where does the government fit in to the market of sports?There are two main reasons why governments intervene in sports efficiency and equity (Andreff, 2001). aptitude reports to the allocation of production resources. That involves sharing and allocation of who does what, how will it be done and where it will be produced. In other words, government and read supplies the right people and funding so that sport production from all levels are made as efficient as possible. Equity on the other hand are concerned how the distri notwithstandingion of the market will benefit and gain throughout society (McWha, Smith, Clarke, 2000). Meanin g that the government and state joins up to gain the participation and enrolment of sport from youth and grassroots levels so that as many as possible can get the chance of getting involved with sports programs. Government tends to use sports funding to gain a bigger and broader social wellbeing and strengthen national identities while gaining and providing the kingdom with more(prenominal) talent and more competitive power on an international scale (McWha, Smith, Clarke, 2000). Government bodies also ensure that rules are fol blueed and that the regulatory framework for how the organisations operate are followed correctly.2. Key IssuesThe sports culture between Europe and America varies a lot. All from regulating, formatting and design and managing are way different from each side of the Atlantic. The way that the American sports leagues are formed is that they are built as independent organisations which has an gateway breastwork through franchise sales. This means that a new entry to the league is only possible if a current team is for sale of if the league are in a need of open up for expansion (Cain, Louis Haddock, 2005). In Europe they use an open model, which is seen as a hierarchical structure where entry relies fully on a promotion/relegation system (Andreff, 1989).2.1 European football gameFootball is by far the worlds most popular sport with over 3.5 billion fans worldwide (Dunning, 1999) The English Barclays prime minister League had in the indurate of 2009-2010 tax revenues worth of 2.1 billion, which by then was a record for the league (Conn, 2011). Now a fewer years later, a new broadcast deal has been signed and in concert with the worlds most expensive regular tickets prices, the revenues will be worth nearly 5 million (Pantanella, 2012). With an shining and an substantial uplift of the already massive broadcast deals of the 2013/2014 season, the English Premier League will score for more then the half of the f sink 20 clubs with the highest revenue of Europe (Bosshardt, Bridge, Hanson, Shaffer, Stenson Thorpe, 2013).From the roots, the clubs throughout Europe is willing organisations. But with the new age of media, commercialisation and globalisation the bigger and the dominant clubs are more seen as business entities with capital, a vision of profit and the responsibility of results for the fans (Boyle Haynes, 2004). According to the Deloitte annually edition of the Football gold League, the Spanish giant Real capital of Spain became the first European club team to surpass the ergocalciferol million (AUD 658 million) revenue threshold in one year during the season of 2011/2012. Second on that appoint is Barcelona FC with AUD 619 million and third is the English sided Manchester United FC on AUD 508 million (Bosshardt, Bridge, Hanson, Shaffer, Stenson Thorpe, 2013)With this amount of money being shoved in and out of the football organisation in Europe it is hard to see why there would be a need of go vernment intervention other than how the regulations of the sharing of the deals will be spent. The bigger, the better and the more popular the club are, the more fans they will attract and the more TV viewers they will get (Fort Quirk, 2005). In Spain there are no regulations or laws of the distribution of the broadcast revenue at all. They are letting every club negotiate individually with the broadcasters available on the market. Since the season of the Spanish La Liga 2004/2005, there has only been one year when a team (Villareal 07/08) other then Real Madrid and Barcelona clinched the first two spots of the table (List of Champions Sport Soccer Statistic Foundation, 2013). convey to this system, the league has close lost its competitive balance for the rest of the teams of the league while the two dominant teams clinch the scoop up commercial-deals for the league for themselves and the spots of continental competition.The English Premier League has also been dominated by t he absolute top 4 teams, Chelsea FC, Manchester United FC, Arsenal FC and Liverpool FC. Since the English Football League First Division rebranded itself to the Barclays Premier League in 1992, there has only been one season where a team outside of the actor mentioned to become Champions (Blackburn Rovers 94/95), and since then there has only been Leeds United that has been able to steal a top three place in the table from the top 4 teams (Past Winners The Football League, 2013).The sharing of the broadcast rights revenue in England is shared in three parts 50% are shared equally throughout all 20 clubs, 25% in facility fees and 25% depending how they end up in the league (Premier League Season Review, 2011). With this numbers in mind, the money attracted to certain clubs seen as being more economically viable than others, comes from individual contracts, endorsements and overseas business opportunities and sponsorships, not exclusive from broadcast rights. This is where the prob lem is. A trend of overseas rich oligopolies taking over ownerships of European clubs has formed an international debate whether the ethics and moral of the competitive balance of the sport. With almost immeasurable amounts of money, a civil person can by the mass of shares of a team and transform it to a name-reputational team with gaining high-value player transfers and offers high wages (Vrooman, 1995).The government and the state bodies around Europe have since 2009 together with UEFA agreed on putting a motion of a so-called Financial Fair suffer. It was introduced due to the concern of the heavy spending of a number of professional clubs across Europe, it was hoped that the regulations would eventually lead to a more level playing field by preventing clubs with very wealthy owners who make substantial cash gifts to their club from gaining an un jolly advantage over other clubs who are run on a more sustainable business model, and in so doing encourage lower levels of spendi ng (UEFA, 2012).2.2 Other leaguesOver the Atlantic Ocean there is a whole other status of sports. America has uniquely formed a fundamental culture, where schools and colleges are to be the main resource of forming the professional leagues (Bottenburg, 2010). Leagues in America have the worlds most profitable league the National Football League (NFL) that alone draws in an annual profit of over one billion Australian dollars (Seepersaud 2010) The American Leagues are seen as the most competitive-balanced leagues in the world, with leagues as the NFL, NHL, MLB and the NBA. In America they use a compartmentalization of implements of their formatting of the leagues to make it as fair and as competitive as possible. But the how the competitive balance work in practise varies from eye to eye. As mentioned before, America uses a closed league system.Thanks to that it is possible for them to use a so called draft system, where the lowest ranking team from previous season has the opportun ity to choose first in the upcoming draft of young talents from all over the world. NFL, NBA and NHL also implemented salary caps, which give the teams over the league a total amount of money to spend on wages each season so that not one single team is the only one to afford the biggest names. They also have a season concluded with a knockout play-off. This benign of formatting makes the outcome each year impossible to range. Since the commercialisation of the sports imploded America there has only been few back-to-back wins in the professional leagues. There has been some dominance by teams as the Los Angeles Lakers (NBA), New York Yankees (MLB), but other than that the outcome is considerably uncertain from year to year. Not least in the NHL and the NFL.3. SummarySince most of the European clubs are win-maximised focused teams with the main aim to survive and stay as high up in the league system as possible, the intervention of government and state should be as low as possible. F or the participants of the game they really do not need any actions to be taken from the government other than regulating the safety on the pitch with guards and police forces protecting them to unknown elements of danger. They will all get paid, and if they are good enough to seek themselves elsewhere for more lucrative deals, the already government-applied silly-season and the transfer-windows will secure them and the clubs.In America the draft system and college involvement should be enough for the governments involvement. Since the American sports leagues are working after a cartel linked system to survive and make profits, the salary cap helps younger and inexperienced players to secure wage-deals that suits them in their careers. The fans will always be together and involved with their club unless something drastic will happen. The way that government should intervene to keep fans from all levels suffer are to maybe try to manage and put pressure on leagues and clubs to keep their gate-tickets as fair and lucrative as possible.With the draft system and the Financial Fair Play, the fans from teams and clubs that have not gained the trophies or cups recently, will be to their advantage in a near future. This will make a higher competitive market for talents and that the spread of players will be wider overall. Community will get help of government involvement of them interact and supply state and government supported facilities by bringing either existing clubs or future franchises to their community. This is a form of politic question that involves tax-money and an overall public demand.As long as the leagues and the teams manage to keep a sustainable competitive balance and a high quality outcome, I do not see why governments should interact and interfere with how the sports leagues are managed today. The Financial Fair Play is too soon to reflect on how it will work out as an outcome for the European football, but we can already see that it has marked its point in countries as Turkey and Spain when UEFA tabu Besiktas and Malaga from continental competition due to overspending of their own capacity. The government should work from the communitys perspective keep a full-on investigation and reporting about drugs and safety of players and athletes. In short, let the leagues and sports manage themselves, because in the end it is all about keeping the most important stakeholders happy and satisfied, the fans.