Sports Finance and Management: Real Estate, Entertainment, and the Remaking of the Business, 1st Edition (Hardback) book cover

Sports Finance and Management

Real Estate, Entertainment, and the Remaking of the Business, 1st Edition

By Jason A. Winfree, Mark S. Rosentraub, Brian M Mills

CRC Press

500 pages | 60 B/W Illus.

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pub: 2011-08-29
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Description

The sports business landscape has changed dramatically in the past two decades. Teams and facilities have become integral parts of the businesses of real estate and development, entertainment, and the media. While an understanding of core financial management issues specific to the sports industry is still mandatory, a greater appreciation of financial and management issues that link teams to the dynamic forces that make it possible to listen or to watch games at home, on the road, or anywhere a fan happens to be is also needed.

Sports Finance and Management: Real Estate, Entertainment, and the Remaking of the Business takes an in-depth look at the changes in the sports industry, including the interconnecting financial issues that occur when a sports team becomes a part of bigger companies, the altered nature of fan loyalty influenced by network and Internet footprint, dramatic changes in sports venues driven by the trend for single-purpose stadiums, and league policies such as revenue sharing, luxury taxes, and salary caps. The authors have deliberately not chosen sports examples to teach general finanancial and management concepts. Rather, they use basic financial and management concepts to illsutrate the differences and uniqueness of the sports industry. This gives students tackling finance issues for the first time a firm foundation, while allowing those more expert in financial issus to apply their skills and knowledge to the issues specific to the sports industry.

Capturing the issues that make the sports industry different from any other, the text examines the effects of public financing, unique pricing structures, and roster depreciation allowances. It includes a detailed treatment of risk measurement based on the monetary value placed on championship wins and the influence fixed rosters have on the investment horizon. These features and more give students the foundation needed to understand finance and management as well as the idiosyncrasies of the sports industry.

Reviews

… sheds light on issues that are unique to the sports business … takes an in-depth look at the changes in the sports industry, including the interconnecting financial issues that occur when a sports team becomes a part of bigger companies … captures the issues that make the sports industry different from any other.

— NeoPopRealism - Wonderpedia, Jan/Feb. 2012

Table of Contents

The Redefinition of the Sports Business

Introduction

Sports Finance and Management in Real Time

References

The Structures of Ownership

Introduction

The Emergence of Team Sports and Profitable Markets

Ownership and Expansion: From Individual Entrepreneurs to Large-Scale Entertainment, Real Estate, and Media Firms

Ownership Patterns Today

Ownership Structures

Horizontal and Vertical Integration

The Integration of Real Estate Development, the Media, Entertainment, and Team Ownership

References

Financial Statements, Revenues, and Costs

Financial Statements

Balance Sheets

Income Statements

Statement of Retained Earnings

Statement of Cash Flows

Analyzing Financial Statements

Ratio Analysis

Revenues and Costs

Stadium Revenue

NFL In-Stadium Revenue

NBA In-Facility Revenue

Naming Rights

Media Revenue

Player Costs

Facilities: “Disneyfication” and Design

Introduction

Facilities: The Early History

The Constrained Supply of Sports Franchises

Disneyfication and the Location of Facilities

Where Should a Facility Be Built?

Design and the Competition for Discretionary Income

The Exterior Design of Facilities and Intrafacility Competition

References

Stadium Financing

Introduction

Financing Tools

Financing Facilities: Who Really Pays?

Facility Financing: The Team’s Share

Facility Financing: A Public Sector Investment

References

Appendix 1

Sports Teams and Real Estate Development, or Real Estate Development Companies with Sports Teams?

Introduction

Increasing Value of Downtown Locations for Sports Facilities

Rise of Horizontal Integration, Residential Real Estate, and Entertainment Venues

Managing the Real Estate Inside a Facility

Managing the Real Estate Outside the Facility: The Increasing Value of Sports Venues as Anchors for Development

References

Media and Sports Management

Introduction

Sports and the Media: Brief History

Phase 1: Media and Team Relationships

Phase 2: Large Scale Revenue from the Sale of Media Rights

Impact of Phase 2: The Profitability and Revenue Power of Television, the NFL, and Revenue Sharing

Phase 3: The Vertical Integration of Teams and the Media

Phase 3 Continues: College Conference Networks

Media, Sports, and the Future: Emerging Competition in the Delivery of Games to Fans and Advanced (Internet) Media

References

What Are Teams Worth? Team Valuation

Introduction

Establishing a Team’s Market Value: Basic Observations

Valuation Models

Other Factors Affecting Value

What Is the Value of NFL, MLB, NBA, and NHL Franchises?

Multiple Earnings

Constant Growth Pricing Model

Other Sports

College Sports

Conclusion

References

Demand and the Sports Business:What Does the Customer Want and How Does a Team Owner Provide It?

Introduction

Defining Demand

Long Run Demand for Sports

Short Run Issues in the Demand for Tickets

Reference

Pricing Strategies

Introduction

Ticket Prices

Are Ticket Prices Too High, Too Low, or Just Right?

Why Are Ticket Prices Inelastic?

Price Discrimination

Bulk and Group Discounts

Product Bundling

Variable Ticket Pricing

Day of Game Pricing

Dynamic Pricing

Personal Seat Licenses

Condominium Seats

Futures Options

Pay What You Want

Media Prices

Merchandise Pricing

References

Appendix 1

Appendix 2

Appendix 3

Capital Budgeting and Team Investments

Introduction

Team Investments

Facility Investments

Player Investments

Cost of Capital

References

League Policies, Taxes, and Profits

Introduction

League Policies

Player Drafts

Revenue Sharing

Luxury Taxes

Salary Caps

Promotion and Relegation

Collective Bargaining

League Specifics

Competitive Balance

Taxes

Roster Depreciation Allowance

Player Taxes

State Taxes

Ticket Taxes

Tax Exempt Status for Universities

Profits

Leverage

References

Further Reading on League Policies

Appendix

References

About the Authors

Jason Winfree, Ph.D., is Associate Professor, Sport Management in the School of Kinesiology's Department of Sports Management at the University of Michigan. Dr. Winfree is a sports economist, whose primary research focuses on professional and collegiate athletics.

Mark S. Rosentraub, Ph.D. holds the Bickner Chair in the School of Kinesiology's Department of Sports Management at the University of Michigan. Previously, he was dean and professor at the Levin College of Urban Affairs at Cleveland State University and an associate dean and professor in the School of Public and Environmental Affairs, Indiana University.

Subject Categories

BISAC Subject Codes/Headings:
BUS027000
BUSINESS & ECONOMICS / Finance
BUS042000
BUSINESS & ECONOMICS / Management Science
BUS053000
BUSINESS & ECONOMICS / Quality Control