Circling the Bases: Essays on the Challenges and Prospects of the Sports Industry

Notes

Notes Chapter 1 1. Moag & Company, “The Sports Industry’s Resistance to Bear Markets ,” Winter 2002. Although the report was written during the 2001 recession , Moag sent it around to the firm’s clients again in 2008 as a guide to the resilience of the sports industry. 2. In early June 2003, the FCC voted 3–2 to allow networks to increase their ownership of local affiliates. The new rules allow a network to own a newspaper and television station in the same city (up to three television stations in the same city) and to reach up to 45 percent of U.S. households via its owned affiliates. 3. See, for instance, the testimonies of James Gleason, COO of Cable Direct and chair of the American Cable Association, and of James Robbins, CEO of Cox Communications, before the U.S. Senate Committee on Commerce , May 6, 2003. 4. Comcast, the telecommunications conglomerate and nation’s largest cable company, is buying NBC Universal, so it will be negotiating with itself when fees for carriage of NBC are set. Comcast also owns the emerging national sports channel Versus. 5. It is, of course, possible that competing broadband systems will emerge along with new aggregating companies. Such a development would alter the sales chain, but it would still represent a fundamental challenge to the existing cable distributors’ ability to sell packages to the household. Accordingly, it would also disrupt the present relationship that RSNs have, via the cable distributors, to the consumer. 6. These estimates are based on the annual estimated franchise valuations that appear in Forbes magazine. 7. Martin Shubik, “The Dollar Auction Game: A Paradox in Noncooperative Behavior and Escalation,” Journal of Conflict Resolution 15, no. 1 (1971): 109–111. This discussion also borrows from Robert Frank, “Challenging the Myth: A Review of the Links among College Athletic Success, Student Quality, and Donations” (paper from the John S. and James L. Knight Foundation Commission on Intercollegiate Athletics, Miami, FL, 2004). 8. To be sure, it is a tendency that professors should readily recognize in these times of grade inflation. A “C” grade is supposed to be average; in many classes, all students receive above a “C,” and, hence, the entire class is above average. 9. Of course, if owners behave strictly as rational profit maximizers and are unaffected by the special features of sports leagues, they will not be influenced by higher offers from competitive teams, and they will simply offer players salaries up to their expected marginal revenue product. 10. In the formal jargon of the NFL CBA, these items would be referred to as Defined Gross Revenue (DGR) and spillover. 11. Paul Brown, Mike Brown’s father, was a long-time owner of the Bengals. 12. The NFL’s salary-cap system contains a player payroll minimum for each team in addition to a maximum for each club. The salary cap for the 2009–2010 season was approximately $128 million per team. The player payroll minimum was 87 percent of that, or about $111 million per team. The payroll minimum also will disappear in 2010, and, thus, it is possible that overall spending on players would decrease despite the absence of a salary cap for the 2010 season. New free-agency rules would also go into effect automatically for an uncapped season. A player would need six seasons of NFL service time to be eligible for unrestricted free agency instead of the four seasons now required. (According to the most recent figures available, 237 players are eligible for unrestricted free agency during the 2010 off-season in an uncapped system. An additional 203 are restricted free agents under an uncapped system—enabling their teams to retain them by matching any contract offers from other clubs—instead of being eligible for unrestricted free agency this off-season.) Further, each team is allowed an 172 ▪ Notes to Chapter 1 additional transition-player tag to use, along with its current allotment of one franchise player or transition-player designation, to restrict the mobility of its players in free agency. And the top eight play-off teams can sign free agents only to replace lost players. 13. Lester Munson,“Antitrust Case Could Be Armageddon,”ESPN.com, July 17, 2009, available at http://sports.espn.go.com/espn/columns/story ?columnist=munson_lester&id=4336261 (accessed July 18, 2009). 14. MLS is structured such that operators of each team jointly own the entire soccer league. On appeal, the U.S. Court of Appeals for the First Circuit...