Module IV: Issues in the Business of Sport

Transcription

1 Module IV: Issues in the Business of Sport In this module we explore the stakes and stakeholders in sport associated with business. At every level of sport business is involved. Whether selling to athletes, using athletes to sell to others, providing athletes new high-quality equipment, supporting team travel or expenses, or paying athletes exorbitantly high salaries, these are only a few ways that sport and business interact. Business and sport do not always share the same goals in a transaction. Sometimes, what is beneficial for one group of stakeholders is detrimental to others. We discuss issues of economic opportunity and fairness in sport franchise ownership in addition to other issues in sport and society that arise when business and sport stakeholders interact. Learning Objectives and How they Can Be Achieved: After completing this module you should know and be able to do the following: 1. Identify the values, important consequence and rights and responsibilities of sport administrators and business professionals with respect to sport. 2. Provide examples where business interests affect sport and society. 3. Recognize social and ethical issues associated with business issues and sport activities. 4. Apply SAGE to sport issues that involve business and management decisions. 5. Identify social and historical factors that affect business and sport 6. Critically think about business and sport issues by applying SAGE. 1. Module Specific Information: Within the United States there has been a concerted effort to improve the representation of minorities in all aspects of society. Northeastern University s Center for the Study of Sport in Society Racial Report Card covering the academic year showed that: College sports have the worst record for hiring women and minorities; the percentage of black players decreased in college and pro sports; and there is no majority ownership in sports for minorities. Pro sports, the NBA was given the highest grade in opportunities for minorities for the ninth straight year. The NFL was second. No majority owners in pro baseball, the NBA or NFL who are black or Latino.. Division III had the worst record of all NCAA divisions. More than 70 percent of all Division III college athletic directors were white men. Only 3.4 percent were black men. The percentage of black athletes in colleges has declined over the past five years while participation of Latino student-athletes went up slightly. League offices in all three pro sports had a better minority hiring record than teams. In 1996, 71.4 percent of the NCAA s top executives were IV-1

2 white and about 21 percent were black. About 92.1 percent of the organization s chief aides were white; 5.3 percent were black and 2.6 percent were Latino. More than 80 percent of the NCAA s office managers were white; 9.4 percent were black; and 1.9 percent were Latino. In the NBA, 77 percent of league office employees were white, and 17 percent black. Eighty percent of NFL league office staff were white, and 15 percent black. The latest numbers available for baseball, , showed that 79 percent were white and 19 percent black. Coaching jobs for blacks in NCAA Division I football, basketball and baseball rank behind pro teams in the NFL, NBA and major league baseball. Only three of 30 NFL coaches were minorities, followed by three of 28 in baseball and seven of 29 in the NBA. College stats showed that, 81.5 percent of Division I basketball coaches were white, along with 92.8 percent of I-A football coaches and 97.6 percent of baseball coaches. 2. Key Terms and Concepts In a laissez faire or free market system, there is no restriction on the pricing of goods and services. In a controlled economy there are many restrictions placed upon the pricing of goods and services. When it comes to pricing human talent in sports, we have different models on which we can build. Some believe that sport simply is entertainment and as such the participants in sports should be paid like entertainers. Others believe that sports talent is in limited supply and justifies price controls and market regulations to insure the security of the market in sports talent. Some believe that sports talent costs left to market forces alone could destroy the league s ability to provide the sports competition necessary for salaries to be paid. When this argument is taken to collegiate sports, we enter into some fundamental issues related to the role of the university and the value of athletics to the university community. 3. Brief Summary of Voices in Sport and Society Readings Panel: The Commercial Imperative, how Much is Too Much? Pg Interviews: Kenneth Shropshire, Ph.D. pgs ; Murray Sperber, Ph.D. pgs ; Richard Lapchick, Ph.D. pgs For your convenience, the following are student summaries of most of the readings. It is not, however, a substitute for the original, this is just for review. Panel: The Commercial Imperative, how Much is Too Much? Rich McKay, General Manager, Tampa Bay Buccaneers Rich feels that there is more to being a winning organization that simply wins and losses on the playing field. It is important to have good people on your team and in your community, not just people who are good football players. He also thinks that the most important person in an organization is the head coach, not the owner or the players. The head coach is the most recognizable person when somebody looks at your IV-2

3 franchise, so therefore the coach must meet ethical standards as well. Rich also feels that accountability is important in any organization. He thinks that it is imperative to make sure that the people within your organization are responsible for what they do on and off the field, whether it is positive or negative. Rich also touched on the issue of minority coaches in football. I think Rich echoes what most people feel, and that is that a coach should be hired on his own merit, not because of his color or creed. Diversity is important, but the decisions made also have to make sense. Rich also sends an important message that academics are by far more important than athletics. There is such a small percentage of athletes that make it to the next level, that they had better focus on education or they will have nothing with it is time to start their lives. Knowledge is the key to life, the more you know the more you can excel. William E. Shelton, President, Eastern Michigan University William feels that because of his extensive background and the fact that he worked his way up through the ranks, starting as a high school teacher and eventually becoming not just President of Eastern Michigan University, but as Chair of the Mid- American Conference, that he has the experience necessary but also the ideas to make college athletics better. William makes a very good point about the hypocrisy that is involved in college athletics, especially the involvement of athletic teams in the university. As he said, besides competing for the university, how else are they involved in the school? They have to raise their own funds, build their own stadiums, they are essentially on an island and have to do everything themselves. William also makes an excellent point when he talks about sportsmanship. He says, sportsmanship is supposedly intended to put into perspective the balance between winning and losing. However, as Dr. Shelton states, we are so concerned about winning, that sportsmanship is really disappearing. All that matters is winning and losing, at any cost. His driving force is the fact that he loves athletics and wants to make things work, even if it is difficult. Dick Devenzio Dick feels that the NCAA-National Conspiracy Against Athletes-and backs up this idea with the fact that any time the interests of a universtiy and the interests of athletics come together, the athletes always lose. He also states that the benefits for athletes have gone down as the profits generated by the NCAA have gone up. He makes a great point about athletes making money with the kid from Nebraska. HE had a full scholarship offer to go there, but he turned it down because he wanted to get a job and didn t want anything handed to him. He actually secured a job as a journalist making $1,000 a week writing a column about Nebraska football. However, the NCAA said IV-3

4 no, he could only make $6700 a year because that was the cost of going to Nebraska. Rules such as these are a travesty holding down the student athletes. He also said that the sad thing is that the NCAA is not about it s athletes. It s about the money, and about keeping the big money makers in the money. Bill Morgan, Ph. D. Bill talks about performance enhancing drugs, a hot topic in all of sports today. He speaks about two ideas, paternalism, the idea that it is ok to interfere with someone s freedom if it is for their own good; and libertarians, who are against bans on drugs. He makes an excellent point when he states that at sports-crazed colleges, the entire school could burn down and as long as the football stadium was still there, everything would be alright. He also states that sports are an experience that brings national identity, especially in the Olympics. However, he does also say that it can be a bad experience because some countries do not win as many medals as others and can be judged as being inferior, just as colleges who may not be as good as others at sports and judged inferior. 4. Brief Summary of Video programs including the DVD Here are brief summaries of the video material provided for this module. Issues in Sport Teleweb students should view this module s brief tutorial on the DVD Program 5 Business and Sports: How Much Is Too Much? This program is designed to introduce ethical issues that arise in sports and society around the money that can be earned through sports. The intersection of money, business and sports raises issues concerning the relationship of private and public enterprises, the worth of human effort in monetary terms, and the way that sports and commercial enterprises can work together to improve or to harm sports in society. Several units in the series refer to issues related to business and sports, including the hiring and firing of coaches, agents, big-time college athletics, celebrity and gamesmanship. We consider how money issues effect sports at all levels of play with: Rich McKay Dick DeVenzio William E. Shelton, Ed.D Bill Morgan, Ph.D. Our goal is to help you recognize and evaluate the role of business in sports. The learning objectives for this program are: Identify ways that business and sports are related. Recognize how sports and business have different values, goals, rules and responsibilities. Recognize how conflicts may arise between the interests of sports and the interests of business entities. IV-4

5 Recognize that different levels of sport may permit different levels of appropriate business activity. Identify some clear examples of sports being harmed by business interests. Recognize some clear examples of sports being benefited by business interests. Summary Business and Sports: How Much is Too Much? We inquire into issues related to the business aspects of sports. In particular, we attend to conflicts that arise when business interests negatively affect the quality of the games and lives of the athletes. The business development associated with modern popular sports such as soccer, American football, baseball, and the Olympic games to cite just a few, has created unprecedented opportunities for athletes to play sports at the highest levels of competition utilizing the finest equipment. But is it good for sports to be controlled by business cartels, associations or by individuals who use sport to make money, as opposed to improving performance or winning games? Conflicts in business and sports occur not only at the professional level of play but also at the college and school level as well. Clearly we have important ethics and management business issues confronting amateur and professional sports. Are all practices available to business generally permissible in the case of sports? Or is sports somehow special and should it be managed using a special set of rules? While some claim that athletes in professional sports are paid too much, Rich McKay argued that many other professions also earn large sums of money, so why shouldn t an athlete earn as much as other entertainers? Later he argued that large public investments in professional sports can make a big difference in the community, just like large public investments in other businesses. Bill Shelton wants us to keep in mind that collegiate sports are not all alike. While some colleges spend relatively small sums on sports, other colleges run multi-million dollar operations. In the huge programs, revenue sports are a big business with all the benefits and liabilities which that implies. Dick DeVenzio makes the point that collegiate sports contribute significantly to the overall college environment even when sports do not create surplus revenue. Like the community which is said to benefit by having a professional sports team, the college benefits by having its collegiate sports teams. Dick DeVenzio and Rich McKay argue that the benefits derived from sports are sufficient to offset the management challenges that sports create in both civic and academic institutions. How much is too much? There is a huge market for sports. Colleges and professional teams provide what the public wants. Perhaps the better ethics and management question is how should the wealth and burdens of sport be distributed? What is a fair distribution of the wealth derived from sports? Professional teams now have unions and bargaining systems, but colleges and universities are a different story. How has the wealth developed in collegiate sports and how have and how should its benefits be distributed? So how should we distribute the wealth derived from sports? Given the growth of money in college sports, is it now appropri- IV-5

6 ate that college athletes receive more of the money their team generates? Dick DeVenzio illustrated the incredible growth in the dollar value of the final four basketball tournament over the last 30 years, while the players who perform in the games receive less than before. DeVenzio argues that the NCAA has a monopoly on basketball and football and benefits from exploiting college athletes. Bill Shelton, President of Eastern Michigan University and former NCAA chairman of the committee on sportsmanship says he has done a 180 degree turn around and now believes that college athletes should receive some of the money that sports generates at the college. He argues that this is a way of developing integrity through avoiding the hypocrisy he believes is prevalent in big time college sports. Bill Morgan summarizes the economic issue and points out that whenever athletes are not free to market their skills in an open market, those who CAN market the skills of the athletes will unfairly reap the rewards that the athletes are denied. How much is too much in sports? This question leads us to appreciate that it is not the size of the sports that is the primary problem but the lack of agreement regarding what constitutes the just and fair management of the goods of sports. In a just society, the athlete, just as the investor, should be able to enjoy both the pleasures of their career and the fruits of their labors. In summary we addressed questions such as how much business in sports is too much? What are necessary and appropriate business activities in sports and what activities are not? Should every business opportunity in sports be exploited? If not, why not? How should sports and business be related in college and professional sports? How should decisions be made in college and professional sports regarding the role of business in sport? 4.2 Program 25 Justice in Sports Management and Ownership This program is designed to explore ethical and societal issues relating to sports management and ownership. Fair and just opportunity for employment as well as ownership in sports constitutes a particular case of the larger social issue regarding justice in opportunity throughout society. Should ownership and management of sports teams reflect the racial balance of society? Should race be an important decision making factor in sports? Investigate economic and power issues in sport with: Professor Ken Shropshire Dr. Richard Lapchick Rich McKay Frank Morsani Armen Keteyian Ray Anderson Tom Reich Our goal is to help you recognize ethics and management issues relating to employment, management and ownership of sports franchises. The learning objectives of this program are: Identify the present situation with respect to the diversity of ownership, employment and management of sports organizations. Describe the ethical issues associated with diversity of ownership, employment and management of sports organizations. IV-6

7 Recognize the legal, moral and social aspects of sports control. Describe the changing realities of sports ownership. Identify the managerial structure in professional sports which contributes to the status quo. Identify actions being taken by activist groups to assist sports organizations in changing the racial and gender mix of their operations. Summary Justice in Sports Management and Ownership In the major sports franchises in the United States and in the major college programs, there seems to be a racial imbalance between the race of the players and the race of the coaches, managers and owners. This racial imbalance calls out for an explanation, and even if a good explanation can be given, it raises the issue of what should be done to reduce any real discrimination or injustice in the management or ownership of sports. Opportunities in ownership and management are limited. The reasons why some ownership bids are successful and why some coaching jobs are offered are often clouded in closed door private negotiations among a close circle of decision makers decision makers who are predominantly white. Sports are public attractions and rely, in many cases, on public dollars for their continued support, so many believe that teams should reflect in their ownership and management the racial balance of society. The patterns of past sports management opportunities and decisions, together with the financial realities of the present, make ownership and race issues in sport come up against harsh economic realities. In many sports leagues, ownership is beyond the financial capability of almost all individuals and is the province of corporations. Management and coaching, on the other hand, are not limited by available capital. Professor Ken Shropshire, author of Black and White: Race and Sport in America, and acting director of the African-American Studies Program at the University of Pennsylvania, notes that the racial percentages of sports ownership and management is similar to the percentages in corporate America. He attributes lack of recent movement in increased black ownership of professional sports franchises to the economic fact that today it is difficult for individuals of any race to purchase a team, but the recent economic realities build in past discrimination. As a lawyer, he points out that it is difficult to prove individual cases of discrimination in sports without specific hard evidence. In the case of sports management, rather than ownership, employment still reflects significant discrimination against African- Americans. He points out that African- Americans require twice the time in a league to achieve their positions even when they are appointed to management positions. Dr. Richard Lapchick, recipient of many prestigious international humanitarian awards, founder and director of Northeastern University s Center for the Study of Sport in Society, and noted author, points out that we have not achieved the second half of Jackie Robinson s dream: equal opportunity to own, operate and manage the games. Not enough attention is focused on the fact that colleges are worse than the professional teams in their hiring of African Americans as coaches and managers of teams. Sports on the field is supposed to be equal but off the field sports still looks like the rest of American society racially unequal. The free exchange of capital and talent in the marketplace is said to permit the best IV-7

8 outcomes for both buyers and sellers. To what extent is there an open sports market for minority coaching and management talent? To what extent are sports management opportunities limited by race? What are the steps that the best teams would take to achieve justice among ownership, management and players? Justice in modern society is not a universally agreed upon concept regarding hiring and promotion. To what extent are sports hiring decisions essentially private decisions and the privilege of ownership, and to what extent are they public decisions, deserving the protections and the voice of the public in the choices made. Professor Ken Shropshire argues that changes must come in the hearts and minds of the owners and managers who make hiring decisions. And he cites Bill Walsh s Excellence in Coaching Clinic as one step toward creating comfort among owners and minority coaches. He notes that from a legal enforcement point of view, discrimination in this area is very difficult to prove. Rich McKay, general manager for the Tampa Bay Buccaneers football team, notes that the Buccaneers did not hire a minority coach; they hired the best candidate who happened to be a minority. He believes that in many coaching decisions outside factors influence the choice made and that, in many instances, the hiring of a head coach is not done in a professional manner. Frank Morsani, a participant in several major franchise purchase deals, sought to bring a baseball team to Tampa, but was denied. He was promised a team for his efforts by those in power; he did many costly favors for them when asked. Yet he was ultimately passed over in the selection process for the new team by Major League Baseball. It is important to note that not all injustice in ownership and franchise selection is based on race. Armen Keteyian, two-time Emmy Award winning sports writer, CBS and HBO sports correspondent, asks the questions: Do athletes consider race when hiring agents? Do agents use the race card to recruit athletes? Ray Anderson is a successful practicing sports attorney representing clients in baseball, football, and the NCAA. A member of the board of the Sports Lawyers Association and the Black Sports Agents Association, he responds to Armen s questions when he says that several agents use the race card and that using the race issue cuts different ways, creating different types of harm and injustice. Tom Reich, prominent sports attorney for over 27 years, represents many high profile athletes. He notes that the use of the race card in sports agent hiring is characteristic of the highly competitive world of sports business. Justice in sports management and sports ownership is a basic and fundamental ethical issue in sports and society. The glass ceiling for women, minority employment and admissions in business and college, justice in pay, hiring, admissions and promotions are still in question outside of sports. So, the existence of these ethical issues within sports should be no surprise. But given the demands for public dollars by privately held sports organizations, and public and corporate support for sports, it does not seem too much to ask that sports organizations strive to respect and work with all aspects of the society in which they are a part and from which they ask our continued loyalty and financial support. IV-8

9 In summary, we addressed the following questions: How should the ownership and management of sports organizations be related to the players and fans of the sport? Should the ownership and management of professional sports teams be racially and ethnically diverse? Who should have the right to buy sports teams? Do owners have the rights to do whatever they wish to a sports franchise? What are the obligations of sports franchise ownership? What are the ethical and managerial issues associated with sports ownership? How should issues regarding sports ownership be decided? 5. Brief Summary of Web Site activities 5.1 This week there is a required activity for the TeleWeb students. You are to analyze the decision by Texas Tech University to hire Bobby Knight as their basketball coach and post your SAGE analysis an important aspect of the decision. Information included for your analysis shows that Texas Tech made over $1 Million in their sports program the year after hiring Mr. Knight, whereas they had lost a significant amount of money the prior four years. Bobby Knight was fired from Indiana University after becoming one the nations most successful coaches. He was fired because of angry outbursts, which occasionally seemed to involve physical violence against his players. Others have testified that Mr. Knight is one of the kindest and most dedicated individuals to his players and that many of his players love him. players and fans both negatively and positively. 5.3 There are many related web sites to link to information regarding business and sport. 5.4 Don t forget to do your quiz for this module. 6. Sports and You... Identify ways that business has enhanced sports. How might we balance the benefits of sports business with the problems? Are salaries in professional sports out of line? When people argue that business leaders are paid huge salaries, why not athletes, how do you evaluate their argument? How might that argument change when used to address the issue of paying some collegiate athletes? Should special consideration be made to include minorities as owners in sports franchises? Should teams consider race in their selection of coaches and managers for their team? 5.2 There is an opportunity to post a position post on this week s discussion board. The topic is to take two stakeholders in sport and explain how business has affected them positively or negatively. For example, you could take the example the owners of professional baseball and how the business of baseball has affected the stakes of both IV-9

10 7. Self Test for Module 4 1. Some argue that college athletes should not be paid because: (a) they are amateurs (b) many receive a scholarship which is, in reality, pay (c) the colleges cannot afford it (d) all of the above 2. Some argue that college athletes should be paid because: (a) the colleges and coaches are making money off of their labor. (b) in a free society it is not fair to select a small group of people and say they cannot be paid (c) the athletes should be treated like any other student (d) none of the above (e) all of the above 3. Rich McKay, General manager of the Tampa Bay Buccaneers, argued that professional athletes are entertainers and professional sports franchises are in the entertainment business, so they should pay the athletes entertainers salaries. 4. Public investment in sports franchises are universally agreed by scholars to be good investments for the community. 5. Sports is one of the last legally protected cartels in an essentially capitalistic market economy. 6. Money has changed sports in the following ways: (a) created more playing opportunities for more athletes (b) created more marketing opportunities for sports franchises and athletes (c) created a gap between the average fan and the player (d) all of the above 7. Most college Division 1 athletic programs make a profit. 8. The value of the NCAA control on collegiate sports has risen dramatically over the last 30 years 9. There are some who argue that big time athletics on college campuses creates hypocrisy in the administration of the educational institution. IV-10

11 10. There is an agreed upon level playing field (fair and equal competition) throughout collegiate sports. 11. Some claim that athletes in professional sports are paid too much. However, most panelists agree that athletes should earn as much as the market bears because: (a) athletes should receive any amount that comprises the standards of excellence and goods internal to sports (b) athletes are like entertainers, so they should earn as much as other entertainers (c) sports talent is in limited supply (d) all of above 12. According to Dick DeVenzio, the incredible growth in the dollar value of the final four basketball tournament over the last 30 years results in the players who performs in the games: (a) receiving more than before (b) receiving the same amount as before (c) receiving less than before (d) receiving too much than before 13. Bill Shelton of Eastern Michigan University now believes that college athletes should receive of the money that sports generate at colleges. (a) all (b) some (c) none (d) $10, According to Rich McKay sports in its purest form is: (a) entertainment (b) competition (c) a struggle with ethics (d) only good if there are winning teams 15. In this type of market system, there is no restriction on the pricing of goods and services. (a) booming (b) laissez faire (c) accelerated (d) none of the above 16. According to Rich McKay, athletes should make much more then what they do. 17.Conflicts in business and sport occur only at the professional level of play. 18. Rich McKay argued that large investments could make a big difference. (a) private (b) public 19. Bill Shelton wants us to believe that all college sports are alike. IV-11

12 20. In large collegiate programs, revenue sports are big business. 21. Even when college sports teams do not make surplus revenue, they still significantly contribute to the overall college environment. 22. Bill Morgan believes those who are able to market skills of athletes and unfairly reap rewards will not do so because of the strong moral value in sports today. 23. Some people believe that sport simply is, and should be paid accordingly. (a) talent (b) fun (c) entertainment (d) a joke 24. In thinking about business and sports and how much is too much, which of the following statements is true? (a) They have little to do with each other. (b) Conflicts can arise between the two. (c) Negative business interests can affect the sport negatively. (d) Both b and c. 25. In U.S. professional sports, the racial balance in team ownership and management does not mirror the racial balance of the athletes. 26. It is very difficult for any individual to acquire a major sports franchise without significant corporate or government support. 27. Opportunities in ownership and management in professional sports franchises principally are not controlled by white people. 28. The Northeastern University Center for the Study of Sport in Society maintains a database of qualified African-American sports professionals for consideration by teams for positions in sports management. 29. Discrimination in the early years of sports, when the franchises were first being developed, established privileges for the original white ownership groups who have become economic realities that are difficult to change. IV-12

13 30. Rich McKay said that the Tampa Bay Buccaneers football team, hired Tony Dungee, an African-American, not because he was the best coach available, but because he was the best African-American coach available. 31. Sports has been an insignificant tool in improving race relations in the United States and in South Africa. Module Four. 1. d, 2. e, 3. a, 4. b, 5. a, 6. d, 7. b, 8. a, 9. a, 10. b, 11. d, 12. c. 13. b, 14. a, 15. b, 16. a, 17. b, 18. b, 19. b, 20. a, 21. a, 22. b, 23. c, 24. d, 25. a, 26. a, 27. b, 28. a, 29. a, 30. b, 31. b IV-13