Amid a plethora of trades that are currently occurring in the National Football League, many fans are witnessing the takeover of the business side of this sport. After all, the fact that players like Antonio Brown, Odell Beckham Jr., and Le’Veon Bell all engaged in contracts that go north of $50 million is a great example of the entrepreneurial spirit these athletes embody.
Obviously, the NFL is just one of the countless examples in sports where it is important to recognize the business happening behind the scenes. If this were not the case, the sporting industry would not be one of the most lucrative markets to ever exist on the planet. So, what exactly should those who want to be involved in the business of sports know about this sector?
According to a sports fanatic Joel Tucker, the most obvious way to identify how sports have touching points with business stems from networking rights. For those unfamiliar, these are the rights that the leagues hold over all their events. For instance, the National Basketball League has the right to all the games as they are the ones that are organizing them. So, when some TV network wants to broadcast those events, they must compensate the NBA to gain access to the content and stream it to their viewers.
Typically, buying those rights comes at a hefty price that is normally driven up by various bids. In translation, multiple TV networks will usually compete for the rights and the highest bidder will get them. These networks then sell advertising space during the broadcast of these games, adding yet another layer of income. This can be directly tied to the concept of the law of supply and demand in business. In other words, as the prices skyrocket, the number of interested buyers will slowly go down. Hence why only a few large TV networks will normally get these contracts.
To raise the mind-boggling revenues that allow teams to remain in business, they rely heavily on their ticket sales. To get a frame of reference, just consider the fact that the Dallas Cowboys had an accumulated income of $108 million from their game tickets in 2017. This stream of income is necessary to support their team with things like salaries for the administrative employees, stadium maintenance, and so much more. Obviously, whatever is the remainder that does not get covered by the ticket sales either comes from marketing contracts or from the team’s owner.
Jobs Within the Industry
No business would be able to remain profitable or even operational, without the employees that help its day to day ventures. Well, although the players tend to be the ones who the media focuses on the most, there are hundreds of other workers that every team must rely on. These include individuals from the layers of the higher management, all the way to the maintenance crews that ensure that the locker rooms are tidy. So, the numerous job opportunities that produce important income for households around the United States are another example of where sports and business overlap.
As mentioned before, it is crucial to recognize that an enormous amount of income that the sporting industry produces comes from marketing engagements. For example, a 30-second commercial that airs during the UEFA Championship League’s final soccer game costs around $4.5 million. Thus, TV networks can sell their air time for an outstanding amount of money that makes their purchase of those networking rights well worth it. Obviously, however, companies will have to engage in bidding wars as well as hire creative minds to design their commercials. This gives rise to another instance of business-minded individuals taking over the industry to maximize earnings.
Trades and Players’ Contracts
Ultimately, Joel Tucker reminds that trades and athletes’ contracts are the very definitions of business. For instance, think back to the football superstars mentioned above who claimed over $90 million in guaranteed funds during their trade deals. Getting such an amount of money is impossible without brilliant negotiators, accountants, business analysts, and finance experts. So, although a person like Antonio Brown may be the greatest living wide receiver, he would not be able to close a $50-million transaction without profound entrepreneurs that understand the market.