Sport as a Business

The role of sport is concrete in business terms, quotes Eric Falt, United Nations (UN) Director of Communications (2004):

It is an industry with unparalleled global reach and power. Globally, sport-related turn-over amounts to three per cent of world total economic activity. In the United Kingdom, for example, sport-related turn-over equals that of the automotive and food industries. Major events such as the soccer World Cup or Formula One Grand Prix are watched around the world. … At the same time, the corporate practices of this worldwide industry can and do have widespread impact, socially and environmentally.

Some sports have achieved a global status; there are more members of the Fédération Internationale de Football Association (FIFA) than of the UN. Football (or ‘soccer’ as it is known in America) is a growth sport; however, its commercial representation can only be considered strong in certain world regions. For example, in 2009, the German Bundesliga overtook the English Premier League to be ranked as the world’s most profitable football league, stacking up €172 million of operating profits, whilst the Premier League more than halved their revenues from €224 million to €96 million in the same year.¹ In total, the big five European football leagues (England’s Premier League, Germany’s Bundesliga, Italy’s Serie A, Spain’s La Liga and France’s Ligue 1) generated revenues of €7,900 million in 2008/09 (€6,300 million in 2004/05 (Jones, Parkes and Houlihan, 2006)).²

Professional team sport, like other forms of popular culture, is attractive and highly marketable. Furthermore, technological advances and globalization have greatly expanded the potential marketplace for professional sport organizations. For instance, Barcelona FC is believed to have 70 million supporters worldwide’ and English rival, Manchester United, has seen its fan base double in the past five years to 139 million.² Real Madrid could have a potential fan base of nearly half a billion.³ However, foreign interest extends beyond Association football, and the success of home-grown players such as Suzuki, Matsui and Matsuzaka has boosted the popularity in Japan of a number of Major League Baseball (MLB) teams. Similarly, 30 million Chinese regularly watch the National Basketball Association’s (NBA) Houston Rockets to cheer on their countryman, Yao Ming (Larmer, 2005).

Sports globalization is impacting the importation and exportation of sports apparel and equipment on a national and international scale. According to reported Street & Smith’s Sports Business Journal, the sport industry ranked as a top fourth industry in the United States which equaled approximately US$300,000 million in sales during 2006.¹ In comparison, it revealed that South Korea had nearly US$130,000 million of sports business in 2002 (Park et al., 2004). Of the entire amount about US$26,000 million, representing 17 percent were derived from sales of sport apparel and equipment in 2002. Thus, it appears that the sports industry represents a significant and expanding consumer product market for both the United States and South Korea.

Regarding the increasing scarcity of public funds, measures to allocate public money efficiently are becoming more and more important. In the sports sector, most of the public funds are spent on the construction and operation of sports facilities in professional spectator sports as well as recreational sports. Since all public authorities are faced with recreational sports while the number of public authorities faced with professional spectator sports is restricted, strategies to (1) save public money and/or (2) reallocate public money more efficiently, particularly in the recreational sports facility sector, are auspicious for all public authorities.

Governments worldwide have been encouraged to subsidize events, build stadia and arenas and engage in highly competitive and costly bidding processes by the expectation that benefits will accrue from major events (Bennett, 2006; Bull and Lovell, 2007; Crompton, 1995; Dolles and Söderman, 2008). There is a general belief amongst policy makers that hosting large-scale sporting events can realize substantial positive externalities (Bull and Lovell, 2007), and that the associated recognition effects are ‘a major rationale for hosting such events’ (Bob and Swart, 2009; Jones, 2001). Baade (2000: 24) argued that cities have used the “promise of increased economic activity to persuade citizens to lend financial support to an aggressive city strategy to remake their centres into cultural destinations”. Such strategies are often manifested through the hosting of major sport events.

The Olympics celebrate sport like no other event in the world. The uniqueness of this event recognizes a wide variety of sports and creates a sense of nationalistic pride. Billings and Eastman (2003: 569) stated, “the Olympics represents a mix of nationalism, internationalism, sport, and human drama unmatched by any other event”. Olympism was represented at the 2006 Winter Olympic Games in Torino, Italy where Olympic organizers coined the theme ‘Passion Lives Here’. This passion was broadcast internationally, bringing the culture and Olympic spirit to consumers’ workplaces and homes. For more than two weeks the 2006 Torino Olympics held a captive audience with 84 medal events, and 1026 medals were awarded to a contingency of 2508 athletes representing 80 international Olympic Committees. Around 130 countries broadcast the Olympics live, totaling almost 1000 hours representing 50 different languages. In terms of website usage, a record was set reaching 72 million pages visited, 9.4 percent more than the 2004 Athens Summer Olympics.¹

Sports activities, which have long been restricted to specific areas, are today leaving those equipped areas for new zones in town centres or deep in the country, where new activities are being developed. This phenomenon of ‘sportivization’ of society is the result of the joint effects of the increase of leisure time, the development of hygiene concerns and recreational activities and of the mediatization of physical and sporting activities. However, sports amenities and, more particularly, public facilities are slow to adapt to these evolutions.

One of the most common issues facing managers these days is the management of conflict. Managers can spend up to 25 percent of their time dealing with conflict (Burke and Collins, 2000) and whether it is conflict between people, conflict between processes or conflict between people and processes, conflict if ignored can seriously affect an organization’s performance. The sporting world and in particular sports organizations are not immune to conflict. Altercations involving high profile players and coaches are commonplace and while less newsworthy, conflict and power plays in local and community sports clubs are common. Sport is a highly emotive area, involving strong-willed, focused individuals with a passion for sport who are usually unwilling to compromise or tolerate alternate perspectives and therefore an inherently conflict-filled environment. The focus of this chapter is to provide an overview of the research examining conflict in sports organizations. The first section provides some background discussion on the changes currently occurring in sports organizations and how these changes have created an environment for conflict. The second section reviews the theoretical and empirical research on conflict in sports organizations.

Sport in Ireland is popular and widespread with levels of participation and attendance high. In common with other Western European regions, participation has been dropping due to increased popularity of other activities such as watching television and playing computer games. The more popular team sports in Ireland in terms of participation are soccer, Gaelic football, hurling, rugby union and field hockey, but in terms of attendances, Gaelic football and hurling are by far the more popular. For many sports national governing bodies (NGBs), international activities refer to hosting events and organizing competitions, while professional dimensions refer to overseeing and monitoring player/athlete salaries, contracts and conditions.

This chapter is concerned with understanding how the role of the central broker influences the effectiveness of an intentionally created network in an elite sports context. Intentionally created networks, in contrast to organic or naturally occurring networks, are a conceptually undeveloped area (Benson-Rea and Wilson, 2003; Pihkala, Varamäki and Vesalainen, 1999; Tikkanen and Parvinen, 2006). Few studies have been undertaken into networks in either the sports sector context (Cousens and Slack, 2005; Erickson and Kushner, 1999; Thibault and Harvey, 1997; Wolfe, Meenaghan and O’Sullivan, 2002) or the not-forprofit sector, making this particular study a newer context for network research. Our work also answers calls by Håkansson (2006) and Möller and Rajala (2007) to identify and categorize the different types of network structure and their important features. The study seeks to develop a deeper understanding of causal events for the effectiveness of networks, and to discover conditions under which these events occur and how they are related to network effectiveness.

The first Ultimate Fighting Championships (UFC) event was held in Denver, Colorado on 12 November 1993. In an eight-man elimination tournament, fighters representing the disciplines of boxing, Brazilian jiu-jitsu, catch wrestling, karate, kickboxing, savate, sumo and tae kwon do competed for the title of ‘Ultimate Fighting Champion’. This first exposure of the North American public to what was initially marketed as ‘no holds barred’ combat saw Royce Gracie from the discipline of Brazilian jiu-jitsu prevail as the tournament winner (Gentry, 2004).

There is no question that the most popular sport in the world in terms of participation, viewership and business is football (known in the USA as soccer). Even though there is widespread participation among Americans under the age of 18, interest in soccer lags behind several other sports and is virtually ignored by the US media (Brennan, 2007). This apparent lack of interest has not, however, stopped investors and others from attempting to develop professional soccer in the USA in order to tap into the sport’s enormous global market. In fact, the Los Angeles Galaxy of the Major League Soccer (MLS) created a stir in January 2007, when the club signed David Beckham, who agreed to leave Real Madrid, the professional Spanish football club, for a five-year, US$250 million contract in Los Angeles.

The transformation of football (or ‘soccer’ in the American context) into a global sport has several dimensions. These include: the migration of elite football talent, such as players and coaches, and the subsequent support of their fans, between nations, as well as within and between continents; the design and manufacturing of clothing, footwear and equipment for football professionals, amateurs and fans which forms a worldwide industry built on the branding of sports and merchandizing goods; the integration of new media technologies and the use of multiple new media platforms regarding the global transfer of images, information and messages produced and distributed by newspapers, magazines, radio, film, television, video, satellite, cable and the internet; and finally, the ideological dimension of the transfer of values centrally associated with football and its governing institutions. The declaration of the Japanese Football Association (JFA) exemplifies these multiple dimensions: “Through football, we realise the full benefits that sports can bring to our lives — the soundness of our bodies, the expansion of our minds, and the enrichment of our societies.”¹