...a playoff race? With no spending rules in place this is becoming the new reality in Major League Baseball. The lack of a salary cap in baseball is allowing teams that have money to spend extravagantly, giving those teams an unfair advantage over those that cannot afford heavy spending. While spending big does not always guarantee a championship, it has been shown to increase the chances of a playoff appearance. Excessive spending on players is one of the major issues. Compare this to a sport like the NFL where a salary cap has been in place for over two decades, and it is clear how spending limits can create a more even playing field. Spending has been shown to increase the chances of having a playoff caliber team. Two separate studies of baseball payrolls conducted from 2000-2010 confirm this. During this ten year period, of the fourteen teams with payroll over $100 million, fifty-three of those made a playoff appearance, versus twenty-five appearances for those with a payroll under $100 million. Of the teams that spent more than the league average over this period, sixty-nine percent made it to the playoffs, seventy-three percent to the League Championship Series, and eighty-three percent went to the World Series. Obviously not all of the big spending teams will win a championship, because there is only one champion for every year. Although one can see that the chances greatly increase when owners are allowed to spend such high amounts to buy all of the best high-priced players...
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...Major Leagues The 1990s and early 2000s was a period of substantial growth for professional sports at all levels. The number of teams in the Big 4 major leagues grew from 103 franchises in 1989 to 122 franchises by 2001. During that time, the National Hockey League (NHL) added eight expansion teams, Major League Baseball (MLB) added four, the National Football League (NFL) added three, and the National Basketball Association (NBA) added five teams. In addition, several new leagues were launched in the 1990s with aspirations of becoming prominent national properties, most notably Major League Soccer (MLS) and the Women's National Basketball Association (WNBA). By 2001, each of the Big 4 leagues had reached a saturation point, having established franchises in nearly every market capable of sustaining a major sports property. A few markets remain available for certain leagues. For example, Los Angeles has not had an NFL team since the Rams abandoned LA for a new stadium in St. Louis in 1995. While the NFL would love to have a franchise in the country’s 3rd largest television market, the lack of a modern, “NFL-ready” stadium has prevented a team from filling this attractive...
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...Moral Capitalism in the NFL lockout When it comes to fights over money, neither pro-football players nor owners are easy to root for. The owners are rich enough to begin with, and the players, though they take part in a violent game that risks their long-term health, are compensated handsomely. To further complicate the legal struggles of billionaires vs. millionaires; both players and owners are competing for human capital by trying to capture the loyalty of the fans. They do this fully aware that the $9 billion dollars they are wrangling over comes from the fans. The same Fans who attend games, buy jerseys, and sit-through television ads. Do this with the expectation that everyone plays by the same rules, and that the game they love, will be back next year. “For many years, the collectively bargained system—which has given the players union enhanced free agency and capped the amount that owners spend on salaries—has worked enormously well for the NFL, for NFL players, and for NFL fans.” Goodell’s first argument is clear, that the status quo has worked out “enormously well” for every party involved. Unfortunately this argument is problematic, given that it was actually the NFL whom decided to opt out of the collective bargaining agreement (CBA). In 2008 the Owners voted unanimously to exit the CBA after the 2010 season, even though the 2006 extension would have been valid through the 2012 season. The Owners shortened the deal by two years because they believed the players...
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...to improve competitive balance among member organizations despite varying economic conditions and market capacities. Every league acknowledges that the purpose of revenue sharing is to allow a closer range of payroll spending that might otherwise not be accomplished, preventing large market teams from controlling the allocation of high-priced free agents (Kesenne, 2006). Television rights and licensing agreements play a huge role in revenue sharing. The National Football League and CBS created a revenue sharing model that included televising all regular season games for an annual fee of $4.65 million and by 2014 the NFL earned a share of $4.9 billion (Stone, 2015). Often times, the media exploits financial figures that are included within the revenue sharing agreement. The National Football League teams share more than sixty one percent of total revenues generated by the league which lends itself to good business. The NFL also shares ticket and merchandise revenues with all teams except for the Dallas Cowboys which keeps revenue generated from merchandise sales and does not receive any from the other thirty-one teams (Kesenne, 2006). Each of the NFL franchises retain suite, club seating and sponsor revenues from naming rights and other properties. In 2014, the NFL generated $10 billion in revenue and is projected to generate up to $25 billion in 2025 (Stone, 2015). Major League Baseball (MLB), the National Hockey League (NHL) and National Basketball Association (NBA) share...
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...state of work throughout the NFL season, is called the jock tax. NFL players are not the only professional athletes in the United States that face this tax, however, the structure of their pay and the salary cap figures make the analysis the most manageable. After examining specific player data, my study determined that were significant discrepancies between a player’s effective tax rate within their conference and division and the average salary differences. The argument that critics have against the jock tax claim that players may be severely detrimental to the after tax earnings of all NFL players. Section I: Introduction According to a recent study in early 2016, the state of California collected just over $229 million from nonresident athletes due to the imposition of the ‘jock tax’ in 2013 (Artz, 2016). California is among 19 states that impose the jock tax on athletes that are visiting said states for performing in professional sporting events. The jock tax represents an auxiliary income tax imposed on nonresidents by the state in which the players are traveling. For example, a player that travels to California faces an additional 13.3% tax rate as a proportion of their days spent in that state relative to the total days of the season. According to federal tax bracket data, any single filer that earns over $415,050 faces a 39.6% income tax (Pomerleau, 2016). After examining the NFL’s rules on the minimum salary for any player in the NFL along with the federal tax bracket...
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...Running head: COMPETATIVE ADVANTAGE AND PRO SPORTS Competative Advantage and Pro Sports Cynthia Moreno University of Phoenix MGT 488 Ricky Lovitt Abstract Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. “A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player” (Barney 1991 cited by Clulow et al.2003, p. 221). To gain competitive advantage a business strategy of a firm manipulates the various resources over which it has direct control and these resources have the ability to generate competitive advantage (Reed and Fillippi 1990 cited by Rijamampianina 2003, p. 362). There are two of competitive advantages: comparative advantage and differential advantage. We will address differential advantage in this paper and how it applies to the business of professional sports. A differential advantage is created when a firm's products or services differ from its competitors and are seen as better than a competitor's products by customers. Four criteria that determine a firm's competitive capabilities in the marketplace and judging a firm’s resources are as follows: 1. Are they Valuable? (do they enable a firm to...
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...However, the NFL was not always the Juggernaut we know it as today. The NFL has been opposed by many other leagues over the years. The XFL or Extreme Football league sought to put an original spin on football. The UFL or United Football league is the NFL’s most recent competitor. The USFL or United States Football league sought to take the National Football League down legally and almost did so in the late 80’s. Arena Football aimed to bring football to an indoor enviorment with extensive offense with the AFL. And Originally the American Football League gave it’s run at rivaling the “big brother of football in the 60’s.However before we understand how the NFL is so dominant we have to understand how it came to be. The history of the National Football League has roots spanning as far back as 1892 when former Yale All-American guard William Heffelfinger was paid $500 by the Allegheny Athletic Association to play in a game against the Pittsburgh Athletic Club, making him the first ever professional football player, according to the book Pigskin: The Early Years of Pro Football. However it wasn't until 1920 that American football achieved a league of any true organization. Roussel, 2 The American Professional Football Association was formed on September 17, 1920 and included ten teams from four different states. However the APFA lasted only two seasons when it was reorganized on June 24, 1922 into the National Football League. The only two teams still in the NFL from the inaugural...
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...Introduction The advent of revenue sharing and salary caps has revolutionized the business of professional sports. The National Football League implemented these concepts in order to promote competitive balance. Theoretically, revenue sharing is supposed to encourage equal distribution of wealth so as to not concentrate top-talent players to the teams with the most resources. In so doing, its practice should work to ensure that there is equal competition among small and large market teams. Also, by enacting a salary cap, larger market teams are prevented from monopolizing talent. Through a series of collective bargaining agreements and lawsuits, there has been a movement in the NFL toward benefiting both the players and owners. The NFL is the most successful professional sports league in the country. This is in large part due to its ability to run efficiently as a business and promote competition as a sport. In this paper, we examine the historical significance of the progressive collective bargaining agreements and how its changes have effected players and owners of teams in the league. We also examine the components of revenue-sharing and the salary cap implemented through the NFL’s CBA and their significance in promoting competitive balance. Historical Analysis of the Salary Cap and CBA The National Football League has undergone many changes since its inception in the 1920s. Early in the development of the National Football League, there was competition among teams in...
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...Gage Meyers Mrs. Byers Comp. 1-4 15 April 2014 Athletes Do Not Deserve What They Are Paid It would be great to make 31.3 million dollars a year. Adding an additional 47 million dollars in endorsements for simply playing a game that an athlete loves. Michael Jordan, along with several other professional athletes, think getting paid millions of dollars is perfect. In the 1996 season, after playing 3,106 minutes, Michael Jordan made 170,000 dollars a day which is the equivalent of 160.97 dollars a second (Christian Science Monitor). Another unbelievable statistic is Mike Tyson's earnings in his match with Peter McNeeley. In a single second, he made 281,000 dollars (Christian Science Monitor). Alex Rodriguez will be paid $29 million this season, making him the highest paid player in baseball (Newsday). Rodriguez’s salary is $4 million more than the entire 25-man roster of the Houston Astros will make this year (Newsday). Athletes do not deserve all that money. President Obama’s salary is 400,000 dollars. President Obama is the leader of the ‘United States of America, and he is paid less than a professional athlete that sits on the bench in any professional sport. Professional athletes are easily the most over paid job in America. Professional athletes are overpaid in several professional sports. Professional sports generate massive revenues, and the athletes who play these sports are being paid tremendously high salaries. New York Yankees baseball star, Alex Rodriguez, signed a contract...
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...Cowboys. They have one of the biggest revenues and budgets in all of sports. They have a worldwide reach because of the their brand power and their on field success. With one of the most powerful and recognized owners in sports the Cowboys have a franchise that tops the list as on e of the most successful sport franchises in all of sports. One of the most common situations in sports is a franchise losing money. It happens many times when the payroll and other expenses exceed the income from the various revenue sources available to the team. The Cowboys make sound decisions when it comes to player contracts. However if they were to splurge and go get an expensive free agent such as Peyton Manning it could put them over their budget. This could mean they wont have the capital to spend for other positions meaning their team might be weaker. To stay within budget the Cowboys might be obligated to adjust certain areas. These areas might be to cut certain nonperforming players who take up a lot of money. This happens many times during the NFL season and offseason. Another move might be to cut back marketing or to cut back on perks for the players. All of these decisions will have consequences outside of merely saving money and will affect the team in other ways. For example if the players perks are cut back then these players will be reluctant to sign back with the team and they will tell other free agents to consider the same. If the marketing is cut back then the reach of the organization...
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...into one large case of Multidistrict Litigation. All of the lawsuits that have been filed claim “tortious conduct” on the part of the NFL, resulting in neuro-degenerative disease and injury to professional football players. As of January 24, 2013, over 4,500 retired NFL players, more than one-third of players to ever sign an NFL contract, had brought a suit against the NFL concerning the head injuries that they sustained on the field during their playing careers. (Anderson, 1). Given the outstanding popularity of football in the United States, these lawsuits have garnered the attention of national media, prompting debate, discussion, and research about the dangers of football-related head injuries and the future of the NFL. (Fenno, 1). The litigation has the potential to reach the scale of the Big Tobacco litigation of the 1990’s, but the NFL has thrown a substantial roadblock in the players’ suit with a federal employment law preemption defense. (Fisher, 1). The consolidation of all the lawsuits into the Multidistrict Litigation has created the ability for both parties to decide the legal issues presented by the players’ claims and the NFL’s defenses. This paper will examine the merits of those claims and defenses, offer insight into how the players applied rhetorical devices to further their case, address the link established between the NFL and Big Tobacco, and how the court could likely rule regarding the concussion litigation, if it makes it to court. To begin, the history...
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...The National Basketball Association (NBA) Lockout HRMG 5930 Strayer University October 08, 2012 Abstract While there were many who might have been sick of the whole NBA lockout fiasco, and were thinking the NBA lockout may have been a bad thing for all parties involved…it was clear that the lockout not only effected the fans, it also had a lasting effect on many people behind the scenes as well. From the people like the office assistants who did a lot of the scheduling of games, marketing and halftime entertainment, to the concession stand companies and workers, bar owners (who hosted watch parties), the thousands of security guards and ushering staff members that worked and staffed the arenas, the problems trickled down and caused issues and unemployment problems for many people we may not have even though about. In retrospect, the lockout affected a lot more than the players and owners that we have seen on television, it lasted so long that its affect also caused havoc and mayhem in the lives of so many working class folks, that it even forced some to seek part-time or other employment to make ends meet in their households. This paper will address what the NBA lockout was about, what each sides issues were (Owners and Players), what they wanted and set out to achieve, the outcome and what it meant for the owners and players, and finally, CBA affected all parties involved. While the fans and countless others were probably sick and tired of the whole NBA lockout...
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...the title, this research is to talk about effects of the 2011 Collective Bargaining Agreement in the National Basketball Association. As we knows, because of the new bargaining agreement, players will earn less money that before, and make contribution to the league, but people doesn't it affect or not. This research gives the author's analysis. Review of Related Literature The author, David J. Berri, is a professor of economics in the Department of Economics and Finance; and his current main research topics are the economics of sports. At the beginning of this research, the author gives some background of strikes and lockouts in professional North American sports. Besides NBA, Major League Baseball(MLB), National Football League(NFL) and...
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...Are Professional Athletes Overpaid? Have you ever considered how much money does an average person need to be able to have food three times a day, have a house, be able to send their children to school to get an education and even have a car? Realistically, all of this plus a little more can be done with an income of between $45,000 and $55,000 easily. For some reason, it was decided by us, people who labor is harder than the most, like janitors, factory workers, and even factory workers, should be paid less than someone that sits on a desk all day or someone that gets paid to play a game for living. Athletes today are the highest paid people in the world, with the exclusion of Donald Trump and Bill Gates. If you think about it, it is absurd to believe that someone is really worth millions of dollars and all they do is play a sport. Millions of people would do this for free if they had the chance. For that reason, I believe professional athletes are overpaid for many reasons. In USA Today Magazine, under section Your Life it says, “Although many professional athletes apparently still feel underpaid, just two percent of the public agrees, according to a survey conducted by Roper Starch Worldwide. In fact, the vast majority of Americans think athletes are overpaid.”(USA Today) This is ridiculous to hear for these athletes already making millions of dollars which is way more than they deserve. Also, in this article it states that professional athletes get paid what...
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...WSJ Project The Lost Wages of Youth This article was about the problem America has today with youth’s ages 16 – 19 not getting hired, or working as much as they used to. The article talked about how the unemployment rate of older teenagers has risen due to higher minimum wages. I really liked this journal. I have been working every summer since I was young, then when I turned 16 I entered the “real” work force, so this topic deals close to me. I think this article is right on saying that raising minimum wage only makes things worse. Sure we make more money an hour, but now everything we buy now costs a lot more to produce, driving costs way up. People think that if they get paid more then they will have more money, when in reality as they make more money, prices rise, actually causing them to have less money. Bring Back the Robber Barons- Daniel Henninger This article by Henninger is about the future of America, and how the Government is hindering us. I really like Henninger’s opinion on this topic. I believe that the government’s stimulus bill to create jobs is stupidity at its max. All this bill does is increase our debt. I like how he wants the barons to come back. Sure they made a lot of money, but they were new, innovative, and brought a new aspect into the game. I don’t think these political entrepreneurs can really help for the better as much as market entrepreneurs could. Once politics take over, the economy crashes. We have seen over and over how well socialists...
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