Importance of stakeholders in a sports league
While sports leagues appear to be necessary for the delivery of competitive matches and seasons, they often actually function to maximise profits for team owners. What should governments do to ensure that the interests of all stakeholders are protected without jeopardizing the competitive environment established by leagues?
Guidelines for submission of written work:
It is recommended that you use REPORT rather than essay style (e.g., use headings/sub headings) in order to help better plan and structure the paper.
• Introduction – Purpose, aim etc
• Background – Why is this an important issue? Brief overview of league business models (profit or win maximising) and structures/processes
• Key issues - Impacting on league business models (revenue sharing) and potential for government intervention - link to and explain using economic concepts
• Likely outcomes - Impacts, benefits of government intervention – on different stakeholders
• Summary and conclusions - What are your conclusions (did you answer the question?)
You will be expected to collate, analyse and synthesise/integrate information relevant to the topic and support your position/recommendations with evidence from a variety of current resources such as academic and industry journals as well as government reports and studies.
This means that you will need to demonstrate that you have done a reasonable amount of research. There will be a range of views/evidence that varies in quality, currency etc. How
have you ‘massaged’ this together to make sense of it for the reader? Are you able to use a variety of different viewpoints and develop a coherent argument? the key here is to have a
variety of current sources. Don’t make the mistake of saying that the ‘currently the situation is’ and then quote a 1989 source. You can use government /consultant/industry reports,
journal articles as well as books. You should also consider what is happening in different jurisdictions? Do different sport systems/leagues have similar issues/problems? There is no
magic number of references – 6 is probably too few - 30 is probably too many (to be able to integrate/synthesise). Make sure they are relevant to the topic and useful – to help you
answer the question. Similarly, a long list of references is of little value if it is obvious that you haven’t read them and they have not been used well.
An assignment that is primarily descriptive and based on personal opinion is not appropriate for this level of study (you must use data and a variety of references).
1. Use an appropriate and consistent referencing and presentation format
2. Indicate the word count on the cover sheet (excluding table of contents, references and any appendices)
3. Don’t use lecture notes as a reference
Searching the literature in terms of searching for materials, there are a number of relevant databases. success all
depends on the search terms - don't be too narrow (e.g., ‘benefits of league expansion’) or too broad (e.g. ‘sports leagues’). You should use a number of different approaches and include a variety of terms. Also check the books and other sources in the reading list.
You are unlikely to find too many sources that directly discuss the question – you will need to use the sources you locate and interpret and synthesize them to use as examples and evidence.
Assignment Marking Criteria
The written papers will be assessed using the following criteria:
• Research: e.g., comprehensiveness (depth, currency and variety of sources)
• Content: e.g., cohesiveness, integration and synthesis of information/data from references, depth to which position is supported, link between literature, analysis/discussion and recommendations.
Under a specific sports league, dozens of teams take part to compete with each other. A professional sports league can be played at an international or national level. Hence, to conduct this kind of association, each team owner and other stakeholders invest a considerable amount of money in order to earn profit. From the economic point of view, sports league is vital as various companies get opportunities to promote their products and services (Bragg et al. 2018). However, to support the interests of all stakeholders, government intervention is essential because of its various tools and policies. The chief purpose of this report is to analyse the role of government and its importance in a sports league. The league business model provides an appropriate structure of profit maximisation, which can be used to depict the scenario with more convenience (Holt et al. 2018). Moreover, the report is intense to discuss about the chief issues related to revenue sharing faced by the stakeholders and importance of government intervention regarding this concept. To analyse the above-discussed concept, the report can investigate both impacts and benefits of government intervention on various types of stakeholders, in the light of some economics theories. In the end, an overall conclusion of the entire report will be provided to understand the entire discussion at a glance.
A sports league can help in developing a nation by contributing positively in multi-dimensional aspects including socio-political economy and industrial domains. From the economic point of view, a sports league can generate employment opportunities and can develop infrastructural facilities, which in turn help other business organisations to develop their business related to the same. A sports league can help a country to earn economic benefit in the form of foreign capital from its international investors. In other words, the host country gets the opportunity to enhance its national income and economic condition by organising a national or international sports league (Gholizadeh, Talebpour, Kashtidar and Abdolmaleki 2018). It is already stated that many stakeholders invest their money in different national or international sports with the objective of earning profit. Here, the concept of stakeholder represents an organisation or an individual with the power of influencing the activities of sports team by their decisions.
One of the primary stakeholders related to a sport are their players, who participate with the objective to earning lucrative incentives. Spectators are also another kind of stakeholder, who helps a sport team by providing economic benefits in terms of the revenue collected from the tickets, which they buy. Apart from selling tickets to various matches, a team also earns financial benefits by selling membership subscription and group merchandise (da Silva and Las Casas 2017). The sport governing body in general are bestowed with the responsibility of implementation of various rules of competition (Yoo and Hong 2017). Various companies offer sponsorship as a training cost and in lieu of that enjoy opportunities to earn economic incentives by promoting their products. Community members also act as stakeholders and help a sport in various ways. A team receives participants, spectators and volunteers from a community. Hence, it is crucial to protect the interests of all kind of stakeholders in a competitive environment. This indicates towards the fact that there remain immense scopes for the government of concerned countries to play a vital role to control interests of all league related stakeholders by protecting them, without destroying the competitive environment of a sports league.
Various forms of stakeholders
To provide an overview of business league model, it may be helpful to choose a particular sports league. The Premier League is a private company consisting of 20 club members. Under the rules of English and European law, UEFA, FIFA and the FA, each team performs independently. Moreover, each club member owns a share of entire league and possesses voting right in case of any contingencies. In addition to this, this premier league does not have any salary cap and it further helps each team members to earn salary according to their demand. A club can hire players from aboard or from other member clubs (Wang, Goossens and Vandebroek 2018). Due to the absence of salary cap, foreign investors show colossal interest as they have significant opportunity to earn revenue. By offering attractive incentives, they can influence team-members to play for their team. The Premier League has received its income from different segments, during 2011-2012 seasons. By providing concessions on their tickets, the Barclays Premier League has successfully sold more number of tickets to their fans, during match time. Moreover, the league also has earned commercial revenues through various club retail outlets and online portals and also in the form of worldwide corporate sponsorships. In addition to this, the association has drawn tremendous amount of income especially from the television channel having the broadcasting rights of their league matches. On the other side, the club members also bear some expenses to conduct an entire league. Investors pay money for promoting their chosen team members. Some additional costs are stadium expenses, team travel, player development and remunerations to the players (Baker 2018). They also provide operating capitals, based on requirements of the association.
Hence, from this financial structure of the premier league, an overview of league business model can be drawn. Each team owner pays remunerations to their respective team members and allocates some resources for their team. On the other side, team members and investors get revenues from the sales of the tickets for the matches, selling of the broadcasting rights to international or national media, facilitating online purchase of their merchandise and from player transfer fees (Wang, Goossens and Vandebroek 2018). The whole amount of profit is divided between the team owners and the investors, according to their share of investment.
A sports league plays dual roles. In one hand, a league delivers various competitive matches and seasons and in other hand, the chief focus of each team-owner remains to maximise their individual level of profit. The concept of profit maximisation indicates the difference between total revenue that the team-owner receives during matches and total cost that the same needs to bear for conducting those matches.
The brief overview of a league business model
Often, each team-owner indulges various illegal techniques for earning higher profits, which can have negative implications on the entire sports association. Profit maximisation by adopting unfair means on part of the investors are even more facilitate in those economies where there are substantial presence of parallel economies, black market and lack of government infrastructure to combat the same. This is a type of market failure which, being very common especially in the developing countries, benefits the concerned investors.
The league business model consists of a large number of interrelated business operations. For an international level of a professional sports league, the role of investors is very critical. The team member cannot solely finance and operate an entire team with their budget. Hence, it is essential to attract more investors (Sloane 2015). However, various team-members practice illegal or unethical activities to earn high amount of revenue, which often adversely affect the interest of all stakeholders. These immoral activities occur in the form of match fixing, bribe, fraud and corruption.
In this context, the chief role of the government is to implement a robust policy framework to protect self-interest of every stakeholder. As the government of a host country organises and hosts various national and international sports, they have a significant role in controlling the entire activity (Potts and Thomas 2018). The sports league becoming a large commercial activity on its own various economic factors become interrelated with this industry.
There remain considerable scopes of market failure in the sports league business model. The concept of market failure describes a situation, where inefficient allocation of resources can be seen in a sports industry. Monopoly power is an example of market failure that various sports leagues enjoy within a country. In this situation, investors are expected to be adversely affected, resulting in substantial economic loss. However, an efficient government can implement suitable policies to prevent such situations. For instance, during recessionary period, investors may face enormous loss by investing money in the sports market. Recession leads a country’s aggregate demand towards the negative direction (Cox 2018). Hence, like other business organisations, sports industry also faces a shortage of demand. This has negative implications on the profit level of the team owners as well as the investors. However, by providing various governmental subsidies and expansionary business incentives, negative impacts of market failures can be reduced to a considerable extend. On another side, presence of strict vigilance on part of the regulatory bodies is expected to help in preventing the team members from practising unethical activities.
Key issues impacting on league business models
Government intervention sometimes becomes essential for a professional sports league. As an international association like that of sports league create global connections, the league can influence political and social economy of all participating countries, as well. Moreover, interests of stakeholders are significant for their overall financial wellbeing (Harvey, Koller and Lowrey 2015). In presence of the practice of unlawful business activities on parts of the team-owners, the financial investors, spectators and other community members are expected to be negatively affected. Moreover, in future, the demand of sports league may be hampered as stakeholders can loss their interests. If the government implements strict rules to control all illegal activities, then those unfair practices could be reduced (Black et al. 2017). These governmental activities may further increase sports demand and interest of stakeholders in future. A good sports league can also help an economy to develop faster. However, excessive governmental intervention may hamper interests of team-members or a sports organisation, as their profit incentives are directly hampered by excessive regulations on part of the government.
In the U.S.A, four sports leagues enjoy cartel like power and dominate all the sports industry of the country as a whole. The federal antitrust law has tried to control their significant market power, though they have failed due to well-entrenched collusive power of the sports associations (Grow 2015). Under section 1 of the Sherman Act, activities of U.S sports leagues have been scrutinised (Clark 2017). However, after inconsistent application of judiciary of section 1, it can be anticipated that section 2 of the Sherman Act may protect the public by its antimonopoly provisions from the four monopoly sports leagues of the U.S.A.
The economy can earn profits if the government intervenes in a sports league appropriately and efficiently (Koller 2015). Moreover, the government can also control market failure by using its various economic tools, like regulatory and targeted monetary policy or fiscal policy. On the other hand, as the sports league generates substantial national income and employment opportunities, public monitoring is crucial in this aspect. Otherwise, the practice of labour exploitation can be seen. Hence, various team members and other governing bodies of the organisation usually prefer governmental vigilance for the protection of their self-interests (Smith, Evens and Iosifidis 2015). Moreover, stakeholders can get the confidence to involve with a sports league or team in presence of a robust and working policy framework of the government of the concerned country. For instance, to prevent doping system, U.K Anti-Doping (UKAD) contacts with drugs policy advisors of U.K government to make import of anabolic steroids as illegal activity as using of drugs become common among regular athletes.
Potential for government intervention - link to and explain using economic concepts
In general, the government can control market failure by adopting various steps. By increasing the number of sports team under a particular sports league, the government can increase the competitive environment among each sports team.
From the above discussion, it can be concluded that the roles of stakeholders are crucial for any sports league. They provide support to their team-members in various ways along with vested their interests. However, the team-owners always want to earn profit under a competitive business environment. For this, they sometimes indulge in unethical practices of that of match fixing, bribe and labour exploitation. This, along with the cartel and monopolistic practices, often leads to market failures in these industries. Under this situation, government intervention and presence of adequate regulatory frameworks are substantially essential. With strong monitoring power and effective policies, the government can control activities of team-owners and can protect the interests of the stakeholders. In this context, it should be mentioned that a country’s economic condition also depends on sport because a sports league generates employment opportunity and helps to increase the national income. However, excessive intervention of government may sometimes adversely affect team-members, as the same often hampers the profit incentives of the owners. Despite this, for broader scenario and greater welfare aspects, the intervention of government can be often found to be beneficial for each sports organisation.
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