Tag: Sports

Guess the Odds that the NCAA Games Will Attract More Gambling in 2023

Posted on by phoffman@channelchek.com
Image Credit: Fictures (Flickr)

As March Madness Looms, Growth in Legalized Sports Betting May Pose a Threat to College Athletes

March Madness began on March 14, 2023, it’s a sure bet that millions of Americans will be making wagers on the annual college basketball tournament.

The American Gaming Association estimates that in 2022, 45 million people – or more than 17% of American adults – planned to wager US$3.1 billion on the NCAA tournament. That makes it one of the nation’s most popular sports betting events, alongside contests such as the Kentucky Derby and the Super Bowl. By at least one estimate, March Madness is the most popular betting target of all.

While people have been betting on March Madness for years, one difference now is that betting on college sports is legal in many states. This is largely due to a 2018 Supreme Court ruling that cleared the way for each state to decide whether to permit people to gamble on sporting events. Prior to the ruling, legal sports betting was only allowed in Nevada.

Since the ruling, sports betting has grown dramatically. Currently, 36 states allow some form of legalized sports betting. And now, Georgia, Maine and Kentucky are proposing legislation to make sports betting legal.

About two weeks after sports betting became legal in Ohio on Jan. 1, 2023, someone, disappointed by an unexpected loss of the University of Dayton men’s basketball team to Virginia Commonwealth University, made threats and left disparaging messages against Dayton athletes and the coaching staff.

The Ohio case is by no means isolated. In 2019, a Babson College student who was a “prolific sports gambler” was sentenced to 18 months in prison for sending death threats to at least 45 professional and collegiate athletes in 2017.

Faculty members of Miami University’s Institute for Responsible Gaming, Lottery, and Sports are concerned that the increasing prevalence of sports betting could potentially lead to more such incidents, putting more athletes in danger of threats from disgruntled gamblers who blame them for their gambling losses.

The anticipated growth in sports gambling is quite sizable. Analysts estimate the market in the U.S. may reach over US$167 billion by 2029.

Gambling Makes Inroads into Colleges

Concerns over college athletes being targeted by upset gamblers are not new. Players and sports organizations have expressed worry that expanded gambling could lead to harassment and compromise their safety. Such concerns led the nation’s major sports organizations – MLB, NBA, NFL, NHL and NCAA – to sue New Jersey in 2012 over a plan to initiate legal sports betting in that state. They argued that sports betting would make the public think that games were being thrown. Ultimately, the Supreme Court ruled that it was up to states to decide if they wanted to permit legal gambling.

Sports betting has also made inroads into America’s college campuses. Some universities, such as Louisiana State University and Michigan State University, have signed multimillion-dollar deals with casinos or gaming companies to promote gambling on campus.

Athletic conferences are also cashing in on the data related to these games and events. For instance, the Mid-Atlantic Conference signed a lucrative five-year deal in 2022 to provide real-time statistical event data to gambling companies, which then leverage the data to create real-time wager opportunities during sporting events.

As sports betting comes to colleges and universities, it means the schools will inevitably have to deal with some of the negative aspects of gambling. This potentially includes more than just gambling addiction. It could also involve the potential for student-athletes and coaches to become targets of threats, intimidation or bribes to influence the outcome of events.

The risk for addiction on campus is real. According to the National Council on Problem Gambling, over 2 million adults in the U.S. have a “serious” gambling problem, and another 4 million to 6 million may have mild to moderate problems. One report estimates that 6% of college students have a serious gambling problem.

What Can be Done?

Two faculty fellows at Miami University’s Institute for Responsible Gaming, Lottery, and Sport – former Ohio State Senator William Coley and Sharon Custer – recommend that regulators and policymakers work with colleges and universities to reduce the potential harm from the growth in legal gaming. Specifically, they recommend that each state regulatory authority:

  • Develop plans to coordinate between different governmental agencies to ensure that individuals found guilty of violations are sanctioned in other jurisdictions.
  • Dedicate some of the revenue from gaming to develop educational materials and support services for athletes and those around them.
  • Create anonymous tip lines to report threats, intimidation or influence, and fund an independent entity to respond to these reports.
  • Assess and protect athlete privacy. For instance, schools might decline to publish contact information for student-athletes and coaches in public directories.
  • Train athletes and those around them on basic privacy management. For instance, schools might advise athletes to not post on public social media outlets, especially if the post gives away their physical location.

The NCAA or athletic conferences could lead the development of resources, policies and sanctions that serve to educate, protect and support student-athletes and others around them who work at the schools for which they play. This will require significant investment to be comprehensive and effective.

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of, Jason W. Osborne, Professor of Statistics, Institute for Responsible Gaming, Lottery, and Sport, Miami University.

About the Quickening Growth Spiral in Revenue of Pro Football

Posted on by phoffman@channelchek.com
Image Credit: Peter T. (Flickr)

The Business of Football, How the NFL Makes Money

There’s a lot of money being made through the business of professional sports leagues. The NBA, MLB, NHL, all have very profitable business models, and although the businesses are all similar, the NFL leads the other U.S. based leagues in generating revenue. The once tax-exempt entity has a dual business structure with multiple layers of income that continues to expand. Below we cover the multiple ways the NFL, and the months-long drive of more than 30 teams to the Superbowl, ring the register.

In 2015, the National Football League forfeited its tax-exempt status with the IRS. The league had benefitted from the unique status beginning in 1942. The decision was based in part on mounting criticism over its rapidly growing earnings streams.

These streams largely come from the 32 teams that make up the NFL, thirty-one of the ball clubs are privately owned, while just one, the Green Bay Packers, continues to operate under a non-profit public corporation status. The clubs all form a trade association through which funds are directed back to the NFL board, some find their way distributed back to the teams.

This form of entertainment rakes in money on many fronts. In-person attendance, TV viewers, different forms of wagering, and advertising dollars all feed into overall league revenue after costs such as salaries that can $50 million annually.

Tickets to the Super Bowl 2023 event between the Kansas City Chiefs and the Philadelphia Eagles are averaging about $10,000. The higher end seats are in the $40,000 range, about the same as a Tesla Model S.

Tax Exemption of Teams

The team with tax-exempt status is exempt from paying all or some of federal income taxes. This status had been maintained by all NFL teams from 1945 through 2015.

The NFL voluntarily opted to give up its tax-exempt status in 2015 and began paying taxes. Some contend this change avoids further negative public outcry. It seems the economic benefits were not as significant as the public relations disadvantages.

 Business Structure

The league separates its income streams into local and national categories. On the national side, the NFL negotiates national merchandise, licensing, and television contracts. The 32 teams receive equal shares of this money, regardless of individual team performance.

Local income is generated through concession sales, ticket sales, and corporate sponsors. This doesn’t nearly cover the cost of fielding a professional football team. Using the Green Bay Packers as a benchmark, the team had expenses totaling $410 million in its fiscal year 2021. Most of this number was attributable to player salaries, with the remainder used for stadium maintenance, advertising, and team and administration expenses.

 How Teams Make Money

The majority of any NFL team’s revenue comes from TV arrangements. Ticket revenues, licensing, merchandising agreements, and endorsement deals are additional income sources.

Revenue of All National Football League Teams from 2001 to 2021 (in billion U.S. dollars)

Data Source: Statista

 

Televised Rights and Deals – The Super Bowl is among the most watched television events in America each year. The regular games broadcast on Sundays, Mondays, and Thursdays throughout the regular season will consistently have the best TV ratings. This is why media corporations pay an above average amount for the right to broadcast them.

The traditional television industry now competes with other video-based programming, all pulling the attention of those seeking entertainment. The NFL audience and draw are not in decline. NFL teams still generate massive local and even international revenue through TV contracts. The individual clubs receive significant amounts from television providers thanks to multibillion-dollar contracts, and there are even more television viewers and broadcasts of games than other programs on set.

Image Credit: Karen (Flickr)

Tickets and Vendor Rental – Far below the rapidly increasing money from TV deals, ticket sales are a large source of income for individual teams. NFL games often sell out, with an estimated average ticket price of $151 and a stadium capacity of roughly 70,000. It’s a nice add-on to broadcast viewership.

NFL teams can also use their stadiums to hold non-football activities, like concerts within local restrictions.  

The cash flow on the rental of space to vendors to sell food and drinks at games are also significant in a stadium with 70,000 fans as a captive audience.

Image Credit: RaymondClarkeImages (Flickr)

Official Sponsorships – Corporate sponsors pay NFL teams to put their logos on products, TV transitions, player jerseys, etc. The franchise rights to NFL grounds naming of stadiums are extremely desirable among corporate advertisers.

The naming right to So-Fi Stadium in LA, home of the Los Angeles Rams, is in the neighborhood of $30 million annually, and similar rights to Allegiant Stadium in Las Vegas is estimated at between $20 and $25 million annually.

Gambling Franchises – Some NFL teams take advantage of this method by opening betting platforms in their stadiums, collaborating with well-known casinos, creating online sports betting websites, and other strategies. This is an area of rapid expansion as sports betting becomes legalized across the US and technology provides opportunities for betting on fragments of the game in addition to the more traditional methods. Incremental income from these growing arrangements has expanded income opportunities among teams.

Image Credit: Karen (Flickr)

Costs

Overall, like any business, the NFL will undoubtedly explore all the opportunities for meaningful income that present itself. Of course the overall income is best measured net of expenditures that include marketing, cost of athletes and other entertainers, management, upkeep, and renovations.  

Take Away

One of the most financially successful professional sports leagues in the US and across the globe is the NFL. Most of the teams’ revenues are generated from broadcasting and licensing deals. The growth in revenue, with the exception of one year during the pandemic curbs, has been accelerating. Technology has brought new methods to gamble on sports, along with some friendly gaming legislation across the nation. This is additive to the bottom line.

It appears that the trend, which has survived some public relations setbacks, isn’t going to continue as Americans tend to spend many hours during the winter months immersed in the sport of football.

Paul Hoffman

Managing Editor, Channelchek

Why NFL Players and Other Pros Need an Elite Money Management Team

Posted on by phoffman@channelchek.com
Image Credit: Randychiu (Flickr)

Managing Money Is as Important as Making It: The Sad Case of Athletes Going Broke

Lacking a solid team is a recipe for organizational failure, and those intending to excel in business—or any other sector—must invest in management. Considering that many professional athletes encounter bankruptcy shortly after retiring, they are a demographic that could greatly benefit from quality financial management teams. Elite athletes earn millions of dollars during a short time, but few succeed at multiplying their earnings to create wealth. An investigation by the Global Financial Literacy Center found that 16 percent of National Football League (NFL) players declare bankruptcy within twelve years of retirement. Quite startling is that some athletes report bankruptcy as early as two years after retirement.

The results of the study also showed that NFL stars were just as likely to experience bankruptcy as other NFL players. Bankruptcy figures are equally daunting for basketball players. Research reveals that National Basketball Association (NBA) players who file for bankruptcy do so within 7.3 years after retirement, and 6.1 percent of all NBA players go bankrupt within fifteen years of exiting their profession. The emotional trauma of bankruptcy can lead to distress. Research indicates that 78 percent of NFL players experience financial distress two years after retirement.

Inept management of finances is the easiest strategy for losing wealth. Professional athletes can avert financial calamities by investing in a better management team. There is a stark difference between managing a junior athlete and managing a superstar who earns millions of dollars yearly. A professional who manages a junior athlete could be an excellent manager for a player at that stage, but the transition to elite status requires people with greater expertise.

In business, a manager should possess the relevant skills. They don’t have to be your friend. Elite athletes need elite managers to help them navigate stratospheric wealth. If a manager doesn’t have expertise in managing successful athletes or businesses, then he is unfit to manage an elite athlete. Athletes who succeed at expanding their empires are reluctant to rely on the services of amateurs.

Magic Johnson credits his success to investing in capable people rather than to the “wisdom” of family members and old friends. Pablo S. Torre paints Johnson as a serious businessman in a piece highlighting the failures of professional athletes:

Johnson started out by admitting he knew nothing about business and sought counsel from . . . men such as Hollywood agent Michael Ovitzand and Peter Guber. Now, Johnson says, he gets calls from star players “every day” . . . and cuts them short if they propose relying on family and friends.

Johnson’s strategy is even more relevant in light of the recent financial scandal involving the disappearance of over twelve million dollars held by sprinting legend Usain Bolt in Jamaican investment firm Stock and Securities Limited (SSL). Venting to reporters, Bolt’s attorney Linton Gordon argues that the Financial Services Commission (FSC) should be held liable for the mishap because the agency lapsed in providing proper oversight:

They should bear responsibility to some extent, if not entirely, because all along they kept quiet and did not alert the public, including Mr. Bolt, to the fact that the company was not operating in a way compliant with the law. It’s 10 years now they say they have been red flagging this company. Had he known that he would have withdrawn his money and he would not have lodged anymore.

Blaming the regulator is easy, but the debacle reveals deficits in Bolt’s management team. Usain Bolt did not need to know that SSL was deemed unsound years ago because his management team should have furnished him with that information. Some years ago, I was at an event where fellow investors argued that SSL was irredeemable. Bolt’s managers were out of the loop. Moreover, Jamaica is known for institutional weakness and fraud, so it’s a bit weird that a man of Bolt’s stature would have so much money stored in a Jamaican institution to begin with.

Some say that the FSC must be accountable for the misappropriation of Bolt’s money, but the FSC penned a report that Bolt’s managers would have seen if they were doing research. Moreover, in a country where agencies are frequently compromised by politics, there is a possibility that the FSC did not suspend the operations of SSL because it was constrained by rogue actors. Bolt’s managers should have shown some insight by recommending that the superstar limit his Jamaican investments and by soliciting the services of leading wealth management firms like UBS Wealth Management or Baird.

The case study of Usain Bolt demonstrates that even athletes with good managers should never hesitate to upgrade when their employees are not equipped for bigger challenges. Money is hard to make, but with a bad manager, it’s easy to lose. Therefore, athletes interested in keeping their money must invest in the right team or face the consequences.

About the Author:

Lipton Matthews is a researcher, business analyst, and contributor to Merion West, The Federalist, American Thinker, Intellectual Takeout, mises.org, and Imaginative Conservative. He may be contacted at lo_matthews@yahoo.com

Scoring Geopolitical Points at World Cup 2022

Posted on by phoffman@channelchek.com
Image Credit: Diego Sideburns (Flickr)

World Cup 2022: How Sponsorship has Become Less About Selling Drinks and More About Geopolitics

The Fifa men’s World Cup 2022 in Qatar is arguably the most political in history.

Even during the seemingly innocuous performance of South Korean pop star Jung Kook at the tournament’s opening ceremony, geopolitics were center stage. For Kook, 25, is not just a good-looking young man with a global fan base and a multi-million dollar fortune. In addition, he has a lucrative endorsement deal with the South Korean car maker Hyundai-Kia, which also happens to be a major Fifa sponsor.

This kind of relationship is neither an accident nor a simple business arrangement. For years, the South Korean government has been pursuing a strategy aimed at building and projecting “soft power”, developing its engagement with target audiences around the world. This has happened not just through football, music and cars, but also through Oscar winning films like Parasite and the massively popular TV series Squid Games.

And it’s not just South Korea taking advantage of the audiences that Fifa can provide. For while sellers of soft drinks and burgers are still part of the sponsorship roster, Fifa’s key partners are increasingly big corporations from countries keen to benefit from the global reach of football.

State-owned Qatar Airways for example, is busy selling plane tickets as Fifa’s official airline partner, but also plays a pivotal role in attempts by the Qatari government to establish Hamad International Airport as a major hub of global travel.

The award winning airline is an effective instrument of soft power, transmitting signals to global audiences about what Qatar is and what it aspires to be. In turn, the airline, and the very act of hosting the 2022 World Cup, are both illustrations of a nation intent on telling the world a particular story about itself – that it is a legitimate, trustworthy and important member of the international community.

The same applies to China, even though sporting and industrial progress have stalled somewhat since the pandemic. Its roster of four key World Cup sponsors featuring electronics (Hisense), mobile phones (Vivo), dairy products (Mengiu) and everything from property to media (Wanda) remains significant for a country hopeful of one day staging the tournament itself and a government keen to spread China’s influence around the world.

Rebels With a Cause

Alongside the World Cup’s main sponsors, a tradition has emerged of business competitors during tournament engaging in “ambush” marketing. This involves brands using the mega-event as a marketing tool without the considerable expense of an official link (Fifa is reportedly charging around US$100 million (£82 million) for a four-year sponsorship deal).

One notably successful ambush was perpetrated by Bavaria Beer’s provocative campaigns at the 2006 World Cup in Germany and again in 2010 in South Africa. These stunts involved equipping spectators with branded clothing, which was smuggled into stadiums. This gained huge global attention which was no doubt frustrating for the tournaments’ “official” beer, Budweiser.

Brightly colored ambush in 2010. EPA/STR

Yet even ambush marketing now appears to have become geopoliticised. For instance, during this World Cup, the authorities in nearby Dubai have been trying to draw attention away from Qatar with a tourism campaign featuring international football stars. The rival emirate will also be staging its own football tournament at the same time as the World Cup, featuring the likes of Liverpool, AC Milan and Arsenal.

And while in 2010, Bavaria Beer used women wearing orange dresses in its ambush, the UK-based brewer and pub chain BrewDog is trying to get in on this year’s action with its strident anti-World Cup marketing campaign.

Through a series of provocative billboards (in the UK), BrewDog is using references to autocracy, human rights abuses and corruption, all targeted at beer drinkers perturbed about Qatar’s staging of football’s biggest global event. While the bottom-line remains the same for BrewDog – to make a profit by selling beer – it is nevertheless contributing to the transformation of advertising and sponsorship from simple marketing to geopolitical posturing.

In a similar way, apparel brand Hummel has decided to hide its name and logos and the Danish football association’s badge from its kit. This is in protest against the treatment of migrant workers in Qatar and in support of LGBTQ+ communities.

In the company’s mission statement, Hummel emphasises its commitment to “Danishness” – and indeed, Denmark has been highly vocal in its condemnation of Qatar. Whenever the national team takes to the field, it will be in shirts that directly challenge the World Cup hosts.

So Qatar’s expensive ambitions in staging this tournament have come up against criticism and protest from countries and corporations alike. In 2022 it seems that football sponsorship is no longer just for kicks, or even customers. Everywhere you look, there are geopolitical points to be scored.

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of Simon Chadwick, Professor of Sport and Geopolitical Economy, SKEMA Business School.