Sports and Entertainment Marketing Ethics

Profit Difference between the revenues earned by a business and the costs of operating the business Difference between the revenues earned by a business and the costs of operating the business Opportunity to earn a profit is at the heart of the free-enterprise system Opportunity to earn a profit is at the heart of the free-enterprise system The World’s 50 Most Valuable Sports Teams The World’s 50 Most Valuable Sports Teams The World’s 50 Most Valuable Sports Teams The World’s 50 Most Valuable Sports Teams

Profit By 2015, global revenues in Sports industry set to rise to $145B By 2015, global revenues in Sports industry set to rise to $145B 3.7% annual growth rate 3.7% annual growth rate What’s driving growth? What’s driving growth? Gate Revenues – still the biggest local source of revenues in most markets Gate Revenues – still the biggest local source of revenues in most markets Merchandising – online, global fan base Merchandising – online, global fan base Sponsorship – sponsors are no longer just interested in raising profile, but about deeper engagement with the fans Sponsorship – sponsors are no longer just interested in raising profile, but about deeper engagement with the fans Media Rights – are huge! Media Rights – are huge! $42B rights deals with CBS, Fox, and ESPN through 2022 $42B rights deals with CBS, Fox, and ESPN through 2022

It’s All About the Money NFL earned $9.5B in revenues in 2012 NFL earned $9.5B in revenues in 2012 Where does it come from? Where does it come from? Ticket Sales Ticket Sales Licensing and merchandise Licensing and merchandise Sponsorship * Sponsorship * Stadiums Stadiums Venture Fund * Venture Fund * Media * Media *

It’s All About the Money How does money play out in college sports? How does money play out in college sports? College Football’s Most Valuable Teams College Football’s Most Valuable Teams College Football’s Most Valuable Teams College Football’s Most Valuable Teams Who benefits from team’s success? Who benefits from team’s success? Should collegiate athletes get paid? Should collegiate athletes get paid?

Why is this Important? Sports teams and entertainers in it to make money! Sports teams and entertainers in it to make money! 2014 Highest Paid Actors 2014 Highest Paid Actors #1Robert Downey Jr. ($75M) #1Robert Downey Jr. ($75M) #2Dwayne Johnson ($52M) #2Dwayne Johnson ($52M) #3Bradley Cooper ($46M) #3Bradley Cooper ($46M) #4Leonardo DiCaprio ($39M) #4Leonardo DiCaprio ($39M) #5Chris Hemsworth ($37M) #5Chris Hemsworth ($37M)

Why is this Important? Sports teams and entertainers in it to make money! Sports teams and entertainers in it to make money! 2014 Highest Paid Athletes 2014 Highest Paid Athletes #1Floyd Mayweather ($105M) #1Floyd Mayweather ($105M) #2Cristiano Ronaldo ($80M) #2Cristiano Ronaldo ($80M) #3LeBron James ($72.3M) #3LeBron James ($72.3M) #4Lionel Messi ($64.7M) #4Lionel Messi ($64.7M) #5Kobe Bryant ($61.5M) #5Kobe Bryant ($61.5M)

Why is this Important? Sports teams and entertainers in it to make money! Sports teams and entertainers in it to make money! 2014 Highest Paid Musicians 2014 Highest Paid Musicians #1U2 ($195M) #1U2 ($195M) #2Bon Jovi ($125M) #2Bon Jovi ($125M) #3Elton John ($100M) #3Elton John ($100M) #4Lady Gaga ($90M) #4Lady Gaga ($90M)

Why is this Important? Businesses engaged in the Sports & Entertainment industry are also in it to make money Businesses engaged in the Sports & Entertainment industry are also in it to make money Goal to increase shareholder value Goal to increase shareholder value Example: Nike outsourcing production to Less- Developed Countries Example: Nike outsourcing production to Less- Developed Countries More profitable More profitable Illegal vs. Unethical Illegal vs. Unethical

Ethics Defined Ethics Ethics Moral principles that govern a person’s or group’s behavior Moral principles that govern a person’s or group’s behavior Ethics in Business Ethics in Business The study of proper business policies and practices regarding potentially controversial issues The study of proper business policies and practices regarding potentially controversial issues Implemented in order to ensure that a certain required level of trust exists between consumers and businesses Implemented in order to ensure that a certain required level of trust exists between consumers and businesses Ethics in Sports Ethics in Sports Sportsmanship – matter of being of good character and doing right action in sports Sportsmanship – matter of being of good character and doing right action in sports

What Does Sportsmanship Look Like? Playing fair Playing fair Following the letter and spirit of the rules Following the letter and spirit of the rules Respecting the judgments of officials Respecting the judgments of officials Treating opponents with respect Treating opponents with respect Shaking hands at the end of the game Shaking hands at the end of the game Never running up the score Never running up the score Never cheating Never cheating Never taunting Never taunting

Unethical Behavior in Sports? Does it exist? Does it exist? Recruiting violations Recruiting violations Performance enhancing drugs Performance enhancing drugs Illegal benefits Illegal benefits Violence Violence Hazing Hazing Behavior of coaches, athletic administrators, parents, and fans Behavior of coaches, athletic administrators, parents, and fans Out-of-control boosters Out-of-control boosters At what levels? At what levels? Professional, Collegiate, Interscholastic, & Youth Professional, Collegiate, Interscholastic, & Youth

Ethical Issues In Youth Sports? Cutting a child trying out for a sports team Cutting a child trying out for a sports team Playing the best players (some do not play) Playing the best players (some do not play) Keeping the best players in the “key” positions Keeping the best players in the “key” positions Competing for championships and trophies Competing for championships and trophies Requiring a child to play a sport Requiring a child to play a sport Specializing in one sport Specializing in one sport Offering teams for one gender only Offering teams for one gender only

Ethical Issues In Interscholastic Sports? Requiring athletes to pass all subjects Requiring athletes to pass all subjects Specializing in one sport Specializing in one sport Treating male athletes preferentially Treating male athletes preferentially Playing while injured Playing while injured Using drugs to enhance performance Using drugs to enhance performance Teaching athletes (by coaches) how to break sport rules to gain an advantage Teaching athletes (by coaches) how to break sport rules to gain an advantage Giving athletes money or other benefits Giving athletes money or other benefits Taunting and gamesmanship Taunting and gamesmanship

Why Unethical Behavior? Pressure to win Pressure to win Money on the line Money on the line Job security Job security Future employment Future employment Pride Pride Living through the athletic accomplishments of their children Living through the athletic accomplishments of their children

Rationalization for Behavior There is no rule against it There is no rule against it Everyone else does it Everyone else does it This action is not unethical because no one will ever know about it This action is not unethical because no one will ever know about it Circumstances require acting in this way Circumstances require acting in this way

Moral Justification Muddy the waters Muddy the waters Claim it really was ethical Claim it really was ethical Make the wrong look right Make the wrong look right No foul, no harm No foul, no harm Make it a non-issue Make it a non-issue Didn’t harm anyone Didn’t harm anyone Unseen by the official Unseen by the official End justifies the means End justifies the means Admit guilt, but focus on the greater good Admit guilt, but focus on the greater good A rule was violated but the amount of good accomplished overshadowed the small amount of harm that occurred A rule was violated but the amount of good accomplished overshadowed the small amount of harm that occurred Everybody’s doing it Everybody’s doing it Downplay it’s significance Downplay it’s significance Feel can’t compete without it Feel can’t compete without it

Problems With Moral Reasoning The longer athletes participate in sport, the lower their moral reasoning The longer athletes participate in sport, the lower their moral reasoning Males have lower levels of moral reasoning than do females Males have lower levels of moral reasoning than do females Team sport athletes show lower levels of moral reasoning than do individual sport athletes Team sport athletes show lower levels of moral reasoning than do individual sport athletes The moral reasoning of interscholastic athletes is less consistent, impartial, and reflective than is that of non-athletes The moral reasoning of interscholastic athletes is less consistent, impartial, and reflective than is that of non-athletes

Agree Slightly Agree Slightly Disagree Disagree Teamwork is important for winning I would taunt my opponent A team must have a good coach to win I would spit on my opponent Luck is a part of winning It is important to shake hands with my opponent after a game I have never been in a game where any rules were violated Referees’ decisions will affect a game’s result Intramurals are a waste of time I would deliberately injure my opponent to help me win. 11. A team must have a “star player” to be a winning team. 12. Respecting my opponent gives me a better chance of winning. 13. The team that prepares the best should win the game. 14. “Winning isn’t everything, it is the only thing.” 15. I have never seen or heard someone taunt or trash-talk an opponent. 16. Respect is an important attribute for a winning team. 17. Football is a more violent sport than ice hockey.

Agree Slightly Agree Slightly Disagree Disagree Integrity is an important attribute for a winning team Intercollegiate athletics are bad for a university I would retaliate if I was given a “cheap shot” by my opponent Skill in a sport is more important than hard work I play fair Being a good sport (showing sportsmanship) is important to winning “Every student an athlete, every student challenged.” 18. I must respect my opponent to play my best. 19. Basketball is a non-contact sport. 20. I would trash-talk my opponent. 21. Soccer is a non-contact sport. 22. I compliment an opponent for a good play. 23. It is “OK” to run up the score against an inferior opponent. 24. Basketball players are better “athletes” than baseball players. 25. I would "bend the rules" to win. 26. It is not whether you win or lose, but how you play the game. 27. It is not up to players to enforce rules (it’s the referee’s job).

Ethical Questions… Should a professional sports team go on strike when athletes are earning multi- million-dollar contracts? Should a professional sports team go on strike when athletes are earning multi- million-dollar contracts?

Pro Sports Lockouts and Strikes Major League Baseball 1972 Major League Baseball 1972 First strike in the history of the league First strike in the history of the league Lasted 2 weeks Lasted 2 weeks Players won salary arbitration and an increased pension Players won salary arbitration and an increased pension Sport lost Sport lost 86 missed games 86 missed games $1M lost pay for athletes $1M lost pay for athletes $5M lost in ticket sales and broadcast fees $5M lost in ticket sales and broadcast fees

Pro Sports Lockouts and Strikes National Football League 1982 National Football League 1982 Lasted 57 days Lasted 57 days Players demanded free agency after 3 years and 55% share of broadcast revenue Players demanded free agency after 3 years and 55% share of broadcast revenue Owners agreed to $2B increase in salaries and additional veterans and severance pay Owners agreed to $2B increase in salaries and additional veterans and severance pay 7 games of regular season cancelled in process 7 games of regular season cancelled in process

Pro Sports Lockouts and Strikes National Basketball Association 1998 National Basketball Association 1998 Lasted 204 days Lasted 204 days Loss of 32 games Loss of 32 games Reinforced a widespread impression of athletes and owners as greedy and overpaid Dubbed the dispute "between tall millionaires and short millionaires.” Attendance at the games and television ratings dropped, and the salary issues that had inspired the dispute were barely resolved

Athletes with Unethical Behavior Black Sox Scandal 1919 Black Sox Scandal 1919 World Series – White Sox vs. Cincinnati Reds World Series – White Sox vs. Cincinnati Reds 8 players banned from MLB for life for purposely losing 8 players banned from MLB for life for purposely losing Shoeless Joe Jackson Shoeless Joe Jackson

Athletes with Unethical Behavior Little League World Series 2001 Little League World Series 2001 Danny Almonte Danny Almonte Pitcher for Baby Boomers Pitcher for Baby Boomers Dominated Series Dominated Series Threw perfect games and 70 mph fast balls ~ pretty impressive for a 12 year old! Threw perfect games and 70 mph fast balls ~ pretty impressive for a 12 year old! Found out after the fact, Danny was actually 15! 2 ½ years older than maximum age to compete in Little League World Series Found out after the fact, Danny was actually 15! 2 ½ years older than maximum age to compete in Little League World Series Danny retroactively declared ineligible Danny retroactively declared ineligible Baby Boomers had to forfeit all their wins Baby Boomers had to forfeit all their wins All of their records were removed from the books All of their records were removed from the books

Athletes with Unethical Behavior US Figure Skating Championship 1994 US Figure Skating Championship 1994 Tonya Harding and Nancy Kerrigan rivals on ice Tonya Harding and Nancy Kerrigan rivals on ice Right before competition, Kerrigan is hit in the knee with a metal pipe by an unknown man Right before competition, Kerrigan is hit in the knee with a metal pipe by an unknown man Amid suspicion, Harding admits she, her now ex-husband, and body guard hired the man to break Kerrigan’s leg Amid suspicion, Harding admits she, her now ex-husband, and body guard hired the man to break Kerrigan’s leg Harding banned from skating Harding banned from skating Threatens to sue and is re-instated Threatens to sue and is re-instated At the following Winter Olympics, Harding places 8 th while Kerrigan wins Silver At the following Winter Olympics, Harding places 8 th while Kerrigan wins Silver

Athletes with Unethical Behavior Pete Rose 1980s Pete Rose 1980s One of best baseball players of all time One of best baseball players of all time Gambled on games Gambled on games Even bet on the Cincinnati Reds – when he was their manager Even bet on the Cincinnati Reds – when he was their manager Originally denied allegations Originally denied allegations Agreed to voluntary ban from MLB in exchange for stop in investigation Agreed to voluntary ban from MLB in exchange for stop in investigation

Athletes with Unethical Behavior Bill Belichick 2007 Bill Belichick 2007 New England Patriots coach New England Patriots coach Filmed competitor Defensive Coordinator’s signals during a game Filmed competitor Defensive Coordinator’s signals during a game “Misinterpretation of the rules” “Misinterpretation of the rules” Fined $500,000 Fined $500,000

Athletes with Unethical Behavior MLB and Steroids MLB and Steroids Records breaking Records breaking Biceps bulging Biceps bulging Mitchell Report Mitchell Report 89 former and current and MLB players named 89 former and current and MLB players named Biggest names Biggest names Roger Clemens Roger Clemens Barry Bonds Barry Bonds Jose Conseco Jose Conseco Mark McGwire Mark McGwire Sammy Sosa Sammy Sosa

Athletes with Unethical Behavior Michael Vick 2007 Michael Vick 2007 Dog fighting scandal Dog fighting scandal Sentenced to 21 months in federal prison Sentenced to 21 months in federal prison Upon release, former team, Falcons, didn’t want a former convict Upon release, former team, Falcons, didn’t want a former convict Now playing for the Eagles Now playing for the Eagles Forgive and forget or shouldn’t even be playing in the NFL? Forgive and forget or shouldn’t even be playing in the NFL?

Athletes with Unethical Behavior Lance Armstrong 2012 Lance Armstrong 2012 U.S. Anti-Doping Agency (USADA) U.S. Anti-Doping Agency (USADA) Amidst alleged increasing evidence and frustration with fighting allegations, Armstrong stops arbitration Amidst alleged increasing evidence and frustration with fighting allegations, Armstrong stops arbitration Banned for life from cycling Banned for life from cycling Stripped of 7 Tour de France victories Stripped of 7 Tour de France victories Livestrong Foundation? Livestrong Foundation? $500 million raised in 15 years to fight cancer $500 million raised in 15 years to fight cancer

Athletes with Unethical Behavior Penn State 2011 Penn State 2011 Jerry Sandusky – child sex abuse Jerry Sandusky – child sex abuse At least 8 underage boys on or near university property At least 8 underage boys on or near university property June 2012, Sandusky found guilty of 45 counts of sexual abuse June 2012, Sandusky found guilty of 45 counts of sexual abuse Faces up to 60 years in prison Faces up to 60 years in prison University officials (including President, Graham Spanier and head football coach, Joe Paterno) fired for allegedly covering up the incidents and enabling more University officials (including President, Graham Spanier and head football coach, Joe Paterno) fired for allegedly covering up the incidents and enabling more NCAA imposed penalties of NCAA imposed penalties of Fine of $60 million Fine of $60 million 4-year post season ban 4-year post season ban Vacating all victories from 1998 – 2011 Vacating all victories from 1998 – 2011 Big 10 also imposed a $13M fine Big 10 also imposed a $13M fine

Athletes with Unethical Behavior SMU mid 70s - mid 80s SMU mid 70s - mid 80s From record From record Won 3 Southwest Conference titles Won 3 Southwest Conference titles Nearly won it’s 2 nd National Title (lost it when decided to take a tie against Arkansas instead of go for the win) Nearly won it’s 2 nd National Title (lost it when decided to take a tie against Arkansas instead of go for the win) To stay competitive with other teams in league (8 schools in Texas, plus Arkansas), began using questionable recruiting tactics To stay competitive with other teams in league (8 schools in Texas, plus Arkansas), began using questionable recruiting tactics Received 2 warnings from NCAA to stop Received 2 warnings from NCAA to stop 3 rd time, received “Death Penalty” ~ highest punishment for repeat offenders 3 rd time, received “Death Penalty” ~ highest punishment for repeat offenders Terminated the football program for two years Terminated the football program for two years Players allowed to leave/go to another school Players allowed to leave/go to another school 1 winning season in next 20 years! 1 winning season in next 20 years!