1. Lesson 3.1 – The Financial Structure of Sports Business Copyright © 2009 by Sports Career Consulting, LLC

2. UNIT 3 Intro to Basic SEM Principles Sports Business Financial Structure Revenue Stream: The means for an organization’s cash inflow, typically as a result of the sale of company products or services As a result of increasing revenue streams, inflated media rights fees and new means for generating revenues in professional sports, overall franchise values have risen exponentially in the past decade, a trend that is expected to continue Copyright © 2009 by Sports Career Consulting, LLC

3. Revenue Streams For Sports Teams  Ticket Sales  Sponsorship  Licensing and Merchandise  Concessions  Parking  Luxury Suites  Club/VIP/Premium Seating UNIT 3 Intro to Basic SEM Principles Sports Business Financial Structure Copyright © 2009 by Sports Career Consulting, LLC

4. UNIT 3 Intro to Basic SEM Principles Luxury Suites & Premium Seating Often times the lack of suites or premium seating options within a venue or facility will prompt a sports franchise to lobby for a new stadium Copyright © 2009 by Sports Career Consulting, LLC

5. Additional Revenue Streams For Sports Teams  Television Contracts  Additional media contracts (satellite, radio, internet) UNIT 3 Intro to Basic SEM Principles Sports Business Financial Structure Copyright © 2009 by Sports Career Consulting, LLC

6. UNIT 3 Intro to Basic SEM Principles Television Contracts TV contracts provide big money for franchises in the game of sports business, now accounting for a major portion of a team’s overall annual revenue Copyright © 2009 by Sports Career Consulting, LLC

7. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC Television Contracts In 1973, the NBA signed a contract with CBS, yielding $27 million in revenue over three years In 2006, the NBA inked a deal with ABC/ESPN worth $2.4 billion through 2008 (the contract was extended in 2007 to run through the 2015-16 season but terms were not disclosed)

8. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC Additional Media Contracts In 2007, Sirius Satellite Radio reached an agreement to broadcast NASCAR races and related events over a five-year period for $107.5 million

9. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC Additional Media Contracts CBS paid $6 billion for the rights to broadcast the NCAA Tournament (March Madness) over an 11 year period, a deal that ends in 2013 that also included the right to stream games over the Internet (the online broadcasts generated an estimated $30 million in ad revenue with its March Madness on Demand package in 2009)

10. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC Additional Media Contracts In 2009, the Yankee’s YES Network struck an agreement with Major League Baseball to make their games available on the Internet within the New York area. The franchise now gains a significant new revenue stream, from the millions of broadband users in the market who are not sitting in front of their televisions but are in offices and other locations with a laptop or a wireless device

11. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC Additional Revenues When the Green Bay Packers renovated Lambeau Field in 2003 with the goal of creating an added revenue stream by building an “atrium” that could host events (from corporate outings to weddings) year round. In 2009, the atrium was booked for more than 500 events, with 62 percent of the bookings coming from outside the Green Bay market and helped the franchise generate $43.7 million in revenue (along with sales from the Packer Pro Shop)

12. Sports Team Expenditures  Facility Rental / leasing arrangements  Staff / Player Salaries (Payroll)  Marketing  Investment in the Customer UNIT 3 Intro to Basic SEM Principles Sports Business Financial Structure Copyright © 2009 by Sports Career Consulting, LLC

13. Sports Team Expenditures  General Operating Expense  Stadium/venue/facility financing  Information management/research  Team expenses (travel etc.)  Maintenance and security UNIT 3 Intro to Basic SEM Principles Sports Business Financial Structure Copyright © 2009 by Sports Career Consulting, LLC

14. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC To gain a better understanding of the financial structure of sports business, let’s review the NFL’s Green Bay Packers’ financials

15. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC Key revenue streams: National revenue from the NFL: $147.1 million National TV revenue: $94.5 million Local revenue: $100.8 million Marketing, Pro Shop and Atrium revenue: $43.7 mil Stadium operations (concessions etc.): $7.7 million Revenue Packers’ total revenue in 2009: $247.9 million

16. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC Packers’ net income in 2009: $20.1 million Costs Packers’ total costs in 2009: $227.8 million Primary expense (cost): Player Payroll expense: $165 million Net Income

17. Lesson 3.4 – Tracking Industry Trends Copyright © 2009 by Sports Career Consulting, LLC

18. Shifts in industry trends could include:  Customer buying patterns  Consumer preferences / distastes  Effective marketing techniques (product placement for example)  Product or service modifications  New technology  Efficient communication tools UNIT 3 Intro to Basic SEM Principles Tracking Industry Trends Copyright © 2009 by Sports Career Consulting, LLC

19. Marketers Must Effectively Track Changing Trends  Monitor sports and entertainment news online  Read trade or business magazines, journals or newsletters  Consider the marketing efforts involved when attending competitor events UNIT 3 Intro to Basic SEM Principles Tracking Industry Trends Copyright © 2009 by Sports Career Consulting, LLC

20. Marketers Must Effectively Track Changing Trends  Attend sport business conventions, exhibitions and events  Obtain research from sport marketing firms  Read local or national news publication UNIT 3 Intro to Basic SEM Principles Tracking Industry Trends Copyright © 2009 by Sports Career Consulting, LLC

21. Marketers Must Effectively Track Changing Trends  Observe activity of competitors  Communicate with others within the industry UNIT 3 Intro to Basic SEM Principles Tracking Industry Trends Copyright © 2009 by Sports Career Consulting, LLC

22. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC In the summer of 2009, Sony Pictures and Redbox Automated Retail LLC signed a multiyear agreement to supply Redbox's video rental kiosks with Sony films. Said David Bishop, President of Sony Pictures Home Entertainment: "The consumer trend is moving toward a rental model, We're following consumer trends and trying to maximize consumer profitability within that trend."

23. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC 1) How the Sports Industry is Faring During Economic Times 2) The Implications of Social Media in the Sports Marketplace 3) Charitable / Cause Marketing Initiatives 4) The Microsite Movement 5) Teams/Leagues Streaming Media in Regional Markets The Top 10 Current Sports Industry Trends Tracking Industry Trends

24. UNIT 3 Intro to Basic SEM Principles Copyright © 2009 by Sports Career Consulting, LLC 6) Global Penetration 7) Sonic Branding 8) Technological Advancements in Outdoor Advertising 9) The Green Movement in Sports 10) Organizations Outsourcing Travel/Ticket Operations The Top 10 Current Sports Industry Trends Tracking Industry Trends