Every industry has its own jargon and sports business is certainly no exception. Speaking the language and understanding the terminology will aid you in crafting a well-worded resume, acing a job interview and overcoming the learn curve of a first job. Simply put, if you don’t sound educated about the industry, business professionals assume you’re not. And even if you’re new to sports business, speaking the lingo gives you credibility while you grow that knowledge. These are some terms defined through the lens of the sports industry.
Advertising vs. Public Relations
While advertising uses company dollars to persuade an audience to purchase or consume a product or service, public relations uses free mechanisms like media interviews and press releases to influence how the public views an organization.
A law that maintains market competition by regulating anti-competitive conduct by companies. In sports, a “labor exemption” was created to allow player unions to enter into potentially monopolistic agreements so long as they are collectively bargained.
Audience Rating vs. Audience Share
Rating is the estimated percentage of TV households tuned to a program at once while share is the percent of households using television who are tuned to a specific program at a specific time. Share capture the people paying attention to the program while rating is more about who had the TV turned on.
Occurs when a home sporting event is not carried by local TV because of a contractual agreement. The NFL, for example, only allows the local station to broadcast a home game if it sells out 72 hours or more before the game starts.
The effort of distinguishing one product or service from a competitor’s product or service. For sports teams, this means creating a logo, selecting a color scheme and choosing a catch phrase to make your team more appealing than others in the league.
Club Option vs. Player Option
A club option is the final year of a player’s contract that is only enforced if the team decides it wants the player at the originally agreed upon salary. A player option is the same concept except the player can choose to remain with the team or opt-out and become a free agent.
Collective Bargaining Agreement (CBA)
The documented result of negotiations between a league’s players union and a collection of owners, who are usually represented by the league’s commissioner. Each CBA expires after a certain number of years after which a new one must be negotiated.
Paid testimonials an athlete or coach gives to a company’s product or service. Top athletes will earn more in endorsement deals than they will with their actual playing contract.
The all-encompassing term for organizing, planning, and delivering an event to an audience. Selling tickets, managing food and drink vendors, signing sponsors and preparing promotions fall under event management.
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What a fan believes he deserves for his loyalty to the team and the emotional bond tying a fan to a team. Though fans have no actual ownership of a team, many speak as though they do because of the connection a team makes to its city and fan base.
Estimating the present value of a sports team by comparing it to similar teams in its league. The valuation must consider the worth of the company including yearly ticket sales, broadcast contracts and facility assets. Valuations are particularly challenging in sports because teams are not bought and sold very often, reducing comparable team sales numbers.
Interactive Fan Experience
Additional mini-experiences built into the overall experience of attending a sporting event. Teams fill digital jumbo screens with attendance games and quizzes allowing fans to do more than just watch the game. More recently, fans can use mobile devices to track in-game statistics, play games against others in the arena and send messages to jumbo screens.
Contractual agreement between a sport’s team and another business entity which allows the licensee to use the brand name and logo in exchange for a fee or royalty. Team branding is licensed on everything from clothes and hats to coffee mugs, toys and posters.
A surcharge attached to the total payroll of a team if it exceeds a predetermined dollar amount set by the league. Used as a deterrent so teams don’t gain a competitive advantage by outspending other teams in the league.
Personal Seat License (PSL)
An additional fee attached to a seat ticket price giving the holder the right to repeatedly buy season tickets for a certain seat and later sell the seat license to another party of their choosing. Currently utilized mostly in the NFL, almost 50% of the teams have PSLs.
Reciprocity of Sponsorship
The theory that, since a sponsor supports an event a fan cares about, the fan will support the sponsor by purchasing their product.
Income a team receives from ticket sales, merchandising, brand licensing and food and beverage sales. Organizations are constantly searching for new revenue streams to increase profit margins.
A limit placed on the amount of money each professional team can spend on player salaries. Some leagues, like basketball, enforce a “soft salary cap” where dollars spent over a certain limit above the cap are hit with a luxury tax. Other leagues, like football, have a “hard salary cap” where teams are not allowed to exceed the cap, no matter the circumstance.
Sports tickets are often bought, by individuals or ticket brokers, at face value and then resold, generally at a higher value, on this aftermarket.
The formalization of relationships between variables in the form of a math equation. More-and-more, statistics are being applied to how teams are built and how on-the-field decisions are made. Modeling helps predict outcomes so management and coaches go off more than basic statistics, gut feelings and naked-eye scouting.
Costs that have already been incurred and cannot be recovered. Management in guaranteed contract sports, like baseball and basketball, often apply the sunk cost theory to players who sign expensive, long-term deals and then way under perform them. The amount an athlete is paid shouldn’t impact the amount of playing time he receives because the cost cannot be recovered no matter what.
Outside companies that, for a fee, supply food and beverages to stadiums during sporting events. Teams hire vendors to manage pieces of a sporting event that they themselves can’t or don’t want to handle internally.
World Anti-Doping Agency (WADA)
An international independent organization that promotes, coordinates and monitors the fight against doping in sports. It is funded by the sports movement and governments of the world and fosters a doping-free culture in sport.