What is the sports product and who buys it? The marketing of professional sports leagues

Professional sports have emerged as a lucrative business, with many opportunities for sports marketers to flourish. As this paper will show, professional sports teams unite to produce a league product that, while initially is produced to provide entertainment for spectators, is now sold to four distinct groups: first, fans who support leagues by attending games, following games on television and other media, and purchasing leagueand team-related merchandise; second, television and other media companies which purchase the right to show games as a programming option; third, communities which build facilities and support local clubs; and fourth, corporations which support leagues and clubs by increasing gate moneys, purchasing teams outright, or providing revenues through sponsorships or other associations. As a result, professional sports leagues provide a unique environment for marketing decisions and processes to occur, in a number of markets and at a number of levels, and should continue to be a growing segment within the broader, global, entertainment industry. Introduction While originally relying solely on gate revenues to maintain financial viability, professional sports leagues now generate income from television and other media revenues (Bellamy, 1988; Chandler, 1991; Harris, 1986; Horowitz, 1978; Rowe, 1995), from the sale of league-related merchandise and apparel (Burton, 1996; Gorman and Calhoun, 1994; Steinbreder, 1992), from corporate sponsorships (Cousens and Slack, 1996; Grimm, 1993; Hofmann and Greenberg, 1989; Schaaf, 1995), and, in some countries, notably the USA, from lucrative stadium arrangements with host communities (Baim, 1994; Euchner, 1993; Ozanian et al., 1995; Shropshire, 1995). As this industry has grown and developed over the past few decades, there has been an increase in ancillary activity, such as the sports trading card and memorabilia industries, which rely on the operations of professional sport (Osterland, 1994; Williams, 1995). In addition, the business of professional sport has grown so dramatically that organisations have been formed specifically to oversee the business operations of teams, leagues, and their members (Kennedy, 1975; Wahl, 1993). As explained by Metcalfe (1987, p. 163), ``perhaps the most visible and far-reaching example of sport as a marketable product is professional team sport''. There are several factors that potentially distinguish professional sports from other businesses, including stadium lease arrangements, monopolistic bargaining for broadcasting rights, territorial rights in predetermined The marketing of professional sports leagues 403 geographic markets, and the capital depreciation of player contracts (Daly, 1977; Noll, 1974; Zorn, 1994). Perhaps the most notable distinction that sport has is in the relationship it has with its consumers. As explained by Whannel (1992, p. 200), ``while there are clearly aesthetic pleasures in merely watching a sport performance, the real intensity comes from identifying with an individual or team as they strive to win''. It is this phenomenon that has helped make sport a vehicle for the promotion of corporate interests, whereas when professional team sport emerged in the nineteenth century, the relationship between sports teams and fans was sustained by a reliance upon community ownership and involvement as is still the case with much European sport (Taylor, 1992). However, with increasing corporate involvement, an American model of private ownership is now influencing professional sport throughout the world (Nauright and Phillips, 1997), and has potential repercussions for many leagues. Professional sports leagues are often able to operate as monopolies (Quirk and Fort, 1992), as they have historically been able to control elite-calibre competition in their given sports. This has been achieved through merging with rival leagues (Cruise and Griffiths, 1991; Harris, 1986; Pluto, 1990), and expanding leagues to preclude new entrants into the market (Ross, 1989). In doing so, leagues have been able to achieve an enviable position, as few substitutes exist for professional sports (Nester, 1990). However, the growth in the professional sports industry in recent years, combined with an increase in corporate involvement would suggest that the monopolistic power held by leagues in producing, marketing, and selling a unique product has transformed the overall arena that is sport. This is due to changes both in the league product, and the groups that purchase it. As explained by Euchner (1993), sport has ``commodified'', as it has become increasingly bound up in the processes of economic production and distribution. Euchner (1993) also argued that professional sports leagues are now a part of the powerful recreation and entertainment sector of the economy. In addition, sports have ``delocalised''; the global marketplace has made sports less attached to specific places, particularly those which have world-wide appeal, such as football and basketball. In effect, fans of professional sports can follow the exploits of their favourite teams or leagues despite the fact that they may be operating out of cities in other parts of the world (the global following for Manchester United), especially those teams that feature local athletes playing abroad (the Irish following for English Soccer Clubs such as Manchester United, Liverpool and Arsenal). Satellite television, the Internet and other technological advances can only hasten the process of delocalisation within the European sporting community. It is within this environment of change and growth that this paper is contextualised. As this paper will show, the manner in which sports leagues are organised to produce and sell the league product suggests that sports marketers must be aware of the unique nature of the professional sports product. Thus, the purpose of this paper is to determine what the professional sports product is, and to what parties this product is sold. This discussion will European Journal of Marketing 33,3/4 404 reveal that there are four distinct groups that purchase the sports product in the specific case of the league, which itself changes according to the needs of the specific consumer. This is because the different groups that purchase the league's product do so for very different reasons. As a result, the marketing of professional sports leagues has become a complex and lucrative operation, which involves decision-making at a number of levels, in a number of markets, as leagues and teams seek out new ways of increasing revenues. The unique nature of the professional team sport product The first task to be accomplished in this paper is to determine what constitutes the sports product. An argument posed by both sports leagues and some scholars, is that the league itself is the economic entity, and not the independently owned league clubs (Goldman, 1989; Grauer, 1983; 1989; Gray, 1987; Jacobs, 1991; Roberts, 1984; 1985; Rosenbaum, 1987). The resulting debate argues that on certain levels, the league functions as a single business entity, while on others, it is more appropriate to view the league as a joint venture, or cartel of independently operated franchises; this in turn will determine at what level marketing strategies should be initiated. A team joining a professional league has the right to compete against other league teams in a schedule of games generated by the league itself; clubs typically receive a league-designated home territory, and voting membership in an executive committee that oversees league operations. In becoming a league member, each club also agrees to abide by any league constitution or by-laws, or league-wide policies and decisions. Despite the independent operations of each league club, teams must work together to create the league product; in the case of professional football, this would be a series of league games with an uncertain outcome (Sutton and Parrett, 1992; Whannel, 1992). Because the league product cannot be created by teams independently, single entity theory contends that the league itself should be considered the business entity, as the consumer would have little interest in the outcome of a contest between two teams not affiliated with the league (Rosenbaum, 1987). Only after all teams agree to the conditions in which the league games are scheduled and governed can the league product be actually produced (Goldman, 1989). Because the attractiveness of the product produced is dependent upon the appearance of rivalry between clubs, the sports leagues must be structured to foster the perception of inter-club competitiveness. To do so, teams are able to independently vie for coaches, trainers, executives, and other non-player personnel. Teams also compete, to a certain extent, for players (Roberts, 1984). In this way, the public is assured that the teams are independently managed with respect to any operations that affect on-the-field performance (Gray, 1987). As explained by Neale (1964), in his classic analysis of professional sports operations, ``the first peculiarity of the economics of professional sports is that receipts depend upon competition among ... the teams, not upon business competition among the firms running the contenders'' (Neale, 1964, p. 2). This The marketing of professional sports leagues 405 unique arrangement required to produce the league product results in a firm that is neither completely integrated into one unit, nor a joint venture or cartel of independent businesses (Brock, 1985). The appeal of the league product rests on the uncertainty of the game's outcome, which has a profound effect on the consumer who, according to Madrigal (1995, p. 206), experiences sporting events as ``a hedonistic experience in which the event itself elicits a sense of drama''. The uniqueness of the sports product is further explained by Whannel (1992, p. 199): Like other forms of entertainment, sport offers a utopia, a world where everything is simple, dramatic and exciting, and euphoria is always a possibility ... Sport entertains, but can also frustrate, annoy and depress. But it is this very uncertainty that gives its unpredictable joys their characteristic intensity. The intensity of the experience is further enhanced by an association to a specific team or its competitors, through the ``mobilisation of local, regional, national or emotional identifications'' (Whannel, 1992, p. 199) and, at times, by gambling on the outcome of the game (Clapson, 1992). Studies have found that the consumers of the sports product so strongly identify with their favourite teams that they attempt to proclaim affiliation with a successful club even when they in no way had a hand in the team's success. This practice is called Basking in Reflected Glory (BIRG) (Cialdini et al., 1976), and is affected by the degree of identification an individual has with a team. Wann and Branscombe (1990) found that ``die hard'' fans, or those with a high degree of identification, were more likely to BIRG when the team was winning, but also more likely to maintain an identification with a losing team. This explains the rabid following that perennial losing teams receive from some fans. However Wann and Branscombe (1990) also discovered that fans with a low identification with a team were more apt to disassociate themselves from a losing team, which may explain the ``fair weather'' fan phenomenon. Initially, the league product in commercially-driven team sports was developed specifically for fans, particularly those that attended games. Today, the different revenue sources that are available to professional sports leagues suggest that while the ``core'' league product (uncertainty of game outcomes) remains, leagues and their member teams produce a number of different products. According to Schaaf (1995, p. 22), ``in the context of sports marketing, the ``product'' is either the entertainment of competition [the uncertainty], or a product/service associated with the excitement of the event, or both''. However, all consumers of the sports product seek to identify with a given team or league, perhaps extending the BIRG phenomena beyond fans to include corporations, television companies, and communities hosting professional teams. It is then important for the sports leagues to recognise what is being sought by the consumer of the sports product, at what level (team or league) decision-making authority should be vested, and what competitors' specific variations of the league product are within its own market segment. European Journal of Marketing 33,3/4 406 The marketing of the league product The following section addresses the markets in which the sports product is sold ± both geographic and competitive ± and the levels at which marketing decisions are made. Traditionally, each league specialised in producing a specific type of sports product, that would be played seasonally. Once a league had established itself in this particular niche, it could be argued that the league had a monopoly position, as there were few substitute products in that sport (Rosenbaum, 1987). However, as schedules became longer in professional sports, and new facilities enabled seasons to continue beyond traditional time periods, major sports leagues began competing with one another for the patronage of consumers in the communities that hosted one or more professional teams. Today, teams compete for those consumers who could choose to attend other entertainment options available. Thus, rather than competing within a narrow, sport-specific market, league franchises now compete in a broader entertainment market (Grauer, 1989). This broader competition would then extend to television audiences, who may opt to choose between professional sports or other types of programming originating from diverse locations. In turn, these viewing preferences would affect the revenues generated by networks which bid for the right to televise league games. Thus, as explained by Noll (1982, p. 348), professional sports leagues operate within several markets, some of which are local, and some of which are national; ``the most important product markets are the sale of admissions and concessions at home contests and the sale of the right to broadcast or televise play-by-play accounts of the games''. In addition, many sports leagues, particularly those in North America, have sought out global markets through expanding television broadcasting and licensing, and by developing new leagues to introduce their specific sports to new geographic areas (Rushin, 1993). The most obvious example of this is the World League of American Football (NFL Europe) which, despite financial losses, is seen as a means to introduce the professional football product to Europe, and expand television interests (King, 1996). In this way, professional sports leagues seek out new revenue opportunities in many different markets. Table I contains a breakdown of the various levels in which the marketing of the league product occurs. Although decision-making can occur at either the league or team level, all authority must ultimately reside in the league as a whole, in order to avoid conflicting relationships with sponsors, networks, and other stakeholders. The leagues must then formulate a strategy to take advantage of potential markets; finding such a corporate position is at the core of strategy development (Jacobsen, 1988). In summary then, the real competition for professional sports leagues in selling the sports product to each of the consumer groups is in competing with other entertainment options. (Rosenbaum, 1987). The sports fan It is the support of the sports fan that underpins the sports industry; as explained by Taylor (1992, p. 188), ``the crowd is the supreme authority without The marketing of professional sports leagues