1.2

generate and hold attention

• Admiration for the athletes’ skills

• Identification with athletes, clubs or nations (basking in reflected glory)

• A civilized «battle of life and death»

• Suspense, excitement, and frustration are authentic and collectively amplified

• Social cohesion among loyal fans

• Conspicuous consumption

Opportunity cost of watching entertainment is lower if there is more leisure time

People spend more on consuming sports

• Mass media’s capacity to showcase sports events and athletes has propelled sports contests from local to global phenomena

• Broadcasting revenue has vastly increased the financial power of the most popular sports

1. sports unique capacity to hold our attention

2. mass media has capacities to earn revenue that correlate a lot with holding attention (ads)

-Broadcasters weren’t willing to pay for broadcasting

-Payment of a small facility fee as compensation for the inconvenience caused by the broadcasters

Today, property rights are claimed by either the home team or the league and sold to broadcasters in the form of broadcasting rights

-Home team: Major bearer of the economic risk to a match

-League: Contributes to the product by its organizational and administrative inputs

-Economies of scale (Set up costs are enormous, high degree of fixed costs and very low marginal costs)

-Aggregation of attention is necessary to capture economies of scale in broadcasting

−In the «old days» aggregation of attention was given due to technological and regulatory constraints

-Technological change (digital technology) and subsequent deregulation of the broadcasting industry led to a strong increase in the number of broadcasters/channels and to a dilution of attention

1. Highly differentiated products

   -Nothing you can substitute it with

2. “Live factor” limits dispersion of attention

   -Replay-function isn’t appealing -> Important for advertisers

Shift in market structures allows sports organizations to capture most of the value added

-Increased competition on demand side (broadcasters as potential buyers)

-”collective selling” on supply side (sports clubs as right holders)

European Broadcasting Union as perfect monopsonist?

Individual selling: Every team sells the righht to broadcast individually

Collective selling: The league sells the right to broadcast

Interrelation of sports broadcasting with other components of the market

1. Sports organization

2. Broadcaster

3. Sponsor

4. Advertiser

5. Other Media

Sport organization:

-Provides the broadcaster and other media with content

-Receives rights fee from the official broadcaster

-Live coverage is complementary to stadium attendance

Broadcaster:

-Pays for the right to broadcast a sport event, season or series of games

-Generates revenue through sale of advertising space and/or subscription fees

-Popularity and appeal of sport

-Attracts a large audience -> Might increase the demand for other non-sport related content

Other Media:

-Media organizations that do not have the exclusive broadcast rights will also seek to attract advertising revenue through coverage of sport

-Print media (e.g., newspapers, magazines) are not charged by sport organizations

Sponsor:

-Acquires exposure to the consumer via the broadcaster and other media

-Sponsorship fees paid to sport organizations are based on the amount of media coverage achieved

Advertiser:

-Acquires exposure to the consumer via the broadcaster and other media

-Fees paid to broadcasters and other media are based on the amount of media coverage achieved

Athletes compete -> Fans are attracted -> Media is attracted -> Sponsors are attracted -> Athletes/Teams generate huge revenues