How has globalization changed sports and what changes are yet to come?
The relationship of US sports and globalization entities at the end of the 1980s, Eastman and Meyer (1989) predicted that sports programming “will change …radically in the next decade” (p. 97) and become “the crucible for programming research in the 1990s” (p. 118). To a large degree, these relatively modest and somewhat contradictory predictions have come to pass. With a seemingly endless proliferation of television channels, sport is seen as the programming that can best break through the clutter of channels and advertising and consistently produce a desirable audience for sale to advertisers.
In economic terms, the telecasting of sports provides a television entity with a level of product differentiation that distinguishes it from its rivals. This often takes the form of “branding” —whereby sports coverage becomes identified with a specific television provider, such as the “NBA on NBC” or ABC’s NFL Monday Night Football. Brand identification is regarded as a key in leveraging corporate assets and in building audience loyalty at a time when viewers are now regarded as “restless” and likely to use a remote control device (RCD) to choose among many viewing options (Bellamy & Walker, 1996).
Sports also are seen as a critical component of the international expansion plans of the US television industry. To Fox Sports’ President David Hill, “sport is the last frontier of reality on television…about the only thing that can guarantee an audience” because of its ability to offer viewers around the globe “a shared communication experience” (Lafayette, 1996, p. 145).
While the sports and television partnership maintains many of its traditional structural features, the combination of a rapidly developing multichannel and international television industry and the increasing marketing-driven nature of sports has caused some disruptions in the once predictable relationship. To a substantial degree, this volatility can be linked to the overwhelming economic success of the relationship. The US sports industry is a media-made phenomenon.
Global television through its power to manufacture “stars, ” sell products, alter lifestyles, and most importantly, commodity audiences made spectator sports an element of mainstream culture. However, technological diffusion and regulatory change have altered the traditional economic structure and concomitant behavior of the television industry. The result is that sports entities are now able to exert more autonomy within the relationship. The US broadcast television industry’s argument that it needed relief from “onerous” governmental regulation was persuasive in a political climate predisposed to economic deregulation.
Ironically, this was the impetus for the rise of alternative distribution outlets like cable which led to a new level of competition for the attention of the television viewer. By the late 1980s, the Big Three networks were consistently losing audience to cable services and the new Fox network. It was not uncommon at this time to hear arguments that the Big Three were “dinosaurs” unable and unequipped to compete in the new multichannel environment (Reith, 1991). One of the reasons these arguments were given credence was the increased amount of desirable programming cable was able to acquire.
Sports product provided one of the better examples of this as the upscale demographics of cable subscribers were seen as a more efficient match for the desired demographics of sports entities and advertisers. Although little sports programming was actually diverted from broadcast to cable (“Sports programming, ” 1993), there is no question that cable provided an amenable outlet for the proliferation of sports product that previously would have been confined to local stations or, in most cases, not telecast at all.
The cable industry’s dual revenue stream of advertising and subscriber fees enabled it to develop services that concentrated solely on sports product (i. e. , ESPN, RSNs). By 1990, cable was a major or even essential revenue source for sports entities. The increased presence of sports on cable can also be attributed to changes within the sports industry. With the ability to effectively control the salaries of players constrained by the advent of free agency, professional sports leagues and franchise owners sought new ways to generate revenues to pay for the now increasingly expensive players.
Enhanced television exposure was a primary means of doing so, a strategy that would have been problematic in the pre-cable limited channel environment. The combination of what many believed was a declining broadcast industry, the rise of alternative television outlets, and the perceived need of sports entities to maximize television revenues led to a fissure in the traditional big television/big sports partnership that seemingly reached its apex in the early 1990s. The Big Three networks vowed that they would not pay any more for sports rights due to the losses they were taking on their current contracts.
They adopted a position that all programming was subject to the cost scrutiny and cutbacks then being implemented in all other areas of their operations as part of corporate “restructuring. ” The major results of this posture occurred in 1994 with the dramatic reduction in national television money for MLB and the end of the NFL’s 30-plus year contractual relationship with CBS. Literature Review Sports are essential to the developing structure. Although all the major US-based media firms are increasing their global investments (e.
g. , NBC Europe, Viacom’s MTV Asia), ABC’s ESPN subsidiary and Rupert Murdoch’s News Corporation presently have the most elaborate sports operations. ESPN International, for example, now reaches in excess of 127 million households in 150 countries outside the US through its three international networks (in Latin America, Asia and the Pacific Rim, and the Middle East/Northern Africa) and investments in Eurosport, Sky Broadcasting, and the Japan Sports Channel (“ESPN International,” 1995).
In fact, the worldwide value of the ESPN brand name was a key reason for Disney’s recent acquisition of Capital Cities/ABC. An important element of the new oligopoly is the increased emphasis on the development and brand exploitation of niche and sub-niche channels including many that focus on sports. ESPN, having grown into the largest US basic cable service, has spun off ESPN2 which targets younger more active viewers with a mix of the NHL and “extreme” sports, ESPNews with 24-hour a day sports highlights and scores, as well as Internet services, and a mix of licensed merchandise.
News Corp. ‘s international presence extends to the two-thirds of the world’s television households the company now has access to through a variety of services such as BSkyB in Britain and Star in southeast. Murdoch has called sports the “cornerstone of our worldwide broadcasting” plans (Knisley, 1995, p. S-2). Elaborating on this theme, Fox executive Chase Carey stated that, “in a world with more and more clutter, sports are going to be an increasingly significant platform with which to distinguish and promote ourselves” (Lafayette, 1996, p.
23). Fox intends to use its acquisition of major domestic sports rights (NFL, MLB, and NHL) as a way to gain viewers and advertisers throughout the world (Dwyer, et al. , 1994). This extends from the exploitation of television rights to the partnership with the NFL in the 1995 revival of the European-based World League of American Football (Mandese, 1994a), to the joint venture with Prime Liberty, the dominant owner of RSNs, that develops domestic and international services under the Fox Sports name (Lafayette, 1996).
The sports industry is well aware of the recent and continuing trends in the global industry and its importance within the partnership. In fact, many of the elements that are considered of primary importance to the emerging new television oligopoly (brand identity, “lifestyle” marketing, and globalization) are the very same elements considered crucial to the sports industry. Ozanian writes that, “Sports is not simply another big business. It is one of the fastest-growing industries in the US, and it is intertwined with virtually every aspect of the economy” (Ozanian, 1995, p. 2).
According to data reported by Helitzer (1996), sports are the twenty-second largest industry in the US with annual revenues in excess of $100 billion. As for professional team sports, the value of the 107 [now 113] franchises in the Big Four leagues was estimated to be $11. 4 billion in 1994, a value estimated to increase to “unimaginable levels” in the next few years (Worsnop, 1995, p. 123). Globalization obviously contributes a substantial portion of the value of professional teams. In the NFL, for example, media revenues (with the vast majority coming from television) constitute approximately two-thirds of total team revenues.
Although the other leagues are not as yet so television-reliant, MLB and NBA teams derive over one-third of their revenues from media (Schaaf, 1995, pp. 103–05). In addition to direct financial impact, the telecasting of sports events has provided leagues with the wide exposure essential to the merchandising of team names and logos, one of the fastest growing revenue streams in sports. Team and league licensed merchandising is now a $13 billion a year business in sales as compared to the approximately $10 billion a year spent on television sports rights (Helitzer, 1996, p.
5). The importance of merchandising is such that teams consistently modify the style and colors of their logos and uniforms in order to enhance sales. The success of merchandising is one reflection of the continuing and growing popularity and power of sports. This revenue stream not only supplements television money, but is built off it. In addition to merchandising, sports entities are increasingly adept at increasing their revenues through playing facilities and integrated marketing schemes.Sample Essay of UkEssays