Effect of Globalization and Commercialization on Sports
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“ Critically evaluate how globalizing and commercial forces have influenced sports generally and football especially. You should also include in your analysis the influence of globilization and commercialization on the management and governance of organizations in light of Stewart and Smith’s (1999) unique features of sport. You should discuss the implications of these changes on the management of sporting organizations. You must be critical rather than descriptive in your analysis and refer to theory wherever possible”
This paper seeks to present how commercialization and globalization have affected sports industry in our days and how sport managers have to respond to these two factors.
Sports always were concerning human communities, and were at the centre of human activities. At the early 590 BC the Greek athletes were financially rewarded for an Olympic victory-winning (Harris, 1964). “Sports has not always had such an international flavour. Sports first spread across international borders through imperialistic efforts. As countries such as Great Britain colonised various areas throughout the world, sport was used to impose the conquerors culture on the colonised land” ( Masteralexis, Barr and Hums,1998, p.210).
Nowdays sports attract the public interest and “Modern sports and modern mass media are both multibillion-dollar businesses. Elite sports cannot function as they do without the mass media to publicize and underwrite them. The huge market for sports equipment and team-related merchandise is to a large extent sustained by the media's 24-hour-a-day sports coverage, and the economic infrastructure of the mass media depends to a considerable extent on the capacity of sports to create large, loyal cohorts of readers, listeners, viewers, and interactive consumers” (http://www.britannica.com/eb/article-253580).
Sport is a main interest in modern societies as more and more people participate like ever before. This massive growth of sport interest and activities has drove to main changes the major characteristics of sport. These changes that characterize sport are related to social changes as “among these changes some trends may be identified. First, sporting activities in western countries are characterized by a trend toward pluralisation i.e. by the increase in the number of sports that are practiced.
At the same time sport activities know a process of diversification and differentiation: recreational, competitive and professional sports are becoming more and more separated. Second, sport activities are subject to a growing individualism. Sport is more and more seen as an option for an individual. The general ideology concerning sport has moved “from sport as a collective right to sport as an individual option” leading to the adoption of the principle of “let the user pay”.
Individualism and pluralization may be seen as the cause of a trend toward the “marketization” (or commercialization ) of sport. In effect, sport is among the fastest growing leisure markets. All sorts of sport, and not only top sport are characterized by a growing involvement of money.” ( Enjolas, 2001).
“Today, sport is big business and big businesses are heavily involved in sport. Athletes in the major spectator sports are marketable commodities, sports teams are traded on the stock market, sponsorship rights at major events can cost millions of dollars, network television stations pay large fees to broadcast games, and the merchandising and licensing of sporting goods is a major multi- national business. These trends are not just restricted to professional athletes and events, many of them are equally applicable to the so-called amateur sports” (Slack, 1998). Here is a selection of some examples that certificate the above : “a report published by Deloitte & Touche and Sport-Business Group has revealed that Manchester United heads football’s rich list with a turn over of 117m pounds.
It is based upon turnover season 1999-2000. In the 2nd is Real Madrid with turnover of 103.7m. pounds.”, “Kellogg has signed its biggest ever UK sports sponsorship deal. It is linking its Nutri-Grain brand with Rugby League’s Challenge Cup. Kellogg will invest more than 1 million pounds into the sponsorship.” , “Musicians, sports stars and actors are rapidly overhauling established business tycoons as some America’s wealthiest young people.”, “Hays and Robertson is planning a two-way floating International Brands Licensing, the Admiral and Mountain Equipment brand business on Aim in June 2002, in an attempt to raise its market value to 11.5 m. pounds.
Hays and Robertson will then join with Sky in a deal to sell England kits and other football kits later on in the year and focus on purchasing licenses for other brands for UK distribution.”(as cited in Beech and Chadwick, 2004, p. 8-9). Also as cited in McGaughey and Liesch (2002) ague that, “… sport has gradually commercialized through the growth of spectatorship, with revenues being generated via gate-takings and activities such as on-course betting (Rowe, 1996). While the advent of ‘live’ broadcasting and the commentary of sports through radio and television initially resulted in declining revenue for sporting bodies, popular sports have increasingly entered more economically rewarding contracts with television interests, with ‘the negotiation of television contracts rapidly becoming the biggest issue in the game’…” (p.384).
According to Beech and Chadwick (2004), the development of a sport as a business is characterized by a sequence of phases. These phases are: the foundation of the sport, its codification, stratification, professionalisation, , post-professionalisation, commercialization and post-commercialization. The commercialization of a sport involves the development of an “overtly business context, external organizations see the opportunity of using the sport for their own purposes, typically marketing in the forms of sponsorship – involving governing bodies, leagues and clubs – and endorsement – involving players.
If the sport organizations, leagues and clubs are inept in their management of the greatly increased financial revenues which become available, they will become available, they will come under pressure to the extent that some professional clubs in particular may be forced out of existence” (p.6). The commercialization in the English soccer began at the end of 1960, when Texaco (an oil company) and Watneys (a brewery) offered sponsorship to cups (Beech and Chadwick, 2004). “ …by the end of the 1990s commercialization had become firmly embedded across the whole of the top leagues as well as the FA, with sponsorship of a range of events and facilities, including individual stadia, common practice. Clubs websites had become integrated with betting companies, mobile phone companies and other external organisations, typically offering directly soccer-related services.
Weaker (in terms of financial success) clubs have faced major pressures such as being forced into administration.” (p.7). Some examples that present the commercialization in the 1990s are “… between January 1993 and January 1997, shares in football sector rose 774per cent, outperforming stock market by a factor of 10.”( Marrow, 1999), “…18 month period between 1995 and 1996, shares in Manchester United and Tottenham rose 336 per cent and 368 per cent respectively.” (Marrow, 1999), “many individuals made slot of money from stock market floatation as Hall Family (Newcastle): 3m 1989-1992- sold a 41.6 per cent stake for 55m. pounds.” (Walters G, 2008, Lecture 1, Birkbeck notes).
The commercialization of the sports has led to the commercial consumer income e.g. shirt sales, the commercial sponsorship income e.g. shirt sponsorship, the stadia development, the increasing of supporters-fans, matches are scheduled for tv audience, the merchandising have become more aggressive, expensive and targeted, the tickets price is higher (Walters G, 2008, Lecture 1, Birkbeck notes). Here are some comments about the commercialization in football: “ One of the reasons the fanzines are not encouraged is because the clubs fear any threat, small or large, to their complete control of merchandising income. Clearly fans want to identify with their clubs and if control also means ensuring that certain basic standards of product and service are met then that’s not necessarily a bad thing…the trouble lies with the way that merchandising has taken over at the expense of developing almost any other form of identification with the club” (Perryman, 1997, p.6), “this should have been a golden age, a perfect time to be a football supporter.
Heysel and Hillsborough were in the past. We had seen off the hooligans and nearly all the fences. Where we were once the enemy within, we were now the height of fashion… tv programmes, plays and even opera took an interest… football shirts were everywhere. There was a boom… this should have been everything we ever wanted. Instead, just when it was, at last, all right to be a football fan, everything went sour…”( Horton, 1997, exploitation 13-14).
“Globalization can be described as a process by which the people of the world are unified into a single society. This process is a combination of economic, technological, sociocultural and political forces” (Wikipedia, 2008).
“In sports, globalization does not mean promoting international games and joining test matches or international competitions. It is a temporary event with minimal lasting effects and therefore is just called internationalization. The globalization of sports intimidates sports organizations that hold the right of franchise in these countries. So, it is a big problem for the professional associations, like those in baseball and soccer in Japan and in Korea and basketball in the Philippines. Sports management is something that is not directly related to globalization. But, today, due to the wide coverage of media and the popularity of sports, globalization is an inevitable issue, even for the local sports organizations.
The international sports enterprises are always looking for a chance to invade a new market, and in this sense, sports is very similar to agricultural and industrial products” (http://ccs.cla.kobe-u.ac.jp/staff/amano/WWW/amano.html, 2008). Also “the global development of sport has also accelerated from the 1980s. For example, one can find the flows from country to country of sports goods, equipment, and landscapes have grown such as the development of the media-sport production complex and projects images to global audiences.”(Lee and Lin, 2007, “the Sport Journal”).
According to Masteralexis, Barr and Hums (1998), “Sport is subject to many of the same forces that are increasing the global distribution of consumer and entertainment products today” (p.209) as sports are affected by international influences as athletes play professionally in foreign countries, people watch sport events from other countries and they consume products of foreign teams. The sports industry like the general business, have realized that they have to expand their boundaries in order to sell their products in the global marketplace, by creating “products that they have the same appeal and generate the same demand in all corners of the world” (p.212) considering the different cultures, laws, languages, customs, traditions. “Efforts in globalizing the sport product can be seen on two fronts:
1. corporations are attempting to utilize the sport theme and sport products to enter the international marketplace and
2. professional sport leagues are attempting to spread the popularity of their leagues and associated products (televised games, licensed sport products, etc. ) overseas” (p.213). As an example “…many sport 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 sport leagues seeks out new revenue opportunities in many different markets…” ( Mason, 1999, p.406).
Trenberh and Collins, 1994, suggested five “manifest market conditions” that affects the sports industry and the sports managers work: “1.a trend toward a increased professionalism in leisure and sports organizations 2. continued development of commercial forms of sport
3. maturation and normalization of career structures in leisure and sport 4. a mounting awareness of the need for fiscal accountability in the public and non-profit sectors and 5. the targeting of management skills by government as a way of enhancing sport systems ‘effectiveness’” (p.276).
According to Boucher(1998), “…there is n question that the field of Sports Management has grown and developed at a rapid race, particularly over the past decade. Concurrent with this growth have been advancements made by professional and academic associations, formed to further needs of a variety of individuals who are affiliated with Sports Management”.
Sport managers have to be aware of the changes that impact their work environment and have to be capable of knowing the new technology, which affects the sports industry and have to understand that sport and sport management as a whole, is growing as a popularity worldwide and sport managers themselves should learn, understand and respect the “differences when dealing in the international sport marketplace” (Masteralexis, Barr and Hums, 1998, p. 36), “ … it is imperative that sport managers understand the issues surrounding the governance and management of international sport…” (Masteralexis, Barr and Hums, 1998, p. 213).
In order to manage the sport product, sport managers should always consider that: “1. the sport product is intangible and subjective making it difficult to ensure costumer satisfaction 2. the sport product is inconsistent and unpredictable 3. the sport product is a perishable commodity, developed in anticipation of demand and produced and consumed simultaneously
4. aspects of financing and budgeting for sports organizations differ from those of a typical business 5. for a manager there is a highly complex network of stakeholders ranging from government agencies to sponsors, volunteers and members 6. sport enterprises earn significant income from sources extraneous to the sale of the service(e.g. sponsorship and television rights) 7. managers of sport leagues must heighten competition to be successful, not eliminate it” (Trenberth, Collins, 1999, p.20).
In addition the role of marketing is very important for a sport manager, in order to attract consumers, as marketing helps : 1. to guide a sporting organization in its selection of the “sport product” and its target costumers 2. to identify and monitor the activities of business competitors 3. to develop and implement promotional strategies 3. to develop and implement distribution strategies 4. to coordinate the research and information needed to carry out the marketing functions(above), audit their performance and help ensure their repeated success. (Trenberth, Collins, 1999, p.218).
Sports managers need to understand also the strong need of : 1. financial management 2. share and stock market 3. mergers and acquisitions 4. sports law, commercial and international law 5. TV rights and EU law in European cases( Trenberth, Collins, 1999, p.279).
This paper has sought to highlight how commercialization and globalization has changed the worldwide picture of sports. As we can conclude a sport manager, in order to be competitive in the global marketplace and in order to be able to react to the changes of the international rules of commercialization have to be aware of the needs of the market and “consumers”-fans that address.
According to Markle(1997), (as cited in Trenberth, Collins, 1999, p.281), “…sports managers need to understand the nature of the business and the disposition of the consumer through demographics, psychographics, socioeconomics, etc…sports managers need to built their business, the product and the perception of the product to be attractive and appealing … to built relationships with sponsors, to learn their business needs and become an agency rather than a salesperson. They should under-promise and over-deliver…”
Also we should always have in mind what Robert L. Boucher (1998, p.79) suggests : “ call me naïve, but it is possible that today’s promoters of commercialism in sport have become intoxicated by sponsorship revenues? …is it right for a sport manager only to be conduit by which a sponsor can achieve greater market penetration? My contention is simply that in our quest for legitimation, we may have sold our souls to the interests of big business. It can be argued that much of what comprises the Sport Management domain is not related to business and producing entertainment for profit. In fact, a large percentage of sport enterprises in the global community are of an amateur nature where the motives of participants, spectators and administrators are of a more altruistic nature. Perhaps Chelladurai’s (1992) observation that there are really, in fact, two fields, that management of human services in sport and management of entertainment services through out sport, is entirely accurate. In any event, the need to return in a balance in orientation and to refocus has never been more pressing”.
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