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Zegers,Charlie, (ND) “Revenue Sharing and North America’s Major ProSports Leagues” by About.com
Accordingto the latest financial NBA information, it has emerged that someteams are earning high incomes from the games. However, others havebeen struggling to earn income that can help to support thenecessities of the teams. Zegers proves that some of the popularteams have been struggling to raise adequate cash by comparing thetop ten best performing teams. The author gives an example that theten most profitable NBA teams earned $150 million between 2010 and2011. However, the author also notes that other 20 teamsparticipating in the NBA also incurred over $400 million dollarsafter the deals to sell their shirts backfired.
Inrecent years, the challenge of league parity and competitive balancehas raised concern in the sports industry. In America, sport teamsvary in terms of financial resources availability, and this has ledto potentially competitive imbalance where big and richer teams havethe ability to procure expensive and better talent. As a result,revenue sharing is expected to improve competitive balance by movingfunds from strong clubs to weaker ones. The revenue sharing schemesvary globally among professional sports.
Someof the best performing sports team in the leagues have long-termcontracts worth billions of dollars. For instance, the Los AngelesLakers, one of the NBA teams that are alleged to earn the highestincome in the league, signed a three billion dollars contract withTime Warner Cable. However, the team and players should look foralternative sources of income instead of just relying on the sportstalent. For example, the Los Angeles Lakers’ contract value of thedeal will depreciate at the rate 10%. Although some people have beenrecommending that the richest NBA teams such as the Celtics, Lakers,Bulls, and Knicks should share their income with the low incomeearning teams. However, the wealthy owners and managers of thesuccessful teams have opposed the movement. A large section of the$4 billion the industry is worth comes from selling broadcast rightsto television stations, as well as advertising diverse products ofthe jerseys.
2.Volin, B. (2013). “Now More than Ever, We Realize NFL Owners Won”by, the Boston Globe,
Themain benefit of revenue sharing to players in respective professionalleagues includes increased salaries. Players are the mainbeneficiaries from the league and franchise success where almost twothirds of the revenue goes to the players. For instance, NFL has manysources of revenues such as TV contracts, licensed jerseys, andlicense fees that are equally shared among teams and players.Therefore, each time the contracts renegotiated this in turn means anincrease to player’s salaries. Under the new agreement of revenuesharing, players will receive enhanced benefits in case they retire.To the owners of small teams, revenue sharing allows them to developfinancially thus providing all teams a chance to compete.Consequently, the leagues have become competitive and healthier.
Accordingto the latest data in the NBA and NFL sports industry, new playershave successfully managed to rise above the competition. The majorsports league in America has experienced player union strikes andowner lockouts. A lockout imposed by owners forced NHL to cancel its2004-2005 season as well as lost much of the 2012-2013 season. As aresult, a new revenue sharing system was implemented by the NHL, inaddition to changes in the rules which created a lasting effect tothe league. The new collective bargaining enhance players benefits byliberalizing free agency where player obtained the freedom to chosewhich teams to play for and enable them gain full market potential.
Onthe other hand, the NBA lost almost half of the 1998-1999 season aswell as the two months in the 2011-2013 season. However, the NFLnearly missed the 2011-2012 games because of a preseason lockout andsubsequently a referee lockout in the 2012-2013 seasons but wasaverted. Consequently, the new collective bargaining agreement ledto positive outcomes where owners accepted a modest raise in theirminimum salary and players agreed to a maximum salary. Player unionstrikes and owner lockouts hurt their respective professional sportsleagues when both players and owners stop working. The refereelockout hurt the brand Labor stoppages have occurs due todisagreements concerning equitable distribution of revenues.
Holmes,Linda. (2012). ESPN`s `Broke` Looks At The Many Ways Athletes LoseTheir Money. ESPN.
TheESPN “The Broke” documentary is a real surprise as it reveals thereal financial status of several NFL players. It is amazing thatseveral players often become broke, or rather they start doing jobsto maintain their lifestyle. From my opinion, the must be a strongexplanation that can be associated with the reasons severalprofessional players often become soon after retiring or later intheir lives. Billy Corben, the screenwriter and director of the movieasserts that poor management of cash during the times players areactive can be associated with lack of long-term strategies formanaging in a way that retired players will continue receiving steadyincome.
Iagree with the author’s assertion that several players lackbusiness experience or ideas for investing considering most of themsucceed in their careers in their late teenage hood or earlytwenties. People in this age bracket have no investment experience,thus they tend to use most of their money purchasing fancycommodities, with little or no savings for the future. Theextravagant lifestyle of many athletes such as buying clothes fromthe most expensive vehicles in town, to purchasing diamonds, as wellas gambling also increase the rate at which players go brokeafterwards. Although poor investment decisions do contribute inmaking musicians broke, the alternative route of bearing childrenwith numerous women is the most burdensome since the player wouldhave to shoulder recurrent expenditure of raising the sired children.
Themajor sport leagues in America have experienced player union strikesand owner lockouts. A lockout imposed by owners forced NHL to cancelits 2004-2005 season as well as, lost much of the 2012-2013 season. As a result, a new revenue sharing system was implemented by the NHL,in addition to changes in the rules, which created a lasting effectto the league. The new collective bargaining enhance players benefitsby liberalizing free agency where player obtained the freedom tochose which teams to play for and enable them gain full marketpotential.