This is an excerpt from Sales and Revenue Generation in Sport Business With HKPropel Access by David Shonk & James Weiner.
Although the prevailing view of business during the 20th century and earlier was that the only responsibility of business was to make a profit, in the 21st century organizations began to focus more on making a positive contribution to society. The principle behind the idea of social responsibility is that those with power should help those in need (Parent, 2018). Therefore, the leaders of corporations understand they have “responsibilities beyond profit maximization” (Babiak & Wolfe, 2006, p. 215) and thus have shifted from simply providing charitable donations to implementing a more strategic corporate social responsibility (CSR) model that integrates corporate donations and community service activities with business operations and interests (Dean, 2002).
Today, almost every professional sport team has some form of community affairs, community outreach, or foundation that gives back to various causes. CSR initiatives are integrated not only into teams but also into virtually every sport organization (e.g., sporting goods manufacturers, college and university athletics programs, and even youth sport) within the broadly defined sport industry. The organizations have adopted some form of activities that reach out to bring messages and resources to underprivileged members of society (Babiak & Wolfe, 2006). What is interesting about sport is how it differs from other types of business. For example, teams are valued based on their revenues and built equity rather than cash flow and assets, and leagues share revenue streams at different levels, including gate receipts, marketing and broadcast rights, concessions, luxury boxes, club seats, advertising, and membership fees (Sheth & Babiak, 2010).
Unique Power of CSR in Sport
Almost every corporation in every industry has some form of social responsibility initiative in place. But what makes the concept of CSR so powerful within sport? What forces contribute to the importance of CSR in sport? Parent (2018) suggests that social responsibility in sport is distinct from and more powerful than CSR in other industries because of the following four factors.
The level of passion generated by sport fans at both an individual and collective level is unique. Sport not only helps individual fans express their identity to a team but also, on a collective level, cuts across all social strata whereby members of different races and ethnicities, religions, socioeconomic status, and gender experience a commonality. Furthermore, sport teams represent their host cities, and there is a reciprocal relationship whereby team success is often contingent upon fan attachment and loyalty.
The visibility, and ultimately the power, of sport exceeds that of other industries because sport is less dependent on simple market-driven economics. In other words, the close ties between teams, leagues, local host-city government entities, tourism providers, and many other stakeholders all factor into the economics of sport. Unlike other industries, professional sport leagues operate as monopolies that are often immune from external competitive forces.
Expectations, particularly from fans and the media, for sport teams to be transparent is more widely scrutinized than in most other industries. Team and athlete outcomes are constantly monitored, personnel decisions (e.g., player salaries) are announced through public statements and press conferences, and off-court or off-field behavior of athletes and sport employees is subject to much greater public attention than in other industries (Parent, 2018). These factors make the effective implementation of social responsibility in the sport industry more challenging than in other industries.
Stakeholders are vitally important within the context of sport. Although an organization operating within most industries has a high degree of control over matters of production, sport leagues are more dependent on the cooperation of many stakeholders, such as the media, teams, fans, leagues, sponsors, and athletes.
Forces That Make CSR Important in Sport
Two primary forces drive the importance of CSR within the context of sport (Djaballah, 2016). These forces include internal resources and external pressures.
Positive Internal Resources
First, sport offers unique internal resources. One example is the youthful appeal of sport and its positive health and social effects. Issues like sustainability awareness, the fostering of cultural values in sport events, and factors such as admiration, passion, and identification that people assign to teams, athletes, sport associations, and facilities are key components of these resources.
Strong External Pressure
Second, sport organizations face strong external pressure that compels them to act more responsibly (Djaballah, 2016). Many sport organizations are economically structured in such a way that they rely on public subsidies or infrastructures. For example, many sport facilities are publicly financed using taxpayer monies and are therefore expected to give back to the community. Also, media attention and fan support often focus on the external performance of sport organizations. In addition, corporations increasingly use sport as a vehicle for carrying out their CSR initiatives to the public.