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Looking at the world through rose bowl-colored glasses

This is an excerpt from Beyond the Scoreboard by Rick Horrow & Karla Swatek.

Welcome to the new era of sport—powered by the fan.

In 2011, fans are the designated drivers of the $750 billion business of sports. The digital age and its endless menu of options, from coverage of obscure fringe sports to prolific online fantasy leagues and sophisticated interactive video games, have fragmented the audience for major sporting events like never before.

American football players locked out? I'll just sample some Aussie rules football online. No NASCAR races on a Tuesday? No problem—I'll just play the latest motor sport video game on Xbox Live and compete head-to-head, in real time, with other drivers all over the world.

These days, fans are also participating in the management of leagues and teams, from voting players into All-Star contests via Twitter and text messages to influencing business decisions by way of powerful online fan forums and in some cases being directly involved in the ownership of a team. If you're a fan, however, unless you're that oddball subscriber to the SportsBusiness Daily, you're not getting the full business picture from your favorite sports talk radio host or Twitter feed. The casual fan is kept in the dark about to what degree this pastime is an incredibly complex multinational operation on par with the biggest Fortune 100 companies and small governments.

Beyond the Scoreboard: An Insider's Guide to the Business of Sport takes a comprehensive look at how the ever-growing professional sport industry really works. What are the real components driving this multibillion-dollar industry? Who are the true movers and shakers? What affects the price of your ticket, where you're able to take in a game, and what you see on Sports Center? What is the undercurrent of technology that now shapes everything that develops in the industry—as it increasingly does in all our lives?

Sport business is lucrative, intense, and largely undocumented. But where is its library of lessons? And how does the entrepreneurial reader learn to think like the skybox exec or superstar to whom victory means the development of brand and bankroll?

Consider the valuations of the world's top sport properties, as estimated by SportsPro magazine. Other industry sources consistently confirm these numbers. Not surprisingly, the National Football League ranks as the world's most valuable sport property at an estimated $4.5 billion (all numbers U.S.). Ranked under the NFL are the other three biggest American professional sports: Major League Baseball ($3.9 billion), the National Basketball Association ($3.35 billion), and NASCAR ($1.9 billion).

Interestingly, the next property on the list is only three years old—the Indian Premier League (cricket), valued at $1.6 billion. On the individual franchise side, the highest-rated team property is the English Premier League's Manchester United at $1.5 billion. The Dallas Cowboys are the top-rated U.S. franchise at close to $1.3 billion. Despite troubles revealed at the end of 2009 and stretching throughout the 2010 season, Tiger Woods tops the athletes' list at an estimated fortune of $1.25 billion, bolstered by his golf course design business and off-course business deals.

Despite these sky-high valuations, is sport—as jaded pundits increasingly suggest—now synonymous with entertainment, nothing more than an athletic reality show with no end purpose staged specifically for the amusement of fans and the convenience of advertisers? Philadelphia Eagles owner Jeff Lurie, also a veteran executive in the motion picture industry, hardly thinks so: “I think sports is a subset of the entertainment industry,” he says. “If you take global entertainment, it's involving movies, live theater and concerts, live sports and televised sports. So it's really a huge segment of the entertainment industry, with a lot of the same priorities.

“If you own a team in the sports sphere, that business shares a lot of characteristics with the traditional entertainment industry because you want to put the best possible product out there,” Lurie continues. “You have to deal with the representatives of the talent. You want the fans to love what you're doing in terms of the performance of the team, which certainly applies to a movie or concert. You don't want predictability, you want a fast-pace product, and you want to work with partners who can work well together as a team as opposed to just hiring the biggest movie star in the world and then throwing the movie out there in a disjointed fashion.

“Finally,” Lurie says, “you're increasingly dealing with a global audience, not just domestic. Hopefully, you're also thinking years ahead, how the game or whatever you're producing can be increasingly accessed and understood around the world.”

Regardless of all the fragmentation in sports, live televised sporting events—the original reality TV—remain the signature opportunity for sponsors and advertisers to capitalize on a mass audience, as evidenced by the staggering sums that media companies are willing to pay for content. NBC's $4.3 billion deal to televise the Olympic Games through 2020; the collegiate Pacific 12 Conference's new media rights agreement with Fox and ESPN, worth $3 billion over 12 years; and the NCAA's college basketball deal with CBS and Turner, announced at nearly $11 billion over 14 years for the rights to broadcast on TV, the Internet, and wireless devices all top the list.

There's no doubt, however, the recession that knocked out the global economy in the mid-2000s has lengthened the industry's injured-player roster. NASCAR, the darling of the 1990s and the early 2000s, has seen the desperation-driven consolidation of most of its top race teams as well as plummeting TV ratings and massive speedways so devoid of human traffic that you hardly need earplugs.

Nine of baseball's 30 teams are currently over Major League Baseball's prescribed debt ratios, and the ownership of two of its cornerstone franchises, the New York Mets and the Los Angeles Dodgers, is in serious jeopardy, the former due to the Wilpon family's all-in investment in Bernie Madoff's Ponzi scheme of a financial institution, and the latter due to the Hollywood-style greed and hubris of owners Frank and Jamie McCourt.

At press time, the NFL and the NBA are mired in labor stalemates not seen in decades. The NFL, whose owners locked out its players after the 2010 season over pay and benefits, a rookie wage scale, and expansion of the season to 18 games among other issues, could be only days away from signing a new collective bargaining agreement and salvaging the 2011-2012 season. The NBA, claiming $300 million in losses for the season just ended, locked out its players after the CBA expired on June 30. The two sides are far apart on revenue sharing and player salary reductions, and with no agreement in sight, the 2011-2012 season is in jeopardy.

In the sport industry, however, the wins column is typically much longer than the losses, and the current era is no different. Because sport is still appointment TV, billion-dollar sponsors—insurance companies, automobile manufacturers, quick-serve restaurant chains, and breweries—have largely stayed the course despite the recession and continue to align their brands with sports. The recession also produced value packages that helped fans stay in their stadium seats; those who can no longer afford to attend watch more sports at home on their 40-inch high-definition TVs.

While Beyond the Scoreboard focuses primarily on football, basketball, and baseball at the professional level—the biggest revenue-generating segments of the sport industry—we also include case studies, lists, and factoids from all sports as they are relevant. So we can't help but notice the lively new franchises in Major League Soccer and the professional National Lacrosse League that are attracting a new generation of fans from America's coasts into the heartland. Golf and tennis have never been more popular; all of their respective majors titles are currently held by foreign nationals, and prestigious tournaments are finding homes in Beijing, Shanghai, and Dubai.

As for us, Beyond the Scoreboard also serves as a companion in print to Rick Horrow's regular segments on Bloomberg Television, www.FoxSports.com, and PBS' Nightly Business Report, to name a few. Beyond the Scoreboard also ushers in a new series of books we are developing with Human Kinetics. The Sport Business Insider series, premiering in 2012, breaks the industry down by specific subject. Each stand-alone title focuses on one aspect of the industry, such as branding in sport, globalization, investing in sport, and deal making.

Sport is indeed the ultimate reality show—and it's a dream job for those of us fortunate enough to work in the industry. But at the end of the day, or more aptly at the end of the game, it is the ultimate mega-business.

Read more about Beyond the Scoreboard: An Insider's Guide to the Business of Sport by Rick Horrow and Karla Swatek.

More Excerpts From Beyond the Scoreboard

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