1983 miles distance between Seattle and Oklahoma City – sounds like a long -trip for European football fans in international competitions, whereas in the US sport it is an easy hurdle to overcome when it comes to changes of location. During our excursion to New York, we gathered exciting insights into the US sports business, which I will summarize below.
Focusing profit?
In 2007, Clay Bennett, the new owner of the basketball team Seattle SuperSonics, decided to leave Seattle due to the fact that the city of Seattle was not able and willing to build a new arena for the basketball team at the expense of the public sector. For the businessman Clay Bennett, the sympathy of basketball fans was not what counts. What counts for him is earning as much money as possible with the traditional NBA team that was founded in 1967 and has been based in Seattle ever since. The discussed hall, which is owned and operated by the city, has a capacity of 17,000 spectators, less than any other in the NBA. According to Bennett, it was simply too small to be profitable as the team made a loss of 17 million dollars in 2006. For this simple reason, the Seattle SuperSonics broke up. The franchise moved to Oklahoma City, playing now under the name Oklahoma City Thunder. An almost impossible scenario for traditional European sports fans, but a short and significant example for how the sport business in the US works.
Entertainment- and profit-oriented
Furthermore, the meetings with the NBPA (National Basketball Players Association), New York Red Bulls (Major League Soccer, MLS) and Octagon (Sports Marketing Agency) strengthened the feeling that US American sport sector needs to be considered as highly entertainment- and profit-oriented. This is caused by the fact that the USA have a multitude of sports in each city which are highly recognized and popular, e.g. in New York New York City FC and New York Red Bulls – soccer, New York Yankees – baseball, New York Rangers – Ice Hockey, New York Giants – football and New York Knicks – basketball. Clubs have to fight and position themselves against internal (soccer clubs) and external (other sport and leisure activities) national competitors on a wider scale than it is the case in Europe.
Powerful Leagues
Another example is the US soccer league system which we learned about in New York. The MLS operates under a single structure. Unlike European football leagues, it is not administered by the country's football association, but is internally self-regulated. The team owners are shareholders in MLS and have a voice. In contrast to many European leagues, the teams in the MLS are franchises. The owner acquires a license from the MLS to provide a team for the league. The league has the right to dissolve any franchise or to put it under its own control if the conditions are not fulfilled. If a player is committed by a franchise, this usually concludes a contract with the MLS and not with the team. The MLS also controls the finances of the individual franchises and sets an upper salary limit for the players. This is to avoid too high a loss for individual teams. Exception here is the Designated Player Rule, with which salaries can be spent above the maximum specified by the MLS.
Each franchise also has the possibility to engage its own players. In this case, however, the salary limits of the MLS must also be adhered to. Moreover, the European system of Play-Offs and Play-Downs simply does not exist in the US sport sector, as the owners have to acquire a license for playing in the desired league. In 2019, as the only new club FC Cincinnati acquired a license for the MLS. Further clubs such as FC Inter Miami, Nashville FC and FC Austin will join in the MLS for a sum in the double digit million range.
Conclusion
To conclude, decisions in the US American sport business sector are based on profitability and entertainment factor. Change of locations or acquiring licenses instead of including the fan base or qualifying yourself (clubs) through sport-based arguments are common practices in the US. Usually deterrent scenarios, which for the US American are an integral part of the understanding of sport. The differences are sometimes huge, but this does not diminish the pleasure of the US American sports fans in their sports.
Julien Schmittberger, International Football Management 2020