The simple objective for professional sports teams is to win a championship, unless it isn’t. Professional sports is about making money and that is no different in the National Basketball Association (NBA). One of the major questions faced by the Association is how much revenue should be shared between teams (Windhorst, 2017).

(NBA Teams with Reported Losses)

One concern brought up by highly profitable teams is that it’s unfair to penalize an organization with a good location and strong management. If someone buys a prime plot of real estate that generates a high rate of return then it’s subject to a tax that increases based on tax brackets; however, we don’t assess an additional tax if the property outperforms those around it. NBA owners who buy franchises with small markets and limited revenue streams know from the outset how difficult it will be to turn a profit, but willingly purchase the team anyways. It’s not the fault of the profitable teams that a bad business decision was made (Windhorst, 2017). The counter to that argument is that it would be difficult for the NBA to function as a 16 team league (Windhorst, 2017). It would mean a shorter schedule equating to less television revenue and a decrease in the fan base from markets that no longer have a team. Even if the number of teams were to be cut down the competition inequality, that currently hurts teams who can’t afford to pay high player salaries, would still exists with the wealthy teams being able to pay salary cap penalties to bring in the big names (Windhorst, 2017). Without some form of revenue sharing, getting close to equality – both on and off the court – is nearly impossible.

(Net Income After Revenue Sharing)

The issue of revenue sharing also brings strategy into question: short term revenue or long term sustainability. NBA owners have a limited timespan to make money off of their team meaning that it is in their interest to raise the current market value. It makes no sense to make an investment that will improve the equality in the NBA down the road when the current ownership will see little of the benefit. Even if current owners were to reap in some of the benefits, the net future value of that money would be less than the current value of the money spent, assuming proper investment. In the long term, increasing the revenue sharing pool would allow more teams to spend money on player salaries in order to be competitive; attracting more interest and larger fan bases to purchase their products (Windhorst, 2017).

In a league where money equals success, is it fair to allow small market teams to perpetually lose money or should more be done to ensure everyone has an equal chance of success?

(446 words)

Sources

Windhorst, B. (2017, September 19). A confidential report shows nearly half the NBA lost money last season. Now what? Retrieved September 25, 2017, from http://www.espn.com/nba/story/_/id/20747413/a-confidential-report-shows-nearly-half-nba-lost-money-last-season-now-what

Images:

NBA Teams with Reported Losses [Digital image]. (2017, September 19). Retrieved September 25, 2017, from http://www.espn.com/nba/story/_/id/20747413/a-confidential-report-shows-nearly-half-nba-lost-money-last-season-now-what

Net Income After Revenue Sharing [Digital image]. (2017, September 19). Retrieved September 25, 2017, from NBA Teams with Reported Losses [Digital image]. (2017, September 19). Retrieved September 25, 2017, from http://www.espn.com/nba/story/_/id/20747413/a-confidential-report-shows-nearly-half-nba-lost-money-last-season-now-what

What’s Wrong With the Golden State Warriors? [Golden State Warriors Team]. (2017, January 24). Retrieved September 25, 2017, from https://static01.nyt.com/images/2017/01/25/sports/25warriors-web/25warriors-web-facebookJumbo.jpg

*Note from the author: much of this blog has be written from my past knowledge of the NBA, professional sports, and revenue sharing across different leagues.

Online gambling has produced some of the most profitable opportunities in the twenty-first century. A natural extension of the pre-existing gambling industry, which is worth over $240 billion in the United States alone, online gambling gives users quick and easy access to place a bet (Pierceall, 2014). Ladbrokes, 888, SkyBet, and Casumo are four of the companies trying to gain a significance presence in the online betting market; however, all are facing fines and public backlash after publishing advertisements that “targeted vulnerable individuals (Davies, Sweney, 2017).”

Generally, corporate executives have an obligation to “make as much money as possible while conforming to the basic rules of the society (Zimmerli, Richter, Holzinger, 2010).” By marketing to a demographic who are the most likely to gamble, each company is trying to maximize the return of their advertising campaigns. If the market research were to be ignored and the advertisements targeted to the general population, the campaigns would become more expensive and see less of a return relative to the amount of money spent. It is also important to recognize that society generally views gambling as a negative. If it truly was the responsibility of a gambling executive to exercise their societal conscious to prevent gambling, they would principally be required to either cease marketing or to shut down their company entirely.

Using stakeholder theory, the betting companies are creating value for employees, stakeholders, and suppliers through the increase in revenue; however, they are not creating value for the customers or the community (Freeman, 2009). These advertisements disproportionately impacted those are who in financial distress; people who are desperate to win money but instead will find themselves throwing away their final pennies (Davies, Sweney, 2017). The addictive nature of these games pushes individuals into a worse financial situation and even into bankruptcy.  The businesses are also harming the community by contradicting the numerous efforts made by governments to curb gambling, especially among high risk individuals. By using a advertisement that pulls pulls at one’s heartstrings, it makes it very difficult to weigh the practical harms of gambling against the chances of fixing all of one’s possible life problems. The companies are also under investigation for violations of the UK advertisement code, which disobeys a societal rule set up to protect the community (Davies, Sweney, 2017).

In running a gambling business, one needs to choose whether their social conscious or the wellbeing of the business is their top priority. The best customers of the gambling industry are the super rich and those who are in desperate need of quick cash; the latter being some of the most vulnerable in society. If all of the negative consequences that inevitably come with gambling can be ignored, then a healthy profit can be made.

[442 words]

Citations:

Davies, R., & Sweney, M. (2017, September 13). Betting firms could be fined over ads ‘targeting vulnerable people’. Retrieved September 13, 2017, from https://www.theguardian.com/media/2017/sep/13/betting-firms-ads-asa-ladbrokes-888-skybet-casumo

Freeman, R. E. (2009, October 1). Retrieved September 13, 2017, from https://www.youtube.com/embed/bIRUaLcvPe8

Pierceall, K. (2014, September 30). The US Gambling Industry Is Worth $240 Billion. Retrieved September 13, 2017, from http://www.businessinsider.com/the-us-gambling-industry-is-worth-240-billion-2014-9

SkyBet [Digital image]. (n.d.). Retrieved September 13, 2017, from http://www.gamingintelligence.com/images/Logo_lg/SkyBet-lg.jpg

Zimmerli, W. C., Richter, K., & Holzinger, M. (2010). Corporate ethics and corporate governance. Berlin: Springer.

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