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Understanding of comparative advantage essential to global sport expansion efforts

This is an excerpt from International Sport Management edited by Ming Li, Eric MacIntosh, and Gonzalo Bravo.

Marketing Foreign Players

An examination of global expansion efforts of professional sport leagues and tour sport also demonstrates the importance of understanding comparative advantage. For many of these sport organizations comparative advantage has sprung from an understanding that the signing of foreign players to strengthen the home franchise roster translates into global expansion opportunity. Professional leagues around the world have quickly adopted this strategy.

For example, an examination of 2008–09 NBA opening-day rosters showed that close to 15 percent of NBA players were considered to be of foreign origin (NBA.com). Players making NBA rosters represent a variety of countries including China, Brazil, Spain, Argentina, Turkey, Serbia, Lithuania, Germany, and France. The NBA has sought to expand its presence in these countries through marketing, the Internet, and broadcasting initiatives.

Note that companies in the athletes’ home countries concurrently seek to leverage the popularity of players competing elsewhere. They do this by creating corporate partnerships that enhance sales in local markets as well as help them reach new international markets. Each of the parties involved in these deals—the athlete, the franchise, the league, and the athlete’s home country corporation—share the common objectives of enhancing brand awareness and recognition while developing new markets and subsequent revenue streams. A good example of this type of partnership involves Yao Ming of China, the Houston Rockets, the NBA, and a Chinese brewery. The Rockets, after signing Yao Ming, sought sponsorship agreements with Chinese companies immediately after his signing. The league was also exploring sponsorship, licensing, and broadcasting deals in China, and the athlete was seeking endorsement opportunities in his homeland. In 2003 the team signed a hefty sponsorship agreement with Chinese beer company Yanjing (Lombardo, 2003). With this deal the Rockets and the NBA were able to capitalize on the global popularity of Ming both in China and beyond. The Yanjing deal placed the player in ads in China and other Pacific Rim nations. The goal of the beer company was not only to generate sales in China but also to reach new international markets in targeted Pacific Rim nations.

In recognition of the strength of the connection between the foreign athlete and the home-country market, some sport organizations such as the National Association of Stock Car Racing (NASCAR) have purposefully and aggressively recruited international athletes in an effort to create a comparative advantage. Drivers including Columbian Juan Pablo Montoya, Scotsman Dario Franchitti, and Jacques Villeneuve, a former Formula One race car driver of French Canadian descent, have been signed to NASCAR teams with the intent of helping to grow the popularity of the sport in international markets.

Other Sources of Comparative Advantage

The NFL, which has few players not born in the United States, has launched expansion initiatives in Europe, Mexico, and Canada with varying degrees of success. The Mexico and Canada connections are based not on the foreign player home-country approach but rather on geographical proximity. Franchises in Southern California, Arizona, Texas, Chicago, Buffalo, Wisconsin, and Minnesota have facilitated interest in Latino and Canadian markets through international broadcasting as well as playing games in foreign cities. The NFL’s presence in Europe was initially driven by an interest in creating a player development business beyond the U.S. collegiate system while building the NFL brand and opening up European markets to U.S. professional football. In 2007 the league announced that it would shut down its NFL Europa League, which was launched in 1995 as an all-European competitive league. The NFL announced that it would switch the focus of its international business strategy to presenting the NFL to the widest possible global audience through media visibility and staging international regular season games (NFL Europa Closes, 2008).

Still other professional leagues and teams have created global partnerships that have enhanced marketing opportunities, created value for both franchises, and grown revenue streams. An example of one such successful joint initiative is the 2001 strategic partnership between two of the most powerful professional sport organizations in the world, Manchester United and the New York Yankees. Together, they developed a strategic alliance to share market information, develop sponsorship and joint promotional programs, and sell each other’s licensed goods. The deal essentially represented multibillion-dollar international opportunities for both organizations. When Manchester United issued a statement about the deal, its shares leapt by 9 percent within one hour on the London Stock Exchange (Joining Forces, 2001).

The story of Major League Baseball (see the case study) illustrates the five basic approaches that pro sport teams, leagues, and tours have demonstrated as part of their internationalization strategy. They include broadcasting, licensing and merchandising, playing exhibition and formal competitions, marketing foreign athletes, and grassroots programs (Gladden & Lizandra, 1998).

Read more from International Sport Management edited by Ming Li, Eric MacIntosh, and Gonzalo Bravo.


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International Sport Management

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