The Economic Impact of Star Athletes in Professional Sports

Introduction 

Sports has been a big business both locally and internationally. The evidence of the impact of sports athletes is available in business pages and daily sports of any newspaper. By 2000, the gross domestic product of sports in the US was estimated to be over $213 billion (Walker and Enz, 2006). At Tiger Wood’s peak, his appearances and endorsements were worth over $80 million (Walker and Enz, 2006). The impact of sports athletes on the local economy is justified by the public contribution, especially during stadium construction. Team supporters and owners who seek to secure public support for stadium renovations or construction often cite the economic impact of the project as the main justification for the high expenditure on many sports-related facilities. Most people support the construction of sports facilities with the belief that it will boost property values and businesses in the local area. On the other hand, the state and federal government benefit from increased revenues. It is essential to evaluate the impact of star athletes on professional sports. 

Over the last decade, the economic impact of star athletes on professional sports has been an issue of public debate. Due to the positive impact of star athletes on professional sports, the main source of funding is quickly shifting from public funding of sports arenas and stadiums to private sector funding. Although the contribution of the private sector has increased significantly, the public sector continues to play a major role especially by providing favorable tax incentives or infrastructure improvements (Walker and Enz, 2006). Additionally, the public sector had become reluctant to fund professional sports teams, and the private sector stepped in and decided to take a lead role in facility construction costs due to the positive long term impact on shareholder value. All in all, star athletes have a positive economic impact on professional sports. 

Discussion 

Celebrity endorsements have generated a lot of revenues for most of the key multinationals, especially in advertising and marketing. It is no different in the world of sports. Major sporting goods brands such as Adidas, Nike, Under Armour, and others have used this tactic to pay top athletes in different sports to endorse products they are attempting to sell (Johnson, 2017). Furthermore, these brands have identified strategies to appeal to large audiences by producing high-quality products for different sports and then utilizing celebrity sports endorsements to promote their products. 

Notably, one of the companies that have used this tactic successfully is Under Armour. They produce different sporting apparel for both golf and basketball enthusiasts alike. Additionally, they use celebrity star endorsements as Jordan Spieth, a growing star in the PGA tour, and Stephen Curry, a popular NBA player, to endorse their lines of products (Johnson, 2017). Additionally, Stephen Curry endorses particular signature shoes by using during every game on the court. Other companies, similar to Under Armour, use endorsements from multiple athletes, and some celebrity sports athletes are endorsed by multiple companies, such as Christiano Ronaldo and Lionel Messi in soccer. Another famous athlete who held multiple endorsements from different major companies was Tiger Woods. 

Tiger woods had developed himself as a major sports brand and was the face of many companies that were sports or golf-oriented, such as Titleist and Nike. Additionally, he was the spokesman of multiple companies that had little to do with golf but were only interested in a celebrity endorsement who will boost their sales. Some of the companies include Wheaties, Buick Motors, and American Express. At the peak of his career, Tiger Wood's annual endorsements were worth over $100 million in revenues (Johnson, 2017). Ultimately, having Woods as the star athlete behind particular brands generated substantial revenue increase. 

It is important to note that Tiger Woods is not the only athlete who achieved significant benefits from achieving multiple endorsements. Michael Jordan may be the most famous NBA player in the country’s history to receive multiple endorsements from over ten companies in his fifteen-year professional career. One of the most notable companies that endorsed Michael Jordan, similar to Tiger Woods, was the Nike brand. He signed a $500000 a year deal with the Nike brand to wear their lines of sneakers during each game (Johnson, 2017). By 2017, Michael Jordan had made over $100 million from endorsement deals that he had made in 2016 (Johnson, 2017). Although the celebrity endorsements and the money Jordan has made from Nike over his fifteen-year career may appear excessive, it has allowed Nike to grow and dominate the shoe market in the US basketball industry year after year. 

It is important to note that Nike introduced the Jordan Brand shoes that control over 64% of the US basketball shoe sales (Johnson, 2017). Furthermore, Jordan’s personal line of sneakers, known as Air Jordan, generated approximately $3 billion dollars in revenues per year. The significant monetary and share market growth is similar to other trends occurring globally due to the impact of sports athletes. Also, Nike-proper may not have the Jordan name, but it has a 29% market share (Johnson, 2017). On the other hand, Under Armour controls 3.6% of the market share because of Stephen Curry’s impact while Adidas only controls 2.3% (Johnson, 2017). As shown with the case of Tiger Woods, Stephen Curry, and Michael Jordan, the impact of celebrity athlete endorsements on a product or company may transform a company within a year. Or in the case of Michael Jordan, convert a product into multi-decade investments that could produce millions of dollars' worth of sales every year. 

It is important that most celebrity endorsements have been successful because they utilize the fans' emotions. Young adults and children who grew up learning to play golf in the early 2000s often want to wear the same clothes, use the same clubs, and hit the same balls that were used by Tiger Woods (Johnson, 2017). To most of the people in the world of golf, Tiger Woods has been a heroic icon of all times, and people believed that if they used the same products that he used, they would be ‘just like him.' It is the same principle that is used by Michael Jordan and Nike to sell sneakers, Derek Jeter to sell baseball cleats, and Roger Federer to tennis rackets. Fans' emotions affect customers in not only the US but also the entire world. Using similar equipment used by star athletes makes them feel better about their own skills. 

Every person who is a sports fan often has a favorite athlete, and when they are selecting equipment brands, they are highly likely to select products that are used by their favorite star athletes. Other than using fans’ emotions to boost their market share, companies also believe that having a celebrity endorsement with boost their credibility and their line of products. For instance, if players or fans are debating on the brand of equipment that they should use, they are more likely to purchase a product endorsed by a celebrity with a positive public image. When a product is endorsed by a celebrity with a positive public image, it gives a sense of trustworthiness to the band and product. It will also boost company sales because consumers believe that if a certain star athlete uses a particular product, they should also use it to improve their performance. 

It is essential to note that the credibility of star athletes is not limited to professional sports only. There are many star athletes who are paid to endorse shampoo brands, drinks, apparel brands, razor companies, and even smartphones. The sense of increasing brand credibility and sense of product validity is attributed to the impact of star athletes. When star athletes branch out from their primary sports to promote particular products, they not only increase product validity but also create and develop brand awareness by using a famous face of the products sold by these companies to sell and increase their market share. Using sports icons can be used to appeal to new audiences that would not have been reached through other means. 

Negative Impact of Star Athletes 

Although a star athlete’s endorsement can be perceived as a trustworthy source of credibility because of their character and skills, it may also have a significant negative effect on professional sports and companies if the face of the product is associated with scandalous or unethical behaviors. For instance, when Tiger Wood’s marital infidelity was publicized, many businesses and companies dropped Tiger woods as their endorsement star to protect their brand image and sales. If a star celebrity such as Tiger woods could influence billions of dollars in sales, it is highly likely that the company could experience losses in a similar degree if the star athlete became a polarizing figure. According to research conducted in 2009, Tiger Wood's scandals cost shareholders, who owned stock in the companies he had endorsed, over $12 billion collectively (Johnson, 2017). It is important to note that some companies such as Buick, Nike, and Gillette, where Tiger Woods held endorsements, experienced about a 2.3% drop in shareholder value overnight (Johnson, 2017). Also, the PGA tour and Tiger Wood brand golf experienced losses worth over $6 billion (Johnson, 2017). Shareholders experienced losses until Tiger Woods dropped him as their star athlete and he decided to take a leave of absence from the PGA tour. 

Overall Economic Impact of Star Athletes 

Celebrity endorsements have become a very effective marketing strategy for vendors. It can result to short and long term success that generates billions of dollars in profit as shown in American economic activities and its impact on America's gross domestic product (GDP) (Pierro, 2014). A critical analysis in the world of sales shows that star athletes who endorse particular products may not be the only source of monetary gain. Star athletes may develop professional sports by creating and selling a team name. It is evident that sports fans enjoy showing support for their favorite teams by wearing a gear that shows their love and commitment to their favorite team. Wallets, shirts, keychains, hoodies, golf accessories, sweaters, car decals, and caps are just a few examples of how fans how support for a team (Pierro, 2014). 

Notably, the impact of star athletes on their professional teams and sports is not limited to the US and its effects are visible globally in the world of sports. There are different teams from different sports who purchase gear in support of their favorite team because of their star athlete. The National Sporting Goods Association estimated that American consumers spend approximately $8 billion annually on apparel alone. Also, many sports fans will purchase a star athlete's brand of shoes or jersey as a method or technique of showing support for that particular star athlete or professional team. Research shows that an average American may spend approximately $725 every year on sports-related products (Johnson, 2017). On the other hand, wealthy fans may spend over $1100 every year on sporting accessories, goods, and apparel in support of their favorite team or star athlete (Johnson, 2017). 

Star athletes have also had a positive impact on the sporting goods equipment industry because average Americans often want to purchase proper equipment to play their favorite sports (Pierro, 2014). It is essential to highlight some of the sports that are affordable. Soccer is the most popular sport globally, and it is played in more countries than any other sport. Star athletes have enticed millions of athletes due to the charm of the game, and it has attracted fans because it is one of the most inexpensive sports to take part in. contrary to other sports, an individual only needs the soccer ball and other participants. Additionally, it can be played using an unofficial ball as long as the ball can roll and be kicked effectively. Soccer has developed into the most favorite sport in developing countries and has brought a sense of unity and pride in such countries. 

On the other hand, organized team sports such as football, baseball, and baseball may require thousands of dollars to equip a team fully. It may appear as negative news for sports athletes; however, it is good news for sporting equipment vendors across the entire country because of the impact of star athletes. For instance, baseball may require different pieces of expensive equipment if a person wishes to play in the highest of standards. Wooden or aluminum bats, helmets, balls, specialized cleats, gloves, and apparel are some of the typical sports equipment that are purchased by sports enthusiasts, and it may be accompanied by a heavy price tag. For instance, purchasing all these merchandises at Dicks Sporting Goods may cost between $400 and $1000 (Johnson, 2017). An average baseball bat costs between $40 and $250 while cleats costs between $50 and $150 (Johnson, 2017). Due to the costs of such equipment, playing baseball may cost thousands of dollars or children at a young age through high school. It is essential to note that there are over 4 million children between the ages of 6 and 12 years in the US that play baseball annually (Johnson, 2017). The industry has grown into a multi-billion dollar investment. Similar costs are incurred in basketball and football. 

Other than sports apparel and equipment, billions of dollars are generated through sports spectatorship. Whether it is in ticket sales, home media, or TV packages, sports enthusiasts spend billions of dollars to watch their star athletes or favorite teams in action (Baade, Baumann, and Matheson, 2008). It is essential to note that watching star athletes and favorite teams have become so popular in the US that there are entire streaming services, television networks, apps, radio stations, and websites that are entirely dedicated to sports fans’ needs (Pierro, 2014). 

One of the main sports television networks is ESPN. ESPN broadcasts a variety of sports news, live sporting events, talking events, and other sports-related issues through channel systems such as ESPNNEWS, ESPN, ESPNU, and ESPN2. The television station was founded in 1979. It was the first channel to dedicate itself entirely to sports. About four decades later, ESPN proclaims itself as the worldwide leader in sports. By 2014, ESPN was worth over $51 million and is one of the most valuable publicly traded companies in the US (Johnson, 2017). Additionally, it generates a significant income of over $4.5 billion annually through different televisions deals with major sporting leagues such as the MLB, NFL, and NBA (Johnson, 2017). Additionally, it also gets a lot of revenue from millions of subscribers. By 2015, ESPN has earned a $15.2 billion deal to broadcast NFL playoff football for 35 years (Johnson, 2017). Although ESPN may appear to be monopolizing the rights to broadcast in the sports industry, it is still seeking to improve its market share. The success of ESPN shows how consumers are willing to spend to watch their favorite star athletes. 

Although the ESPN may not have the rights to broadcast the Super Bowl, according to advertising and viewership, the Super Bowl is a real gold mine. According to 2016 Forbes estimates, the Super Bowl has a gross of over $620 million dollars (Johnson, 2017). The figure establishes the Super Bowl as the most profitable and expensive one-day sporting event in history. The previous record of the most profitable and expensive one-day event was the Floyd Mayweather and Manny Pacquiao boxing feat that had a revenue of over $200 million (Johnson, 2017). The primary source of income for the Super Bowl is ticket sales which cost between $800 and $3000 (Johnson, 2017). On the other hand, secondary market NFL championship tickets are worth between $4500 and $6000 (Johnson, 2017). Multiplying the price of tickets by the average number of attendants, approximately 71000 people, amount to millions of dollars in revenues. During NFL championships and the Super Bowl, people spend at least $150 on other expenses such as merchandise, food, and other services during the game (Johnson, 2017). In 2016, CBS Media estimated that fans spent over $10.83 million dollars during the 2016 Super Bowl. Gambling has also been a major source of revenue (Johnson, 2017). 

The impact of star athletes in professional sports, employment, and income is essential to the American economy. It contributes over $14.3 billion to the American economy without counting the impact of the Super Bowl (Depta, 2015). Moreover, it contributes to over 456000 jobs in the American economy with an average salary of about $39000 annually (Depta, 2015). The jobs are more than sports athletes but also other occupations such as agents, coaches, and referees. Other opportunities include stadium vendors and their employees. Also, the 2010 New York City Marathon contributed over $340 million to the city economy while Chicago Cubs generate over $600 million every year for Illinois (Depta, 2015). Due to the high revenues generated by sports events, it has had a positive effect on star athletes' incomes and employees in sports-related events (Coates and Humphreys, 2011). Some star athletes are paid over $25 million annually (Depta, 2015). Also, the value of many sports organization has risen significantly over the past century. 

Conclusion 

As mentioned in the discussion, sports has played a key role in entertaining American citizens. Football, baseball, basketball, and other sports have achieved mass popularity over the decades. Star athletes have played a key role in transforming professional sports. There are entire television networks that are dedicated to sporting events, and sports has become a part of people's lives. Some of the inspirational athletes who received major celebrity endorsements include Tiger Woods, Stephen Curry, and Michael Jordan. Regardless of many sports’ humble beginnings, it has been commercialized into a multi-billion dollar industry that employs hundreds of thousands of Americans while paying them decent salaries. 

Travelling to see star athletes or favorite teams, ticket costs, television packages, and purchasing sports equipment are all sources of revenues from sports enthusiasts. Revenues and profit from sporting events have transformed the industry into a global monetary giant. It has also contributed to local economies by increasing property values and employment opportunities. Also, the high revenues generated from sporting events have had a positive impact on incomes of star athletes and other people employed in the sports industry. Over the course of the sporting event, local economies become hotspots for financial gains. Hotels, businesses, restaurants, and vendors are dependent on sporting events to accommodate the large influx of sports fans and tourists (Pierro, 2014). Ultimately, star athletes have had a positive economic impact on professional sports. 

References 

Baade, R. A., Baumann, R. W., & Matheson, V. A. (2008). Assessing the economic impact of college football games on local economies. Journal of Sports Economics , 9 (6), 628-643. 

Coates, D., & Humphreys, B. R. (2011). The effect of professional sports on the earnings of individuals: evidence from microeconomic data. Applied Economics , 43 (29), 4449-4459. 

Depta, L. (2015). 12 Ways Sports Make a Positive Impact. Retrieved from https://bleacherreport.com/articles/2347988-12-ways-sports-make-a-positiveimpact#slide12 

Johnson, B. (2017). The Economic, Social, and Emotional Impacts of Sports in the United States. 

Pierro, J. (2014). The Impact of Professional Sports Franchises on Local Economies. 

Walker, S., & Enz, M. (2006). The impact of professional sports on the local economy. W. New Eng. L. Rev. , 29 , 149.