Issues With Merchandising
In the previous article, we have already studied what merchandising is. We now know why it is an important source of revenue for the sports team. We also know how the business of merchandising is conducted and what are the benefits of the same. However, it needs to be understood that there are a lot […]
Introduction to Financial Markets and Institutions
There are certain types of financial markets and financial institutions that are found in almost every country in the world. For instance, most countries where economic activities take place have an established stock exchange and a banking system. Each of these institutions is different and hence perform different functions. However, together, these financial markets and […]
Capital Structure Ratios – Meaning and Importance
Capital structure ratios are very important to analyze the financial statements of any company for the following reasons: Same Business Can Yield Different Returns Investors understand that the way a business is funded can have a lot of impact on the returns it provides. Although the total return provided will always be the same, the […]
Advantages of Using Cryptocurrency
The popularity of cryptocurrency has exploded over the past few years. Statistics clearly suggest that cryptocurrencies are one of the most widely traded financial assets today. This is obviously because of the fact that there are some advantages to using cryptocurrency. In this article, we will have a closer look at those advantages and try […]
Types of Products in Commercial Banking
Commercial banking has traditionally been the backbone of banking. Banking was created to funnel idle resources in households to productive purposes in business. Over the long period of time that banking has been in existence, the nature of products provided to commercial customers has undergone a huge change. Several new types of products have been […]
There are a large number of sporting leagues around the world. However, when we study all the leagues, we find that each of them has around 10-20 members who are playing in the top professional class of leagues.
There are very few events such as the FIFA World Cup soccer where 50+ teams participate in the first round of the tournament.
The FIFA World Cup is an exception and can hold viewer interest since it happens once in four years. If it was an annual event, it would have been difficult to sustain viewer interest with so many teams participating.
This is true across all geographical regions are sports be it basketball or baseball in North America, club-level soccer in Europe, or cricket in Southeast Asia. There are often hundreds of different clubs which are playing these games. However, the number of spots in the top league remains restricted. This is because of several financial factors which impact the organization of the league.
In this article, we will have a closer look at some of these financial as well as organizational factors. These factors have been described in detail below:
In many European football leagues, there are leagues that have a six-layer hierarchy. However, in most parts of the world, a two or three-level hierarchy exists. The hierarchy of leagues is important for multiple reasons. One of the reasons is that it allows people with different levels of interest to view the game.
Viewers who have a very high level of interest have the opportunity to watch a large number of games as lower hierarchy levels play.
On the other hand, there are other viewers who only watch important matches and hence view the professional league. The hierarchy of leagues also allows the players to progress and get relevant exposure before they play at a professional level.
Players who are performing well at the lower levels of the league are given the opportunity to play at the higher levels. This is beneficial for everyone since a good player has a higher revenue-generating potential at a higher level and hence higher-level clubs are willing to acquire them at a higher price. As a result, there is a financial benefit for both the clubs as well as the players.
In most parts of the world, the area under the jurisdiction of sporting leagues is such that it becomes impossible to have more than twenty geographical regions that the clubs represent.
It is financially not viable to have more than one club represent the same area. Similarly, the viability of sporting clubs gets reduced if they are not affiliated with or represent a particular region.
For a sporting event to be successful, it needs to have a decent interval between the games. This interval is necessary to prevent the loss of viewer interest.
At the same time, if they are eliminated from the event at an early stage, their viewership numbers decrease even if they have a few matches left. If the number of matches is too large, the individual probability of a team making it to the next round will be quite low and also will be difficult to predict. It is for this reason that leagues that have a very large number of teams do not exist in the world.
Some of the teams would have a lot more money and resources as compared to other teams. As a result, their ability to win matches will also be considerably higher than many other teams. This will result in a series of one-sided matches. Also, there will be issues with the pricing of tickets since viewers may not be willing to pay a huge amount to view such games.
The fact of the matter is that sporting leagues across the world have tried various formats and have come to the conclusion that having ten to twenty teams of similar capabilities is the best way to ensure the financial success of the league.
Your email address will not be published. Required fields are marked *
