Sports Facility Agreements: A Financial Snapshot

For sports fans, our focus is mainly on the teams, the athletes, and the outcomes. However, one of the most crucial parts of the game are the venues and facilities used to host a given match. There are many elements that are considered before finalizing facility deals for sports clubs and sporting events. Facility contracts are generally drawn up between the facility operator and team that will be utilizing the facility for its tournaments. However, in cases where the facility deal is done with a committee or conference, seen more frequently in tournaments such as the Olympics, there are several different ways a facility deal could be drawn up. One of the more common ways to create a facility deal between the facility operator and the committee is through a financial partnership for the duration of the tournament. This blog will provide insight on a typical financial breakdown of such a partnership within a facility contract. 

There are three main issues that are considered and agreed upon by parties within the four corners of a basic facility contract; financial/economic, technical/operational, and liability considerations.  Although no two facility contracts are the same, the financial and economic considerations of such contracts have the highest degree of variability.  In the cases of tournaments such as the Olympics, creating a financial partnership between the committee and the facility operator is one common method that can be utilized. A breakdown of this portion of the facility contract would detail the distribution of net revenue as well as the division of the responsibility surrounding the expenses.

From a financial standpoint, the contract would detail the a set percentage of net revenue from the tournaments that is decided on by all parties to be paid forward to the facility operator within an agreed upon time frame (e.g. 90 days) after the completion of the tournament. In facility contract cases such as the Olympics, the facility operators of stadiums and arenas that are built for the Olympic Games are operated by the host city of the games. This net revenue is derived from the gross revenue less the expenses that are accrued. The gross revenue generally consists of the tournament ticket sales, tournament sponsorships, net merchandise, and program revenue. Each of these categories that form the entirety of the gross revenue is reviewed and the details are agreed on by all parties involved in the financial partnership within the facility contract. For example, all parties (In this case: facility operator and the committee) would analyze and reach an agreement on ticket prices, which include the different seating prices for individual matches as well as set prices for tournament package ticket sales.

The second financial aspect of a facility contract is the delegation of expenses. Given a tournament such as the Olympics, the facility operator and committee would have to agree on who is financially responsible to cover which costs. In most cases, the facility operator is responsible for the expenses and appointments that are related to the operation of the tournament. Such items might include but are not limited to, court set-up and breakdown, security, police, post-event cleaning, emergency medical technicians (EMTs), announcers, sales staff, meals, ticket printing, sound technicians, and hospitality areas. On the other hand, the committee is responsible for the tournament expenses such as hiring and paying game officials, scorekeepers, and statisticians. In the case of the Olympics, where the duration of the tournament is over a longer period of time and involves teams and athletes that participate from all around the world, the expenses go beyond just competition venue and tournament expenses. For example, other expenditure considerations for the Olympics include training venues for the athletes to prepare for their events and non-competition venues. Due to the nature of the Olympics (time frame and magnitude of competing teams and athletes), some examples of non-competition venue expenses consist of Olympic villages, other villages, International Broadcast Centre (IBC), Main Press Centre (MPC), and transportation such as airports, parking, and railways.

Gender Wage Inequality in Sports – U.S. Woman’s National Team Seeks to Make History

It is indisputable that equal pay for women has been a long held controversial topic across the country. Pay discrepancies are beginning to be addressed in corporate America, Hollywood, and very recently in the world of sports. In March of 2016, five elite female athletes serving the U.S. women’s national soccer team (“WNT”), filed a complaint accusing the United States Soccer Federation (“USSF”) of pay discrimination, siting significant pay discrepancy with the U.S. Men’s National Team (“MNT”).[1]  The case, submitted to the Equal Employment Opportunity Commission (“EEOC”), a federal agency that enforces civil rights against workplace discrimination, provides leverage for the women’s team when they renegotiate their collective bargaining agreement at the end of 2016.[2]  The plaintiff’s named on the law suit are star players Carli Lloyd, Hope Solo, Megan Rapinoe, Becky Sauerbrunn, and Alex Morgan. The five are representative parties to the suit.

One of the chief issues in the case, and also the economic focal point, is the amount of revenue the women’s team grosses compared to the men. According to the budget report from the USSF, the women’s team is projected to bring in more than $17 million in revenues, including a $5 million surplus for fiscal year 2017, nearly doubling their male counterparts, who are expected to run a deficit.[3]  Despite this, the women’s team is being pad significantly less than their male peers. For example, in 2018, the MNT is projected to make $76,000 per player just for making the World Cup roster, while the women’s team made $15,000 in 2015 for the same accomplishment.[4]  Furthermore, when a player on the men’s team qualifies for the World Cup team the player earns $2.5 million. In contrast, a player on the women’s team earns $345,000 when the team qualifies for the World Cup.[5]  Sports Illustrated has also reported that the women’s team received $60 Per Diem during international competition, while the men’s team received $75.[6]  This discrepancy for a daily allowance supports the women’s team’s argument the wage discrimination is based on sex.

On May 24th, 2016, a letter was sent from the USSF to the EEOC requesting that the complaint be dismissed, and claiming that there is no evidence that the USSF is acting with discriminatory motive or in violation of any law.[7]  Furthermore, the letter states, “the suggestion that US Soccer has been anything other than strongly supportive of the WNT is deeply disappointing and inaccurate.”[8]  According to the filing, the USSF’s decision to pay women and men differently in all other aspects is “unjustified and discriminatory.”[9]

So why is it that our nations top female athletes are being paid substantially less for producing equal, if not better results than their male counterparts? The answer lies in the differences in how each team’s contracts were negotiated in their respective collecting bargaining agreements. The pay structures for the men and women’s teams were negotiated separately by each of the team’s respective union’s, and the terms of each collective bargaining agreement determines how the players get paid. The WNT’s compensation is structured as a base pay with additional bonuses based on appearances and wins, whereas the MNT’s compensation is constructed around national team appearances, results, and roster selection.[10]  The differences in these terms allow for the players on the men’s team to have more opportunities to earn money per game than the women do. The women’s pay structure incentivizes the players to succeed as a team, whereas the men’s pay structure incentivizes the players to succeed as individuals. It can be said that this type of pay structure for the men’s team mimics the pay structure and culture that has been established for all American Leagues across the board. The NFL, MLB, NBA, and NHL motivate and reward their athletes based on each player’s individual success. It is possible that U.S. Soccer has negotiated the men’s contracts as such in an attempt to integrate the global sport of soccer into the United States athletic culture and norm. Whereas the women’s contracts were negotiated similarly to most of the world’s top Men’s soccer federations’; to drive competition and success between teams as a whole rather than taking an “every man for himself” approach.

         With that being said, playing for the national team is globally recognized as a players’ service to their country without salary. It brings attention to the topic of service versus employment. Despite getting paid a salary, the women’s team’s structure is focused more on the team and national victory as a whole, which is what motivates most national teams as they are serving their country. On the other hand, the men’s team is structured more around individual success, making their efforts with the national team similar to that of a club team rather than a service to their country. Instead of focusing on how we can change and fill the wage gap between the men’s and women’s teams; perhaps it is more important to focus on how we can improve upon the men’s team to serve their countries and be rewarded for their success as a team just like the women’s and most other national teams worldwide.

[1] Andrew Das, Top Female Players Accuse U.S. Soccer of Wage Discrimination, NY Times (Mar. 31, 2016), available at http://www.nytimes.com/2016/04/01/sports/soccer/uswnt-us-women-carli-lloyd-alex-morgan-hope-solo-complain.html.

[2] Id.

[3] Laura Santhanam, Data: How does the U.S. women’s soccer team pay compare to the men?, PBS (Mar. 31, 2016), available at http://www.pbs.org/newshour/rundown/data-how-does-the-u-s-womens-soccer-team-pay-compare-to-the-men/.

[4] Id.

[5] Id.

[6] Grant Wahl, USWNT Wage Discrimination Complaint Must Be Taken Seriously By U.S. Soccer, Sports Illustrated (Mar. 31, 2016), available at http://www.si.com/planet-futbol/2016/03/31/uswnt-eeoc-wage-discrimination-equal-pay.

[7] Anne M. Peterson, US Soccer Asks EEOC to Dismiss Wage Discrimination Complaint, The Big Story (May 31, 2016), available at http://bigstory.ap.org/article/48a059bbda5c4c07adbeff6bea5379ff/us-soccer-files-response-eeoc-claim-wage-discrimination.

[8] Id.

[9] See Santhanam, supra note 1.

[10] See Wahl, supra note 4.