Deck 7: Designing the Organization and the Sport Agency Industry

Question 1

As of 2011, the average salary of a Division I Bowl Subdivision football head coach was $5.47 million (up 550 percent from $950,000 in 2006). At least 64 of these coaches made $1 million, 32 made at least $12 million, nine made more than $13 million, three made more than $14 million. University of Texas head coach Mack Brown topped the list, earning over $15 million.

Answer 1

False

Question 2

Player unions certify all player agents, as do many individual states. Unions also serve to negotiate basic agreements with leagues, limit the percentage of compensation that agents can charge for contract negotiation, and help players and agents access information that will aid them in preparing for negotiations.

Answer 2

True

Question 3

Player salaries are the second-most significant expense for professional sport organizations, and have steadily, and in some cases dramatically, increased since the 1970s.

Answer 3

False

Question 4

In professional league sports, agents are limited by the players unions on what percentages they can charge for negotiating contracts with teams, which is no more than 20 percent. However, agents can earn more when negotiating contracts for endorsements and other agreements and for coaches and non-unionized clients, because these are not subject to union oversight. Most firms have standard percentages for marketing services, the highest reaching the 50 percent range.

Question 5

The reserve clause was initiated in the National League in 1879 to reduce player salaries, the most significant expenditure for professional teams. At first, teams reserved five players who were not permitted to sign with other teams. This also meant that teams could then trade and sell players under contract as well. Eventually a clause was inserted into the Uniform Players Contract stipulating that clubs had the right to renew a signed contract for a period of one year on the same terms.

Question 6

Edgar Schein suggests that four essential elements must be present for an organization to function effectively: common goals, division of work, coordination of effort, and authority structure. According to Schein's model, if any of these elements are missing or poorly designed, the organization is likely to be unsuccessful in implementing its strategies and pursuing its mission.

Question 7

The traditional models of organizational design include the functional structure, divisional structure, conglomerate structure, and matrix structure.

Question 8

Creative Artists Agency (CAA), which operates entertainment events and venues, as well as its agency business, utilizes a functional structure, which allows CAA to expand into many types of entertainment activities, and it uses these separate yet similar divisional operations to the benefit of the company.

Question 9

Katzenbach and Smith composed the following definition of a high-performance team: a small number of people with complementary skills who are committed to a common purpose, a set of performance goals, and an approach for which they hold themselves mutually accountable.

Question 10

As with any work redesign, the move to team-based work may represent a significant change in the way people are asked to perform their daily tasks. This can be especially problematic in the agency business, when individual risk and personal effort are what gets most agents to the top of their firms. And it is also likely that many agents are likely to share similar skill sets and personality types, therefore composing teams of members with complementary skills and a commitment to a common approach is more problematic.

Question 11

Which of the following correctly ranks (highest to lowest) the leagues by their 2012 average salary?

A) MLB, NBA, NHL, NFL
B) MLB, NBA, NFL, NHL
C) NBA, MLB, NHL, NFL
D) NFL, MLB, NBA, NHL

Question 12

Which of the following earned the most in endorsements in 2012?

A) Tom Brady
B) LeBron James
C) Phil Mickelson
D) Lionel Messi

Question 13

A contract is defined as a written or oral agreement between parties that is enforceable under the law, which must contain a promise to do something in the future. A contract typically consists of which of the following elements?

A) An offer, acceptance, and consideration.
B) An offer, acceptance, and legality.
C) An offer, consideration, and mutuality.
D) An offer, consideration, and legality.

Question 14

Which of the following pairs does not include two figures who influenced sport agency in the early part of the twentieth century?

A) Tank Black and Babe Ruth
B) Mark McCormack and Arnold Palmer
C) Charles C. Pyle and Harold "Red" Grange
D) Christy Walsh and Knute Rockne

Question 15

Which of the following effectively ended the reserve clause?

A) The formation of the Brotherhood of Professional Baseball Players, led by John Montgomery Ward, which led to the formation of the Players League.
B) The Federal League's lawsuit claiming the reserve system was an anti-trust violation that kept them from acquiring the talent necessary to compete equally.
C) A lawsuit initiated by Curt Flood, who challenged the right of the St. Louis Cardinals to trade him to the Philadelphia Phillies.
D) A salary arbitration hearing where arbitrator Peter Seitz decreed that Andy Messersmith was no longer contractually bound to the Los Angeles Dodgers.

Question 16

Consider an example of a sport agency firm with a mission to provide clients with financial stability combined with a consideration for a client's personal values. The contract department focuses on negotiating the highest rate of compensation regardless of the location of employment, but the client might be content with less money if he or she could be located in an area closer to home and family. The sponsorship unit might be seeking only the most lucrative endorsement agreements, but the client might be unwilling to represent certain products that he or she doesn't use or feels are unhealthy or destructive (such as alcohol). Meeting this challenge will mean that the firm employs which of Edgar Schein's four essential elements of organizational design?

A) Common goals
B) Division of work
C) Coordination of effort
D) Authority structure

Question 17

Which of the following is not one of the distinct strategic advantages of the large freestanding sport management firms like CAA, IMG, and WMG?

A) These firms offer a wide range of services to athletes, but also serve corporate clients interested in sport-related sponsorships and managing sport-related events.
B) These firms are also usually more established and have a higher profile because of their other prominent clients.
C) These firms can provide the personal service and attention young and inexperienced athletes need.
D) These firms also can benefit clients because of their extensive resources.

Question 18

In the ________________________ of organizational design, the work of the organization is divided according to the kind of products or services being provided, the type of customer being served, or the geographic area in which the organization competes.

A) conglomerate
B) divisional
C) functional
D) network

Question 19

Which of the following pairs does not include conditions necessary for effective teamwork?

A) Complementary skills and common purpose.
B) Common approach and mutual accountability.
C) Flexible design and core vision.
D) Small number of people and performance goal.

Question 20

The third key ingredient for successful teamwork is the commitment of team members to ________________________. Without this, work groups are likely to be little more than collections of individuals each performing independently. With it, work groups become genuine teams.

A) complementary skills
B) a common purpose
C) a common approach
D) mutual accountability

Question 21

In the chapter we discussed Edgar Schein's four essential elements of organizational design in the context of sport agency firms. Imagine that you are a new agent hired by DiaMMond Management, and are seeking to keep a promising client from jumping from your firm to Scott Boras. Explain to the client why DiaMMond is able to serve him better because of the ways it employs each of Schein's elements.

Question 22

Having made the pitch using Schein's elements, describe for this client which of the traditional models of organizational design DiaMMond uses, and why it allows the firm to serve them more effectively than one employed by Octagon or IMG.

Question 23

Your client is still wavering, so now you need to impress him with how innovative DiaMMond can be. Explain to him how DiaMMond might employ one of the flexible models of organizational design to help him secure significant endorsement income.

Question 24

Now your client is looking like he wants to stay. To keep him in the fold, outline for him how DiaMMond exemplifies the conditions for effective teams as described by Katzenbach and Smith, and explain for him how this will help him when it comes to his first salary arbitration hearing.

Question 25

Teamwork is something with which your client is familiar, so you need to continue to sell him on this concept by explaining how DiaMMond has improved salary arbitration awards for other clients by overcoming two specific barriers to effective teamwork.