Wednesday, November 11, 2009

Who Pays for Professional Sports?

This entry is going to stray a bit from my usual highly interesting stuff regarding recreational paintball fields to something that I’m not really involved in, but still have an opinion about. Since I’m the one in control of the “Publish Post” button, I can do that.

Professional athletes playing in professional leagues, by definition (or at least the way I define it) get paid. Usually the pay is in the currency of the country they are playing in (although Canadian hockey players playing for Canadian teams in the NHL apparently negotiate in US dollars). This money comes from funds the team acquires (the sales the team makes).

Professional athletes also get paid by others to endorse products. This may mean that an athlete gets money (and sometimes products) just for allowing his/her name to be used by a certain corporation. Athletes may also get more involved and be part of commercials or advertisements. I’m sure all this is negotiated beforehand, but nevertheless, athletes make money from these activities.

Those are two main revenue streams for athletes that I, as an outsider, can easily see. There may be other minor ones, but these are definitely the major ones and realistically, only a very small percentage of elite athletes are probably making money by lending their name and/or image.

Both the teams and companies must obviously see value in these arrangements. Both teams and companies (retailers and manufacturers) operate as businesses and try to make a profit. Some teams may be led by an egocentric billionaire, but I’m sure that even most of those would rather make money than lose money.

So where do these corporations (teams and companies) get their revenue from? Well that would be you and me (and anyone else that might be interested in sports). Directly or indirectly we are paying these athletes by viewing their competitions and by buying the products from the companies paying the athletes for their endorsements. We either watch them in awe and are willing to pay for that opportunity, or we are buying the gear in the hopes that we can be a little more like them. If we are watching them, we don’t necessarily have to be involved in the sport. I watch lots of sports that I have never participated in, or even had a desire to try. Nevertheless, if I am viewing the sport, I’m helping pay for the athlete’s compensation, even if it’s just bolstering the ratings on TV, which allows the network to pay the leagues and can then sell advertising at higher prices to companies who can then pay for the athlete’s endorsements.

We all know how it works. The point I am trying to make is that without viewers and people buying the gear and equipment, there would be no professional sports and no professional athletes.

So how does paintball fit into the discussion? Paintball has pro players. At least that is what they are called. I assume a pro paintball player is being compensated for his/her efforts in some way. Since I have not heard of teams or leagues compensating any players with monetary funds in any meaningful way (I’m sure there might be a little of this going on but there is no real revenue stream from viewers in paintball)), I assume that “pro” paintball players are getting compensated by companies with products or even monetary contributions from these companies. I am sure that a big part of those contributions have been and still are paintballs. It doesn’t matter what it is, the point is that these companies must see value in paying pro players (directly or through their teams). The value comes from selling their products to others, like you and me. We see the pros and want to be like them, or at least want to use similar gear playing the game the pros play.

What happens then when there are less and less people who want to be like the pros and less and less people who want to use the gear the pros are using? The short answer, the funds dry up. The companies don’t have the funds available to pay for the endorsements and the companies may not see as much value in providing the endorsements at all.

This is why the money from Paintball Industry to pay for pro paintball has decreased over the last few years. Without new players entering the game at the very bottom, there is no one to advertise to and to try to impress with the awesomeness of pro paintball. So the focus has switched for much of Paintball industry. Money spent by paintball industry has to see a return of some sort. The focus now is, or at least should be, trying to attract new people into paintball, at the lowest level. So the question I ask is, how well is Paintball Industry doing this? What are they doing to make this happen and what can they do? Do they have the resources, knowledge and the ability to even do anything meaningful? I guess time will tell. In the meantime, Pro Paintball will continue to bleed, as will the rest of the paintball industry.


  1. I think you're missing two key aspects of why sponsorship money has gone down, and, will never be as good (at least as far as sponsorship money from paintball companies goes) again.

    1) Margins. The difference between the manufacturing costs and wholesale cost of paintball products has gone down. This is especially true for guns. If sponsoring a team increases your sales of a gun you're selling for $1500, the team only has add maybe 10% as many gun sales as when they are increasing the sales of guns that are being sold for $300. That right there makes a team worth 10% of what it used to be, at least as far as gun sponsorship, than it was before. (10% is drastic, but illustrates the point.)

    2) Benevolence. 5-10 years ago, most paintball manufacturers were controlled by ex-tournament-players. They assigned an unrealistic value to tournament paintball. Now that almost all major manufacturers are run by corporate types, the 'you're like me!' benevolence factor has gone away.

    I do not think either of those things will ever be back - the rapid technological development phase of paintball is over, and the home-grown company phase of paintball is over. That doesn't mean more bodies are not important, but people should be aware that even if we get frequent participation to where it was before, we still won't get back the same level of paintball company sponsorship that existed previously.

  2. You are right. Margins will never be what they were, although I believe they will improve as the number of companies dwindles down a bit and more and more of the executives making the decisions are business men instead of paintball players. And I think you are also right about the benevolence. These same businessmen executives are not going to disperse unproportional amounts of advertising/promotional budgets to tournament paintball if the return on investment isn't there. And it's not anymore (and maybe never was).

  3. Just noticed this on Paintball X3. They seems to be hearing about sponsorship cuts for the coming tournament season.