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NBA Sport Organisation and Governance

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Page 1: Coursework NBA

NBA

Sport Organisation and Governance

Page 2: Coursework NBA

TABLE OF CONTENTS

Introduction…………………………………………………….

Evolution of NBA and Euroleague……………………..

Commercialisation of Sport Organisations…………………………..

Sport Spectating Trend……………………………………………………

Fast Growing Technologies………………………………………………….

Fast Growing Competition…………………………………………………………

Professionalization of Sports Management……………………………….

Benefits and Disadvantages Commercialisation & Professionalization…….

Conclusion………………………………………………………………………………..

References……………………………………………………………………………………

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Introduction

In the last twenty years, sport has shifted from being a pastime to a business because of the

commercialisation process, which has led sports organisations and managers to become

focused on business principles. This process of commercialisation has also led sports

organisations to be labelled as ‘business-like’ because they become market orientated, pursue

operational strategies that increase the volume of revenue, and become responsive to the

customers’ needs. Two aspects of sport commercialisation have been found. The first one has

been an upsurge in the truly commercial operational activities of sport. Increasingly more

sports organisations across the world have become focused on maximising their revenue and

profit, employing this principle as the fundamental basis for decision making and strategy

development. Consequently, expenditure associated with sponsorship, rights of television,

players’ payments and sports betting have escalated noticeably in the last few decades as

more and more sports organisations have looked for enhancing their opportunities to generate

revenue by implementing a business approach to the sport management (Tsuji, 2015). As an

instance, the National Basketball Association (NBA) and its related sponsors moved towards

the global economy with the core objective of maintaining the levels of profit (Weichao,

2010). The ‘NBA International’ as an overseas division was established, deals to broadcast

sports were contracted with national networks in many individual countries, and deals at the

regional levels were struck with satellite channels, like Sky Sports, Star Sports and ESPN

International (Weichao, 2010). Another aspect of commercialisation has occurred within

those sports organisations that are not-for-profit or owned by the state. These organisations

have experienced considerable cultural and operational transformation within the past ten

years, because their managements have adopted a business-oriented approach in the

organisations’ management. So, it indicates that decision making in these organisations

reveals that of commercial organisations, and has led to the constitution of systems including

strategic planning, performance management and quality management.

The focus of this essay is NBA and its purpose is to critically analyse how the sport

organisation has transformed over time. In particular, is going to assess the impact of

increased commercialisation and professionalization on NBA’s organisation and governance.

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Evolution of NBA and Euroleague

Its first game is officially recognised by the NBA as having been played in 1946, ironically,

in Toronto Canada. Such a match was between the New York Knickerbockers and the

Toronto Huskies. The league was called the BAA (Basketball Association of America) at that

time, it amalgamated with some other leagues to establish the NBA which finally merged

with the ABA and constituted the NBA. (Chiba, 2015) Euroleague, on the other hand, was at

one point a FIBA run competition between the major teams of Europe, before becoming

usurped by the modern Euroleague Basketball Company in 2000 (Štrumbelj et al., 2013).

This specific format has transformed more than a few times from playoffs to final fours and

back, and the teams are continuously moving in and out. Therefore, this league is a

comparatively new trying to establish itself. Further, it is an open league to all meaning any

team can qualify to join the league.

So as to compare the NBA and Euroleague, comprehending the changes that European

basketball have experienced during the last twenty years. With crucial figures of basketball,

such as David Stern, NBA commissioner, discussing the notion of a prospect international

league that will make a bloc of teams from US and Europe, it is essential to compare the play

style and the success of both NBA and Euroleague (Chiba, 2015). Within Euroleague, the

Final Four format was first introduced in 1987 that has really transformed the face of

European basketball, as the basketball (before new format) in the region was more a local

than an international phenomenon (Chiba, 2012). On the other hand, the NBA was considered

to be a much better league, one that European teams did not even dream of competing with

(Weichao, 2010).

The introduction of the new to the Euroleague brought a significant change. The nature of

this new format was very competitive that ultimately brought a lot of interest and advertisers

to the league (Mills, 2012). Unexpectedly, teams were playing with much heavy budgets and

were capable of trying US-based players to go Europe and demonstrate their talents (Chiba,

2012). The mixture of the European team like basketball style with the individual style of

play and athleticism that were brought by the US players transformed the face of the

Euroleague and of the overall basketball in Europe (Chiba, 2012).

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Very quickly, the Final four games became most interesting events of the year across the

world and more and more US players were considering bringing their talents and abilities to

Europe (Alvarez et al., 2011). NBA scouts, on the other hand, were developing and taking

interest in successful players belonging to Europe. On annual basis, the NBA draft started to

showcase European players and the virtual explosion of player traffic was brought by the

achievement of some of them in the NBA between the two continents. (Alvarez et al., 2011)

The interest level developed by the US players and experts of basketball in the Final four and

the Euroleague enhanced even more when national basketball teams of Europe were fully

capable of partaking in international competitions to beat the US team (Alvarez et al., 2011).

It was an indication of a changed time and that the supremacy of US basketball was not

inviolable.

Moreover, in the 19th and 20th century, both the US and the European formations and cultural

patterns associated with sports established along quite diverse paths. At first, there were

many sports that became very popular in America than Europe, with basketball, baseball,

football and hockey as the most common sports of America, versus tennis, gymnastics,

cycling, ‘global football’ as the most well-liked sports in Europe (Huang and Hong, 2015).

The second is that all these sports were established, structure and practiced in many diverse

contexts: that of educational institutions in the US and that of voluntary clubs and

associations in Europe. Another path is that the sports (specifically NBA) in US

commercialised and professionalized earlier and much more comprehensively than European

sports (specifically Euro-league) (Huang and Hong, 2015). Euro-league is the highest level

tier and most crucial professional club basketball competition in Europe. The fourth, as a

business, US professional sports were planned and organised in closed leagues of rival

franchises, while professional as well as unprofessional European sports established part of

open competitions on the basis of promotion and relegation principle (Sampaio, Lago and

Drinkwater, 2010). Another path is that the open sport competitions of Europe highly

accepted and recognised at an international level and were governed by non-profit federations

operating at the international level. On the other hand, closed professional leagues in America

remained national in scope and meaning for a long time, and were formed under profit-

oriented administrative control devoid of any regulatory body working at the international

level. This frequently led to the establishment of competing leagues in the same sport branch.

In this regard, the NBA is one of the outstanding professional basketball league formed in

North America. NBA is extensively considered to be the leading professional basketball

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league for men across the world. Besides an active member of the USA Basketball (USAB),

recognised by FIBA (the International Basketball Federation), the league has 30 franchised

member clubs (Huang and Hong, 2015). Lastly, the US government rarely influenced the

development of the cultures and formations of sporting than Europe (Fei, 2007). The NBA

developed market-driven and independent of the state, while The European governments,

such as in Turkey, increasingly interfered in the sports world, mainly following the World

War II.

Because the formation and culture of sporting in America appears to be the anomaly in this

respect, many authors have emerged to speak of “America’s sports exceptionalism” (Brown,

2005; Dyreson and Mangan, 2013). This is suitable with the American self-respect and pride

to be primarily distinctive, different from the remaining part of this world. Moreover, it

elaborates on the academic literature on American exceptionalism, and this thesis,

nevertheless, has also become subject of significant debate; regarding the causes of

America’s alleged distinctiveness, as well as, whether this notion is a truth or a myth, and

what empirical proof can be found for both positions (Dietschy, 2011). In recent times, this

debate has been extended to the sports field. Further, according to Nafziger (2004), trends of

commercialisation, professionalization and globalisation continue on both sides that

ultimately accelerates a convergence of the sports model followed by North America and

Europe in more than a few respects and on all competition levels (Nafziger, 2004).

However, at present, the American and European leagues have a deep mutual respect for one

another. The upcoming times may very well bring with it a really international league in

which the worldwide teams will be fully capable of competing and the basketball will be an

international sport.

Commercialisation of Sport Organisations

Commercialisation has been the leading factor behind the sport development as a business,

leading to an industry that generates revenue for both national and local economies by means

of event revenue, tourism, employment, sponsorship, taxes, etc (Puchan, 2005). This

commercialisation has been caused to happen mostly by the actions and interactions of the

sport spectating trend; fast changing technologies; fast growing competition; and the

professionalization of sports management (Larsen, 2002). Nowadays, commercialisation has

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fundamentally change all of the popular and professional sports such as football and

basketball. NBA and media have a “win-win” situation and they both depend on each other.

To describe this relationship Jhally (1989) has coined the term the “sports/media complex”

which refers to the close connection and interrelationship that has been established between

the media, particularly television, and spectator sports. As we see today, NBA

commercialization has changed the sport (more time-outs, more gameplay).

Sport Spectating Trend

A growing trend towards sport spectating has been evidenced. By the start of the 1994-95 in

the USA, the NBA was being transmitted on in either one or two-hour or live game packages

in more than 135 countries to a projected spectators of over 5550 million (Lee and Pedersen,

2009). In 2001, the NBA had extended to over 200 countries across 42 languages (Lee and

Pedersen, 2009). The NBA is the only mega sports event that has set an attendance record

during the past two years, but the big 4 (NFL, NHL, NBA, and MLB) continue to enjoy their

inspiring growth (Uden, 2005).

Two ways have been found through which this spectator sport trend has commercialised

sport. The first one is that, due to the cash money involved in sponsorship, gate receipts and

television rights, it is necesary to manage sport as a business venture. The second way is that

in return for revenue, there is high level of expectations of audiences and sponsors about the

occasion provided by sport. Maguire (2005) discussed the reasons for this trend and

maintained that the total is very striking because of the involvement of large sums of money,

and because excellence is expected in spectator sport, people generally incline to be enticed

to it. It is stimulating and smart to point out the millions of dollars earned by an athlete or

involved in sport sponsorship (Maguire, 2005). Just playing the game is not enough; there

needs to be early and half-time entertainment, extra commentary, match analysis, catering

amenities and merchandising. Spectator sport is indeed an entertainment that needs to be

managed accordingly.

Fast Growing Technologies

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In the past few decades, fast growing changes in the technological world has drastically

changed the face of sport and the television has been the most noteworthy of these

technologies. According to Owen-Pugh (2007), television has changed the lives of all of

those who are involved in playing, organising and promoting sport, because greater income

has been provided by the television for established sports and an opportunity for exposure for

many minority sports. As far as the NBA’s success is concerned, fast growing advancement

of technology, mainly the technologies of radio, television, and radio and the World Wide

Web have had immense impact. Besides traditional game broadcasts, a variety of diverse

programmes is produced by the NBA. NBA Action and NBA Jams are two programmes that

target children and teens (Fortunato, 2000). For those who do not have a television, the

league still uses radio as broadcasting medium. The Internet has greatly opened up new

worlds for the NBA. In past, people had to wait for tomorrow’s newspaper to read the news

of sports. Now, there are many websites, like NBA.com, make people up-to-date all the time.

In fact, the impact of television on all the sports and their organisations has been substantial

and has coerced the sport commercialisation by requiring sports organisations to establish the

business practices essential to manage and fulfil their spectators’ demands (Dick and Sack,

2003). Nevertheless, it is a reciprocal relationship, even though sport has transformed to suit

the television needs, this has been recognised by the television and it has served the

spectating trend by increasing televised sport (Johnston, 2003). The potential this offers for

more viewing rights, sponsorship and therefore more revenue for sport is vast. The market of

television market is extremely competitive. The beginning of satellite, cable and digital TV;

together with increases in the number of trrestria1 channels, has had the effect of more

enhancing the sports’ value, as main organisations of broadcasting compete to broadcast

popular mega events of sport. This is evident in the deal made by NBA. In 1976, the

American Basketball Association (ABA) was merged with the NBA. From the starting stage,

the ABA expected to force a merger with the NBA, therefore repeating the successful effort

of American Football League (AFL) to force a merger with the National Football League

(NFL) (Hickey and Kelly, 2008). It has been maintained by the NBA that officials of ABA

told potential owners that they could get the team of ABA for half of what it cost to get the

expansion of NBA team at the time. The officials of new league predicted with absolute

confidence that if and when a merger arose, the investment would be seen double by

surviving owners. The remaining ABA owners agreed in 1976, in exchange for the Spirits

folding, to pay $2.2 million to St. Louis owners with a 1/7 share of the television revenues in

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perpetuity of four remaining teams (Berri and Schmidt, 2006). As popularity of the NBA

blow up in the 1980s and 1990s, the television rights of league were sold to CBS and then

NBC, and further deals were made with the TNT and TBS; league television revenue touched

the hundreds of millions of dollars (Berri and Schmidt, 2006).

Fast Growing Competition

Even though sport is always considered as one of the major relationships between people, it is

explicit that there are many sports organisations operating in a more and more competitive

business market, with fierce competition emerging from other sports and leisure

organisations, local, regional, national and international. (Hui, 2013)

For sports business, the primary reason of increasingly competitive market is improvements

in technology. At first, advancements in the technological world in means of travel have

made sports events’ customers far more mobile, letting them to buy services of sports in other

areas of the world (Owen-Pugh, 2007). The second is that the sports world has been shrunk

by the modern communications to little more than a village (Owen-Pugh, 2007) e. For people

it is now feasible to view sports’ mega events all over the world, place bets on the results and

have as their ‘local’ team a sports team in another country (Hui, 2013). Moreover,

competitiveness becomes more noticeable when it is considered by an individual that sports

organisations compete for discretionary, unrestricted expenditure (Nafziger, 2004). For this

very reason, the managements of sports organisation are competing within their relative

industry, while competing with other approach to use their discretionary income. In fact, a

business approach is necesary to be adapted to the delivery of sports so as to make sure

survival of the business in a more competitive industry.

Professionalization of Sports Management

Increasing professionalization of professionals involving in managing sports organisations is

one of the major effects of the commercialisation that has occurred during the past few

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decades. In sports organisations all over the world, the presence of comprehensive strategic

planning, strategies related to human resource and marketing plans have led to enhancements

in professional practice (Ratten, 2011). This professionalization of sport management has

been made possible by two key aspects (Thomas, 2006). The first one is that there has been a

fast growing training and education programme for people who want to be the sport

managers. The ere almost 200 higher education institutes only in North America that offer

many degree programmes in the discipline of sports management and it is one of the fastest-

emerging study domains in US high institutes (Thomas, 2006). The overall scenario is not

different in the UK where over 1000 universities have found that offer many courses contain

‘sport’ or ‘leisure’ in the title. Professional sports bodies or organisations have also had a

pivotal part to contribute: Among many others, USA has one of the top leading sports

organisation called the NBA. Similarly, UK, Japan, Australia, New Zealand and others have

sport organisations catering for professionals and academics. All of these organisations have

played a vital role to the increasing professionalism of people involved in sports

management.

The second aspect is that the academic study of sports management has started and conducted

research with the aim to analyse and examine the sports organisations and their managements

so as to establish best practice. In this domain, research has taken every single aspect of

management, like organisational design, promotion and marketing, sponsorship, the human

resource management, quality management, ethics and equity. Numerous scholarly and trade

journals have been found that disseminate the research findings to an international audience.

The major effects of these two major aspects have been the development of a management

culture on the basis of the belief that effective management practice is the only best solution

for the survival of an organisation. A belief is inherent in this culture effective management

demonstrates business-like management through which commercialisation of sport

management has been driven, and hence sport, in all industry sectors. There are strong

evidence of professionals, provided by Drewes (2005), who use techniques like performance

management, quality management and firm financial controls. Drewes (2005) has also

recognised the value of personal and people skills and good generic management skills. Thus,

it is explicit that the sport management’s professionalization has played a role to the

increased commercialisation of the whole sports industry.

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Benefits and Disadvantages Commercialisation & Professionalization

Johnston (2003) describes that benefit of sport commercialisation is that amateur level sports

can take full advantage through commercialization process at the professional level. This

process has brought greater exposure to sports at an amateur level benefit directly through

commercialization and the exposure brings it to a professional level sport. Moreover,

commercialisation of sports has the potential to assist in generating more revenue that creates

more capital for sports and for different industries (Yuoran, 1999). Yuoran (1999) added that

the revenue of a US has been increased because of the commercialisation and

professionalization of sports because this approach has given the opportunity to the US to

organise more international competitions in the country. According to Luo, Dai and Huang

(2015), advertisements of the NBA entice more foreigners that ultimately lead to high

revenue level, and this approach is very effective and beneficial to the entire economy.

Another example is the Beijing Olympics which was held in 2008. In this Olympic Games, a

majority of the people turned up for the mega sports event and the main reason behind this

was commercialisation of this event; thus, contributing to economic growth of China very

well (Luo, Dai and Huang, 2015). The stance of Hu (2011) is that commercialization and

professionalization of NBA has led to the increase in the sports’ number and quality shown

on television now. Devoid of commercial sponsorship, people are not capable of following

their much-loved sports. For this reason, sports commercialization has benefited society in

providing best entertainment. According to Uden (2005), commercialisation is driven by

professionalization and it means that that sports organisations became profit-making bodies

and that the professional sports leagues and systems at the club level were established. Sports

club operations now can cover the sales of ticket, promotions and advertising, club transfers,

commercial competitions, and broadcasting via electronic media (Uden, 2005). For example,

Chinese athletes have also started joining other countries’ professional leagues, and the

American NBA is its best example (Luo, Dai and Huang, 2015).

Moreover, for the enhancement of capital accumulation in its sponsoring firms, the NBA has

made sure that when its events are televised at the regional and national levels these firms are

offered commercial slots in the broadcast (Luo, Dai and Huang, 2015). According to Huang

and Hong (2015), this approach lets the NBA and its sponsor to take full advantage. As he

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suggests, this is particularly a case in circumstances where promotions are developed by a

sponsorship company (corporate sponsor) which directly work with the NBA as both partners

take advantage of the “intertextual association derived from the proximity of two All

American commodity-signs” (Cvetkovich and Kellner, 1997, p.86), and Coca-Cola and

McDonald are the two best examples of corporate sponsor in the case of NBA.

On the other hand, the commercialisation of sports has also been criticised more as an

unwanted process, because it has been contended that this process eliminate the ‘essence’ of

sport. According to Robinson (1999) (cited in Huang and Hong, 2015), community and

recreational focus of sport have been undermined by professionalism and specialism.

Chandler, Cronin and Vamplew (2002), on the other hand, discussed at length how sport

commercialism has promoted the practice of violence, cheating, betting and gambling.

Nevertheless, the money earned by professional league teams, the trend towards

professionalization of conventionally incompetent sports, and the increasing amount of

money being paid for the right to broadcast events proposes that while the sport

commercialization’s desirability can be challenged, the real commercialisation process cannot

be debated.

According to Zhou, Zhang and Zhang (2013), the commercialization of NBA is non-

beneficial because it goes against human rights. Therefore, the commercialization of sport

would mean that the sports dynamics itself will be ran like a business, leading to ‘buying’

players as though they were commodities. Even though it would imply that increasingly

money as capital can be capitalised in the sport, rights and discretion of human have been

invaded; since players will be groomed and "bought" as per their talents and abilities. Besides

grooming players as per their talents, not all will be pervaded the equal opportunity to play,

and those who may be enthusiastic yet not very brilliant player will be deprived of the

experience.

Conclusion

This essay has critically analysed NBA and how this sports organisation has transformed over

time due to the process of commercialisation and professionalization. Both advantages and

disadvantages have been found associated with commercialisation and professionalization of

sports. However, the conclusion of this study is that though there are some disadvantages of

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sports commercialisation and professionalization, the benefits are plentiful. One of the best

benefits of sports commercialisation and professionalization is that it boosts the country’s

economy because advertisements of the NBA events entice more and more people from

around the world that ultimately lead to greater level of revenue, and this approach is very

effective and beneficial to the entire economy. In fact, commercialisation is driven by

professionalization, meaning that NBA became profit-making organisation in America and

other professional sports leagues and systems at the club level were also established due to

commercialisation.

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