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HOULIHAN LOKEY HOWARD AND ZUKIN RELEASES STUDY OF SPORTS

 HOULIHAN LOKEY HOWARD AND ZUKIN RELEASES STUDY OF SPORTS
 NEW YORK, Sept. 17 /PRNewswire/ -- Houlihan Lokey Howard and Zukin, the national financial advisory and investment banking firm, released today its long-awaited report on the financial future of professional sports. Titled The Changing Structure of Professional Sports: Economic Trends, Opportunities, and Future Strategies, the study takes a hard look at the financial challenges facing the four major sports leagues -- The National Football League (NFL), Major League Baseball (MLB), the National Basketball Association (NBA), and the National Hockey League (NHL).
 At a time when revenue from national television contracts, the largest revenue source for all but the NHL, is shrinking -- while player costs continue to skyrocket and stadium capacity, in three of the leagues, is already above 90 percent -- the Houlihan Lokey report answers the question: Where will the revenue come from to keep professional sports profitable?
 "What this study confirms," said Paul J. Much, senior managing director at Houlihan Lokey and co-author of the report, "is that real world economics has finally caught up with the leagues. Our valuation opinions on a wide range of sports teams and sports-related organizations clearly indicate that with profit margins continuing to erode, the investment risks of owning a professional sports team have increased. We're finding that the 'ego factor' which frequently motivated ownership in the past is quickly being replaced by the need to manage a sports team like any other business."
 The report concludes that no single source of revenue can replace the growth which past television contracts provided. But several sources such as pay-per-view, international broadcast, licensed products, and stadium reconfiguration together can recoup some of the lost growth potential.
 On the controversial subject of escalating player costs, the report cites the continuing trend toward unrestricted free agency and argues that the NBA structure of a salary cap combined with player revenue sharing is the management model that makes the most sense. "Rather than fighting over how to slice up the pie, NBA players and owners are working with league management to increase the size of the pie for all." The report goes on the observe that some form of increased revenue sharing among teams will be required, in all but the NFL, in order for "smaller market teams to effectively compete on the field with larger market teams."
 "While the appropriate revenue mix and solutions will differ for each league," said Much, "future profitability in all of the leagues will be determined by two factors: the ability to put effective management strategies in place at both the league and team levels; and the will of all parties -- league management, team management, and the players -- to find new ways of working together."
 -0- 9/17/92
 /CONTACT: Paul J. Much, senior managing director of Houlihan Lokey Howard & Zukin, 212-582-5000 or after 9/17/92, 312-346-0518/ CO: Houlihan Lokey Howard and Zukin ST: New York IN: LEI SU: ECO


SM-LR -- NY027 -- 0552 09/17/92 10:34 EDT
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Publication:PR Newswire
Date:Sep 17, 1992
Words:495
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