Logo for the 2009 NCAA ‘Final Four’ basketball championship, played in Detroit, Michigan.
A front-page story in the Washington Post that ran a few days before the April 2009 “final four” championship NCAA basketball games, focused on the big money that would be flowing into Detroit’s local economy because of the tournament. And indeed, organizers of the event estimated that between $30 million and $40 million would come to the host city. More than 100,000 people were expected to come to Detroit for the event, described by the Post as “the most lavish celebration in college sports.” On April 4, 2009, the first two games were played at Detroit’s Ford Field stadium, and for the first time in tournament history, an NCAA attendance record was set, with some 72,000 fans attending.
The Post story – headlined: “Desperate For a Rebound, Detroit Turns to Basketball” — contrasted the good times for the NCAA with the hard times in Detroit and Michigan, epitomized by the current declining economic fortunes of Detroit’s automakers. NCAA basketball is just one part of what appears to be a rapidly growing “entertainment economy.” But perhaps there is also a broader message to spotlight here: the rise of the “media and entertainment” sectors of America’s economy in recent years versus the declining manufacturing sector.
Manufacturing, obviously, is vital for sustaining any national economy, and Americans would like to see nothing better than a solid manufacturing come-back in the Midwest and elsewhere in the months ahead. Still, in recent decades, the sports, media, and entertainment portions of the American economy have been exploding in value and growth. NCAA basketball is just one part of that – part of what some have called in recent years, “the entertainment economy.” Whether this “new economy” is as desirable as the old industrial variety is another question, certainly, but it is occurring nonetheless.
Sports in general have become a rising and significant part of the U.S. media/entertainment sector. In 1960, for example, there were 42 professional sports franchises, mostly in the northeastern U.S. By 2000,there were more than 110 franchises, and they were spread over more regions of the country. The media, meanwhile, have loomed powerfully over this growth. Since 1980s the annual number of hours of sports programming aired by major broadcast networks and cable systems has more than doubled, rising to 10,000 hours in 2000. The increasing economic value of sports broadcast and cable rights have attracted media and entertainment companies as sports franchise investors, as well as wealthy individuals. And “big event” playoff games and the like, draw lots of attention from would-be host cities.
Ford Field in Detroit played host to more than 72,000 fans for the Final Four NCAA basketball games of early April 2009.
“The Super Bowl, Olympic Games, all star games, and league play-offs for the four major professional sports leagues, and the [NCAA basketball] tournament, qualify as sports mega-events in the United States,” observe analysts Robert A Baade and Victor A Matheson. “Convinced that these sports events produce substantial incremental economic activity, cities compete as vigorously to host them as do the athletes who participate in the events…”
In April 2009, CNN.com reported a story headlined: “Hawaii Looks to Sports for Economic Boost,” explaining how the NFL Pro Bowl game — featuring all-star professional football players in an end-of-season contest — has been an important contributor to the state’s economy for more than 20 years. The game had been played in Honolulu at Aloha Stadium every year since 1980, and it sold out every time. Honolulu Mayor Mufi Hannemann explained that the tens of thousands of people who came to that game every year spent “at least $30 million” across the state. Honolulu lost the game to Florida recently, but Mayor Hannemann is optimistic about getting it back in 2011 and 2012. Hannemann also co-chairs the U.S. Conference of Mayors’ Olympic Task Force, which is hoping to bring the Olympics to Chicago in 2016. Hawaii could benefit from that as well, becoming a stopping off point for visiting fans and participating teams on their way to Chicago. Sports, it seems, is an important part of Hawaii’s economic planning.
1979 NCAA championship players Magic Johnson of Michigan State, left, and Larry Bird of Indiana, right.
NCAA basketball, a part of the larger sports universe, has become its own big business. But this has happened in a relatively short space of time, with broadcast and cable television serving as a powerful handmaidens. NBC telecast the championship NCAA game over its network for the first time in 1969, continuing to do so through the 1970s. There was no cable television then.
By 1979, however, there came Bill Rasmussen, founder of ESPN, an “all sports” cable TV network. Rasmussen had rounded up broadcasting rights for tape-delayed NCAA basketball games as part of what he was then building. There was little TV coverage then of the games leading up to the NCAA finals. It also happened about that time that fan interest in college basketball was ignited by two young rival players named Magic Johnson and Larry Bird who battled each other in the NCAA finals.
CBS' ad revenues.
In March 1979 when Bird and Johnson played in the championship game, more than 35 percent of the TV sets turned on were tuned to that game. That type of TV audience share is not possible in today’s market, but it did show the way to the gold mine in NCAA basketball broadcasting. ESPN, meanwhile, was soon broadcasting 14 of 32 first-round games, and often showed the most competitive games, gaining national appeal. The NCAA tournament was boosted considerably by ESPN’s tournament coverage.
In 1979, the NCAA tournament had a 40-team field. It was expanded twice over the next six years, to 48 teams in 1980 and 64 teams in 1985. The TV rights fees were $5.2 million in 1979. They doubled in 1980. By 1982, when CBS outbid NBC for the tournament, the price went to $48 million. In 1985, they doubled again to $96 million. By 1994 CBS paid $1.73 billion for NCAA games through the year 2002. The current package through the year 2011 cost CBS $6.2 billion. But CBS appears to be getting some of that back in ad revenues, both from conventional broadcast and the internet (see graphic).
The televised play of the Final Four NCAA basketball tournament, of course, is only part of the NCAA tournament’s overall economic effect. And basketball is only one of many NCAA sports with championship events, with various college conferences and leagues participating as well. Advertisers from Nike to Chevrolet have been attaching themselves to NCAA sports, and in some cases, individual players, for some time now. On March 10, 2009, for example, Nike announced it would outfit the players of five NCAA teams for tournament play — Duke, Gonzaga, Memphis, Michigan State, and the University of Oregon. Nike would equip the players head-to-toe with a ’360′ treatment, providing “base-layer apparel, unique uniforms, and customized footwear”. Pontiac, Coca-Cola, AT&T meanwhile, were among prominent Final Four advertisers.
One of a myriad of NCAA video games available for a number of college sports.
The NCAA itself is a major business, sharing its revenue with the leagues and schools in some sports. One only need visit the NCAA.com website to get an idea of the business side of college sports these days and how college sports have become a powerful force in the national economy. As USA Today has recently reported, individual univer- sities are also striking their own sports deals. The University of Maryland now plays football at the Chevy Chase Bank Field at Byrd Stadium as part of its 25-year, $20 million naming-rights deal with the bank. The money also helped finance new luxury suites and other upgrades at the Maryland football stadium. The University of Kansas basketball team recently dropped former sponsor Nike and went with Adidas in a new apparel contract. An eight-year, $26.67 million deal with the athletic company, among other things, places the Adidas three-stripe logo on UK’s basketball jerseys. The University of Texas is exploring its own TV network to fill a statewide cable channel and various internet outlets to broadcast University of Texas football, basketball, and other sports. In fact, since early 2007, at least 37 schools have guaranteed themselves a combined $1.7 billion in fees by bundling and selling multimedia rights.
The Bigger Picture
College sports, of course, are only a sliver of the great American sports pie, and the U.S., only one part of the larger global sports scene. But adding up only the “sports parts” of the media/ entertainment/advertiser juggernaut that is now found globally – Media & entertainment now contribute well north of $500 billion annually to the global economy, and some analysts expect that an even more powerful sports/entertainment com- ponent will emerge in the decades ahead. whether World Cup Soccer, Indian cricket, Olympic events, tournament golf and tennis, NASCAR racing and more – plus the prospect of NFL, NBA and Major League Baseball expansion abroad in the future, and one can get an idea of the shift that is occurring in national and global economies. And sports, of course, are only one part of the bigger media/ entertainment engine. There is Hollywood and Bolly- wood, the music industry, television and radio, Broadway and the West End, the internet, video games, hand-held entertainment, related software/hardware, and much more. These are all economic powers within the media/entertainment equation. They now contri- bute well north of $500 billion annually to the global economy, and some analysts expect that an even more powerful sports/media/entertainment component will emerge in the decades ahead, current economic difficulties notwithstanding. NCAA basketball, and its elevation in recent decades to mega-sport event status, illustrates how modern societies are incorporating media, sports, and entertainment elements as increasingly important economic contributors.
Harold L. Vogel, Entertainment Industry Economics: A Guide for Financial Analysis, Boston: Cambridge University Press, 2004.
Michael Wilbon, “30 Years Ago, Madness Tipped Off,” Washington Post, Thursday, March 26, 2009, p. E-1.
Robert A Baade and Victor A Matheson, “An Economic Slam Dunk or March Madness? Assessing the Economic Impact of the NCAA Basetball Tournament,” in John Fizel and Rodney D. Fort, Eds, Economics of College Sports, Westport, CT: Praeger Publishers, 2004, pp. 111-134.
John Fizel and Rodney D. Fort, Eds, Economics of College Sports, Westport, CT: Praeger Publishers, 2004.
Business Wire, “Nike Outfits NCAA Basketball Teams for Battle with Innovative Uniform System,” March 10, 2009.
Mickey Mouse was born in 1928, shown here in the film short, 'Steamboat Willie,' which debuted in New York.
In the 1930s, in the depths of the Depression, a new kind of economics began to emerge from an unlikely source: a cartoon character named Mickey Mouse and his animated friends. Mickey was the creation of a young Los Angeles-based artist named Walt Disney. Along with partner Ub Iwerks, Disney had bounced around Hollywood and New York with some fits and starts, but no real major successes. Then in 1928 the two artists tried a new mouse character in place of an earlier Disney rabbit named Oswald, which Universal Studios claimed as their property. Thereafter, Disney vowed to secure his inventions, and he and his partner created a new mouse character. Disney first thought to name his mouse “Mortimer,” but his wife Lillian suggested “Mickey” to his and history’s good fortune. Disney and Iwerks first introduced the Mickey Mouse cartoon character to the world in a May 1928 silent short titled Plane Crazy. That first cartoon was not a success, as Disney then lacked the needed distribution channels. But the next cartoon released in November 1928, Steamboat Willie, was a success. A short film just under 8 minutes as most then were, Steamboat Willie was the first to synchronize sound with movement and character – in this case Mickey whistling as he piloted his boat.
Walt Disney and Ub Iwerks in early career.
Steamboat Willie met with great success among the movie-going public. Disney’s earlier Mickey cartoons were then reissued with sound, followed by a dozen new ones – all issued in 1929. Walt Disney Productions was formed that year as well, and the company began turning out the short, animated films – “shorts,” as they were called – on a regular basis. By 1932, Disney received a special Academy Award for the creation of Mickey Mouse, whose series was moved into color by 1935. Along the way, a cast of supporting animated characters were introduced in the Mickey films – Minnie Mouse, Horace Horsecollar, Clarabelle Cow, Donald Duck, Goofy, Pluto and others.
Disney 'Skeleton Dance' poster, 1929-30.
Alongside the Mickey Mouse series, Disney also produced short cartoon films called the “Silly Symphonies” that were, according to the Walt Disney Family Museum, “more daring, quirkier and more diverse” than anything in the Mickey Mouse series. Some of these films were also highly artistic, and helped bring notice to Disney & Co. on that level as well. Among the most famous and remembered of the Silly Symphonies are: The Skeleton Dance, Flowers and Trees, The Old Mill, and Three Little Pigs. Disney’s animated characters populated these shorts as well, including – Donald Duck, the Big Bad Wolf, Elmer Elephant, and Max Hare, among others. Still, it was Mickey Mouse who became Disney’s star, and it turned out, well beyond the movie houses.
America in the 1930s, however, was not in jovial state. Following the 1929 stock market crash, the economy deteriorated steadily. Through 1932, Herbert Hoover was president and he did not believe the federal government should become directly involved in fixing the economy. In 1933, shortly after President Roosevelt was elected and inaugurated, “New Deal” programs sought to stimulate the economy and provide jobs. Still, there was a long road ahead. Unemployment by then had reached historic levels, as the nation’s financial system teetered on the edge of collapse. In the midst of this, the country looked for any signs of optimism, recovery, and prosperity ahead. And some of that came from a surprising quarter — from Walt Disney’s animated creations. The short Mickey Mouse cartoons had become a hit with movie goers of all ages, and new films of Mickey and his friends were being churned out by Disney and his artists at a rate of about one per month. But most importantly for the 1930s, the cartoons were proving to be a business stimulus.
By 1935 Mickey Mouse and his friends had become a merchandising phenomenon. No less a cheerleader than the New York Times chronicled Mickey and Disney’s rising “multiplier role” in an otherwise bleak national economy. “New applause is heard for Mickey Mouse. . .”, wrote H.L. Robbins in the New York Times Magazine of March 1935.“The fresh cheering is for Mickey the Big Business Man, the world’s super-salesman. He finds work for jobless folk. He lifts corporations out of bank- ruptcy…” – The New York Times
March 1935 “The fresh cheering is for Mickey the Big Business Man, the world’s super-salesman. He finds work for jobless folk. He lifts corporations out of bankruptcy. Wherever he scampers, here or overseas, the sun of prosperity breaks through the clouds.”
Indeed, through the 1930s, Mickey Mouse merchandising exploded; hundreds of products were available across the country and around the world. There were Mickey Mouse phonographs and radios; Mickey Mouse wrist-watches, satchels and briefcases. There was also Mickey Mouse soap, candy, playing-cards, hairbrushes, chinaware, alarm clocks, hot-water bottles, table covers and napkins, Mickey Mouse biscuits and dairy, Mickey Mouse book-ends, and of course, Mickey Mouse music. At least four publishers were then selling Mickey Mouse books, one of which in1934 had sold 2.4 million copies. Mickey Mouse pencils, paper, school notebooks, and tablets were sold by the million as well. Food-product companies “hired” Mickey to sell breakfast cereal and also used Madison Avenue advertising to tout their new friend. In England there was Mickey Mouse marmalade. New York’s Fifth Avenue sold Mickey Mouse charms and bracelets, some in gold and platinum, and a few with diamonds. A Cartier diamond bracelet sold for $1,200. Some department stores used Mickey Mouse window displays, which could cost $25,000 for a single display. By 1934, Mickey merchandise was earning about $600,000 a year.
Screenshot of title card & credits for Disney's 1928 Mickey Mouse cartoon, "Steamboat Willie."
Walt Disney Enterprises in the 1930s had its New York offices in the United Artists Building on 7th Avenue just off Times Square. Those offices, among other things, dealt with the licensing and commercial business that Mickey and his friends were generating. The first concession for a Mickey Mouse product, in 1930, had gone to a doll maker. Five years later there were eighty product-related licensees for Mickey and other Disney characters in the U.S., fifteen in Canada, fifteen in Australia, forty in England, eighty in other European counties. Disney Enterprises by then had branch offices in Chicago, Toronto, London, Paris, Copenhagen, Milan, Barcelona, Lisbon and Sydney. Mickey was becoming a burgeoning global business, and even kept a few companies from going bankrupt. Take the company that made a Mickey Mouse wrist watch.
Sample of a 1930s Ingersoll Mickey Mouse wrist watch (see Cowan Collection in Sources).
The Mickey Mouse Watch was first made in mid-1933 by the Ingersoll-Waterbury Clock Company of Waterbury, Connecticut. The company’s financial condition at the time was not good, but the Mickey Mouse watch was offered for sale at an expensive $3.25, or about $52.00 in today’s money. Still, the response to the watch was somewhat favorable, even at that price. However, the market improved when Ingersoll-Waterbury reduced the price to $2.95, using some advertising to tout the new price (see below). In fact, the watch did well enough for Ingersoll-Waterbury that it is credited with helping to keepthe company afloat during the Depression. Ingersoll-Waterbury became “Timex” in the 1960s, continuing to produce Mickey and Minnie Mouse watches. Other companies have since become involved in making Mickey Mouse watches including Seiko, Fossil, Colibri, and Disney Time Works.
Mickey wrist watch ad, 1930s.
Lionel Trains was another company that was helped by Mickey in the 1930s. Lionel had been a very prosperous company that appeared to weather the initial blows of the 1929 stock market crash. But, the economic crisis soon caught up with the company, and by 1931 sales dropped dramatically at Lionel as Americans tightened their belts. In the 1930s, however, Lionel introduced the Mickey Mouse wind-up handcar toy that came with a box of its own track. The reaction to the toy caught Lionel by surprise. Selling for $1 or less ($16 in 2007 dollars), the company sold over 250,000 units in under four months and could not keep up with demand. The Mickey Mouse Handcar train toy would sell over one million units in three years. Still, even with Mickey’s success, Lionel would continue to struggle. Yet some credit this one toy with keeping the company from bankruptcy. The toy brought Lionel cash flow, positive business press, and access to funding for other profitable projects.
As Mickey Mouse products were having a positive effect throughout the economy of the 1930s, the bigger enterprise of Walt Disney Productions – and what would become its mainstay business and product well-spring for years to come – would be its feature-length animated motion pictures. And that too, began in the 1930s.
Movie poster for Walt Disney’s first feature-length animated film, 'Snow White and the Seven Dwarfs,' 1937.
“Snow White” Effect
Mickey and Disney’s fortunes in the 1930s had risen primarily on the basis of its nine-minute cartoons. Granted, there were a number of them running in theaters regularly through the mid-1930s. But no major motion picture by Disney then existed. The first would come in late 1937 when Disney released a full-length animated film, Snow White and the Seven Dwarfs. Many wondered whether Disney would make money with so extravagant a production as Snow White, which took years to make and cost $2 million to produce – then an enormous expenditure. For a time, in fact, Snow White was dubbed “Disney’s Folly” – but not for long.
When it opened in Hollywood at the Carthay Circle Theater on December 21, 1937, one trade paper noted that “a picture capable of making happy kiddies out of the bluebloods of Hollywood… will captivate the plain population as perhaps no other motion picture ever has or will.” And it did.
Walt Disney on the cover of Time magazine, December 27, 1937, along with his seven new friends.
As Snow White and The Seven Dwarfs opened around the country, the general public couldn’t get enough of it. In New York, it opened at Radio City Music Hall in January 1938 and ran for five weeks, and could have gone longer except for prior contracts. No feature had then played the Music Hall for more than three weeks. ”If you miss it,” said film critic Frank S. Nugent of the ‘New York Times,’ ”you’ll be missing the ten best pictures of 1938.” Time magazine had featured Walt Disney on its December 27, 1937 cover showing Disney at his work desk along with studio miniatures of his new stars – the Seven Dwarfs.
By the spring of 1939, Snow White had earned an estimated worldwide gross of $10 million, then a sizeable fortune. But Snow White had also broken a barrier, going beyond cartoon shorts. No longer would animation be limited to a minor supporting role or one-reel shorts. Snow White was a clear signal that animation could become a major new business, as Disney’s subsequent films would prove. The success of Snow White, says the Disney Family Museum “was more than a gratifying success story – it was the gateway to a practically unlimited future.”
Even in 1938, Disney’s success was being viewed by some observers as a sign of something much bigger. By May 1938, the film had become such a merchandising success that the New York Times celebrated its economic impact, using the term “industrialized fantasy” in a positive way, touting the new business not only as a positive contributor to climbing out of the 1938 recession, but also as new category of promising new industry. Here’s the complete May 2, 1938 New York Times editorial: “Prosperity Out of Fantasy”:
“Prosperity Out of Fantasy” New York Times Editorial
May 2, 1938
It is said that what America needs to swing it out of the present economic tailspin is a new industry. Many things just over the horizon, such as television, air-conditioning in the home and flivver airplanes, have been suggested. But none of them seems yet to have materialized in terms of wages and heavy sales. Would it be ridiculous to suggest that industrialized fantasy may prove to be the answer?
Industrialized fantasy sounds like something extremely complex. Yet it is quite simple. Walt Disney’s picture-play “Snow White and the Seven Dwarfs” is an excellent example. Here is something manufactured out of practically nothing except some paint pots and a few tons of imagination. In this country imagination is supposed to be a commodity produced in unlimited quantities.“Figments of Disney’s imagination have already sold more than $2,000, 000 worth of toys since the first of the year.” If it can be turned out as an article of commerce which the public will readily buy, then prosperity should be-well, just around the corner, anyway. The Disney picture cost about $2,000,000 to produce.
To be sure, it gave employment to no flesh-and-blood actors, human attributes being confined to voices on the sound tracks. But it kept a small army of artists, animators and gag men busy for many months. And from all reports it will not only return more than this investment to Mr. Disney, but is showering fortune on every playhouse that shows it. Dopey, Grumpy and their fellow-dwarfs, despite the fact that they get no wages themselves, have been the most valiant miners and sappers against recession whom the moving picture magnates have hired this year. No mat ter what business may have been in most theaters, the exhibitors of “Snow White” have not had to layoff a single dwarf.
Moreover, the picture has virtually developed a new industry from its by-products. Figments of Disney’s imagination have already sold more than $2,000,000 worth of toys since the first of the year. Since January, says Kay Kamen, Mr. Disney’s representative here, 117 toy manufacturers have been licensed to use characters from “Snow White.” The only thing in the picture that the public doesn’t seem to crave is poisoned apples.
One factory in Akron, Ohio, which makes little rubber dwarfs, has been running twenty-four hours a day, while many of the other rubber factories are closed. Dopey and Grumpy are putting men to work in paint shops, box factories, silica mines, stone quarries and mills all over the map. Wherever they turn up, prosperity begins to radiate.”Snow White” is Disney’s first full-length picture. What is going to happen when he really gets into his stride? Industrialized fantasy? It should be industrially fantastic.
One of many 'Walt and Mickey' statues found throughout the Disney empire today.
New Kind of Commerce
Disney of the 1930s, of course, pales beside the Disney of today. But even in those early years, Disney’s “entertainments” were having a decided impact on the larger world. The Disney of the 1930s was not only helping to buoy a shaky American economy, it was also helping to build the foundation of something new – a global entertainment economy. As time would tell, this new kind of commerce would reverberate in jobs, finance, balance-of-trade and more, becoming a much bigger part of the national and global economies. It would also permeate popular culture and politics in new and more powerful ways.