nep-spo New Economics Papers
on Sports and Economics
Issue of 2006‒07‒02
two papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Rottenberg and the Economics of Sport after 50 Years: An Evaluation By Peter J. Sloane
  2. Are Economic Agents Successful Optimizers? An Analysis through Service Strategy in Tennis By Franc J.G.M. Klaasen; Jan R. Magnus

  1. By: Peter J. Sloane (University of Wales Swansea and IZA Bonn)
    Abstract: Simon Rottenberg’s seminal 1956 article in the Journal of Political Economy, 1956, is generally accepted as the starting point for the development of the economics of sport. While he recognised that certain features of professional sports leagues were unusual he saw little reason to treat this industry any differently from a conventional industry. He discusses the importance of uncertainty of outcome, the monopsonistic nature of the labour market, the nature of the product and demand (attendances). He considers alternatives to the reserve clause, such as equal revenue sharing, maximum salary limits, equal market franchise distribution and roster limits. Each of these is rejected in favour of a free market solution which, on the basis of the invariance principle, he suggests will perform just as well as the reserve clause in allocating talent to where it is most productive. The ensuing literature has focused on all these issues, many of which have created considerable debate amongst sports economists. In particular the assumption of profit maximisation has been challenged and a divergence of views, reflected in the so-called North American and European models of sports leagues has emerged. Over the last 50 years sports leagues have expanded, TV markets have opened up and legal challenges to existing practices have multiplied. This paper seeks to evaluate Rottenberg’s contribution to a rapidly expanding field and to judge its relevance today.
    Keywords: sport, monopsony, monopoly power
    JEL: J0 L0 L8
    Date: 2006–06
  2. By: Franc J.G.M. Klaasen (Faculty of Economics and Econometrics, Universiteit van Amsterdam); Jan R. Magnus (Department of Econometrics and OR, Tilburg University)
    Abstract: We consider the question whether top tennis players in a top tournament (Wimbledon) employ an optimal (efficient) service strategy. We show that top players do not, in general, follow an optimal strategy, and we provide a lower bound of the inefficiency. The inefficiency regarding winning a point on service is on average at least 1.1% for men and 2.0% for women, leading to a possible increase of income for the efficient player of 18.7% for men and 32.8% for women. We use these findings to shed some light on the question whether economic agents are successful optimizers.
    Keywords: Inefficiency; Frontier; Optimal strategy; Tennis
    JEL: C14 C15 D01 D21
    Date: 2006–05–22

This nep-spo issue is ©2006 by Joao Carlos Correia Leitao. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.