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on Sports and Economics |
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Issue of 2006‒07‒09
three papers chosen by Joao Carlos Correia Leitao Universidade da Beira Interior |
| By: | Peter Sloane (University of Wales Swansea; IZA) |
| 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 L83 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0608&r=spo |
| By: | Dennis Coates (Department of Economics, University of Maryland, Baltimore County); Craig A. Depken, II (Department of Economics, University of Texas at Arlington) |
| Abstract: | This paper estimates the total sales and sales tax revenue impacts on host communities of a variety of professional and collegiate sporting events. Using 126 jurisdictions from Texas, covering every month from January, 1990 through April of 2006, the analysis finds that regular season games in the NBA, NFL, NHL, and MLB have widely disparate effects. The NBA and NFL regular season games are net losers of revenue, NHL and MLB games generate additional revenue. Collegiate regular season football games are revenue generators for small cities and towns home to D-I and D-IAA football, but cities that are home to teams from the old Southwest Conference or the new Big 12 conference do not gain revenues from home contests. The Super Bowl generated over $2 million in tax revenues for Houston, by far the largest revenue boost of any of the events in our data. |
| Keywords: | tourism, economic impacts, special events |
| JEL: | L83 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0606&r=spo |
| By: | Robert Sandy (Indiana University Purdue University Indianapolis (IUPUI)); Peter Sloane (University of Swansea); John Treble (University of Swansea) |
| Abstract: | Most models with profit maximizing teams conclude that competitive balance is unchanged or reduced in response to gate sharing. We critique these models and then develop three alternatives: adding unshared post-season revenue; modelling the largest market team as a dominant firm with a rising marginal cost of talent; and a new general model that incorporates both a consumer demand for athletic talent and close competition. All three approaches can cause gate sharing to increase competitive balance. |
| Keywords: | Sport, Monopsony, Monopoly Power |
| JEL: | J0 L0 L83 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0607&r=spo |