nep-spo New Economics Papers
on Sports and Economics
Issue of 2006‒11‒18
four papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Major League Duopolists: When Baseball Clubs Play in Two-Team Cities By Phillip Miller
  2. Revenue Sharing in Sports Leagues: The Effects on Talent Distribution and Competitive Balance By Phillip Miller
  3. Private Financing and Sports Franchise Values: The Case of Major League Baseball By Phillip Miller
  4. Willingness to Pay for Amateur Sport and Recreation Programs By Bruce K. Johnson; John C. Whitehead; Daniel S. Mason; Gordon J. Walker

  1. By: Phillip Miller (Department of Economics, Minnesota State University)
    Abstract: This paper focuses on examining the attendance of MLB teams that play home games in the same metropolitan area – duopoly teams. Comparisons were made between the determinants of attendance for duopoly teams and monopoly teams. While duopoly and monopoly teams share most of the same determinants, the estimated weights on some determinants differ. There is evidence that one duopolist’s attendance is negatively related to the other’s performance. Evidence is therefore provided that fans of one team respond to quality changes in the other team in a city.
    Keywords: Sports, Baseball
    JEL: L83
    Date: 2006–11
  2. By: Phillip Miller (Department of Economics, Minnesota State University)
    Abstract: This paper uses a three-stage model of non-cooperative and cooperative bargaining in a free agent market to analyze the effect of revenue sharing on the decision of teams to sign a free agent. We argue that in all subgame perfect Nash equilibria, the team with the highest reservation price will get the player. We argue that revenue sharing will not alter the outcome of the game unless the proportion taken from high revenue teams is sufficiently high. We also argue that a revenue sharing system that rewards quality low-revenue teams can alter the outcome of the game while requiring a lower proportion to be taken from high revenue teams. We also argue that the revenue sharing systems can improve competitive balance by redistributing pivotal marginal players among teams.
    Keywords: competitive balance, revenue sharing, sports labor markets, free agency
    JEL: C7 J3 J4 L83
    Date: 2006–11
  3. By: Phillip Miller (Department of Economics, Minnesota State University)
    Abstract: This paper examines the impact of receiving a new stadium on team franchise values. I argue that a new stadium will increase the franchise values of teams regardless of how construction was financed. A team playing in a stadium that it owns will be able to capitalize the value of the stadium in the team’s franchise value and will thus have a higher franchise value. Using panel data for Major League Baseball teams from 1990-2002, I find that, after controlling for team quality and metro area differences, regardless of the financing mechanism, a team playing in a brand new stadium realizes an increase in its franchise value. I also find that a team playing in its own stadium has a higher franchise value than a team playing in a public stadium. However, the difference in franchise values between playing in a team-owned stadium and playing in a public stadium does not offset the average cost of constructing the stadium. The paper thus provides a deeper understanding the determinants of franchise values and of the motives of sports team owners in their lobbying efforts for public subsidies.
    Keywords: Stadiums, Baseball
    JEL: L83
    Date: 2006–11
  4. By: Bruce K. Johnson; John C. Whitehead; Daniel S. Mason; Gordon J. Walker
    Abstract: A Contingent Valuation Method (CVM) survey in Alberta, Canada allows estimation of the household willingness to pay (WTP) for enhancements in the province’s extensive sport and recreation programs. The estimated annual WTP of $18.33 per household for small enhancements in the programs far exceeds the estimated willingness to pay of households in the United States to avoid the loss of major league sports teams, as determined in previous CVM studies. Those opposed to gambling, which helps to fund the Alberta programs, are more likely to favor using income taxes to finance expansions.
    Date: 2006

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