nep-spo New Economics Papers
on Sports and Economics
Issue of 2010‒05‒22
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. TV Revenue Sharing as a Coordination Device in Sports By Peeters Th.
  2. Executive Salary Caps: What Politicians, Regulators and Managers Can Learn from Major Sports Leagues By Helmut Dietl; Tobias Duschl; Markus Lang
  3. An Economic Model of the Evolution of the Gender Performance Ratio in Individual Sports By Dupuy Arnaud
  4. Get Back in the Game: Sport, The Recession and Keeping People Active By Lunn, Pete

  1. By: Peeters Th.
    Abstract: As sports clubs jointly produce contests, they cannot determine contest quality through their private talent investments. Sports leagues therefore try to coordinate talent investments towards the pro?t-maximizing contest quality. In this paper I analyze how revenue sharing mechanisms may serve this goal when demand comes from hard-core club and neutral sports fans.Performance-based sharing turns out to be an ine¢ cient sharing rule for the cartel, although it is not harmful for social welfare. This ine¢ cient cartel behavior can be rationalized as the result of bargaining with asymmetric outside options. Data from US and European sports leagues illustrate the theoretical fi?ndings.
    Date: 2010–04
  2. By: Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Tobias Duschl (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: The year 2007 marked the beginning of the worst financial crisis since the Great Depression. Currently, politicians, regulators, and economists are searching for measures to avoid such a crisis in the future. One of the most prominent proposals is the introduction of salary caps for corporate executives. Proponents of salary caps for executives argue that the main cause of the crisis was greed and argue that salary caps will prevent greedy managers from excessive risk-taking by limiting the upside potential of any form of risk-taking. Unfortunately, there exists little experience with salary caps in the corporate world. Despite the fact that there is a huge body of literature and numerous theoretical as well as empirical insights on executive pay, there is effectively no basic economic research on salary caps in the corporate world. The only industry that has a tradition in determining, implementing, and enforcing salary caps is the professional team sports industry. At this time, all four North American major team sports leagues have some variant of a salary cap or luxury tax mechanism. In this article, we build on the insights and experiences of the sports sector with salary caps. We discuss the attributes and workings of salary caps as well as consider their adequacy as a mechanism for salary regulation. Additionally, we point out the major issues of public discourse about salary caps in the corporate world and relate these issues to the experiences gained in the sports sector.
    Keywords: Salary Caps, Executive Compensation, Corporate Governance, Financial Crisis, Financial Regulation
    JEL: G38 K23 M52
    Date: 2010–05
  3. By: Dupuy Arnaud (METEOR)
    Abstract: This paper shows that the gender world record ratio in four disciplines, i.e. marathon, triple jump, pole vault and 800 meters, follows a S-shape over time. It is argued that this pattern is initiated by a sudden drop in the social barrier for women to participate in these disciplines. This drop in social barrier materializes –later- by the authorization for women to participate at major events, such as the Olympic Games, in these disciplines. The paper builds a simple economic model of sector self-selection and human capital accumulation with intrinsic disutility (social barriers) to participate in some sectors. As social barriers are removed in a sector, the Gender Performance Ratio is shown to follow a S-shape over time under very basic assumptions and calibrations. Ability self-selection, measured as the difference between mean ability of women in that sector and population mean, becomes more positive after removal of the social barrier.
    Keywords: microeconomics ;
    Date: 2010
  4. By: Lunn, Pete
    Date: 2010–04

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