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on Sports and Economics |
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Issue of 2010‒10‒16
ten papers chosen by Joao Carlos Correia Leitao University of Beira Interior and Technical University of Lisbon |
| By: | Robert Baumann (Department of Economics, College of the Holy Cross); Bryan Engelhardt (Department of Economics, College of the Holy Cross); Victor Matheson; Taylor Ciavarra (Department of Economics, College of the Holy Cross) |
| Abstract: | We estimate the impact sporting events have on local crime rates using the technique developed in Arellano and Bond (2001). For events, we consider the presence of MLB, NBA, NFL, and NHL franchises as well as whether a city held one of the respective championships, the Olympics, or World Cup matches. We find little to no evidence that sporting events are correlated with either property or violent crime. |
| Keywords: | Crime, Sports Economics, Economic Impact |
| JEL: | L83 O18 R53 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0911&r=spo |
| By: | Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Tobias Duschl (Institute for Strategy and Business Economics, University of Zurich); Egon Franck (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | This paper develops a model of a professional sports league with network externalities by integrating the theory of two-sided markets into a contest model. In professional team sports, leagues function as a platform that enables sponsors to interact with fans. In these league-mediated interactions, positive network effects operate from the fan market to the sponsor market, while negative network effects operate from the sponsor market to the fan market. Clubs react to these network effects by charging higher (lower) prices to sponsors (fans). Our analysis shows that the size of these network effects determines the level of competitive balance within the league. Traditional models, which do not take network externalities into account, under- or overestimate the actual level of competitive balance, which may lead to wrong policy decisions. Moreover, we show that clubs benefit from stronger combined network effects through higher profits. Finally, we derive policy recommendations for improving competitive balance by taking advantage of network externalities. |
| Keywords: | Competitive balance, contest, multisided market, network externalities, team sports league |
| JEL: | L11 L13 L83 M21 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0912&r=spo |
| By: | Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | This paper develops a contest model of a professional sports league in which clubs maximize a weighted sum of profits and wins (utility maximization). The model analyzes how more win-orientated behavior of certain clubs affects talent investments, competitive balance and club profits. Moreover, in contrast to traditional models, we show that revenue sharing does not always reduce investment incentives due to the dulling effect. We identify a new effect of revenue sharing called the "sharpening effect". In the presence of the sharpening effect (dulling effect), revenue sharing enhances (reduces) investment incentives and improves (deteriorates) competitive balance in the league. |
| Keywords: | Competitive balance, contest, invariance proposition, objective function, revenue sharing, team sports league, utility maximization |
| JEL: | L83 D43 C72 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:1006&r=spo |
| By: | Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Egon Franck (Institute for Strategy and Business Economics, University of Zurich); Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | This paper outlines how the theory of contests is applied to professional team sports leagues. In the first part, we present the traditional Tullock contest and explain some basic properties of the equilibrium. We will then extend this static contest to a two-period model in order to analyze dynamic aspects of contests. In the second part, we will present applications of contest theory in sports. In particular, we will show how the Tullock framework is applied to models of team sports leagues. For this purpose, we will first explain the value creation process in team sports leagues and show how club revenues are related to the contest success function. Then, we present some basic modeling issues; for instance, we show how the assumption of flexible vs. fixed talent supply depends on the league under consideration and how it influences the equilibria. Furthermore, we explicate the effect of revenue sharing on competitive balance in the different models. Then we address the relationship between competitive balance and social welfare. Finally, we illustrate why many clubs tend to "overinvest" in playing talent in many team sports leagues. |
| Keywords: | Contest theory, Tullock contest, sports leagues, competitive balance, revenue sharing, social welfare, overinvestment |
| JEL: | C72 L83 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0913&r=spo |
| By: | Brad R. Humphreys (Department of Economics, University of Alberta); Yang Seung Lee (Department of Economics, College of the Holy Cross) |
| Abstract: | The paper develops a quality adjusted professional sports franchise price index for North America based on a repeat sale method. This index reflects trends in the general price of sports franchises holding local market, facility, and team characteristics constant. The price index exhibits considerable volatility but no upward trend over time, unlike previous quality adjusted price indexes based on hedonic models in the literature. The lack of an upward trend in this quality adjusted price index indicates that specific franchise characteristics drives observed increases in prices over the past forty years. |
| Keywords: | repeat sales method, sports franchise, quality adjusted price index |
| JEL: | G12 L83 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0914&r=spo |
| By: | Madeleine Andreff (University of Paris-Est Marne la Vallée); Wladimir Andreff (University of Paris 1 Panthéon Sorbonne) |
| Abstract: | This paper uses forecasting techniques to predict outcomes in the Beijing Olympics and 2010 World Cup using economic variables. |
| Keywords: | sport, Olympics, World Cup |
| JEL: | L83 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:1008&r=spo |
| By: | Stephen Shmanske (Department of Economics, California State University, East Bay) |
| Abstract: | By definition, giving 100% effort all of the time is sustainable, but begs the question of how to define 100% effort. As a corollary, once a benchmark for defining 100% effort is chosen, it may be possible, even optimal, to give a greater amount of effort for a short period of time, while recognizing that this level of effort is not sustainable. This dynamic effort provision problem is analyzed in the context of effort and performance by National Basketball Association (NBA) players over the course of a season. Within this context, several benchmarks for sustainable effort are considered, but these are rejected by the data. Meanwhile, the data are consistent with the proposition that NBA players put forth optimal effort, even if such effort is not always sustainable. |
| Keywords: | Sports, NBA, effort |
| JEL: | L83 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:1005&r=spo |
| By: | Tim Pawlowski (Institute of Sport Economics and Sport Management, German Sport University Cologne); Christoph Breuer (Institute of Sport Economics and Sport Management, German Sport University Cologne) |
| Abstract: | Considering the increasing stress of competition in winter sports, e.g., caused by the increasing popularity of sun holidays in the winter season or recently developed new ski areas, cable-car companies have to optimize their price-performance ratio with a modified marketing management approach. For most decisions regarding the marketing mix (e.g. the price calculation of new supply attributes), the knowledge about the monetary value of the different single attributes a consumer receives when purchasing a ski-lift ticket is indispensable. Since economics in general has a certain value for practical decision-taking in leisure management we follow other authors and transfer the economic concept of ‘hedonic prices’ to the field of empirical leisure research to derive the monetary value of some core service attributes in winter sports. The study is based on data of n=260 ski areas in five countries of the European Alps (Austria, France, Germany, Italy, and Switzerland). While the developed hedonic price models show rather high-variance explanatory power, most of the estimated attribute prices differ significantly between the countries studied. Possible implications for the price and product policies of cable-car companies are presented and discussed. |
| Keywords: | Winter sports, hedonic approach, monetary value, ski, service, price |
| JEL: | D01 D12 L83 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:1003&r=spo |
| By: | Robert Baumann (Department of Economics, College of the Holy Cross); Bryan Engelhardt (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross) |
| Keywords: | Olympics, impact analysis, mega-event, tourism |
| JEL: | L83 O18 R53 J21 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:1002&r=spo |
| By: | Tim Pawlowski (Institute of Sport Economics and Sport Management, German Sport University Cologne); Christoph Breuer (Institute of Sport Economics and Sport Management, German Sport University Cologne) |
| Abstract: | Although some research has already focused on the analysis of expenditure elasticities of leisure demand, some shortcomings with regard to the content and the underlying theoretical model as well as the applied methods exist. This paper aims at avoiding these problems to provide consistent derivatives of leisure service expenditure elasticities. Therefore, a regular demand system is derived from microeconomic duality theory. To implement leisure specific demand factors (i.e., demand- and supply-based sports and recreational opportunities as well as sports and recreational preferences) while still being consistent with neoclassical demand theory, the basic model is extended by applying the demographic translation framework. Data of the continuous household budget survey (n=7,724) from Germany is used for the estimation of the derived demand system. It is shown how sensitive the results are depending on the applied (censored) regression model: 16 out of 18 analyzed services are indicated as luxury goods based on the findings of the Tobit model type I but as necessities based on the findings of the Tobit model type II. Possible implications are presented and discussed. |
| Keywords: | Expenditure elasticity, demand, services, Tobit, Almost Ideal Demand System |
| JEL: | D01 D12 L83 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:1004&r=spo |