nep-spo New Economics Papers
on Sports and Economics
Issue of 2011‒02‒05
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Economics of the Super Bowl By Victor Matheson
  2. Financing Professional Sports Facilities By Robert A. Baade; Victor A. Matheson
  3. The Bottom Line: Accounting for Revenues and Expenditures in Intercollegiate Athletics By Victor A. Matheson; Debra J. O’Connor; Joseph H. Herberger
  4. Contracts as Rent-Seeking Devices: Evidence from German Soccer By Eberhard Feess; Michael Gerfin; Gerd Muehlheusser

  1. By: Victor Matheson
    Abstract: The Super Bowl is America’s premier sporting event. This paper details basic economic facts about the game and examines the controversy surrounding the purported economic impact of the game on host communities. While the league and sports boosters claim that the game brings up to a $500 million economic impact to host cities, a review of the literature suggests that the true economic impact is a fraction of this amount.
    Keywords: sports, stadiums, Super Bowl, impact analysis, football
    JEL: L83
    Date: 2010–01
  2. By: Robert A. Baade (Department of Business and Economics, Lake Forest College); Victor A. Matheson (Department of Economics, College of the Holy Cross)
    Abstract: This paper examines public financing of professional sports facilities with a focus on both early and recent developments in taxpayer subsidization of spectator sports. The paper explores both the magnitude and the sources of public funding for professional sports facilities.
    Keywords: Stadiums, arenas, sports, subsidies
    JEL: L83 O18 R53 J23
    Date: 2011–01
  3. By: Victor A. Matheson (Department of Economics, College of the Holy Cross); Debra J. O’Connor (Department of Economics, College of the Holy Cross); Joseph H. Herberger (Department of Economics, College of the Holy Cross)
    Abstract: This paper examines the profitability of Division I athletic programs at colleges and universities in the United States under a variety of accounting definitions of profit. The data identify several broad themes. First, a majority of athletic departments rely heavily on direct and indirect subsidization of their programs by the student body, the institution itself, and state governments in order to balance their books. Without such funding, less than a third of BCS athletic departments and no non-BCS departments are in the black. Second, athletic programs rely heavily on contributions to balance their books. Donations to athletic departments may serve as a substitute for donations to the rest of the university, lowering giving to other programs. Third, football and men’s basketball programs are generally highly profitable at BCS schools, but below this top tier, fewer than 10% of football programs and 15% of men’s basketball programs show a profit by any reasonable accounting measures.
    Keywords: Athletics, higher education, sports
    JEL: L83 O18 R53 J23
    Date: 2011–01
  4. By: Eberhard Feess; Michael Gerfin; Gerd Muehlheusser
    Abstract: Recent theoretical research has identified many ways how contracts can be used as rent-seeking devices vis-à-vis third parties, but there is no empirical evidence on this issue so far. To test some basic qualitative properties of this literature, we develop a theoretical and empirical framework in the context of European professional soccer where (incumbent) teams and players sign binding contracts which are, however, frequently renegotiated when other teams (entrants) want to hire the player. Because they weaken entrants in renegotiations, long-term contracts are useful rent-seeking devices for the contracting parties. However, they also lead to allocative distortions in the form of deterring efficient transfers. Since incumbent teams tend to benefit more from long-term contracts in renegotiations than players do, these must be compensated ex ante by higher wages when agreeing to a long-term contract. Using data from the German “Bundesliga", our model predictions are broadly confirmed.
    Keywords: Strategic contracting; rent-seeking; empirical contract theory; long-term contracts; breach of contract
    JEL: L14 J63 L40 L83
    Date: 2010–11

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