nep-spo New Economics Papers
on Sports and Economics
Issue of 2013‒07‒15
five papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. When can economic impact be positive? Nine conditions that explain why smaller sports can have bigger impacts By Agha, Nola; Rascher, Daniel
  2. Finanzregulierung und internationale Wettbewerbsfähigkeit: Der Fall Deutsche Bundesliga By Budzinski, Oliver; Müller, Anika
  3. Workers' Responses to Incentives: The Case of Pending MLB Free Agents By Joshua Congdon-Hohman; Jonathan A. Lanning
  4. Evaluating individual player performance indexes in basketball with Stata By Giovanni Capelli
  5. Rent Sharing and Gender Discrimination in Collegiate Athletics By Mario Lackner; Christine Zulehner

  1. By: Agha, Nola; Rascher, Daniel
    Abstract: This explanatory research reviews the economic impact literature to identify the conditions that would theoretically allow any sport, large or small, to generate positive economic effects. Nine conditions are identified that, when present, could allow a community to experience a positive economic impact from a team or stadium. The nine conditions are then used to explain the discrepancy in known empirical outcomes in Major and Minor League Baseball. It appears as if major league teams are more likely to violate the conditions while minor league teams are not. This research finds theoretical support for previous suggestions that smaller teams and events may be beneficial to local economies. In doing so, it also explains previous empirical results that found some minor league baseball classifications are associated with positive gains in per capita income.
    Keywords: economic impact, minor league baseball, MLB, stadiums, efficiency
    JEL: L83
    Date: 2013–07–04
  2. By: Budzinski, Oliver; Müller, Anika
    Abstract: -- [Financial Regulation and International Competitiveness: The Case of the German Bundesliga] The paper discusses the intensively discussed problem of financial crisis, overburdening debts and insolvencies in professional European football. The academic literature identifies several special characteristics of professional football leagues that allegedly lead to a systematic over-investment as well as features of a rat race. As a consequence, there are systemic market failures that warrant a regulative intervention by the competent national and European football associations. However, from an economics perspective, most of these alleged market failures turn out to be normal features of business competition. A closer inspection merely leaves two problems to be solved: (i) the widespread rescue of insolvent clubs (that are too prominent too fail) causing moral hazard issues and (ii) negative externalities on the league competition when an insolvent club would leave the market in the middle of the season. Even though these remaining issues may be viewed to justify regulations on the financial behavior of clubs by the league organizations, a note of caution needs to be issued: intervention may lead to over-regulation that distorts competition and, in particular, serves to cement the status quo competitiveness relations (i.e. preventing the incumbent top clubs from new emerging competitors). Furthermore, existing anticompetitive arrangements in football leagues contribute to the alleged market failure problems, so that more competition and not less competition may be the appropriate answer. A review of the pioneer financial regulations of the German Bundesliga allows for the conclusion that most of the German rules do not yet cross the line to over-regulation. However, the 50+1-rule, restricting newcomers from taking ownership of clubs (while protecting existing investments of the same type) clearly restricts competition and protects anticompetitive rents of incumbents. In the face of the upcoming UEFA-wide financial regulations, a first-mover effect may help German clubs to increase their international competitiveness.
    Date: 2013
  3. By: Joshua Congdon-Hohman (Department of Economics, College of the Holy Cross); Jonathan A. Lanning (Department of Economics, Bryn Mawr)
    Abstract: This study examines ways in which workers respond to implicit incentives. Specifically, we examine the extent to which workers shift their effort to activities that are measured and which have been previously rewarded in the labor market. To examine this question, we examine the changes in the performance measures of professional baseball players in the season prior to the opportunity to freely negotiate their contract (free agency). We will examine different eras in baseball to examine if we can identify changes in behavior in this pivotal year based on changes to the current premium outputs for each time period.
    Keywords: Agency theory, strategic performance, opportunistic behavior, baseball
    JEL: J24 J31 L83
    Date: 2013–07
  4. By: Giovanni Capelli (Università degli Studi di Cassino)
    Date: 2013–07–09
  5. By: Mario Lackner; Christine Zulehner
    Abstract: In this paper, we analyze the effect of market power on the share of females in top management positions using data from a market in which some firms have market power due to an institutionalized cartel. We investigate collegiate athletics and interpret coaches as top-level managers or chief executive officers (CEOs). The causal link between market power and female employment is established by exploiting the existence of the Bowl Championship Series (BCS) as an exogenous shock. Our results show that an increase in the market share has a negative effect on females relative to males among coaches. We interpret this as clear evidence for Becker's (1957) theory on employer discrimination. Only firms operating in an oligopolistic or otherwise not perfectly competitive environment can sustain a taste or cost of discrimination. Market power is necessary to let firms share rents with their workers, which they do in a discriminatory way.
    Keywords: gender discrimination, market power
    JEL: J71 L40
    Date: 2013–06

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