Economics of Sports Leagues

2017 ◽  
Author(s):  
David George Surdam
Keyword(s):  
Bargaining Power ◽  
Sufficient Conditions ◽  
Team Sports ◽  
Professional Sports ◽  
Price Setting ◽  
Professional Team Sports ◽  
Sports Team ◽  
Sports Leagues ◽  
Ticket Prices ◽  
American Economy

This chapter is a general overview of the economic aspects of professional team sports leagues as well as the American economy. The NBA's turbulent birth as the BAA demonstrated that professional sports team owners' twin advantages of price-setting power over ticket prices and enhanced bargaining power over players were not sufficient conditions to ensure profitability. Price-setting power without sufficient demand could still lead to losses. The challenge was to increase demand, which would have led to higher ticket prices, more attendance, and greater revenues and profits. Greater profits would have enabled owners to pay higher salaries and to improve conditions, helping to erase any fly-by-night image. Thus the chapter looks at the issues surrounding profits, player salaries, technology, expansions, discrimination, and so on; as well as how the American economy performed during the years 1945–61 and how it affected attendance and demand for professional team sports leagues.

Player Rights 1951 and 1957

2017 ◽  
Author(s):  
David George Surdam
Keyword(s):  
Team Sports ◽  
Professional Sports ◽  
Congressional Hearings ◽  
Professional Team Sports ◽  
Sports Leagues ◽  
Professional Sports Leagues

This chapter examines one of the most contentious issues in professional sports leagues that were tackled at the Congressional hearings in 1951 and 1957: player rights. The reserve clause and the player draft allowed owners to minimize competition for players and therefore to have salary-setting power over their players, giving them discretion in how much they paid them. Owners and their commissioners employed novel arguments supporting the necessity of having the reserve clause. This chapter first provides an overview of the sorry state of player salaries in professional team sports before considering the owners' explicit use of the reserve clause and how players began challenging it. It concludes with a discussion of Congress's inquiry into player rights, the challenges to the player draft, the formation of players' associations, the outcome of the hearings, and the inquiry's impact on owner-player relations.

The New York Yankees Cope with the Great Depression

2008 ◽  
Vol 9 (4) ◽  
pp. 816-840 ◽  
Author(s):  
David G. Surdam
Keyword(s):  
New York ◽  
Great Depression ◽  
Major League Baseball ◽  
Team Sports ◽  
Price Setting ◽  
The Great Depression ◽  
Professional Team Sports ◽  
Major League ◽  
Hall Of Fame ◽  
Ticket Prices

The New York Yankees donated their financial records to the National Baseball Hall of Fame. These records provide a rare glimpse into the business of professional team sports. I use these records to examine how the Yankees' management reacted to the Great Depression. Since the team possessed both price-setting power over ticket prices andmonopsony power over player salaries, how did the team adjust ticket prices and salaries in response to the falling incomes of its customers and general deflation of the early 1930s? How did the team's response differ from other teams in Major League Baseball?

scholarly journals Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues

2011 ◽  
Vol 13 (2) ◽  
pp. 1-30 ◽  
Author(s):  
Helmut M. Dietl ◽  
Tobias Duschl ◽  
Markus Lang
Keyword(s):  
Level Structure ◽  
Team Sports ◽  
Professional Sports ◽  
Executive Pay ◽  
Corporate Sector ◽  
Sports Industry ◽  
Professional Team Sports ◽  
Sports Leagues ◽  
Regulatory Measures ◽  
Professional Sports Leagues

Executive pay regulation is widely discussed as a measure to reduce financial mismanagement in corporations. We show that the professional team sports industry, the only industry with substantial experience in the regulation of compensation arrangements, provides valuable insights for the regulation of executive pay. Based on the experience from professional sports leagues, we develop implications for the corporate sector regarding the establishment and enforcement of executive pay regulation as well as the level, structure, and rigidity of such regulatory measures.

Professional Team Sports in American Economic History

2018 ◽  
pp. 128-146
Author(s):  
Stanley L. Engerman
Keyword(s):  
Gender Discrimination ◽  
Economic History ◽  
Team Sports ◽  
Professional Sports ◽  
Ice Hockey ◽  
Spectator Sports ◽  
Professional Team Sports ◽  
Sports Leagues ◽  
And Gender ◽  
Degree Of Similarity

This chapter presents several of the major issues of analysis in certain of the major spectator sports. It focuses, among the professional sports, on baseball, football, basketball, and ice hockey—particularly on baseball, which has a much longer history and a more substantial literature than do the other sports. While each of these sports leagues is operated as a separate entity, there is a great degree of similarity in their actions and activities. The chapter does not cover all economic aspects of sports, but focuses on those considered most significant. The four major economic issues to be discussed are (1) the economics of cartels; (2) the labor market (the institutions and the behavior of labor markets); (3) racial and gender discrimination in sports; and (4) government subsidies to teams to influence their location.

Economics of Antitrust

2017 ◽  
Author(s):  
David George Surdam
Keyword(s):  
Team Sports ◽  
Professional Sports ◽  
Revenue Sharing ◽  
Antitrust Law ◽  
Competitive Balance ◽  
Sports Teams ◽  
Sherman Act ◽  
Professional Team Sports ◽  
Sports Leagues ◽  
Professional Sports Leagues

This chapter examines the economics of antitrust, with particular emphasis on how antitrust law affects professional team sports. In the late 1800s, Americans worried about the growing concentration of power in the hands of a few producers such as Standard Oil, American Tobacco, and other large firms that consolidated their holds over industries by merging and acquiring other companies. Other industrial leaders sought to fix prices above those obtained under competition. The Sherman Antitrust Act, enacted in 1890, contains provisions addressing “contract,” “conspiracy,” and “trade and commerce.” This chapter first considers how courts applied the Sherman Act to cases involving professional team sports before discussing the characteristics of professional sports leagues, how owners of professional sports teams reported profits and losses, the issue of player salaries and exploitation, and competitive balance and revenue sharing in professional leagues. It also describes franchise relocation and expansion and how television created demand in sports.

The Impact of Free Agency on Competitive Balance in North American Professional Team Sports Leagues

2006 ◽  
Vol 20 (3) ◽  
pp. 345-365 ◽  
Author(s):  
Joel Maxcy ◽  
Michael Mondello
Keyword(s):  
National Football League ◽  
Team Sports ◽  
National Hockey League ◽  
Competitive Balance ◽  
Free Agency ◽  
Free Agent ◽  
Professional Team Sports ◽  
Dependent Variables ◽  
Sports Leagues ◽  
The Impact

Free agency was reintroduced to professional team sport leagues in the 1970s. Sport enthusiasts expressed concern that competitive balance would diminish as star players congregated to large market cities. However, the economic invariance principle rejects this notion, indicating that balance should remain unchanged. This article empirically examines the effects of changes in free agent rules on competitive balance over time in the National Basketball Association (NBA), National Football League (NFL), and National Hockey League (NHL). Regression analysis using within-season and between-season measures of competitive balance as dependent variables provides mixed results. The NFL and NHL provide evidence that an aspect of competitive balance has improved, but results from the NBA indicate that balance has worsened since the introduction of free agency. We conclude that the ambiguous results suggest that the effects are not independent, but instead depend on the interaction of free agent rights with other labor market and league rules.

Infant Mortality of Professional Sports Clubs: An Organizational Ecology Perspective

2012 ◽  
Vol 232 (3) ◽  
Author(s):  
Bernd Frick ◽  
Björn Wallbrecht
Keyword(s):  
Length Of Stay ◽  
Team Sports ◽  
Poor Performance ◽  
Organizational Ecology ◽  
Ice Hockey ◽  
Sports Clubs ◽  
Professional Team Sports ◽  
Small Market ◽  
Sports Leagues ◽  
Using Data

SummaryDue to their limited financial resources winning the national championship or qualifying for an international cup competition is not a viable option for most small market clubs in any of the European professional team sports leagues, such as soccer, ice hockey, basketball or handball. However, since a particularly poor performance is usually punished by relegation and since being relegated to the respective second division is associated with a dramatic decline in revenues, avoiding relegation is a target in itself. Using data from seven different professional team sports leagues in four different countries we estimate various parametric and semi-parametric regression models to identify the determinants of the clubs’ length of stay in their respective first division. In line with the organizational ecology literature we find that club experience, previous club performance (number of previous championship titles and number of previous relegations) and market size (average attendance) affect survival in a statistically significant and economically relevant sense. Perhaps surprisingly, founding conditions seem to be irrelevant for a club’s length of stay in its respective first division.

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