The Economics of Sports

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  • Edition: 3rd
  • Format: Hardcover
  • Copyright: 2008-01-01
  • Publisher: Addison Wesley
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The sports industry can be the ideal paradigm to illustrate economic concepts such as industrial organization, public finance, and labor economics. The Third Edition of this market-leading text features the latest issues and research, such as stadium attendance demographics, business models of successful teams, and the growing internationalization of sports. Book jacket.

Table of Contents

Prefacep. xiii
Introduction and Review of Economic Conceptsp. 1
Introductionp. 3
Three Major Areas of Economics Exploredp. 6
The Role of Modelsp. 7
Positive Versus Normative Economicsp. 8
Biographiesp. 9
Sports History and Balance of Coveragep. 9
The Organization of the Textp. 10
Additional Support and Sourcesp. 11
Review of the Economist's Arsenalp. 13
Introductionp. 13
Opportunity Cost and Comparative Advantagep. 14
A Reintroduction to Supply and Demandp. 15
Demand, Supply, and Equilibriump. 16
Supply and Demand Curves and the Price of Baseball Cardsp. 19
Price Ceilings and the Benefits of Scalpingp. 27
Market Structures: From Perfect Competition to Monopolyp. 28
A Note on the Definition of Outputp. 28
Perfect Competitionp. 29
Monopoly and Other Imperfectly Competitive Market Structuresp. 31
Applying the Models: Evaluating an Increase in Costsp. 35
The Development of Professional Sportsp. 37
Choices under Uncertaintyp. 38
Biographical Sketchp. 43
Summaryp. 44
Discussion Questionsp. 44
Problemsp. 45
Utility Functions, Indifference Curves, and Budget Constraintsp. 47
Constrained Maximizationp. 47
Using Indifference Curves and Budget Constraints: The Rise of Soccer and Baseballp. 54
Regression Analysis in Briefp. 57
Multiple Regression and Dummy Variablesp. 62
The Industrial Organization of Sportsp. 65
Sports Franchises as Profit-Maximizing Firmsp. 67
Introductionp. 67
The Importance of Leaguesp. 68
Setting the Rulesp. 69
Limiting Entryp. 71
Controlling Entry as Cooperative Behaviorp. 75
League Contractionp. 76
Marketingp. 77
What Are Profits and How Are They Maximized?p. 79
A Detailed Look at Revenuep. 80
Gate Revenuep. 82
Television Revenuep. 85
The Effects of Revenue Sharingp. 92
Costp. 94
Opportunity Cost-Teams on the Movep. 95
Taxes, Profit, Owner Behavior, and Vertical Integrationp. 95
Turning Losses into Profits: The Accounting Gamep. 99
Using Sports to Maximize Profits Elsewherep. 99
Operating Income, Book Profit, and Bill Veeckp. 100
Soccer's Alternative Business Modelp. 102
Profit Maximization in Soccerp. 103
The Impact of Promotion and Relegationp. 104
The Financial Dangers of an Open Systemp. 106
Soccer in America: The MLS and a Single-Entity Leaguep. 107
Biographical Sketchp. 107
Summaryp. 108
Discussion Questionsp. 109
Problemsp. 109
Monopoly and Antitrustp. 111
Introductionp. 111
What's Wrong with Monopoly?p. 112
Monopolists and Deadweight Lossp. 113
Promotion, Relegation, and Monopoly Powerp. 115
Monopolists and Price Discriminationp. 116
Consumer Surplus and Personal Seat Licensesp. 119
Monopoly Stood on Its Head: A Brief Introduction to Monopsonyp. 120
What's Right with Monopoly?p. 121
Barriers to Entryp. 124
Society's Response to Monopoly and Monopsony: Antitrust Lawsp. 125
An Important Anomaly: Baseball's Antitrust Exemptionp. 126
The Economic Impact of the Antitrust Exemptionp. 131
Limited Exemptions: The NFL and Televisionp. 133
The NCAA: An Incidental Cartelp. 134
Prisoner's Dilemma: How Rational Actions Lead to Irrational Outcomesp. 137
Biographical Sketchp. 140
Summaryp. 142
Discussion Questionsp. 142
Problemsp. 143
An Alternative Application of Game Theoryp. 144
Competitive Balancep. 147
The Fan's Perspectivep. 148
The Owners' Perspectivep. 151
The Effect of Market Sizep. 152
How Competitive Balance can be Measuredp. 154
Within-Season Variationp. 154
Between-Season Variationp. 158
Attempts to Alter Competitive Balancep. 160
Revenue Sharingp. 162
Salary Caps and Luxury Taxesp. 162
The Reverse-Order Entry Draftp. 163
Schedule Adjustments in the NFLp. 163
The Effects of Attempts to Alter Competitive Balancep. 164
The Coase Theorem and Competitive Balancep. 165
Salary Capsp. 166
The Draftp. 168
Revenue Sharing and Luxury Taxesp. 169
Promotion and Relegationp. 169
Biographical Sketchp. 170
Summaryp. 172
Discussion Questionsp. 172
Problemsp. 172
Two Additional Ways to Measure Competitive Balance: The Lorenz Curve and the Markov Chain Methodp. 174
Public Finance and Sportsp. 179
The Public Finance of Sports: The Market for Sports Franchisesp. 181
Introduction: How Walter O'Malley Changed the Landscape of Sportsp. 181
The Competition for Teams and the Value of a New Stadiump. 185
How Teams Exploit Market Forcesp. 190
Leagues, Cities, and Monopoly Powerp. 191
The All-Or-Nothing Demand Curvep. 193
The Winner's Cursep. 195
How the Olympics and the World Cup Induce Overspendingp. 196
The Form and Function of Stadiums and Arenasp. 200
What's in a Name?p. 201
The Size and Shape of Facilitiesp. 202
Location, Location, Locationp. 208
Biographical Sketchp. 211
Summaryp. 212
Discussion Questionsp. 213
Problemsp. 213
The Costs and Benefits of a Franchise to a Cityp. 215
Introductionp. 215
Why Do Cities Do It? The Benefits of a Franchisep. 216
Privately Built Facilitiesp. 216
Is a Stadium a Worthwhile Investment for a City?p. 217
Why Governments Subsidize Sports Franchisesp. 219
Multiplier Effectsp. 227
Can Anyone Win at This Game?p. 231
The Impact of Special Eventsp. 234
A Public Choice Perspectivep. 235
Financing Facilitiesp. 237
An Economic View of Taxes: Who Should Pay?p. 238
Sales Taxesp. 241
Incremental Financingp. 242
Taxes That Broaden the Burdenp. 243
The Benefits of Debtp. 244
Biographical Sketchp. 246
Summaryp. 247
Discussion Questionsp. 247
Problemsp. 248
The Labor Economics of Sportsp. 249
An Introduction to Labor Markets in Professional Sportsp. 251
Introductionp. 251
Overview of Labor Supply and Demandp. 252
Labor Supplyp. 253
Labor Demandp. 255
Market Demand and Equilibriump. 258
Imperfect Competition and the Demand for Laborp. 258
Human Capital Theoryp. 259
Monopsony and Other Restrictions of Competitive Marketsp. 262
Monopsonyp. 262
The Reserve Clausep. 264
Free Agencyp. 265
Final Offer Arbitrationp. 266
Salary Capsp. 268
The Draftp. 270
Empirical Evidence on Restricted Player Movement and Player Salariesp. 271
The Impact of Rival Leaguesp. 275
The Economics of Tournaments and Superstarsp. 277
Evidence on the Potential Inefficiency of Tournamentsp. 281
What Is a Gold Medal Worth?p. 285
An Exception to the Rule: NASCARp. 285
The Distribution of Incomep. 287
Biographical Sketchp. 290
Summaryp. 292
Discussion Questionsp. 292
Problemsp. 293
The Labor-Leisure Choice Model of Indifference Curvesp. 295
Labor Unions and Labor Relationsp. 303
Introductionp. 303
A Brief Introduction to the Economics of Unionsp. 304
An Overview of Strikesp. 308
Labor Conflict in Professional Sportsp. 314
A Change of Pace: The 2002 Baseball Agreementp. 315
Thrown for a Loss: The NFLPA and Salaries in Professional Footballp. 317
Reversal of Field: Recent Settlements in Basketball and Hockeyp. 320
Professional Tennis Associationsp. 324
Biographical Sketchp. 330
Summaryp. 331
Discussion Questionsp. 332
Problemsp. 333
Discriminationp. 335
Introductionp. 335
Becker's Theory of Labor Discriminationp. 337
Different Forms of Discrimination in Professional Sportsp. 339
Employer Discriminationp. 339
Does Anyone Win with Employer Discrimination?p. 344
Employee Discriminationp. 350
Consumer Discriminationp. 353
Discrimination by National Origin in European Soccerp. 355
Positional Discrimination or Hiring Discriminationp. 357
Gender Equity-A Special Case?p. 360
Title IX and Discrimination in College Sportsp. 362
Biographical Sketchp. 364
Summaryp. 366
Discussion Questionsp. 366
Problemsp. 366
Sports in the Not-for-Profit Sectorp. 369
The Economics of Amateurism and College Sportsp. 371
Introductionp. 371
The Troublesome Concept of Amateurismp. 373
A Brief History of Amateurism and "the Olympic Ideal"p. 373
Amateurism, Profits, and the NCAAp. 376
The Code of Amateurism: Academic Ideals or Monopsony Power?p. 377
Pay for Play: The Grant-in-Aidp. 381
What's in a Name? The Lot of the "Student-Athlete"p. 382
Measuring the Net Value of Athletes to Collegesp. 382
Dividing the Profits: The NCAA as an Efficient Cartelp. 383
College as an Investment for the Student-Athletep. 387
The NCAA and the Uneasy Coexistence of Athletics and Academiap. 392
Why Schools Promote Big-Time Athletic Programsp. 394
The Difficulty in Regulating College Sportsp. 397
The Knight Commission on Intercollegiate Athleticsp. 398
Academic Standards: Bulwarks of Integrity or Barriers to Entry?p. 399
Academic Standards as a Barrier to Entryp. 403
The Finances of College Athleticsp. 404
Do Colleges Make a Profit from Athletics?p. 404
College Athletics and Profit Maximizationp. 407
Biographical Sketchp. 409
Summaryp. 410
Discussion Questionsp. 410
Problemsp. 411
Works Citedp. 413
Indexp. 433
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