economics of sports

6LI019
ECONOMICS
OF
SPORT
GENERAL
MODULE
INFORMATION
Professional
sport
is
a
growing
and
increasingly
globalised
industry.
This
module
will
introduce
students
to
how
the
analytical
tools
of
economics
helps
a
critical
understanding
of
the
professional
sports
industry.
Issues
in
professional
sport
such
as
ownership,
finances,
labour
markets
and
public
finance
will
be
examined.
These
will
include
specific
topics
such
as
franchising,
private
versus
public
ownership,
competitive
balance,
sponsorship,
media,
pay
and
pay
differentials,
collusion
versus
competition.
This
module
will
prepare
students
for
work
in
the
sports
industry
and
in
local
and
central
government
specifically
with
regard
to
leisure
and
sport
policy.
LEARNING
OUTCOMES
• Apply
economic
theories
to
a
critical
understanding
of
the
professional
sports
industry.
• Critically
assess
through
economic
analysis,
public
policy
towards
the
professional
sports
industry.
STAFF
CONTACTS
Module
Leader:
Steven
Gelder,
Office:
;
Office
Phone:
(01902)
323125
internal
3125
Email:
S.Gelder@wlv.ac.uk
Module
Lecturer:
Dr
Stuart
Farquhar,
Office:
MN216;
Office
phone:
(01902)
323920
internal
3920;
Email:
s.s.farquhar@wlv.ac.uk
CORE
BOOK
Leeds,
M.A.
&
Von
Allmen,
P.
(2015)
The
Economics
of
Sports,
5th
ed.,
Harlow,
Essex:
Pearson
Education
Limited
ASSESSMENT
This
is
a
portfolio
assessment
consisting
of
two
separate
tasks.
Task
one
is
an
academic
paper
on
an
issue
in
professional
sport
from
a
list
of
nominated
topics
(70%
of
the
final
mark).
Task
two
is
a
research
proposal
on
a
topic
of
your
choice
in
the
economics
of
sport
(30%
of
the
final
mark).
Task
1.
Academic
Paper
(3,500
words)

You
are
required
to
write
a
paper
on
one
of
the
following
topics
in
sports
economics.
1 Salary
Caps
and
Competitive
Balance.
Analyse
the
impact
of
salary
caps
on
competitive
balance
in
the
NBA
and
NFL
and
critically
examine
the
potential
impact
of
the
introduction
of
a
salary
cap
in
the
English
Premier
League
(EPL)
2 Public
Finance
and
Sports.
Evaluate
the
case
for
and
against
the
the
provision
of
new
sports
stadium
for
private
sports
teams
with
government
money
in
the
form
of
stadium
subsidies.
3 Discrimination
in
Sports.
Are
sports
truly
a
level
playing
field?
Critically
examine
the
issues
of
discrimination
in
sport.
4 Organisation
of
Sports
Leagues.
Compare
and
contrast
alternative
models
of
the
organisation
of
sports
leagues.
In
your
conclusion
you
should
identify
your
preferred
model
with
a
suitable
justification.
For
the
Research
Proposal
(1,500
words)
The
topic
will
be
your
choice.
The
research
proposal
will
be
just
that:
a
proposal
for
a
research
paper.
I
recommend
sketching
an
idea
after
the
first
day
of
class
and
then
revising
it
throughout
the
semester
as
you
read
the
module
materials
and
have
a
chance
to
think
more
about
the
economics
of
sports
and
your
interests.
We
have
seminar
week
11
laid
aside
to
discuss
your
research
proposal.
The
research
proposal
should
be
four
to
five
pages
in
length.
It
should
have
the
following
headings:
Title
Background
(2-­‐3
pages)
-­‐
state
your
question
clearly
in
the
form
of
a
hypothesis,
explain
why
it
matters
and
is
important,
how
you
will
test
the
hypothesis,
what
existing
ideas
and
studies
predict,
expect,
and/or
claim
Research
aims

a
bullet
point
list
of
three
or
four
research
aims
Method
(1
page)
-­‐
Outline
of
your
proposed
research
strategy/approach
including
what
data
you
would
need
and
where
you
would
obtain
the
data.
Key
References
(1
page)
-­‐
A
list
of
the
key
references
in
the
topic
area.
MODULE
CONTENT
LECTURES
Lecture
Week
Lecture
Topic
Core
Reading
1
Introduction
to
sports
economics,
the
economist’s
arsenal
1

demand
&
supply,
production
Leeds
&
Von
Allmen

Ch.
1
&
2
Bryson,
A.,
Frick,
B.,
&
Simmons,
R.
(2015)
Sports
economics:
It
may
be
fun
but
what
is
the
point,
National
Institute
Economic
Review,
232,
R1-­‐R3
2
The
economist’s
arsenal

market
structures,
utility
functions,
indifference
curves
and
budget
constraints
Leeds
&
Von
Allmen

Ch.
2
3
The
peculiar
economics
of
professional
sports,
nature
of
sport
as
a
product,
the
objectives
of
sports
organisations
(profit
maximising
versus
win
maximising
versus
alternative
objectives)
Leeds
&
Von
Allmen

Ch.
3
4
Organisation
of
professional
team
sports

monopoly,
cartels,
joint
ventures
Leeds
&
Von
Allmen

Ch.
4
5
Competitive
balance,
uncertainty
of
outcome
hypothesis
and
the
invariance
proposition
Leeds
&
Von
Allmen

Ch.
5
6
Labour
markets
in
sport
1

demand
for
and
supply
of
labour
in
individual
and
team
sports,
marginal
revenue
product
theory,
economics
of
superstars,
tournament
theory,
transfer
markets
Leeds
&
Von
Allmen

Ch.
8
7
Labour
markets
in
sport
2

imperfections

monopsony
power
of
sports
leagues,
salary
caps,
player
entry
drafts,
luxury
or
competitive
balance
taxes,
unions
in
professional
sports,
collective
bargaining
Leeds
&
Von
Allmen

Ch.
9
8
Labour
markets
in
sport
3
-­‐
discrimination
Leeds
&
Von
Allmen

Ch.
10
9
Public
finance
and
professional
sport
1

who
benefits
and
how?
Leeds
&
Von
Allmen

Ch.
6
10
Public
finance
and
professional
sport
2

who
pays
and
why?
Leeds
&
Von
Allmen

Ch.
7
11
Sports
in
the
not-­‐for-­‐profit
sector
Leeds
&
Von
Allmen

Ch.
11
12
Revision
and
Assessment
Session
SEMINARS
SEMINAR
WEEK
SEMINAR
ACTIVITY
READING
1
Ticket
prices,
attendance
demand
and
revenues
Is
there
a
relationship
between
team
success
and
attendance
demand?
Ahn,
S.C.,
&
Lee,
Y.H.
(2014)
Major
league
baseball
attendance:
Long-­‐term
analysis
using
factor
models,
Journal
of
Sports
Economics,
15(5),
451-­‐477
Krautmann,
A.C.,
&
Berri,
D.J.
(2007)
Can
we
find
it
at
the
concessions”
Understanding
price
elasticity
in
professional
sports,
Journal
of
Sports
Economics,
8(2),
183-­‐191
Brown,
D.,
&
Link,
C.R.
(2008)
Population
and
bandwagon
effects
on
local
team
revenues
in
major
league
baseball,
Journal
of
Sports
Economics,
9(5),
470-­‐487
Davis,
M.C.
(2009)
Analysing
the
relationship
between
team
success
and
MLB
attendance
with
GARCH
effects,
Journal
of
Sports
Economics,
10(1),
44-­‐58
Crooker,
J.R.,
&
Fenn,
A.J.
(2007)
Sports
leagues
and
parity:
When
league
parity
generates
fan
enthusiasm,
Journal
of
Sports
Economics,
8(2),
139-­‐164
2
The
difference
between
professional
sport
and
other
industries.
Sports
organisations
in
individual
and
team
sports

e.g.
Football,
American
Football,
Basketball,
Ice
Hockey,
Tennis,
Golf,
etc.
Krakel,
M.
(2007)
A
note
on
revenue
sharing
in
sports
leagues,
Journal
of
Sports
Economics,
8(3),
309-­‐316
Kesenne,
S.
(2007)
Revenue
sharing
and
owner
profits
in
professional
team
sports,
Journal
of
Sports
Economics,
8(5),
519-­‐
529
Madden,
P.
(2011)
Game
theoretic
analysis
of
basic
team
sports
leagues,
Journal
of
Sports
Economics,
12(4),
407-­‐431
Dietl,
H.M.
Grossmann,
M.,
&
Lang,
M.
(2011)
Competitive
balance
and
revenue
sharing
in
sports
leagues
with
utility-­‐
maximising
teams,
Journal
of
Sports
Economics,
12(3),
284-­‐308
3
Sports
broadcasting,
sports
sponsorship,
Do
sports
teams
maximise
profit?
Alla,
G.,
&
Roy,
G.
(2008)
Does
television
crowd
out
spectators?
New
evidence
from
the
Scottish
premier
league,
Journal
of
Sports
Economics,
9(6),
592-­‐605
Fort,
R.D.
(2015)
Managerial
objectives:
A
retrospective
on
utility
maximisation
in
pro
team
sports,
Scottish
Journal
of
Political
Economy,
62(1),
75-­‐89
Leach,
S.,
&
Szymanski,
S.
(2015)
Making
money
out
of
football,
Scottish
Journal
of
Political
Economy,
62(1),
25-­‐50
4
Team
versus
league
objectives

the
origins
of
the
English
Premier
League,
a
European
Football
League?
Sloane,
P.
(2015)
The
economics
of
professional
football
revisited,
Scottish
Journal
of
Political
Economy,
62(1),
1-­‐7
Bae,
S.
&
Choi,
J.P.
(2007)
The
optimal
number
of
firms
with
an
application
to
professional
sports
leagues,
Journal
of
Sports
Economics,
8(1),
99-­‐108
5
Does
competitive
balance
really
matter?
Measuring
uncertainty
of
outcome
and
competitive
balance
Kesenne,
S.
(2015)
Revenue
sharing
and
absolute
league
quality:
Talent
investment
and
talent
allocation,
Scottish
Journal
of
Political
Economy,
62(1),
51-­‐58
Meehan,
J.W.,
Jr.,
Nelson,
R.A.,
&
Richardson,
T.V.
(2007)
Competitive
balance
and
game
attendance
in
major
league
baseball,
Journal
of
Sports
Economics,
8(6),
563-­‐580
Pawlowski,
T.
(2013)
Testing
the
uncertainty
of
outcome
hypothesis
in
European
professional
football:
A
stated
preference
approach,
Journal
of
Sports
Economics,
14(4),
341-­‐367
Lenten,
L.J.A.
(2015)
Measurement
of
competitive
balance
in
conference
and
divisional
tournament
design,
Journal
of
Sports
Economics,
16(1),
3-­‐25
Coates,
D.
&
Humphreys,
B.R.
(2012)
Game
attendance
and
outcome
uncertainty
in
the
national
hockey
league,
Journal
of
Sports
Economics,
13(4),
364-­‐377
6
Why
do
winners
in
tennis
and
golf
tournaments
usually
win
double
the
prize
money
to
the
runners-­‐
up?
Why
do
sports
superstars
earn
such
large
salaries?
Assess
the
difference
in
transfer
markets
between
American
Sports
(such
as
the
NFL,
NBA)
and
European
Sports
(such
as
in
football
and
rugby
union)
Newman,
A.H.
&
Tafkov,
I.D.
(2014)
Relative
performance
information
in
tournaments
with
different
prize
structures,
Accounting,
Organisations
and
Society,
39,
348-­‐361
Buraimo,
B.,
Frick,
B.,
Hickfang,
M.,
&
Simmons,
R.
(2015)
The
economics
of
long
term
contracts
in
the
footballers’
labour
market,
Scottish
Journal
of
Political
Economy,
62(1),
8-­‐24
Frick,
B.
(2007)
The
football
players’
labour
market:
Empirical
evidence
from
the
major
European
leagues,
Scottish
Journal
of
Political
Economy,
54(3),
422-­‐446
7
The
impact
of
labour
market
rules
(salary
caps,
luxury
taxes,
player
entry
controls)
on
competitive
balance.
An
assessment
of
the
invariance
proposition.
Kesenne,
S.
(2000)
The
impact
of
salary
caps
in
professional
team
sports,
Scottish
Journal
of
Political
Economy,
47(4),
422-­‐430
Burdekin,
R.C.K.,
&
Franklin,
M.
(2015)
Transfer
spending
in
the
English
Premier
League:
The
haves
and
the
have
nots,
National
Institute
Economic
Review,
232,
R4-­‐R17
Link,
C.R.
&
Yosifov,
M.
(2012)
Contract
length
and
salary
compensating
wage
differentials
in
major
league
baseball,
Journal
of
Sports
Economics,
13(1),
3-­‐19
Binder,
J.J.
&
Findlay,
M.
(2012)
The
effects
of
the
Bosman
ruling
on
national
and
club
teams
in
Europe,
Journal
of
Sports
Economics,
13(2),
107-­‐129
8
Why
are
there
so
few
black
managers,
coaches
in
professional
sports?
Allen,
W.D.
(2015)
The
demand
for
younger
and
older
workers:
Patterns
from
NFL
labour
Should
women
tennis
players
be
paid
equal
prize
money
to
male
tennis
players
in
grand
slam
events?
Do
black
players
get
paid
less
in
professional
team
sports?
markets,
Journal
of
Sports
Economics,
16(2),
127-­‐158
Ashworth,
J.,
&
Heyndels,
B.
(2007)
Selection
bias
and
peer
effects
in
team
sports:
The
effect
of
age
grouping
on
earnings
of
German
soccer
players,
Journal
of
Sports
Economics,
8(4),
355-­‐377
Lane,
E.,
Nagel,
J.,
&
Netz,
J.S.
(2014)
Alternative
approaches
to
measuring
MRP:
Are
all
men’s
college
basketball
players
exploited,
Journal
of
Sports
Economics,
15(3),
237-­‐262
Groothuis,
P.A.,
&
Hill,
J.R.
(2013)
Pay
discrimination,
exit
discrimination
or
both?
Another
look
at
an
old
issue
using
NBA
data,
Journal
of
Sports
Economics,
14(2),
171-­‐185
Yang,
C-­‐H.,
&
Lin,
H-­‐Y.
(2012)
Is
there
salary
discrimination
by
nationality
in
the
NBA?:
Foreign
talent
or
foreign
market,
Journal
of
Sports
Economics,
13(1),
53-­‐75
Madden,
J.F.
&
Ruther,
M.
(2011)
Has
the
NFL’s
Rooney
rule
efforts
“levelled
the
field”
for
African
American
head
coach
candidates?
Journal
of
Sports
Economics,
12(2),
127-­‐142
9
Assessment
Task
1
Session

Academic
Paper
10
Should
taxpayers
subsidise
professional
sports
teams?
Humphreys,
B.R.
&
Zhou,
L.
(2015)
Reference-­‐dependent
preferences,
team
relocations,
and
major
league
expansion,
Journal
of
Economic
Behaviour
&
Organisation,
109,
10-­‐25
Barget,
E.,
&
Gouguet,
J-­‐J.
(2007)
The
total
economic
value
of
sporting
events
theory
and
practice,
Journal
of
Sports
Economics,
8(2),
165-­‐182
Castellanos,
P.,
Garcia,
J.,
&
Sanchez,
J.M.
(2011)
The
willingness
to
pay
to
keep
a
football
club
in
a
city:
How
important
are
the
methodological
issues?
Journal
of
Sports
Economics,
12(4),
464-­‐486
Agha,
N.
(2013)
The
economic
impact
of
stadiums
and
teams:
The
case
of
minor
league
baseball,
Journal
of
Sports
Economics,
14(3),
227-­‐252
Miller,
P.
(2007)
Private
financing
and
sports
franchise
values:
the
case
of
major
league
baseball,
Journal
of
Sports
Economics,
8(5),
449-­‐467
11
Assessment
Task
2
Session

Research
Proposal
12
Review
of
Sports
Economics
Rodenberg,
R.M.,
Kuburakis,
A.,
&
Coates,
D.
(2013)
Sports
economics
on
trial,
Journal
of
Sports
Economics,
14(4),
389-­‐400
Kahn,
L.M.
(2007)
Sports
league
expansion
and
consumer
welfare,
Journal
of
Sports
Economics,
8(2),
115-­‐138
For
the
seminar
sessions
you
are
expected
to
bring
any
necessary
materials
(such
as
journal
papers,
data,
etc.)
to
prepare
for
discussion
and
analysis.

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