The sports industry provides a seemingly endless set of examples from every area of microeconomics, giving students the opportunity to study economics in a context that holds their interest. Thoroughly updated to reflect the current sports landscape, The Economics of Sports introduces core economic concepts and theories and applies them to American and international sports.
Updates for this sixth edition include:
More coverage of international sports, including European football;
A revised chapter on competitive balance, reflecting new techniques;
A brand-new chapter on mega-events such as the Olympics and World Cup;
New material on umpire bias;
A completely redesigned chapter on amateur competition that focuses exclusively on intercollegiate sports. This chapter is also now modular, enabling instructors who wish to intersperse it with the other chapters to do so with greater ease.
This accessible text is supported by a companion website which includes resources for students and instructors. It is the perfect text for advanced undergraduate and graduate courses on sports economics.
Author(s): Michael A. Leeds, von Allmen, Peter, A. Matheson, Victor
Edition: 6th
Publisher: Routledge
Year: 2018
Language: English
Pages: 777
Title......Page 4
Copyright......Page 5
BRIEF CONTENTS......Page 6
DETAILED CONTENTS......Page 8
List of Figures......Page 17
List of Tables......Page 21
Preface......Page 23
Part One: Introduction and Review of Economic Concepts......Page 30
1 Economics and Sports......Page 31
Introduction......Page 32
1.1 The Organization of the Text......Page 35
Special Features and Additional Resources......Page 36
Opportunity Costs......Page 38
Absolute and Comparative Advantage......Page 39
Biographical Sketch: Babe Didrikson Zaharias......Page 41
Summary......Page 46
Discussion Questions......Page 47
Problems......Page 48
2 Review of the Economist’s Arsenal......Page 50
Introduction......Page 51
Learning Objectives......Page 52
2.1 The Supply and Demand Model......Page 53
Demand, Supply, and Equilibrium......Page 54
Changes in Supply and Demand......Page 59
A Note on the Definition of Output......Page 71
The Production Function......Page 72
Price Ceilings and the Economics of Scalping......Page 76
Perfect Competition......Page 78
Monopoly and Other Imperfectly Competitive Market Structures......Page 81
The Impact of an Increase in Costs......Page 87
2.4 The Rise of Professional Sports......Page 89
Biographical Sketch: Mark Cuban......Page 92
Summary......Page 96
Discussion Questions......Page 97
Problems......Page 98
2A.1 Constrained Maximization......Page 100
2A.2 Using Indifference Curves and Budget Constraints: The Rise of Soccer and Baseball......Page 109
Appendix 2B: Regression Analysis in Brief......Page 113
Part Two: The Industrial Organization of Sports......Page 122
3 Sports Leagues and Franchises......Page 123
Introduction......Page 124
Learning Objectives......Page 126
3.1 Open versus Closed Leagues......Page 127
Maximizing Profits or Maximizing Wins?......Page 130
Revenue Is Determined by Demand......Page 138
A Detailed Look at Revenue......Page 144
Costs......Page 157
League Size, Opportunity Cost, and Team Movement......Page 158
3.4 Open Leagues: Revenue and Cost in European Soccer......Page 166
Profit Maximization in Soccer......Page 169
Biographical Sketch: Bill Veeck......Page 176
Summary......Page 180
Discussion Questions......Page 181
Problems......Page 182
4 Monopoly and Antitrust......Page 190
Introduction......Page 191
Learning Objectives......Page 192
Monopolists and Deadweight Loss......Page 193
Do Monopolies Always Charge Monopoly Prices?......Page 198
Promotion, Relegation, and Monopoly Power in Open Leagues......Page 199
4.2 Strategic Pricing......Page 201
Variable and Dynamic Ticket Pricing......Page 202
Bundling......Page 206
Price Discrimination and Two-Part Pricing......Page 207
4.3 What’s Right with Monopoly?......Page 214
4.4 Strategic Barriers to Entry......Page 217
4.5 Society’s Response to Monopoly: Antitrust Laws......Page 220
An Important Anomaly: Baseball’s Antitrust Exemption......Page 221
Leagues That Lack an Antitrust Exemption......Page 226
Limited Exemptions: The NFL and Television......Page 228
Biographical Sketch: Alvin “Pete” Rozelle......Page 229
Summary......Page 234
Discussion Questions......Page 235
Problems......Page 236
5 Competitive Balance......Page 243
Introduction......Page 244
Learning Objectives......Page 245
The Fans’ Perspective......Page 246
The Owners’ Perspective......Page 249
The Effect of Market Size......Page 250
The Influence of Diminishing Returns......Page 253
A Brief History of Competitive Balance......Page 254
Within-Season Variation......Page 256
Between-Season Variation......Page 261
Illustrating Competitive Imbalance......Page 266
The Invariance Principle......Page 269
Revenue Sharing......Page 273
Salary Caps and Luxury Taxes......Page 275
The Reverse-Order Entry Draft......Page 277
Promotion and Relegation......Page 282
Biographical Sketch: Bud Selig......Page 283
Summary......Page 287
Discussion Questions......Page 289
Problems......Page 290
Part Three: Public Finance and Sports......Page 297
6 The Public Finance of Sports: Who Benefits and How?......Page 298
Introduction......Page 299
Learning Objectives......Page 301
Facilities, Attendance, and Profits......Page 302
The Size and Shape of Stadiums and Arenas......Page 306
The Size and Shape of Basketball and Hockey Arenas......Page 313
The Size and Shape of Football and Soccer Stadiums......Page 314
Do New Facilities Create Better Teams?......Page 316
Teams as Public Goods......Page 318
6.3 How Cities Benefit from Teams and Facilities......Page 321
Positive and Negative Externalities......Page 322
Facilities, Spending, and Tax Revenue......Page 326
Studies of Economic Impact......Page 333
Interest Groups and Public Choice......Page 334
Location, Location, Location......Page 337
Biographical Sketch: Al Davis......Page 339
Summary......Page 344
Discussion Questions......Page 345
Problems......Page 346
7 The Public Finance of Sports: Who Pays and Why?......Page 353
Introduction......Page 354
Learning Objectives......Page 355
Teams on the Move......Page 356
The Four Eras of Stadium Construction......Page 358
Leagues, Cities, and Market Power......Page 363
How Exchange Rates Affect Costs......Page 369
Why Most Stadiums Are Not in the Center of Town......Page 372
7.4 Stadium Costs and Financing......Page 375
7.5 Paying for Stadiums......Page 380
Who Pays a Sales Tax?......Page 384
Incremental Financing......Page 387
Taxes That Spread the Burden......Page 388
The Benefits of Debt......Page 389
Biographical Sketch: George W. Bush......Page 392
Summary......Page 395
Discussion Questions......Page 396
Problems......Page 397
8 Mega-Events......Page 403
Introduction......Page 404
Learning Objectives......Page 406
8.1 A Brief History of Mega-Events......Page 407
The Original Mega-Event: The Ancient Olympics......Page 408
The British Ethic and the Rise of the Modern Olympics......Page 410
The Modern Olympic Games......Page 411
FIFA and the World Cup......Page 414
8.2 The Short-Run Benefits of Hosting Mega-Events......Page 415
Two Types of Event Studies......Page 417
Problems with ex ante Economic Impact Studies......Page 418
Ex post Economic Impact Studies......Page 424
8.3 The Long-Run Benefits of Hosting Mega-Events......Page 430
General Infrastructure......Page 432
Advertising and Branding......Page 433
8.4 The Costs of Hosting Mega-Events......Page 436
8.5 Why Do Cities Continue to Bid?......Page 444
Non-Economic Rationales......Page 445
The Winner’s Curse......Page 446
The All-or-Nothing Demand Curve......Page 448
Biographical Sketch: Willard “Mitt” Romney......Page 450
Summary......Page 453
Discussion Questions......Page 454
Problems......Page 455
Part Four: The Labor Economics of Sports......Page 462
9 An Introduction to Labor Markets in Professional Sports......Page 463
Introduction......Page 464
Learning Objectives......Page 466
9.1 An Overview of Labor Supply and Labor Demand......Page 467
Labor Supply......Page 468
Labor Demand......Page 471
Labor Market Equilibrium......Page 474
Human Capital and Player Compensation......Page 479
9.2 Rank-Order Tournaments and Superstar Effects......Page 481
Tournaments and Effort......Page 482
Women and Tournaments......Page 485
The Economics of Superstars......Page 486
Tournaments, Superstars, and the Distribution of Income......Page 487
9.3 The Dangers of Tournaments and Superstar Effects......Page 490
Pay Disparities and Externalities: The Case of NASCAR......Page 491
The Danger of Trying Too Hard......Page 493
Performance-Enhancing Drugs......Page 494
Biographical Sketch: Scott Boras......Page 498
Summary......Page 502
Discussion Questions......Page 503
Problems......Page 504
Appendix 9A: Using Indifference Curves to Model the Labor–Leisure Choice......Page 506
9A.1 The Labor–Leisure Model When Hours Are Fixed......Page 515
10 Labor Market Imperfections......Page 524
Introduction......Page 525
Learning Objectives......Page 526
The Economics of Monopsony......Page 527
The Impact of Rival Leagues......Page 529
The Reserve Clause......Page 531
A Brief Introduction to the Economics of Unions......Page 533
The Unique Role of Player Associations......Page 538
Professional Associations......Page 539
The Advent of Free Agency......Page 542
Forms of Free Agency......Page 544
The Franchise Tag......Page 546
Salary Arbitration......Page 547
Measuring Monopsony Power......Page 549
Salary Caps......Page 550
Luxury or Competitive Balance Taxes......Page 555
10.4 Conflict and Compromise in Collective Bargaining......Page 557
Economic Theory and Labor Conflict......Page 558
Labor Conflict and Professional Sports......Page 561
Biographical Sketch: Marvin Miller......Page 563
Summary......Page 567
Discussion Questions......Page 568
Problems......Page 569
11 Discrimination......Page 576
Introduction......Page 577
Learning Objectives......Page 578
11.1 Evidence of Discrimination in Sports......Page 579
11.2 The Economic Theory of Discrimination......Page 581
Employer Discrimination......Page 583
Does Anyone Win with Employer Discrimination?......Page 588
Employee Discrimination......Page 594
Consumer Discrimination......Page 596
Positional Discrimination or Hiring Discrimination......Page 600
11.4 Gender Equity......Page 604
What Is a Woman?......Page 606
Biographical Sketch: Branch Rickey......Page 607
Summary......Page 612
Discussion Questions......Page 613
Problems......Page 614
Part Five: Sports in the Not-for-Profit Sector......Page 623
12 The Economics of Intercollegiate Sports......Page 624
Introduction......Page 625
Learning Objectives......Page 626
A Brief History of the NCAA......Page 627
The Structure of the NCAA......Page 630
12.2 The Costs and Benefits of Big-Time College Sports......Page 632
The Revenue from Intercollegiate Athletics......Page 633
The Cost of Intercollegiate Athletics......Page 640
Do Colleges Make a Profit from Athletics?......Page 644
The NCAA and Optimal Cartel Behavior......Page 645
Prisoner’s Dilemma: How Rational Actions Lead to Irrational Outcomes......Page 648
Academic Standards: A Key to Academic Integrity or Exercise of Monopoly Power?......Page 651
Antitrust and College Sports......Page 654
College Sports as Public Goods......Page 656
Admissions......Page 657
Donations and State Funding......Page 658
The Value of Athletes to Colleges......Page 660
The Value of College to Athletes......Page 661
Racial Discrimination......Page 670
Title IX and Gender Discrimination......Page 671
Biographical Sketch: Sonny Vaccaro......Page 675
Summary......Page 679
Discussion Questions......Page 681
Problems......Page 682
References......Page 693
Index......Page 748
