The Economics of Professional Team Sports

The Economics of Professional Team Sports

The Economics of Professional Team Sports

The Economics of Professional Team Sports

Synopsis

Do dominant teams kill public interest in professional sports? This text offers a survey of the economic literature on sporting leagues, the demand for professional team sports and the players' labour market.

Excerpt

As members of the public, there is no especial reason why economists should be interested in professional team sports. This book is thus not simply based on the interest of the authors who happen to be economists. On the contrary, this book is based on a belief that sports, and particularly, professional team sports, lend themselves to economic analysis. Consequently, some of the topical issues in professional team sports regarding, for example, the Bosman Ruling, the rise of the Premier League in association football (soccer), the effectiveness of salary caps in sport, we argue, can be understood from an economic perspective. There are two main reasons for this. The first comprises the nature of professional team sports as opposed to sports generally. The second is the world-wide growth in the commercialisation of sport.

Professional team sports comprise leagues of clubs who compete on the sporting field by arrangement through a fixture list and according to rules of the sport, which are set by leagues. Success in sporting terms is essentially defined in terms of the rank order of clubs in the league at the end of a season after points have been allocated for their performance in the set of fixtures. This, of course, is something that applies to all team sports—whether of an amateur or professional status. The production of team sports per se is not in itself something that naturally lends itself to economic analysis. Schoolchildren can produce team sports! What matters as well is that money changes hands in the production, distribution and consumption of the sport; money, of course, being the mechanism by which key sporting resources such as athletes are obtained by, and allocated between, the various teams to use in competition against their opponents on the field. Clearly professionalism in sport is an integral aspect of this development.

The purchase and sale of players as well as payment to them to perform, for example, require financing decisions. Thus, gate revenues need to be earned to pay players’ salaries. Clubs must co-ordinate match schedules since they cannot produce in isolation, and potential spectators must be informed where and when matches are to occur. In turn, spectators need accommodation and a means by which payment can be extracted from them while restricting access

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