Sports Economics

A presentation on the 2012 peer-reviewed article by lecturer Liam Lenten, which appeared recently in the journal Applied Economics Letters, entitled: “The Underdog Should Always Fire the First Salvo against Brazil”, which tests the old myth in football that it is unwise for an opposition team to score early in any game against the almighty Brazilians. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

A guest lecture by John Didulica, currently the Football Operations Manager of Australian domestic league team Melbourne Heart, a former professional footballer, and a lawyer by academic training. He was also at one time the CEO of the player’s union for footballers in Australia, the AFPA. His talk is titled as: "The Business of Football and Footballers: From Maximum Wage to Petrodollars". Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture encompasses two related topics “Public Finance of Sports” and “Subsidies and Economic Impact Analysis”. Both parts of this lecture look at the role of government in the sports industry, and whether or not it should use public taxpayers’ funds to bid to bring the event to town, bring the team to town, or build the new stadium. Where they decide in favour of doing so (even when it would run at a substantial financial loss), we also explain the reasons behind such a decision. We use the FIFA World Cup and IOC Summer Olympic Games as case studies, and investigate both the pros and cons of public expenditure in sport. Numerous concepts from standard microeconomics are also invoked here, such as monopoly power, winner’s curse, direct and indirect costs and benefits, and multipliers. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture encompasses two related topics “Public Finance of Sports” and “Subsidies and Economic Impact Analysis”. Both parts of this lecture look at the role of government in the sports industry, and whether or not it should use public taxpayers’ funds to bid to bring the event to town, bring the team to town, or build the new stadium. Where they decide in favour of doing so (even when it would run at a substantial financial loss), we also explain the reasons behind such a decision. We use the FIFA World Cup and IOC Summer Olympic Games as case studies, and investigate both the pros and cons of public expenditure in sport. Numerous concepts from standard microeconomics are also invoked here, such as monopoly power, winner’s curse, direct and indirect costs and benefits, and multipliers. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

In this, the final part of three on 'Professional Team Sports Leagues in Australia', we take the modelling from earlier and use it to draw conclusions about what we would expect to find about competitive balance in the AFL over the history of the competition when we look at the figures. We also compare competitive balance in the AFL to the Major Leagues (MLB, NFL and NBA) on one hand, and other pro-sports leagues in Australia (NRL and NBL) on the other hand. The results are mixed - some of these comparisons tell us exactly what we would expect to see, while a few others tell us something contrary to expectations. Some additional figures on the general economic health of the AFL are also discussed. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

In this, the final part of three on 'Professional Team Sports Leagues in Australia', we take the modelling from earlier and use it to draw conclusions about what we would expect to find about competitive balance in the AFL over the history of the competition when we look at the figures. We also compare competitive balance in the AFL to the Major Leagues (MLB, NFL and NBA) on one hand, and other pro-sports leagues in Australia (NRL and NBL) on the other hand. The results are mixed - some of these comparisons tell us exactly what we would expect to see, while a few others tell us something contrary to expectations. Some additional figures on the general economic health of the AFL are also discussed. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture, the second of three on 'Professional Team Sports Leagues in Australia', follows on from the previous one insofar that the 'unrestricted' model under the assumption of win-max (AFL) [and compared to profit-max (Major Leagues)], is now 'restricted' with common past and present policies used to ensure competitive balance. These policies include, draft/zoning/reserve clause; salary cap (and minimum salary); gate-revenue sharing; and league-revenue sharing. As we see, the conclusions on the effectiveness (or otherwise) of these policies varies greatly depending on the scenario involved. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture, the second of three on 'Professional Team Sports Leagues in Australia', follows on from the previous one insofar that the 'unrestricted' model under the assumption of win-max (AFL) [and compared to profit-max (Major Leagues)], is now 'restricted' with common past and present policies used to ensure competitive balance. These policies include, draft/zoning/reserve clause; salary cap (and minimum salary); gate-revenue sharing; and league-revenue sharing. As we see, the conclusions on the effectiveness (or otherwise) of these policies varies greatly depending on the scenario involved. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

In this lecture, the first of three successive lectures on the 'Professional Team Sports Leagues in Australia', we set up a model that allows us to compare team behaviour in the Major Leagues (already considered as where the teams are modelled as profit-maximisers) with the Australian Football League (AFL), where the teams are instead modelled as win-maximisers who are willing to merely break-even. These modelling differences for the AFL are argued on the basis of very low average team profits, as well as the different history and ownership structure of the teams comparative to the Major Leagues. The ultimate aim is to find whether competitive balance policies, of both the revenue-sharing and labour market restriction types, are indeed effective (or ineffective) in maintaining competitive balance levels. To this end, today we describe many facets of the AFL as an (alternative) case study, then draw the basic unrestricted (free agency) equilibrium conditions under both team behaviour assumptions and compare those conditions. We will then proceed from this point to model various restrictions on the model next week. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Do you question why professional athletes are paid so much money? This lecture delves into labour markets of the professional sports industry, starting with a coverage of both demand and supply in the basic setting, and then considering how the status quo differs in situations that represent common market restrictions in sports, such as 'monopsony power' of firms (teams) leading onto common competitive balance policies, like salary caps and the draft. We also consider some nuances of certain individualistic sports, such as tennis and golf, in which 'rank-order' tournaments are common, and in which 'superstar' effects can arise. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Do you question why professional athletes are paid so much money? This lecture delves into labour markets of the professional sports industry, starting with a coverage of both demand and supply in the basic setting, and then considering how the status quo differs in situations that represent common market restrictions in sports, such as 'monopsony power' of firms (teams) leading onto common competitive balance policies, like salary caps and the draft. We also consider some nuances of certain individualistic sports, such as tennis and golf, in which 'rank-order' tournaments are common, and in which 'superstar' effects can arise. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Do you question why professional athletes are paid so much money? This lecture delves into labour markets of the professional sports industry, starting with a coverage of both demand and supply in the basic setting, and then considering how the status quo differs in situations that represent common market restrictions in sports, such as 'monopsony power' of firms (teams) leading onto common competitive balance policies, like salary caps and the draft. We also consider some nuances of certain individualistic sports, such as tennis and golf, in which 'rank-order' tournaments are common, and in which 'superstar' effects can arise. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Have you ever wondered why in some sports leagues, some teams appear destined never to win the title, yet other teams appear destined to win it quite frequently? This lecture outlines 'competitive balance' (CB) as being an unusual economic phenomenon specific to the sports industry - that we, as consumers of sport, actually like uncertainty! We define ways of measuring CB, as well as summarising certain policies that can influence the level of CB, while noting some of the possible distortive effects of such policy on the behaviour of certain teams and/or individuals. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Have you ever wondered why in some sports leagues, some teams appear destined never to win the title, yet other teams appear destined to win it quite frequently? This lecture outlines 'competitive balance' (CB) as being an unusual economic phenomenon specific to the sports industry - that we, as consumers of sport, actually like uncertainty! We define ways of measuring CB, as well as summarising certain policies that can influence the level of CB, while noting some of the possible distortive effects of such policy on the behaviour of certain teams and/or individuals. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture goes from the framework of examining team behaviour to the next level - instead viewing the 'league' as a firm and considering alternative models (to pure profit-maximisation) of firm behaviour that arguably better describe such behaviour of leagues (as well as other non-profit administrative organizations). We will see how a breakdown of revenues and costs and the league policies relating to both can alter the behaviour of teams in perverse ways, and we also provide a general description of the many and varied roles of leagues. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture goes from the framework of examining team behaviour to the next level - instead viewing the 'league' as a firm and considering alternative models (to pure profit-maximisation) of firm behaviour that arguably better describe such behaviour of leagues (as well as other non-profit administrative organizations). We will see how a breakdown of revenues and costs and the league policies relating to both can alter the behaviour of teams in perverse ways, and we also provide a general description of the many and varied roles of leagues. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture sets up a formal model of sports team behaviour (from Rod Fort), working from the common starting assumption of profit-maximisation (though noting certain caveats to this). We model one particular factor of production, labour (players' wages), and see how the teams' decisions on amount of labour affect not only revenues, costs and ultimately profits, but also team quality and how often they 'win'. These conclusions then make it possible to infer a few useful conclusions about the way the sports industry works, particularly in North America. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture sets up a formal model of sports team behaviour (from Rod Fort), working from the common starting assumption of profit-maximisation (though noting certain caveats to this). We model one particular factor of production, labour (players' wages), and see how the teams' decisions on amount of labour affect not only revenues, costs and ultimately profits, but also team quality and how often they 'win'. These conclusions then make it possible to infer a few useful conclusions about the way the sports industry works, particularly in North America. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture sets up a formal model of sports team behaviour (from Rod Fort), working from the common starting assumption of profit-maximisation (though noting certain caveats to this). We model one particular factor of production, labour (players' wages), and see how the teams' decisions on amount of labour affect not only revenues, costs and ultimately profits, but also team quality and how often they 'win'. These conclusions then make it possible to infer a few useful conclusions about the way the sports industry works, particularly in North America. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture centres on the role of the television broadcasters in sports and how this huge influx of funds, non-existent a couple of generations ago, and how its profound impact on the modern landscape of the modern sports industry. Various emphases are given to the market structure, the broadcast rights, advertising, and sponsorship. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture centres on the role of the television broadcasters in sports and how this huge influx of funds, non-existent a couple of generations ago, and how its profound impact on the modern landscape of the modern sports industry. Various emphases are given to the market structure, the broadcast rights, advertising, and sponsorship. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Microeconomic theory applied to issues such as market structure (monopoly versus perfect competition), demand effects on revenue, and price discrimination. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture continues and concludes the 'Microeconomic Principles and Sport' topic, continuing along the theme of explaining apparent anomalies that we tend to observe specifically in the sports industry. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

This lecture continues and concludes the 'Microeconomic Principles and Sport' topic, continuing along the theme of explaining apparent anomalies that we tend to observe specifically in the sports industry. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Dr Liam Lenten introduces microeconomic principles, and applies them to a sporting framework. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Dr Liam Lenten introduces sports economics and what the course will cover. Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

For the final video of the series, it is shown that there is an (indirect) explanation for governments using our (including sports antagonists) taxes to pay for building sports stadiums, bidding for major sporting events, and the like -- and that it can produce socially-optimal outcomes, but is this ever the case in reality? Some material in these videos is based on textbook examples from: Sports Economics (3rd edn.) Selection from Fort, Leeds and von Allmen for Ross Booth (Monash University) and Liam Lenten (La Trobe University). Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

We consider the link between the Russell Crowe character in the film 'A Beautiful Mind' (John Nash) and why media rights deals in sports have exploded in the last generation, helping to make earnings of top professional athletes many times that of the average wage. Some material in these videos is based on textbook examples from: Sports Economics (3rd edn.) Selection from Fort, Leeds and von Allmen for Ross Booth (Monash University) and Liam Lenten (La Trobe University). Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

In the fourth video in this series, we see how the economic concept that describes why international trade makes everybody better off, can also reveal why Jamaica chose to run the World's fastest sprinter, Usain Bolt, in the third-leg (rather than in the traditional anchor-leg) in their 4×100 metre relay final at the 2008 Beijing Olympic Games. Some material in these videos is based on textbook examples from: Sports Economics (3rd edn.) Selection from Fort, Leeds and von Allmen for Ross Booth (Monash University) and Liam Lenten (La Trobe University). Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

We use the tool of demand-elasticity to address the issue of why ticket pricing in professional sports tends to be lower than the level that economists would suggest to be optimal. A possible explanation to this apparent puzzle is offered -- in the form of 'complementary' revenue sources. Some material in these videos is based on textbook examples from: Sports Economics (3rd edn.) Selection from Fort, Leeds and von Allmen for Ross Booth (Monash University) and Liam Lenten (La Trobe University). Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

We use a simple microeconomic theoretical model to illustrate how it is possible to compare two professional sports teams, one of which sells-out every home game, and the other only half-fills their stadium -- yet the management of both teams are equally happy with the status quo. Some material in these videos is based on textbook examples from: Sports Economics (3rd edn.) Selection from Fort, Leeds and von Allmen for Ross Booth (Monash University) and Liam Lenten (La Trobe University). Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.

Following a brief introduction to this series, it is demonstrated how a quirky (and not well-thought out) rule in a football tournament could arguably justify an on-pitch strategy that would be deemed unacceptable under normal circumstances. This represents an important economic analogy to the importance of mitigating perverse incentives in public policy. Some material in these videos is based on textbook examples from: Sports Economics (3rd edn.) Selection from Fort, Leeds and von Allmen for Ross Booth (Monash University) and Liam Lenten (La Trobe University). Copyright 2012 La Trobe University, all rights reserved. Contact for permissions.