THE ECONOMICS OF PRO SPORTS: WHY ARE THE YANKEES AND COWBOYS SO PROFITABLE?
INTRODUCTION
NAME: ______________________________________
This lesson investigates the value of sports franchises in the various professional sports leagues. Students will investigate the revenues and costs of
pro sports teams and determine which teams are the most valuable. Lastly, students will understand the specific rules of the game, which leagues
employ that influence franchise values.
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Discuss:
1.
2.
3.
4.
5.
Define the term: profit _______________________________________________________________________________________________
Are professional sports teams interested in profit? ______________________________________________________________________
Think of and list ways pro sports teams earn revenues: ___________________________________________________________________
What are many of the costs a typical sports team incurs? _________________________________________________________________
Choose one of the sports leagues and collect data to finish the worksheet. Depending on which league you choose, go to Forbes magazine (links below) to
research the answers. When finished, research & answer the questions below:
Forbes: Use this magazine to investigate the most and least valuable franchises in the National Football League, National
Basketball Association, National Hockey League, and Major League Baseball by clicking on "The Business of Sports" and
then choosing the league you're interested in on the right side:
Baseball: www.forbes.com/lists/2011/33/baseball-valuations-11_land.html
Football: www.forbes.com/lists/2011/30/nfl-valuations-11_land.html
Basketball: www.forbes.com/lists/2011/32/basketball-valuations-11_land.html
Hockey: http://www.forbes.com/sites/mikeozanian/2012/11/28/nhl-team-values-2012-maple-leafs-first-hockey-team-worth-1billion/
6.
List & discuss below what factors determine a team’s value.
7.
Does your league ‘share’ revenue? How?
8.
Research the internet and find the amount of money each league gets per year in TV & radio revenue. How significant a
factor is it?
9.
Research the internet and find the five highest paid athletes in that sport. Who are they and how much do they make per
season?
10. Conclusion: Professional sports league franchises are much like business firms. They have revenues and costs, which
influence their profits and overall value. It’s also true that the “rules of the game” also affect the incentives which the teams
face. Just like taxes or government subsidies might influence the behavior of business firms in certain industries, the rules
leagues make about the sharing of revenue influence the way they behave!