Economics 320: Economics of Sports
Fall 2014
Professor Mike Haupert
403V Wimberly Hall
785-6863
mhaupert@uwlax.edu
Office hours: MWF 2:30-3:30, Th 10-3, and by appointment
Required Text:
Sports Economics, Blair, Roger, New York: Cambridge University Press, 2012
Additional readings available in electronic format
Course Description: Economic analysis will be used to study the sports industry. We
will focus on various topics of the industry including the demand for sports, the economic
impact of sports franchises, labor markets, sports and the media, public financing of
stadiums, and college sports.
Course Requirements: You are expected to attend every class, complete all reading
assignments before we discuss the material they cover, complete all homework
assignments on time, and participate in class discussions. If you do all of this, the class
will be rewarding, enlightening, engaging, and intellectually stimulating. If you do none
or only part of this, your experience is likely to be tedious, boring and irrelevant.
Grading: Grades will be determined by a number of activities, and will be curved on the
basis of total semester points earned. The major assignments, which will be discussed at
length later in the semester, are listed below. Some are group projects that may be
completed with two to three people per group, with each person in the group receiving
the identical grade. The economic impact project will be presented to the class. A
separate grading rubric for the presentation will be handed out later in the semester.
Presentations should be five to seven minutes in length. There will be weekly quizzes
related to the material covered during the week. There will be guest speakers throughout
the semester. You will be expected to provide a critical analysis of their presentation in
the form of a one to two page essay. Two exams will be given, each covering
approximately half of the semester. All assignments will be accepted up to 24 hours after
the due date for half credit. Beyond that no credit will be given.
Academic Misconduct
Academic misconduct will not be tolerated. Any student engaging in academic
misconduct will be subject to disciplinary sanctions as described in the Wisconsin
Administrative Code, Chapter UWS 14.
The University’s position:
Academic misconduct is a violation of the UW-L student honor code
http://www.uwlax.edu/records/UCGat/Regulations/Disciplinary.htm. Academic
misconduct is unacceptable. All work handed in for this class must be the students’ own
individual work. Plagiarism or cheating in any form may result in failure of the
assignment or exam, failure of the course, and may include harsher sanctions. Refer to
the Eagle Eye at http://www.uwlax.edu/StudentLife/academic_misconduct.htm#14.03 for
a detailed definition of academic misconduct. For helpful information on how to avoid
plagiarism, go to http://www.uwlax.edu/murphylibrary/research/plagiarism.html. You
may also visit the Office of Student Life if you have questions about plagiarism or
cheating incidents. We encourage you to discuss any concerns regarding plagiarism or
cheating with any of us directly and well before any assignments are handed in. Failure to
understand what constitutes plagiarism or cheating is not a valid excuse for engaging in
academic misconduct.
Students with Disabilities
Any student with a documented disability (e.g., physical, sensory, psychological, learning
disability, AD/HD, or are a current or prior military service member with wounded
warrior status) who needs to arrange reasonable academic accommodations must contact
Disability Resource Services (165 Murphy Library, (608) 785-6900) at the beginning of
the semester. In addition to registering with Disability Resource Services, it is the
student’s responsibility to discuss their needs with the instructor in a timely manner.
Grade Disputes: If you disagree with a grade you receive on any exam or assignment,
you may appeal the grade, in writing (typed, double-spaced) within 24 hours of the time
that I initially return the item to the class. If you choose to appeal a grade, keep in mind
that the entire exam or assignment may be regraded, not just the disputed item.
Syllabus
Guest Speakers
Oct 3 David Surdam
Oct 10 Adam Hoffer
Oct 22 Chris Goodell
1. Introduction
a. Readings
i. Blair Ch 1
ii. Surdam, David, “What brings fans to the ball park? Evidence from
New York Yankees’ and Philadelphia Phillies’ financial records,”
MVEA Journal of Economics 35, no. 1 (2009), pp 35-47
b. Assignments
i. Discussion: Why is football so popular?
ii. One page summary of Surdam article
2. The Economics of the Leisure Industry
a. Readings
i. Haupert, Michael, “The Economic History of Entertainment and
Sports,” in Robert Whaples and Randy Parker, eds., The Routledge
Handbook of Modern Economic History, London: Taylor and
Francis, Ltd., 2012
b. Assignments
i. leisure survey
3. Economics and the Sports Industry
a. Readings
i. Neal, Walter, “The Peculiar Economics of Professional Sports: A
Contribution to the Theory of the Firm in Sporting Competition and
in Market Competition, Quarterly Journal of Economics, Feb. 1964
4. Estimating the Demand for Professional Sports
a. Readings
5.
6.
7.
8.
i. Berri, David J., Martin B. Schmidt and Stacey L. Brook, “Stars at
the Gate: The Impact of Star power on NBA Gate Revenues,”
Journal of Sports Economics 5:1 (February 2004), pp33-50
ii. Knowles, Glenn, Keith Sherony, and Michael Haupert, "The
Demand for Major League Baseball: A Test of the Uncertainty of
Outcome Hypothesis," The American Economist, 36, no. 2: 1992
iii. Lemke, Robert J., Matthew Leonard, and Kelebogile Tlhokwane,
“Estimating Attendance at Major League Baseball Games of the
2007 Season,” Journal of Sports Economics 11, no. 3, (June 2010),
pp 316-48
b. Assignments
i. The Babe Ruth Project
ii. Discussion: What ails the Bucks?
Professional Sports Franchise Profit Maximization
a. Readings
i. Blair Ch 2 and 5
ii. Alexander, Donald, “Major League Baseball: Monopoly Pricing
and Profit-Maximizing Behavior,” Journal of Sports Economics 2,
no 4 (2001), pp 341-55
iii. Haupert, Michael, and Kenneth Winter, “Pay Ball: Estimating the
Profitability of the New York Yankees, 1915-1937,” Essays in
Economic and Business History XXI, (Spring 2003), pp 89-102
b. Assignments
i. Sports franchise simulation
The Organization of Sports Leagues
a. Readings
i. Blair Ch 3
ii. Cain, Louis P. and David D. Haddock, “Similar Economic
Histories, Different Industrial Structures: Transatlantic Contrasts in
the Evolution of Professional Sports Leagues,” Journal of
Economic History 65, no 4 (Dec 2005), 1116-1147
Sports and the Media
a. Readings
i. Blair Ch 7
ii. Tainsky, Scott, “Television Broadcast Demand for National
Football League Contests,” Journal of Sports Economics 11, no. 6,
(December 2010), pp 629-40
The Competitive Balance Issue
a. Readings
i. Blair Ch 4
ii. Bowman, R. Alan, James Lambrinos, and Thomas Ashman,
“Competitive Balance in the Eyes of the Sports Fan: Prospective
Measures Using Point Spreads in the NFL and NBA,” Journals of
Sports Economics 14, no. 5 (October 2013), pp 498-520
iii. Fort, Rodney, and Joel Maxcy, “Competitive Balance in Sports
Leagues: An Introduction,” Journal of Sports Economics 4, no. 2
(May 2003), pp 154-60
b. Assignments
i. Competitive balance
9. Labor issues I: The Value of an Athlete
a. Readings
i. Blair Ch 17
ii. Rottenberg, Simon, “The Baseball Players’ Labor Market,” Journal
of Political Economy, June, 1956
iii. Scully, Gerald, “Pay and Performance in Major League Baseball,”
American Economic Review, December, 1974
10. Labor issues II: What do they pay these guys for anyway?
a. Readings
i. Blair Ch 22-23
b. Assignments
i. Player wage study poster presentation
11. Labor issues III: Discrimination in Sports Labor Markets
a. Readings
i. Blair Ch 25
ii. Kahn, Lawrence, “Race, Performance, Pay, and Retention Among
National Basketball Association Head Coaches,” Journal of Sports
Economics 7:2 (May 2006), pp 119-49
iii. Lanning, Jonathan, “Productivity, Discrimination, and Lost Profits
During Baseball’s Integration,” Journal of Economic History 70,
no. 4, (December 2010), pp 964-88
12. The Economic Impact of Sports
a. Readings
i. Blair Ch 14-15
ii. Coates, Dennis, and Brad Humphreys, “Do Economists Reach a
Conclusion on Subsidies for Sports Franchises, Stadiums, and
mega-Events?” Econ Journal Watch 5, no. 3 (September 2008), pp
294-315
iii. Siegfried, John, and Andrew Zimbalist, “A Note on the Local
Economic Impact of Sports Expenditures,” Journal of Sports
Economics 3, no. 4 (November 2002), pp 361-66
b. Assignments
i. Economic impact
13. Unpaid Professionals: College Athletics
a. Readings
i. Blair Ch 18 and 24
ii. Kahn, Lawrence M., “Markets: Cartel Behavior and Amateurism
in College Sports,” Journal of Economic Perspectives 21, no. 1
(winter 2007), pp 209-26
iii. Pope, Devin G., and Jaren C. Pope, “The Impact of College Sports
Success on the Quantity and Quality of Student Applications,”
Southern Economic Journal 75, no. 3 (Jan 2009), pp 750-80
b. Assignments
i. Discussion: Whither the amateur athlete?
14. Stadiums and Public Finance
a. Readings
i. Blair Ch 16
ii. Long, Judith Grant, “Full Count: The Real Cost of Public Funding
for Major League Sports Facilities,” Journal of Sports Economics,
May 2005; vol. 6: pp. 119-143
iii. Poitras, Marc and Lawrence Hadley, “Do New Major League
Ballparks Pay for Themselves?” The Journal of Business 79, no 5
(2006), pp 2275-2299
iv. Sanderson, Allen R. 2000. "In Defense of New Sports Stadiums,
Ballparks and Arenas." Marquette Sports Law Journal 10
(Spring):173-192
b. Assignments
i. Franchise movement
15. Cheating
a. Readings
i. Blair Ch 11 and 13
ii. Mohan, Vijay, and Bharat Hazari, “Cheating in Contests: Antidoping Regulatory Problems in Sport,” Journal of Sports
Economics, forthcoming fall 2014
b. Assignments
i. Discussion: Does it really matter if athletes use PEDs?
Learning Objectives
1. Identify the unique characteristics of the leisure market
2. Estimate the demand for professional sports
3. Explain profit maximizing behavior in the sports industry
4. Model the role of competitive balance in the profitability of sports leagues
5. Analyze the relationship between media and sports
6. Use economic models to critique sports labor markets
7. Apply the concept of cartel theory to sports leagues
8. Justify the role of the public sector in the provision of sports
Brief overview of assignments
Discussions: A one page summary of your thoughts on the topic. These will be collected
after the discussion and credit will be given for your participation in the discussion, not
your written essay. The written essay is for your use during the discussion, to remind you
of what convincing arguments you thought of the day before. Do not write an essay if
you are not going to be present for the discussion. Essays will not be accepted at any
time other than immediately after the discussion.
Leisure survey: You will be conducting a survey of a small sample of non-UWL folks
on their use and perception of leisure. The questions will be distributed to you and you
merely need to ask them and record answers. Very simple. I will then add your
contribution to the growing database and we will look at leisure over the past fifteen
years.
Babe Ruth project: In this assignment your group will use historical data with modern
economic theory to make a recommendation on whether or not the Yankees should agree
to the purchase of Babe Ruth from the Red Sox along with the financial rationale for your
decision.
Sports franchise simulation: In this simulation your group will purchase a sports
franchise, make financial decisions regarding its operation, and then pit your decision
making abilities against those of your classmates to see how well your franchise
performs.
Competitive balance: Choose a sport other than baseball and analyze competitiveness in
that sport. How is it measured, how and why has it changed over time, and how might it
be improved.
Player wage study: The assignment will consist of using primary contract data, creating
a spreadsheet, merging it with performance data and then analyzing the relationship
between pay and performance. The results will be presented as a poster session at the
end of the semester as part of the Economics Department Celebration of Critical
Thinking. You will need to be present for the poster session, which will last
approximately three hours. Attendance for the duration of the event will constitute 50%
of the grade. Details will be provided at least ten weeks in advance in order to allow you
to adjust your schedule.
Economic impact analysis: Your assignment is to estimate the economic impact of a
specified athletic event on a target city. You will estimate the cost of putting on the event
and the expected revenues as well as defining the geographic area in which you will be
measuring costs and benefits. The economic impact project will be presented to the class.
A separate grading rubric for the presentation will be handed out later in the semester.
Presentations should be five to seven minutes in length.