Welcome to
The Economics of Sports!
Michael A. Leeds
106E Speakman Hall
215-204-8030
mleeds@temple.edu
Two Important Warnings
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This is an ECONOMICS course
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Need not “know sports”
Can discuss boxscores – after class
Text: The Economics of Sports
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Numerous Links on Blackboard
Will assign “current” readings
Technological Matters
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You should all be on Blackboard
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Vital for
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Communication/Information
Occasional readings
Grading
If not – see me ASAP
Syllabus on Blackboard – read it!
Keys to Success
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Read twice
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Skim before class
Read carefully afterward
Review notes weekly
See me if confused
Overview of Course
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Review of Basic Economics
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Industrial Organization
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Why/how do cities finance facilities?
Labor
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Do Teams/Leagues Maximize Profits?
Do/Should Antitrust Laws Apply?
Public Finance
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Will largely assume you know this – see me if you do not!
Why Do Athletes Make So Much?
Unions & Discrimination
The NCAA, the Olympics, and Amateur Sports
Review of Basic Economics
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Will cover just a few highlights:
The irrelevance of fixed costs
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The importance of capacity constraints
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Impact of A-Rod on Ranger ticket prices
Do Phillies charge too much?
Do Flyers charge too little?
Uncertainty and Risk
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Is losing a good strategy?
Why sell season tickets?
Maximizing Profit
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How do we define profit?
p= TR-TC
Where are profits maximized?
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MR=MC
What do Rangers sell?
What kind of cost is Alex Rodriguez’s
salary?
Phillies Pricing Strategy
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A monopoly
Demand slopes down
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$
MC
What is MR?
Why does it look like this?
MC a backward “L”
Does it pay to sell out?
Pe
Qe
MR
D
How About the Flyers?
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First Union Center holds
~17,000
Veterans Stadium held
~60,000
Should Flyers sell out?
What about prices?
P
MMC
C
Pe
D
Qe
MR
Uncertainty:
Can Losing be a Good thing?
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Are the Yankees bad for baseball?
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Are dynasties a bad idea?
How often should the home team win?
Why do teams sell season tickets?
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Why do fans buy them?
First of several reasons
Can Losing be Good?
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Cleveland Browns won all the time in AAFC
Fans of AAFC lost interest
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Attendance fell in MLB in 1950s
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Even Browns fans
Attendance fell
NY teams in every World Series (sort of)
Why go see Pittsburgh play Cincinnati?
Study looked at attendance in MLB
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Controlled for day, time, weather, quality of opponent
Attendance highest when home team won 60% of time
Season Tickets
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Transfers risk from team to fans
Why would fans assume risk?
What other reasons?
Do teams want to sell only season tix?