Introduction to A Modern Guide to Sports Economics

Abstract

Sports economics is now a well-established specialization in economics, with great interest from both academics and practitioners. This book presents modern research in sports economics, and is visible proof of that interest and relevance. The field has dedicated journals such as the Journal of Sports Economics and the International Journal of Sport Finance. Other journals have devoted special issues to sports economics; see for example the Scottish Journal of Political Economy (2015), the Journal of Economic Psychology (2019, volume 75B) and De Economist (2021, issue 1). Sport is considered to be an ideal testing ground for economic hypotheses (the objective of the participant is usually easily established - winning, and feedback from actions is rapid), and it is also interesting and important in its own right. Fan demand, as measured by time spent watching sports in a stadium or on television, is enormous. Understanding the production process underlying a sports contest is an important part of sport consumption. Fans derive utility from discussing the quality of the teams, recent transfers, refereeing errors, individual performance, competitiveness of the contest, etc. with each other. Different aspects of these items are discussed in this book. The first main chapter, by Fort, elaborates on the development of (European) sports economics. He examines this from an American perspective, but he also looks at the future and stresses the relevance of sports analytics and media policy. The next five chapters relate to competitive balance and attendance. Reade takes a long-term perspective when he analyses attendance patterns at professional football matches in England and Wales from 1888 onwards. Attendance is persistent, which provides support for the hypothesis that fan loyalty is an important determinant. Two chapters by Andreff and Scelles focus on outcome uncertainty fluctuation and match demand. In the first they propose measuring competitive intensity as opposed to competitive balance. In their second chapter they discuss the impact of competitive intensity on fan demand. These two chapters focus on professional football. Kesenne presents an overview of important issues regarding competitive balance in any team sports league. Causes and instruments to change competitive balance are discussed. Nalbantis and Pawlowski take a very detailed look at attendance. They moderate the relation between outcome uncertainty and attendance by pricing category and seating quality at football matches. Demand for expensive tickets is primarily driven by fans preferring the ex ante favorite to win, while fans buying inexpensive tickets seem to prefer a home win. Finally, Paul follows up on the importance of sports analytics as identified by Fort. He shows that new shot attempt metrics developed in the National Hockey League have significant positive effects on attendance.