Revenue divergence and competitive balance in a divisional sports league

The North American model of resource allocation in professional sports leagues is adapted for English (association) football. The theoretical relationship between revenue and competitive balance is shown to be robust with respect to changes in teams’ objectives and labour market conditions. Empirical revenue functions are reported for 1926-1999. These indicate a shift in the composition of demand favouring big-city teams and an increase in the sensitivity of revenue to performance. An analysis of match results in the FA Cup competition suggests an increase in competitive imbalance between teams at different levels of the league’s divisional hierarchy, as the theory suggests

Factors Affecting Repeat Visitation and Flow-on Tourism as Sources of Event Strategy Sustainability

The sustainability of including medium sized one-time sport events in an event portfolio is examined with reference to the capacity of one such event to stimulate flow-on tourism (i.e. tourism activities beyond the event but around the time of the event), a desire to return to the destination, and positive word-of-mouth. Relationships among four motives (socialising, escape, learning about the destination, and learning about athletics), identification with the event (self and social identity), previous visitation to the host destination, information search, tourism activities, and likelihood of recommending and/or returning to the host destination were examined for four categories of attendees at the Pan American Junior Athletics Championships: primary purpose spectators, casual spectators, athletes, and non-athlete participants. All four categories of attendee engaged in some information search and participated in flow-on tourism, but to a low degree. Information search fostered flow-on tourism. Classic tourism activities (e.g. sightseeing, visiting museums) were motivated by a desire to learn about the destination, and encouraged future visitation and likelihood of recommendation. It is concluded that medium-sized one-time sport events can play a sustainable role in event portfolios, but their efficacy requires greater integration of destination experiences with the event. It is suggested that future work should examine the means to cultivate that integration, including creation of more effective alliances between destination marketers and event organizers

Sport in the city: measuring economic significance at the local level

In many cities throughout Europe, sport is increasingly being used as a tool for economic revitalisation. While there has been a growth in literature relating to the specific economic impacts of sports-led development, including professional sport facilities, teams, and sport events, limited research has been undertaken on the contribution of the whole sport sector to output and employment. In the United Kingdom (UK), studies have focused on evaluating sport-related economic activity at the national level, yet despite the increasing use of sport for local economic development little research has been undertaken at the city level. To address this situation, this article uses the National Income Accounting framework to measure the economic importance of sport in Sheffield, UK. It shows that the value-added in 1996/97 was 165.61m or 4.11% of Gross Domestic Product (GDP), approximately twice the amount predicted from current national estimates. It is argued that this can primarily be explained by previous studies under-estimating the economic importance of sport, largely due to methodological differences. It goes on to suggest that future research on the significance of sport should be undertaken at the local level to provide policymakers with information at the spatial level where regeneration programmes are being implemented.</p

Trends in Competitive Balance: Is There Evidence for Growing Imbalance in Professional Sport Leagues?

The concept of competitive balance is a central aspect in the literature of sports economics. A popular argumentation of sport functionaries is that dominance of one or a few teams could lead to unequal incomes for the clubs, restrictions in the clubs' ability to improve sporting performance and ultimately to a loss of attractiveness and loss of income for the league. Following this line of reasoning and alleging a negative trend in competitive sports functionaries often try to implement regulations in team sport leagues. The aim of this paper is to analyze for eight different leagues if there is such a trend existing. For an empirical test for trends in competitive balance of four European soccer leagues (ENG, ESP, GER, ITA) and four US Major Leagues (MLB, NBA, NFL, NHL), OLS regressions with a constant were carried out. For the entire observation period from 1969/70 to 2003/2004, of 48 trends ascertained, only 12 could be observed as being significantly positive (i.e. growing imbalance) with 19 significantly negative (i.e. growing balance). The remaining 17 trends were insignificantly different from zero

Are Restrictions of Competition by Sports Associations Horizontal or Vertical in Nature?

In this paper, we discuss from an economic perspective two alternative views of restrictions of competition by sports associations. The horizontal approach views such restrictions as an agreement among the participants of a sports league with the sports association merely representing an organization executing the horizontal cooperation. In contrast, the vertical approach views the sports association as being a dominant upstream firm enjoying a monopoly position on the market stage for competition organizing services, an important input for the actual product - the sports game. Taking the recent financial fair play (FFP) initiative by UEFA (the Union of European Football Associations) as an example, we demonstrate that the different views lead to different assessments of restrictive effects and, thus, matter for competition policy decisions. The economic story of the potential restrictive effect of FFP on players' and player agents' income may fit more plausibly to the horizontal approach, whereas the potentially anticompetitive foreclosure and deterrence effects of FFP may be economically more soundly reasoned by taking the vertical view