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DETAILED CONTENTS

List of Figures xiii

List of Tables xvi
Prefacexviii

Part One: Introduction and Review of Economic Concepts 1

1 Economics and Sports 3

Introduction 3
1.1 The Organization of the Text 4
Special Features and Additional Resources 5
1.2 Babe Ruth and Comparative Advantage 6
Opportunity Costs 6
Absolute and Comparative Advantage 6
Biographical Sketch: Babe Didrikson Zaharias 8
Summary, Discussion Questions, Problems 10

2 Review of the Economist’s Arsenal 13

Introduction 13
Learning Objectives 13
2.1 The Supply and Demand Model 13
Demand, Supply, and Equilibrium 14
Changes in Supply and Demand 16
2.2 Output and the Production Function 24
A Note on the Definition of Output 24
The Production Function 24
Price Ceilings and the Economics of Scalping 27
2.3 Market Structures: From Perfect Competition to Monopoly 28
Perfect Competition 28
Monopoly and Other Imperfectly Competitive Market Structures 30
The Impact of an Increase in Costs 33
2.4 The Rise of Professional Sports 34
Biographical Sketch: Mark Cuban 36
Summary, Discussion Questions, Problems 38

Appendix 2A: Utility Functions, Indifference Curves,

and Budget Constraints 40
2A.1 Constrained Maximization 40
2A.2 Using Indifference Curves and Budget Constraints:
The Rise of Soccer and Baseball 45

Appendix 2B: Regression Analysis in Brief 48

viii Detailed Contents

Part Two: The Industrial Organization of Sports 53

3 Sports Leagues and Franchises 55

Introduction 55
Learning Objectives 56
3.1 Open versus Closed Leagues 56
3.2 The Economics of Team Behavior 57
Maximizing Profits or Maximizing Wins? 57
3.3 Closed Leagues: Revenue and Cost in North American Sports 61
Revenue and Cost 61
Revenue Is Determined by Demand 61
A Detailed Look at Revenue 65
Costs 72
League Size, Opportunity Cost, and Team Movement 73
3.4 Open Leagues: Revenue and Cost in European Soccer 78
Profit Maximization in Soccer 80
3.5 Single-Entity Ownership 83
Biographical Sketch: Bill Veeck 84
Summary, Discussion Questions, Problems 85

4 Monopoly and Antitrust 91

Introduction 91
Learning Objectives 91
4.1 What’s Wrong with Monopoly? 91
Monopolists and Deadweight Loss 92
Do Monopolies Always Charge Monopoly Prices? 95
Promotion, Relegation, and Monopoly Power in
Open Leagues 95
4.2 Strategic Pricing 96
Variable and Dynamic Ticket Pricing 97
Bundling 99
Price Discrimination and Two-Part Pricing 100
4.3 What’s Right with Monopoly? 103
4.4 Strategic Barriers to Entry 104
4.5 Society’s Response to Monopoly: Antitrust Laws 106
An Important Anomaly: Baseball’s Antitrust Exemption 107
Leagues That Lack an Antitrust Exemption 110
Limited Exemptions: The NFL and Television 110
Biographical Sketch: Alvin “Pete” Rozelle 111
Summary, Discussion Questions, Problems 114

5 Competitive Balance 119

Introduction 119
Learning Objectives 119
5.1 Why Study Competitive Balance? 119
The Fans’ Perspective 120
The Owners’ Perspective 121
The Effect of Market Size 122
The Influence of Diminishing Returns 124
A Brief History of Competitive Balance 124
5.2 Measuring Competitive Balance 125
Within-Season Variation 125
Detailed Contents ix

Between-Season Variation 128

Illustrating Competitive Imbalance 131
5.3 Attempts to Alter Competitive Balance 132
The Invariance Principle 133
Revenue Sharing 135
Salary Caps and Luxury Taxes 136
The Reverse-Order Entry Draft 137
Schedule Adjustments in the NFL 139
Promotion and Relegation 140
Biographical Sketch: Bud Selig 140
Summary, Discussion Questions, Problems 142

Part Three: Public Finance and Sports 147

6 The Public Finance of Sports: Who Benefits and How? 149

Introduction 149
Learning Objectives 150
6.1 How Teams Benefit from New Facilities 150
Facilities, Attendance, and Profits 150
6.2 How Fans Benefit from a New Facility 152
The Size and Shape of Stadiums and Arenas 152
The Size and Shape of Basketball and Hockey Arenas 156
The Size and Shape of Football and Soccer Stadiums 157
Do New Facilities Create Better Teams? 158
Teams as Public Goods 159
6.3 How Cities Benefit from Teams and Facilities 160
Positive and Negative Externalities 161
Facilities, Spending, and Tax Revenue 164
Studies of Economic Impact 168
Interest Groups and Public Choice 168
Location, Location, Location 170
Biographical Sketch: Al Davis 172
Summary, Discussion Questions, Problems 174

7 The Public Finance of Sports: Who Pays and Why? 179

Introduction 179
Learning Objectives 179
7.1 How Cities Came to Fund Stadiums 180
Teams on the Move 180
The Four Eras of Stadium Construction 181
7.2 How Teams Exploit Monopoly Power 183
Leagues, Cities, and Market Power 183
7.3 Stadium Location and Costs 187
How Exchange Rates Affect Costs 187
Why Most Stadiums Are Not in the Center of Town 188
7.4 Stadium Costs and Financing 190
7.5 Paying for Stadiums 192
Who Pays a Sales Tax? 195
Incremental Financing 197
Taxes That Spread the Burden 197
The Benefits of Debt 198
x Detailed Contents

Biographical Sketch: George W. Bush 200

Summary, Discussion Questions, Problems 201

8 Mega-Events 205
Introduction 205
Learning Objectives 206
8.1 A Brief History of Mega-Events 206
The Original Mega-Event: The Ancient Olympics 207
The British Ethic and the Rise of the Modern Olympics 208
The Modern Olympic Games 208
FIFA and the World Cup 210
8.2 The Short-Run Benefits of Hosting Mega-Events 211
Two Types of Event Studies 212
Problems with ex ante Economic Impact Studies 213
Ex post Economic Impact Studies 216
8.3 The Long-Run Benefits of Hosting Mega-Events 219
General Infrastructure 221
Advertising and Branding 221
8.4 The Costs of Hosting Mega-Events 222
8.5 Why Do Cities Continue to Bid? 226
Distribution of Costs and Benefits 227
Non-Economic Rationales 227
The Winner’s Curse 228
The All-or-Nothing Demand Curve 229
Biographical Sketch: Willard “Mitt” Romney 230
Summary, Discussion Questions, Problems 232

Part Four: The Labor Economics of Sports 237

9 An Introduction to Labor Markets in Professional Sports 239

Introduction 239
Learning Objectives 240
9.1 An Overview of Labor Supply and Labor Demand 240
Labor Supply 241
Labor Demand 242
Labor Market Equilibrium 245
Human Capital and Player Compensation 247
9.2 Rank-Order Tournaments and Superstar Effects 248
Tournaments and Effort 248
Women and Tournaments 250
The Economics of Superstars 250
Tournaments, Superstars, and the Distribution of Income 251
9.3 The Dangers of Tournaments and Superstar Effects 253
Pay Disparities and Externalities: The Case of NASCAR 253
The Danger of Trying Too Hard 254
Performance-Enhancing Drugs 255
Biographical Sketch: Scott Boras 258
Summary, Discussion Questions, Problems 259

Appendix 9A: Using Indifference Curves to Model the

Labor–Leisure Choice 262
9A.1 The Labor–Leisure Model When Hours Are Fixed 266
Detailed Contents xi

10 Labor Market Imperfections 271

Introduction 271
Learning Objectives 271
10.1 The Monopsony Power of Sports Leagues 272
The Economics of Monopsony 272
The Impact of Rival Leagues 273
The Reserve Clause 274
10.2 Unions in Professional Sports 275
A Brief Introduction to the Economics of Unions 275
The Unique Role of Player Associations 278
Professional Associations 278
10.3 Free Agency 279
The Advent of Free Agency 280
Forms of Free Agency 281
The Franchise Tag 282
Salary Arbitration 282
Measuring Monopsony Power 284
Salary Caps 285
Luxury or Competitive Balance Taxes 288
10.4 Conflict and Compromise in Collective Bargaining 288
Economic Theory and Labor Conflict 289
Labor Conflict and Professional Sports 291
Biographical Sketch: Marvin Miller 292
Summary, Discussion Questions, Problems 294

11 Discrimination 299
Introduction 299
Learning Objectives 299
11.1 Evidence of Discrimination in Sports 299
11.2 The Economic Theory of Discrimination 301
11.3 Different Forms of Discrimination in
Professional Sports 301
Employer Discrimination 302
Does Anyone Win with Employer Discrimination? 304
Employee Discrimination 308
Consumer Discrimination 309
Positional Discrimination or Hiring Discrimination 311
11.4 Gender Equity 314
What Is a Woman? 315
Biographical Sketch: Branch Rickey 316
Summary, Discussion Questions, Problems 318

Part Five: Sports in the Not-for-Profit Sector 325

12 The Economics of Intercollegiate Sports 327

Introduction 327
Learning Objectives 327
12.1 The NCAA 328
A Brief History of the NCAA 328
The Structure of the NCAA 329
12.2 The Costs and Benefits of Big-Time College Sports 330
The Revenue from Intercollegiate Athletics 331
xii Detailed Contents

The Cost of Intercollegiate Athletics 335

Do Colleges Make a Profit from Athletics? 337
12.3 Monopoly Power in College Athletics 337
The NCAA and Optimal Cartel Behavior 338
Prisoner’s Dilemma: How Rational Actions Lead to
Irrational Outcomes 339
Academic Standards: A Key to Academic Integrity or
Exercise of Monopoly Power? 341
Antitrust and College Sports 343
12.4 Spillovers from Athletics to the University 344
College Sports as Public Goods 344
Admissions 344
Donations and State Funding 345
12.5 The College Sports Labor Market 346
The Value of Athletes to Colleges 346
The Value of College to Athletes 346
12.6 Discrimination and College Sports 351
Racial Discrimination 351
Title IX and Gender Discrimination 352
Biographical Sketch: Sonny Vaccaro 354
Summary, Discussion Questions, Problems 356

References365
Index393
FIGURES

2.1 The Demand for Baseball Cards 14

2.2 The Supply of Baseball Cards 15
2.3 Equilibrium in the Baseball Card Market 16
2.4 Changes in the Demand for and Supply of Baseball Cards 18
2.5 A Change in Supply Due to a Tax 20
2.6 Relatively Elastic versus Inelastic Supply 21
2.7 The Supply of Mickey Mantle and Hank Aaron Cards 22
2.8 The Relationship between Individual Demand and Market
Demand for Baseball Cards 23
2.9 Differences in Demand for Hank Aaron and Mickey Mantle
Cards Create Differences in Price 23
2.10 (a) The Total Product Curve, (b) the Marginal Product Curve,
and (c) the Marginal Cost Curve 25
2.11 The Effect of a Price Ceiling 27
2.12 Determination of Competitive Firm Demand 29
2.13 Marginal Revenue and Marginal Cost 29
2.14 Demand and Marginal Revenue from Ticket Sales 31
2.15 Rockies Attendance and Prices 32
2.16 (a) Blackhawks Attendance and Prices, (b) White Sox
Attendance and Prices 32
2.17 A Change in Demand Due to the Addition of a Marquee Player 33
2.18 The Marginal Utility and Marginal Cost of Leisure Time 34
2A.1 Consumer Preferences 41
2A.2 Indifference Curves 41
2A.3 Diminishing Marginal Rate of Substitution 42
2A.4 The Impossibility of Intersecting Indifference Curves 43
2A.5 Budget Constraint 43
2A.6 The Effect of Changes in Price on the Budget Constraint 44
2A.7 The Effect of an Increase in Income 44
2A.8 The Utility-Maximizing Bundle 45
2A.9 The Trade-Off between Goods and Leisure 46
2A.10 The Utility-Maximizing Combination of Goods and Leisure 46
2A.11 Subsistence Level of Income Allows No Leisure 46
2A.12 An Increase in Income Allows for Some Leisure 47
2B.1 Scatterplot of Attendance and Winning Percentage
in MLB, 2016 49
2B.2 The Regression Line 50
3.1a Total Revenue and Total Cost Curves 60
3.1b Profit-Maximizing and Win-Maximizing Behavior 61
3.2 Revenue, Cost, and City Size 64
3.3 Gate Revenue for the NBA, NFL, NHL, and MLB 66
3.4 Determining the Optimal Size of a Closed League 74
xiv Figures

3.5 The Effect of Entry on Demand 76

4.1 The Cost of a Monopoly to Society 92
4.2 Consumer Surplus for Individual Consumers 94
4.3 Variable Ticket Pricing 98
4.4 Segmented Market Price Discrimination 101
4.5 Representative Demand Curve for a Consumer and
Two-Part Pricing 103
4.6 Profit-Maximizing Output for a Natural Monopoly 104
5.1 The Benefit of Improving the Team Depends on Market Size 123
5.2 The Lorenz Curves for La Liga and the NHL, 2015–2016 132
5.3 The Market for Tickets to the Opening Ceremonies at the
2018 Olympics 133
6.1 Seating and Field Configuration for a “Cookie-Cutter” Stadium 153
6.2 Seating and Field Configuration for a Football-Only Stadium 154
6.3 Seating and Field Configuration for a Modern Baseball-Only
Stadium 155
6.4 A New Facility Might Encourage a Team to Win More Games 158
6.5 Negative Externalities Shift the Supply Curve Leftward 162
6.6 Positive Consumption Externalities Shift the Demand Curve
Outward 164
7.1 The Currency Market Sets the Exchange Rate for Canadian
and US Dollars 188
7.2 Competing Firms Move to the Center of Town 189
7.3 The Rent Gradient 189
7.4 The Impact of a $4/Night Tax on Hotel Stays 193
7.5 A Tax on Dialysis Causes Very Little Deadweight Loss 194
7.6 Tax Breaks Favor Municipal Bonds 199
8.1 Athens’ Olympic Athletic Center, the “Spiros Louis” Stadium,
Built in 2004 and Fallen into Disrepair Less Than Ten years Later 220
8.2 A Monopolist Can Extract Consumer Surplus by Setting Price
and Quantity 230
9.1 Average Player Salaries in the Major Leagues Since 1991 240
9.2 Individual and Market Labor Supply Curves for Workers
and Boxers 241
9.3 The Labor Demand Curve 243
9.4 The Equilibrium Wage and Quantity in the Labor Market 245
9.5 Wages Increase in the NBA Due to Increases in Demand 246
9.6 The Effect of Roster Limits 246
9.7 The Increasing Marginal Cost of Effort 249
9.8 Creating the Incentive for a High Level of Effort in a
Tournament 249
9.9 Minor Differences in Performance Can Lead to Large Shifts
in Demand 251
9.10 The Lorenz Curve for the ATP’s Top 50 Money Winners in 2016 252
9.11 Comparing the Rewards in the 2015 PGA Championship and
the 2015 Daytona 500 253
9.12 PED Use: A Prisoner’s Dilemma 256
9A.1 Indifference Curves 262
9A.2 The Income and Time Constraints 263
9A.3 Individual Utility-Maximizing Curves 264
9A.4 Changes in Labor Supply Due to Wage Changes 265
9A.5 The Individual Labor Supply Curve 266
9A.6 Increases in Wealth That Result in No Labor Supplied 267
Figures xv

9A.7 Labor Supply When Players Cannot Choose the Number

of Games 267
10.1 Employment and Wage Level for a Monopsonist 272
10.2 Effect of Unions on Wages 277
10.3 Bilateral Monopoly 277
10.4 Payrolls for Teams in the Four Major Leagues 287
10.5 The Contract Zone 289
10.6 (a) Contract Zone with Powerful Union, (b) Contract Zone
with Powerful Employer, (c) Mistaken Perceptions about
the Contract Zone 290
11.1 (a) Equilibrium Wages with Discrimination; (b) Equilibrium
Wages with No Discrimination 303
11.2 Discrimination with a Large Pool of Players 305
11.3 The Color Line Breaks Down as a Result of the Prisoner’s
Dilemma 307
12.1 Cartels and Marginal Cost 339
12.2 Optimal Division of Output by a Cartel 340
TABLES

1.1 The Gain and Loss from Moving Babe Ruth 7

2.1 Career Statistics of Hank Aaron and Mickey Mantle 16
2B.1 Multiple regression results 51
3.1 Performance Measures for the Phillies, Yankees, Indians,
and Royals, 2011–2016 58
3.2 Dallas Mavericks’ and Toronto Raptors’ winning percentage
and operating income, 2007–2012 59
3.3 Market Value, Revenue, Payroll, Gate Revenue, and Operating
Income, 2016 63
3.4 Current US Major League Television Broadcasting Deals 67
3.5 The Ten Most Lucrative US Naming Rights Deals (in $ Millions) 71
3.6 Ten Most Populous Metropolitan Statistical Areas and Their
Sports Teams, 2017 75
3.7 Top Ten European Soccer Club Values and Revenues, 2016  78
3.8 Organizational Structure of English Soccer 78
3.9 The Hierarchy of English Soccer Competition 79
3.10 Revenue Distributions for the EPL, the Bundesliga, La Liga,
Serie A, and Ligue1, 2014–2015 81
4.1 Changes in Attendance and Average Ticket Prices 2001–2016 96
5.1 New York Yankees’ Success and American League and National
League Attendance, 1950–1958 120
5.2 Winning Percentages for the National and American
Leagues, 1996 126
5.3 Dispersion of Winning Percentages, 2015–2016 127
5.4 Distribution of Championships, 2006–2007 to 2015–2016 130
6.1 Stadium Age and Luxury Seating for the Five Most Valuable
NFL Franchises 152
6.2 MLS Soccer-Specific Stadiums 157
6.3 How Logrolling Can Improve Social Well-Being 169
7.1 Stadium Construction in North American Sports Leagues,
1990–2017 190
7.2 Facilities Built between 2010 and 2017 191
8.1 Number of Bids for Summer and Winter Olympic Games 210
8.2 Direct Revenues from Olympic Games 212
8.3 Examples of Mega-Event ex ante Economic Impact Studies 217
8.4 Examples of Mega-Event ex post Economic Impact Studies 218
8.5 Costs of Hosting Mega-Events 225
9.1 The Five Highest-Paid Celebrities and Athletes in the Forbes
2016 “Celebrity 100” 252
10.1 Labor Unrest in Professional Sports Since 1980 288
11.1 Racial and Ethnic Breakdown of MLB Players in 2015 at
Selected Positions (%) 312
TABLES xvii

11.2 Percentage of Whites at Different Levels of Professional

Sports Leagues (%) 313
11.3 Performance and Rewards for Men’s and Women’s Soccer Teams 314
12.1 Market Value and Revenue for the 20 Most Valuable Football
Programs 331
12.2 Power 5 Conference Broadcast Revenue for Football 332
12.3 Selected Bowl Payouts in 2016–2017 333
12.4 Bowl Payouts by Conference 334
12.5 Mean Revenues, Expenditures, Subsidies, and Profits for
FBS Athletic Departments 337
12.6 College Football Broadcasts as a Prisoner’s Dilemma 341
12.7 Graduation Success Rates (GSRs) for Men’s 2015 Sweet
16 Teams 349
12.8 Graduation Success Rates (GSRs) for Women’s 2015 Sweet
16 Teams 350
12.9 The Probability of Signing with a Professional Team 351
PREFACE

As always seems to be the case, much has happened in the world of sports since
the publication of the previous edition. From the doping scandals that rocked
the most recent Olympics to the movement of not one but two NFL franchises to
Los Angeles and the $200 million NCAA settlement over the cost of attendance,
the economic landscape of professional and amateur sports is constantly chang-
ing. As a reflection of the dynamic nature of the field, the sixth edition of The
Economics of Sports includes several major changes since the fifth edition.

Perhaps the most notable change is the addition of Victor A. Matheson from the
College of the Holy Cross to the author team. Victor is an internationally rec-
ognized expert in the field of sports economics, most notably in the economic
impact of franchises and mega-events. A second major change for this edition
is a direct result of Victor’s influence on the book: the addition of a new chapter
devoted to mega-events, such as the World Cup and the Olympics. Separating
mega-events from the analysis of franchise location and the costs and benefits
of stadium funding allows us to analyze the public finance of sport more clearly
and completely.

In addition to adding a new author, we have a new publisher. We are very excited
to join Taylor & Francis. From our first meeting, we were impressed with their
ability to see our vision for a comprehensive approach to learning sports econom-
ics that includes not only the text but also a full complement of online resources,
including an author blog, mini-lectures from the authors, and enhanced lecture
support materials and instructor resources.

From its modest beginnings as something of a novelty, sports economics has

become a vibrant sub-discipline within the larger field of applied microeconom-
ics, fully recognized by the American Economic Association as a stand-alone
field with its own JEL classification code. Researchers tend to be drawn to the
field for two reasons: the wide variety of interesting economic questions one
can ask about the industry itself and the extraordinary availability of data that
allow economists to use sport to answer broader questions about economic
relationships.

As the research field has developed, the number of sports economics courses
has grown as well. Throughout this growth and change, sports economics con-
tinues to serve as both a mirror and a lens; reflecting our broader culture and
values, while bringing into focus such fundamental issues as fairness and the
legitimacy of free markets. With the passing of each season, new events unfold
in professional and amateur sports that call out for analysis. Finally, in the con-
text of this book, sports economics remains a vital and interesting area of study
for students of economics. Sports provides a seemingly endless set of examples
Preface xix

from every area of microeconomics, giving students the opportunity to study

public finance, industrial organization, and labor markets in a context that holds
student interest like no other.

Over the many years that we have worked on this project, we have enjoyed con-
tinuous help and support from students and colleagues at colleges and universi-
ties across the United States and around the world. Our colleagues continue to
offer encouragement, share classroom experiences, and suggest new and differ-
ent coverage as the industry evolves. For all this support and help, we are most
grateful. We hope that our own enthusiasm, as well as the enthusiasm others
have shared with us, is reflected in the text.

New to This Edition

The sixth edition contains several meaningful changes that are reflected
throughout the book. These changes enhance the features from previous edi-
tions that have made learning about sports economics meaningful as well as
enjoyable:

• We have added significant coverage of sports outside North America, most

notably, European soccer. While you will find discussion of leagues and
events outside North America throughout the text, this new material is most
evident in Chapters 3, 4, and 8.
• As noted above, Chapter 8 is new to the book. This chapter covers the
economics of mega-events such as the Olympics, the World Cup, and the
Super Bowl.
• Because we now devote significant attention to the Olympics in the chapter
on mega-events, Chapter 12 now deals solely with intercollegiate sports in
the US.
• The material on intercollegiate sports in Chapter 12 has been significantly
modified to reflect the different ways in which people teach this material.
Those who wish to treat intercollegiate sports separately from professional
sports may continue to use Chapter 12 as a stand-alone chapter. However,
the material in Chapter 12 now parallels the coverage of the preceding
chapters. This allows instructors who wish to use intercollegiate sports to
illustrate earlier concepts to “cut and paste” these sections into earlier
chapters.
• We have added significant discussion of empirical findings of economists
throughout the text.
• All tables and figures have been updated to reflect the most recently avail-
able information.
• We have substantially increased the volume and types of online support
materials to include an author blog, mini-lectures from the authors, periodic
updates of tables, and additional material that we were not able to include
in the text.

As with the previous editions, our goal is to keep the text comprehensive yet
accessible. The text is designed to serve as the foundation for undergraduate
courses in sports economics. The nature of the subject matter makes this a
unique challenge. Unlike area courses such as industrial organization or labor
economics, which are self-contained fields in the broader area of economics,
sports economics cuts across a wide array of economic disciplines. To deal with
this problem, we have split the text into five parts, three of which are devoted
to illustrating prominent areas of economics: industrial organization, public
xx Preface

finance, and labor economics. We hope that this division provides students
with an overview of much of economics and inspires them to pursue each indi-
vidual field.

Intended Audience
Balancing accessibility against an economist’s desire for theoretical rigor remains
a challenge. Economics of sports classes are taught at a variety of levels, rang-
ing from undergraduate courses with principles of economics as the only pre-
requisites, to the graduate level. This text is designed to provide the instructor
a great deal of flexibility. All the material in the main body of the text should be
accessible to students with a single semester of microeconomics principles. To
enrich courses taught at a higher level, we have included appendices containing
intermediate-level material at the end of several chapters. The online resources
provide additional opportunities to add depth and rigor.

To ensure that all students begin the course with a common background, we
provide a substantial review of principles-level material in Chapter 2. This mate-
rial can be covered explicitly in class or left to the students to read on their
own, as needed. For instructors interested in presenting econometric research,
Chapter 2 contains an appendix on the fundamentals of regression. In advanced
undergraduate- and graduate-level courses, the text can serve as a foundation
for readings from primary source materials.

Organization of the Text and Coverage Options

As stated previously, the text is divided into five parts. The first two chapters
introduce students to sports economics, review principles-level tools, and illus-
trate how economic principles apply to the sports industry. Chapters 3, 4, and
5 cover the industrial organization of the sports industry. Here, we discuss the
competitive landscape, the implications of monopoly power, profit maximiza-
tion, and competitive balance. Chapter 4 focuses on antitrust and regulation and
how they have impacted the formation, success, and, sometimes, the failure of
leagues. Chapter 5 explains why leagues worry about competitive balance, how
to measure competitive balance, and how leagues attempt to alter competitive
balance. Chapters 6, 7, and 8 focus on public finance. In Chapters 6 and 7, students
learn the benefits and costs of providing public support for stadiums and events,
why teams seem to have so much power over municipalities, and why munici-
palities fight so hard to keep the teams they have or court new ones. Chapter 8
presents the economics of mega-events, including why nations strive to win the
right to host them and why the benefits rarely outweigh the costs. Chapters 9
through 11 focus on labor issues in sports. Chapter 9 introduces the fundamen-
tal theories of labor markets, including human capital theory and tournament
theory. Chapter 10 covers monopoly unions and monopsony leagues, two labor
market imperfections that profoundly impact the functioning of most sports
labor markets. Chapter 11 discusses discrimination in sports. Finally, Chapter 12
focuses on the economics of intercollegiate sports. Because major college sports
is an industry in itself, this chapter serves as a capstone to the text, incorporating
the theories and concepts from many of the previous chapters.

Acknowledgments
In a project such as this, the list of people who contributed to its completion
extends far beyond those whose names appear on the cover. We owe personal
Preface xxi

and professional debts of sincere gratitude to a great many people. First, we

thank our editorial team at Routledge: Emily Kindleysides, Natalie Tomlinson,
and Laura Johnson. We also are grateful for the advice, encouragement, and
suggestions from the ever-growing community of sports economists who use
this book. Their input and support serve as a continuing source of motivation
and assistance. We would particularly like to thank all of those who read and
reviewed the manuscript as we prepared the sixth edition. Their suggestions for
improvements were excellent, and we tried our best to incorporate them wher-
ever possible. A special thanks to Eva Marikova Leeds for her diligent review of
the manuscript during the revision process. Finally, as always, we thank our fam-
ilies: Eva, Daniel, Melanie, Heather, Daniel, Thomas, Eric, Jolie, Lara, and Aly, all
of whom provided unwavering support.
Michael A. Leeds
Peter von Allmen
Victor A. Matheson
 Part One

INTRODUC TION AND REVIEW

OF ECONOMIC CONCEPTS

Chapter 1 Economics and Sports 3

Chapter 2 Review of the Economist’s Arsenal 13
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delicacy and had given that expression of questioning pathos to the
profound wide-open eyes.
It is not possible here to enumerate all her portraits, admirable as
many of them are. Her likenesses of Mdlle. Armandine, of a
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The enthusiastic words, full of light and colour, in which she
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Not to be overlooked are some of her landscapes and
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As characteristic and full of atmosphere is the study of a landscape
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Your eyes look full of the mists of autumn.”
 I have only picked out the most important of her works here, but
there are many more—bold designs, original little sketches, studies
of all kinds, with always a characteristic touch of expression.
There is that dare-devil sketch of a nude model sitting astride on a
chair looking at the skeleton, between the lips of which she has stuck
a pipe while waiting for the artist. The sardonic humour conveyed by
the contrast of this fair young woman in her fresh exuberance of form
facing the skeleton with a challenging attitude is an unparalleled
piece of audacity for a young girl to have painted. It is especially
good, too, as an arrangement of colour, and shows perhaps more
originality of invention than anything else this artist did. The Fisher
with Rod and Line is an interesting study of a brown Niçois with the
deep blue sea-water below. And last, not least, there is the
unfinished sketch for the picture of The Street by which she was so
completely engrossed only a few weeks before her death. The
background of houses, the bench with the people sitting back to
back in various attitudes expressive of weariness, destitution, or
despair—one with his head hidden by his arm leaning on the back of
the seat, another with crossed legs staring straight before him with
the look of one for whom there is no more private resting-place than
this—all these half-finished figures, even when only consisting of a
few scratches, are as true to every-day life as can be. But when all
the preliminary studies for this characteristic picture were done,
when the canvas had been placed and all was ready, the artist found
but one thing missing, and that, alas, was herself!
Though all the work accomplished by Marie Bashkirtseff is strictly
modern and realistic, the dream of her last years was to paint a great
religious picture. The subject was to be the two Maries mourning
beside the tomb of Christ. She imagined these women not as they
had hitherto been represented by the old masters, but as forlorn
outcasts, wayworn and weary, the “Louise Michels” of their time,
shunned of all pharisaic, respectable folk. They were to embody the
utmost depth of love and grief. Her descriptions of this picture that
was to be, as given in her journal, are highly suggestive and poetical.
The figures of these women—one standing, the other in a sitting
posture—would have shown in their pose and attitude different
phases of sorrow. The woman on the ground abandoning herself to
the violence of unrestrained mourning; the other as rigid as a statue,
as if in confirmation of Mrs. Browning’s line, “I tell you hopeless grief
is passionless.” Only a few inadequate sketches, however, are left of
this pictorial vision in which the crescent moon was described as
floating in an ensanguined sunset sky above a waste dark with the
coming night.
This word-picture never took shape in line and colour. But it
haunts you with a suggestion of lofty possibilities to be reached by
Marie Bashkirtseff as an artist had she only lived to carry out her
conceptions. And as the poet declares “songs unheard” to be
sweeter than any that we may ever hear, so it is with this unpainted
picture as compared to the painted ones; for, remarkable as her work
is, it is to a great extent remarkable as having been done by so
young a girl after only a few years of study. It is as a promise even
more than a performance that it claims our admiration.
As we already know, Marie Bashkirtseff belongs to the modern
French school of naturalists, more particularly to that branch of it of
which Bastien-Lepage was the most representative man. But her
work is not exclusively French. There is in it also a pronounced
Russian element. There is a marked race-likeness between her work
and that of other eminent Russian painters and novelists. Matthew
Arnold’s definition of the Russian nature in his article on Count Leo
Tolstoï might with very little alteration be applied to Marie
Bashkirtseff herself. “Russian nature,” he says, “as it shows itself in
the Russian novel, seems marked by an extreme sensitiveness, a
consciousness most quick and acute, both for what the man’s self is
experiencing and also for what others in contact with him are
thinking and feeling. He finds relief to his sensitiveness in letting his
perceptions have perfectly free play, and in recording their reports
with perfect fidelity. The sincereness with which the reports are given
has even something childlike and touching….”
This was ever Marie Bashkirtseff’s paramount aim, both as a
painter and writer, to make a perfectly faithful report of nature, of
human nature and what is external to it—to give a living picture of
gesture and manner as well as of thought and feeling—in short, to
produce human documents. Her mind and temperament, happily for
her, were in touch with the times. For the specially Russian alertness
to impressions and its genius for recording them has also become
the mark of the latest phase of European art. And Marie Bashkirtseff
took to it as if to the manner born (as indeed she was), rather than in
imitation of the modern French style, or of Bastien-Lepage in
particular.
In realizing this dominant quality, one wonders how it had fared
with this impressionable artist if, instead of being surrounded by
Parisian influences, she had lived in her native land, the South of
Russia. Supposing she, with her intense receptivity, had imbibed
those primitive aspects of life still to be found amid the remoteness
of the Steppe? Faithful to what lay around her, Marie has painted
dreary houses blurred by mist, waifs and strays of the Paris
boulevards, unlovely children in unlovely rags. The critic who blames
her preference for what is ugly and sordid does not do so without
cause. But when he asks why she does not paint the elegances by
which she is surrounded, she replies on her part, “Where, then, shall
I find any movement, any of that savage and primitive liberty, any
true expression?”
That natural movement and primitive liberty she could certainly
not expect in Paris night-life. But in the Ukraine she might have
found it without admixture of ugliness; she might have been inspired
by its coquettish villages gleaming white amid orchards; by the
robust and handsome peasantry still clad in their picturesque
national garb. What splendid models a realist like herself would have
had to paint from in those well-shaped peasant girls, whose
movements had never been hampered by anything more artificial in
the way of clothes than an embroidered chemise and a petticoat
reaching no further than the ankles. Here she would still have met
something of the “savage and primitive liberty” which her soul longed
for preserved in many an old Cossack custom and village rite. Still
more so in the aspects of primitive nature—in the boundless
expanse of the Steppe, “that green and golden ocean” as Gogol calls
it, “variegated by an infinite variety of iridescent tints.” What a virgin
soil for an artist in love with nature! What new types! What splendid
opportunities for the expression of beauty in form and colour!
Perhaps it is idle to speculate on such possibilities, but it seems as if
Marie Bashkirtseff might have produced work of a much higher order
had her astonishing gift for recording impressions found impressions
more pictorially attractive to record; had she lived in an atmosphere
bathed in an ampler light, amid a population still partial to the display
of brilliant colours in their dress. However that might have been will
never be known now.
There is a passage in her Journal where, speaking of the
sacrifices which art exacts, she says she has given up more for it
than Benvenuto Cellini when he burn his costly furniture; indeed, it
was her life itself which she gave. To quote her own striking words:
“Work is a fatiguing process, dreaded yet loved by fine and powerful
natures, who frequently succumb to it. For if the artist does not fling
himself into his work as unhesitatingly as Curtius did into the chasm
at his feet, or as the soldier leaps into the breach, and if when there
he does not toil with the energy of the miner beneath the earth, if, in
short, he stays to consider difficulties instead of overcoming them
like those lovers of fairyland who triumph over ever fresh difficulties
to win their princesses, his work will remain unfinished and die still-
born in the studio. The general public may not understand, but those
who are of us will find in these lines a stimulating lesson, a comfort,
and an encouragement.”
Marie Bashkirtseff’s work, unfortunately for us, was left unfinished,
but it has not died still-born in the studio. It is astonishingly alive.
More alive to-day than on the day it was painted, and resembles that
plant of basil which throve so luxuriantly, rooted in a dead man’s
brain. For the energies of her glowing vitality are now alive in her
pictures.
I subjoin here a complete list of Marie Bashkirtseff’s works:—

1. Portrait de Mdlle. Bashkirtseff.

2. Portrait de Mdlle. Dinah.
3. Portrait de Mme. P. B.
4. Jeune femme lisant.
5. Le Meeting.
 6. Fleurs.—Salon, 1884.
7. Fleurs.
8. Les trois Rires.
9. Tête (Étude).
10. Profil.
11. Nature morte.
12. Intérieur d’une chaumière à Nice.
13. Portrait du Général Pélikan.
14. Georgette.
15. Portrait de Mdlle. Bashkirtseff.
16. Esquisse.
17. Tête d’enfant.
18. Coco.
19. Étude des mains.
20. Esquisse.
21. Marine.
22. Monsieur et Madame (Étude).
23. L’Atelier, Julian.
24. Tête (Étude).
25. Tête d’enfant.
26. Le Soir.
27. Ophélie (Étude).
28. Paysan de Poltava (Étude).
29. Tête (Étude).
30. Grand-Père malade.
31. Copie.
32. Étude.
33. La Rue.
34. Avril.
35. Portrait du Prince Bojidar Karageorgevitch.
36. Le Parapluie.
37. Jean et Jacques.
38. Étude d’enfant.
39. Paysage d’Automne.
40. Portrait de Mdlle. Dinah.
41. Étude de femme.
42. Portrait de Jacques Rendouin.
43. Jeune Garçon (Étude).
44. Tête de femme.
45. Étude.
46. Coin de Rue.
47. Portrait de Mdlle. de Canrobert.
48. Une Vague.
49. Étude de mains.
50. Paysage à Sèvres.
51. Paysage à Sèvres.
52. Paysage.
53. Portrait de son frère.
54. Portrait de femme.
55. Étude de Main.
56. Vielle femme (Étude).
57. Tête (Étude).
58. Esquisse.
59. Mendiant (Étude).
60. Projet du tableau: “Les Saintes Femmes.”
61. Les Saintes Femmes (Esquisse)
62. Mendiant de Grenade.
63. Une Dame.
64. Parisienne.—Salon, 1883.
65. Tête de Forçat.
66. Irma (Étude).
67. Paysage de Nice.
68. Copie d’après Velasquez.
69. Chiffonière.
70. La Rue Brémontier.
71. Étude de mains.
72. Gommeux.
73. La Bohémienne.
74. Intérieur d’une boutique au Mont Dore.
75. Portrait de Mdlle. C.
76. Intérieur de bric-à-brac à Madrid.
77. Écluse à Asnières.
78. Étude d’enfant.
79. Étude (Modèle).
 80. Modèle.
81. Pêcheur à Nice.
82. Esquisse.
83. Au bord de la mer.
84. A la fenêtre.
85. Thérèse.
86. Wanka.
87. Paysage à Nice.
88. Étude.
89. Étude.
90. Marine.
91. Bébé.
92. Marine.
93. Étude pour le tableau: “Les Saintes Femmes.”
94. Convalescente.
95. Mendiant Italien.
96. Portrait.
97. Étude.
98. Portrait de Mme. Gredelue.
99. Portrait de Mme. Nachet.
100. Japonaise.
 Marie Bashkirtseff.
(After a Photograph.)

PASTELS.

101. Portrait de Louis de Canrobert.

102. Portrait de Mdlle. de Villevielle.
103. Portrait de Mdlle. Eral.
104. Portrait de Mdlle. Babanine.
105. Portrait de Mdlle. Armandine.
106. Portrait de Mdlle. Dinah.
 DESSINS.

107. Portrait.
108. Tête.
109. Soirée Intime.
110. Projet de tableau.
111. Coco, Chèvres.
112. Un Monsieur.
113. Une Dame.
114. Le Sommeil.
115. Les Cartes.
116. La Lecture.
117. La Cigarette.
118. Un Monsieur et une Dame.
119. Une Dame.
120. Une Dame.
121. Une Tête.
122. Mimi.
123. Marie.
124. Rosalie.
125. L’Orateur.
126. Ophélie.
127. Les Enfants.
128. Bojidar.
129. L’Orpheline.
130. Amélie.
131. Devant la Cheminée.
132. Madame B.
133. Une partie.
134. Salon d’essayage chez Doucet.
135. Carnaval de Nice.
136. Tête.
137. Tête.
138. Mademoiselle D.
139. Les Cartes.
140. Étude.
141. à 144. Études d’après le Modèle.
 SCULPTURE.

1. La Douleur de Nausicaa.
2. Femme appuyée.
3. Le Bras.
4. Petit Garçon.
5. Une Femme.

MATHILDE BLIND.
 The Gresham Press,

UNWIN BROTHERS,

CHILWORTH AND LONDON.

 Transcriber’s Note:
This book was written in a period when many words had not
become standardized in their spelling. Words may have multiple
spelling variations or inconsistent hyphenation in the text. These
have been left unchanged. Obsolete words, alternative spellings,
and misspelled words were not corrected.
One footnote was moved to the end of the chapter. Obvious
printing errors, such as backwards, upside down, or partially printed
letters and punctuation, were corrected. Final stops missing at the
end of sentences and abbreviations were added.
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