1. Economics of Sports
Unit 2  Economics

2. Table 2-4 Teams, Population, and Per Capita Income, Major League Areas
City
Number of Teams
Number of teams
Population
Income 2007
New York—Northern New Jersey—Long Island
MLB (2), NBA, NFL (2), NHL (3) 8
9,441,316
$73,088
Los Angeles—Long Beach—Santa Ana
MLB (2), NBA (2), NHL (2) 6
6,386,821
$63,569
Chicago—Naperville—Joliet
MLB (2), NBA, NFL, NHL 5
4,907,604
$70,715
Dallas—Fort Worth—Arlington
MLB, NBA, NFL, NHL 4
3,146,612
$63,719
Philadelphia—Camden—Wilmington
2,967,657
$73,536
Washington—Arlington—Alexandria
2,960,336
$97,095
Houston—Sugar Land—Baytown
MLB, NBA, NFL 3
2,775,580
$60,188
Atlanta—Sandy Springs—Marietta
2,721,722
$67,568
Miami—Fort Lauderdale—Pompano Beach
2,680,893
$55,749
Boston—Cambridge—Quincy
2,438,340
$83,103
Detroit—Warren—Livonia
2,233,015
$66,930
San Francisco—Oakland—Fremont
MLB (2), NBA, NFL (2)
2,221,909
$86,560
Phoenix—Mesa—Scottsdale
1,988,176
$62,143
Minneapolis—St. Paul—Bloomington
1,805,206
$79,158
Seattle—Tacoma—Bellevue
MLB, NFL 2
1,782,632
$75,625
San Diego—Carlsbad—San Marcos
1,510,524
$71,139
St. Louis
MLB, NFL, NHL
1,455,449
$64,111
Tampa—St. Petersburg—Clearwater
Baltimore—Towson
MLB, NBA
1,403,709
$77,501
Denver—Aurora
1,334,413
$71,531
Pittsburgh
1,180,651
$59,095
Portland—Vancouver—Beaverton
NBA 1
1,143,930
$66,077
Cincinnati—Middletown
1,099,419
$65,396
Cleveland—Elyria—Mentor
1,082,972
$61,193
Kansas City
1,052,220
$66,504
Sacramento—Arden-Arcade—Roseville
1,042,211
$68,928
Orlando—Kissimmee
1,035,320
$57,186
San Antonio
933,596
$54,141
San Jose—Sunnyvale—Santa Clara
NHL
920,884
95,980
Columbus
920,190
$64,886
Indianapolis—Carmel
NBA, NFL
882,857
$64,343
Charlotte—Gastonia—Concord
859,243
$62,594
Milwaukee—Waukesha—W. Aliss
808,367
$66,707
Jacksonville
NFL
661,231
$61,488
Memphis, Nashville
NBA, NFL, NHL
636,871
$54,479
Oklahoma City
600,597
$55,168
Salt Lake City
569,422
$63,851
Buffalo—Niagara Falls
566,372
$59,763
New Orleans—Metairie—Kenner
542,239
$56,375
Raleigh—Cary
541,873
$72,792
Green Bay
165,426
$61,644
Min
Max
Ave
2.7
1,825,933
$67,457
Median
2.0

3. Table 2-5 Correlations between NBA Attendance and Prices, 2000-2007
Team
Correlation (+)
Correlation (-)
INDIANA
0.81
HOUSTON
-0.85
NEW YORK
0.79
GOLDEN STATE
-0.78
DALLAS
0.77
NEW ORLEANS
-0.64
SACRAMENTO
0.73
ATLANTA
-0.57
PHILADELPHIA
0.72
NEW JERSEY
-0.51
PORTLAND
MIAMI
-0.39
PHOENIX
0.57
CHARLOTTE
-0.38
MINNESOTA
0.56
DETROIT
-0.37
MEMPHIS
0.47
MILWAUKEE
-0.36
TORONTO
0.46
DENVER
-0.34
CLEVELAND
SEATTLE
-0.33
L.A. LAKERS
0.30
BOSTON
-0.30
CHICAGO
0.28
ORLANDO
-0.26
SAN ANTONIO
0.25
WASHINGTON
-0.17
UTAH
0.21
L.A. CLIPPERS
0.02

4. Supply (more supplied at higher prices, i.e. luxury suites)
Demand (more demanded at lower costs, i.e. sports programming on TV)
The irrelevance of fixed costs
Player’s salary

5. Maximizing Profit Recall: Profit = TR-TC
Goal: Maximize profits?
Key question: What do the NY Jets sell?
Tickets!
Mark Sanchez’s salary is a fixed cost to the Jets
It is unchanged no matter how many tickets they sell
Signing Sanchez does not affect Marginal Costs

6. Why Do Teams Raise Prices?
MC does not change – but Marginal Revenue might
More fans want to see the Jets play
Demand – and MR – increase
The Jets charge more because they can – not because they must

7. Uncertainty Are the Yankees bad for baseball?
Are dynasties a bad idea?
How often should the home team win?
Why do teams sell season tickets?
Why do fans buy them?

8. Can Losing be Good? Cleveland Browns dominated the old AAFC
Fans lost interest
Even Browns attendance fell
Attendance fell in MLB in 1950s
Dodgers, Giants, or Yankees were in every World Series
Why bother seeing Pittsburgh play Cincinnati?
A study has looked at attendance in MLB
Controlled for day, time, weather, quality of opponent
Attendance highest when home team won 60% of time

9. Season Tickets Pay for a December game in March
Transfers risk from team to fans
Why would fans assume risk?
Often pay lower price
Get preferred status for post-season