Team owners often argue that a new venue will lead to more wins for the team. This premise is examined here by modeling teams as multiproduct, profit-maximizing firms. Teams' competitive quality and playing venues are two inputs in the production of outputs (e.g., game tickets sold, media programming, etc.). The degree of input complementarity or substitutability between competitive quality and venue quality plays a critical role. The authors empirically test the effect of new venues on winning percentage for Major League Baseball (MLB), National Football League (NFL), National Basketball Association (NBA), and National Hockey League (NHL) teams, finding no significant effect except in the case of MLB teams.
Get full access to this article
View all access options for this article.
References
1.
Adelman, M. (1997). The early years of baseball, 1845-1860. In S. Pope (Ed.), The new American sport history: Recent approaches and perspectives. Urbana: University of Illinois Press.
2.
Alexander, D. L., Kern, W., & Neill, J. (2000). Valuing the consumption benefits from professional sports franchises and facilities. Journal of Urban Economics, 48(2), 321-337.
3.
Baade, R. (1996). Professional sports as catalysts for metropolitan economic development. Journal of Urban Affairs, 18(1), 1-17.
4.
Baade, R., & Dye, R. F. (1990). The impact of stadiums and professional sports on metropolitan change. Growth and Change, 21(2), 1-14.
5.
Baldo, A., Biesada, A., Hackney, H., Ozananian, M., & Taub, S. (1991, July). Secrets of the front office: What America's pro teams are worth. Financial World, 162(9), 28-43.
6.
El-Hodiri, M., & Quirk, J. (1971). An economic model of a professional sports league. Journal of Political Economy, 79(6), 1302-1319.
7.
Fort, R. D. (1999). Stadium votes, market power and politics. University of Toledo Law Review, 30(3), 419-441.
8.
Fort, R. D. (2000). Market power in pro sports. In W. S. Kern (Ed.), The economics of sports. Kalamazoo, MI: Upjohn Institute.
9.
Fort, R. (2003). Sports economics. Upper Saddle River, NJ: Prentice-Hall.
10.
Gaschnitz, K. M. (1997). Professional sports statistics: A North American team-by-team and major non-team events, year-by year reference, 1876 through 1996. Jefferson, NC: McFarland.
11.
Irani, D. (1997). Public subsidies to stadiums: Do the costs outweigh the benefits? Public Finance Review, 25(2), 238-253.
12.
Johnson, B., Groothuis, P., & Whitehead, J. (2001). The value of public goods generated by a major league sports team: The CVM approach. Journal of Sports Economics, 2(1), 6-21.
13.
Noll, R. G., & Zimbalist, A. (Eds.). (1997). Sports, jobs and taxes. Washington, DC: Brookings Institution.
14.
O'Roark, J. B. (2001). Capital structure and team performance in professional baseball. Journal of Sports Economics, 2(2), 168-180.
15.
Ozanian, M. (1996, May 20). How to buy a sports team. Financial World, 167, 56-67.
16.
Ozanian, M. (1997, June 17). Scoreboard valuation. Financial World, 168, 46-51.
17.
Ozanian, M., et al. (1995, May 9). Suite deals: Why new stadiums are shaking up the pecking order of sports franchises. Financial World, 166, 42-56.
18.
Ozanian, M., Kimelman, J., Reingold, J., Osterland, A., Starr, J., & Grabarek, B. (1994, May 10). The $11 billion pastime. Financial World, 165, 50-64.
19.
Ozanian, M., Taub, S., Fink, R., Kimelman, J., Reingold, J., & Starr, J. (1993, May 25). Foul ball. Financial World, 162, 18-25.
20.
Ozanian, M., Taub, S., Morris, K., & Fink, R. (1992, July 7). Big leagues, bad business. Financial World, 161, 34-51.
21.
Quirk, J., & Fort, R. (1992). Pay dirt: The business of professional team sports. Princeton, NJ: Princeton University Press.
22.
Quirk, J., & Fort, R. D. (1999). Hard ball: The abuse of power in pro team sports. Princeton, NJ: Princeton University Press.
23.
Rosentraub, M. (1999). Major league losers: The real cost of sports and who's paying for it (Rev. ed.). New York: Basic Books.
24.
Scully, G. (1974). Pay and performance in major league baseball. American Economic Review, 64(6), 915-930.
25.
Scully, G. (1989). The business of Major League Baseball. Chicago: University of Chicago Press.
26.
Scully, G. (1995). The market structure of sports. Chicago: University of Chicago Press.
27.
Siegfried, J., & Zimbalist, A. (2000). The economics of sports facilities and their communities. Journal of Economic Perspectives, 14(3), 95-114.
