Economic Aspects of Sports

1
Economic Aspects of Sports

• By
• Michael Ueltschey
• David Testo
• Ben McKinnon
• Gheric Berton

2
Major League Business

• Professional Sports In a League of their
  own.
  
• Monopolistic Qualities
• Similarities/Differences between Sports
• Salary caps

3
Competitive Balance in Sports

• How sports teams work
• Costs
• Revenue
• Difficulty in maintaining balance
• Big Cities vs. Little Cities
• Financially stronger teams will, on average, be
  the better teams and be in bigger cities

4
Impact of Stadiums

• Do sports stadiums have a positive effect on the
  economy of a city and its economic well-being?
  
• 3 levels of benefit involved in analysis
• Direct expenditures
• Indirect expenditures
• Various non-quantifiable benefits

5
Impact of Stadiums

• Benefits
• Revitalization through construction of a new
  stadium
  
• Tourism
• Creation of new jobs

6
Impact of Stadiums

• Costs associated with construction of a new
  stadium
  
• Creation of low wage jobs
• Opportunity Costs of foregone alternatives

7
A Closer Look at the Economic Impact of Sports at
UNC

• The Dean E. Smith Center
• Home basketball games generate around 493,000
  dollars with in the local economy. The two
  highest percentages were Restaurants and Tickets
  
• How was this information obtained?
• Surveys/ Questionnaires
• Resident or Non-resident
• Items surveyed

8
Dean Domes Effect on Local Economy

• Local Business Revenue
• Restaurants - 72,000
• Night Clubs - 30,000
• Retail Stores - 62,000
• Comparing Residents vs. Non-Residents
• Non-Residents spend more than Residents in
  virtually every category except tickets.

9
Chapel Hill Spending Basketball
10
The Final Effect

• The spending by local patrons
• The expenditures by visitors from outside the
  community
  
• The overall impact

11
Top Salaries in Top 4 Sports in the US
12
Alex Rodriguez

• Ticket Sales increased 7
• Facilitates down to concessions, parking, and
  merchandise
  
• Ticket prices went up 10 - from 20-22

13
The Big Difference

• The Information Age
• 1924 Babe Ruth - 52,000
• 2002 Huge Television Deals
• NBC and Turner Broadcasting

14
Supply/Demand Markets in our Capitalistic Economy

• Your abilities are worth whatever somebody is
  willing to pay
  
• 270 million Americans determine the salaries of
  these athletes
  
• Big Money Jealousies
• Athletes vs. Celebrities
• Oprah, Jerry Seinfeld, Tom Cruise

15
What Happens With Lower Salaries

• Teachers, Nurses, Policeman, and other
  professionals
  
• Ticket Prices
• Owners