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Playbooks and Checkbooks

Playbooks and Checkbooks: An Introduction to the Economics of Modern Sports

Stefan Szymanski
Copyright Date: 2009
Edition: STU - Student edition
Pages: 248
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  • Book Info
    Playbooks and Checkbooks
    Book Description:

    What economic rules govern sports? How does the sports business differ from other businesses?Playbooks and Checkbookstakes a fascinating step-by-step look at the fundamental economic relationships shaping modern sports. Focusing on the ways that the sports business does and does not overlap with economics, the book uncovers the core paradox at the heart of the sports industry. Unlike other businesses, the sports industry would not survive if competitors obliterated each other to extinction, financially or otherwise--without rivals there is nothing to sell.Playbooks and Checkbooksexamines how this unique economic truth plays out in the sports world, both on and off the field.

    Noted economist Stefan Szymanski explains how modern sporting contests have evolved; how sports competitions are organized; and how economics has guided antitrust, monopoly, and cartel issues in the sporting world. Szymanski considers the motivation provided by prize money, uncovers discrepancies in players' salaries, and shows why the incentive structure for professional athletes encourages them to cheat through performance-enhancing drugs and match fixing. He also explores how changes in media broadcasting allow owners and athletes to play to a global audience, and why governments continue to publicly fund sporting events such as the Olympics, despite almost certain financial loss.

    Using economic tools to reveal the complex arrangements of an industry,Playbooks and Checkbooksilluminates the world of sports through economics, and the world of economics through sports.

    eISBN: 978-1-4008-3000-8
    Subjects: Economics, Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-xxii)
    (pp. 1-26)

    On February 27, 1874, a game of baseball was played at Lord’s Cricket Ground in London, between teams led by two men who shaped the destiny of sports across the globe. On one side was a young Al Spalding, founder of the sporting goods company and a man who helped create modern professional baseball. On the other was Charles Alcock, secretary of the prestigious Surrey Cricket Club and of the recently formed Football Association.

    Spalding had been sent to London by his team manager to see whether it would be possible to organize a tour of Great Britain to exhibit...

    (pp. 27-58)

    Freakonomics, the best-seller that uses economics to explain behavior most people wouldn’t think has anything to do with economics, called Japanese sumo wrestling corrupt. “Cheating to lose is sport’s premier sin,” declared authors Steven Levitt and Stephen Dubner. They showed that bouts that are more critical to one wrestler than to his opponent tend to be won by the one who needs it most. In the next bout, the winner then “re-pays” his opponent, who wins the follow-up match far more often than he would under normal circumstances.

    But is that cheating? Whether you think so or not depends on...

    (pp. 59-91)

    In December 1990 the Major League Baseball team owners agreed to pay $280 million in damages to the Players Association in compensation for colluding to undermine free agency. Between 1985 and 1988 the owners had apparently followed a tacit rule according to which no one would bid for a free agent until his prior club indicated that it was not interested in bidding. In 1985 only one out of twenty-nine free agents received an offer from another clubbeforehis former club had indicated that it would not bid. In the investigations that followed, no direct proof was ever offered...

    (pp. 92-124)

    Jose Canseco is proud to claim that he introduced the systematic use of anabolic steroids into baseball. The first player ever to hit forty home runs and steal forty bases in a season, he would probably have been a cinch for the Hall of Fame, absent some injuries and his boasts about steroids: “I was known as the godfather of steroids in baseball. I introduced steroids into the big leagues back in 1985, and taught other players how to use steroids and growth hormone.” But Canseco is not repentant. First, he believes “every steroid out there can be used safely...

    (pp. 125-154)

    Broadcasting has transformed the nature of spectator sport. Just as recording technologies have enhanced the earning power of pop stars, so broadcasting has enabled the top athletes to reach a global audience. This has been the prime motivator behind the explosion of salaries at the top end of the talent distribution, but has also narrowed the demand for the less talented. In the 1930s minor league baseball in the United States and second-division soccer in England drew huge audiences. Once TV made the top teams available for all, demand for the second tier of competition fell.

    Originally the organizers of...

    (pp. 155-179)

    On June 19, 1999, the citizens of Sion, Switzerland, assembled in the town square for a party. Together they watched on a huge TV screen the proceedings of the 109th plenary session of the International Olympic Committee in Seoul, South Korea. At stake was the awarding of the 2006 Winter Games. Six months previously the bids of each of the competing cities had been evaluated by an IOC technical committee, and the evaluation report had identified Sion as the most suitable site. Following the scandal surrounding the awarding of the 2002 winter games to Salt Lake City, Olympic delegates were...

    (pp. 180-184)

    Modern sports are undoubtedly in a mess. Corruption, exploitation, monopoly abuse, drug abuse, cheating, foul conduct on the field and criminal offenses off it—there is almost no form of human misconduct that cannot be found in abundance. If the old adage that sport is a mirror of society is true, then there is much that we should be ashamed to see. Yet sports have never been more popular than they are today. All of the abuses that we see are a consequence of our own intense desire to watch our own team, our own country, or our favored athlete...

  11. A Beginner’s Guide to the Sports Economics Literature
    (pp. 185-196)
  12. Acknowledgments
    (pp. 197-198)
  13. Index
    (pp. 199-225)