Aju J. Fenn

The Impact of Free Agency and the Salary Cap on Competitive Balance in the National Football League

This article examines the competitive balance of the National Football League (NFL) using Gini coefficients and the deviations of the Herfindahl-Hirschman Index. The authors present upper bounds for both measures that are constructed using actual playing schedules. They model competitive balance as a function of player talent, the incidence of strikes, the expansion of the NFL, change in the number of playoff teams, schedule length, team relocation, the number of new stadiums, and the introduction of free agency and the salary cap in the NFL using data from the 1970 to 2002 seasons. The authors find that free agency and salary cap restrictions tend to promote competitive balance, whereas a concentration of player talent reduces competitiveness among teams. Player strikes and the construction of new stadiums also affect competitive balance.

The Short Supply of Tall People: Competitive Imbalance and the National Basketball Association

In recent yearsa wealthof literaturehasbeen offeredexamining theeconomics ofprofes-sionalteamsports.Muchofthisworkfollowsintheneoclassicaltradition,employingthestandard assumptions and focusing primarily on the impact of individual decision mak-ing. The purposeofthiswork istoshowthattheblindersimposedby thenarrow focus ofthe neoclassical tradition on the issue of competitive imbalance may alter the conclu-sions that a broader view suggests.Economists from the time of Adam Smith have trumpeted the virtues of competi-tion. From the perspective of individual firms, though, profits are typically increasedwhen competition is eliminated. However, in professional sports, the elimination ofcompetition effectively removes the primary source of revenue. In the words of WalterNeale, “Pure monopoly is a disaster. [Former heavy-weight champion] Joe Louis wouldhave had no one to fight and therefore no income” (1964, 2).The analysis of Neale extends beyond the obvious case of the boxing champion toany professional sport. As noted by Mohamed El-Hodiri and James Quirk (1971, 1306),

The Demand for NFL Attendance: A Rational Addiction Model

This paper examines the demand for attendance at National Football League (NFL) games using a rational addiction model to test the hypothesis that professional football displays the properties of a habit-forming good. Rational addiction theory suggests that past and future consumption play a part in determining the current periods consumption for habit-forming goods. A pooled data set is collected using statistics from each NFL team from the 1983 to the 2002 seasons. Current attendance is modeled as a function of team specific variables including past and future attendance, ticket price, and team performance as well as league variables such as the incidence of strikes. The model is estimated using Two-Stage Least Squares (2SLS). It is found that past and future attendance, winning percentage, the age of the stadium in which a team plays, and the occurrence of strikes are significant factors in the determination of attendance at NFL games. The fact that coefficients for past and future attendance are positive and significant in this analysis lends support to the notion that NFL fans display characteristics of rational addiction in their consumption behavior.

Sports Leagues and Parity When League Parity Generates Fan Enthusiasm

This article demonstrates theoretically that, given a casual relationship exists from league parity to fan interest, as large-market teams myopically outbid small-market teams for talent there is potential for league parity to be underprovided. In this model, league parity is treated as a public good. With this characterization, this article arrives at the familiar economic result that public goods tend to be underprovided. This article does not discuss the impact of declining league parity intertemporally. Intuition suggests this decline could hamper interest in the league sport and even lead to a smaller fan base. The results suggest that if league parity is an important determinant of fan interest, a league lump-sum payment (transfer) and tax (subsidy) system may result in higher league profits. The article does add as a caveat that the authors are in no way justifying the revenue sharing plan adopted by Major League Baseball or any other league.

Cigarettes and addiction information: simulating the demand effects of the tobacco industry's 'conspiracy of silence'

Although cigarette manufacturers were aware of the addictive properties of nicotine as early as 1962, the information did not become available to the US public until 1979 when the Surgeon General disclosed it (US Department of Health, Education, and Welfare, 1979). This study simulates the impact this information would have had on the demand for cigarettes had it been released in 1962. The simulations build on past work by Fenn et al. (2001) who found evidence that the release of addiction information resulted in a structural shift in demand in 1979. In the present study, the econometric results from Fenn et al. (2001) are used to compute simulated time paths for state-level per capita consumption under the hypothetical scenario involving the earlier release of the addiction information. Using these simulated consumption paths; the projected reductions in cigarette sales revenue are calculated. These dollar figures provide a benchmark against which to judge the compensation amounts that the industry must pay because of recent tobacco lawsuit settlements.

Economics of NFL Attendance

The NFL started as an in-person spectator sport. Football teams played in baseball stadiums and around the MLB schedule. That is no longer the case. In 2010 the average attendance at an NFL game has grown to 516,238 spectators at home games. At least 150 million people watched part of an NFL game during the first 4 weeks of the 2010 season. On average 18.9 million people watched an NFL game on TV in 2010. The NFL was the most profitable US professional sports league, with a staggering

Trends in Stadium and Arena Construction, 1995-2015

7.8 billion in revenues in 2009. While game day ticket sales are still an important part of NFL revenues they are second to the revenues from the NFL television broadcasting contracts. According to Forbes, in 2008 NFL revenues added up to

Estimating Local Welfare Generated by an NFL Team under Credible Threat of Relocation

7.6 billion.

From college to the pros: predicting the NBA amateur player draft

3.7 billion came from television contracts including DirecTV. Thus, the average team made

The Determinants of NFL Viewership: Evidence from Nielsen Ratings

237 million in total revenue. A typical team made