Mark S. Nagel

Where Did National Hockey League Fans Go During the 2004-2005 Lockout? An Analysis of Economic Competition between Leagues

Identifying and evaluating competitors is a critical aspect of operating a sport organisation. However, North American sports franchises have a limited understanding of competitors in their geographic market – particularly when calculating the degree of competition from other sport teams. Increasing the understanding of local sport competitors, whether in the same or different professional leagues, is critical not only to future franchise operations, but also for potential litigation concerning relevant product markets. This article utilises a natural experiment involving the National Hockey League’s (NHL) 2004-2005 lockout to assess the competitiveness of the NHL with the National Basketball Association (NBA) and four minor hockey leagues. On average, the five potential competitor leagues attained a 2% increase in demand, all else equal, during the lockout period. For the NBA this translates into more than US

Treatment of travel expenses by golf course patrons: Sunk or bundled costs and the First and Third Laws of Demand

1 million per team in increased incremental ticket revenue.

Free Ride, Take It Easy: An Empirical Analysis of Adverse Incentives Caused by Revenue Sharing

To attract golf patrons, sport managers must understand consumption patterns of the golfer. Importantly, the treatment of travel costs must be understood. According to the Alchian-Allen (1964) theorem, golfers treat travel costs as bundled costs (third law of economic demand) whereas classical consumer theory indicates that golfers treat travel costs as sunk costs (first law of economic demand). The purpose of this study was to determine if golf patrons treated travel costs as sunk costs or if they treated travel costs as a bundled cost. Data from a survey of course patrons in Ohio support the treatment of travel costs as bundled costs by golf course patrons, especially those classified as tourists. The strong, positive correlation found between distance traveled and the cost of greens fees enables managers to utilize geographic segmentation in choosing to whom to market their course based upon their product’s price compared to area competitors.

Financial Risk Management: The Role of a New Stadium in Minimizing the Variation in Franchise Revenues

A fundamental belief in professional sport leagues is that competitive balance is needed to maximize demand and revenues; therefore, leagues have created policies attempting to attain proper competitive balance. Further, research posits that objectives of professional sport teams’ owners include some combination of winning and profit maximization. Although the pursuit of wins is a zero sum game, revenue generation and potential profit making is not. This article focuses upon the National Football League’s potential unintended consequences of creating the incentive for some teams to free ride on the rest of the league’s talent and brand. It examines whether an owner’s objectives to generate increased revenues and profits are potentially enhanced by operating as a continual low-cost provider while making money from the shared revenues and brand value of the league. The present evidence indicates that, overall, being a low-cost provider is more profitable than increasing player salaries in an attempt to win additional games.

The Business of Japanese Baseball

One of the absolutes in professional sports, and a reason for its success, is the uncertainty of the outcome of individual games, seasons, and championships. This uncertainty impacts a team’s attendance and financial operation. While leagues cultivate uncertainty through various rules such as salary caps, revenue sharing, and the amateur draft, individual franchises have to manage the result of variability in annual revenues. Not only is this due to the parity in a league but also from injuries and changes in player quality that are unexpected. Whether uncertainty or winning or the perfect combination of the two, some aspects that affect revenues can be controlled by team management more so than others. Even though on-the-field success is not easily controlled by team management, the overall quality of the experience can be impacted from, among other things, a quality stadium with comfortable seating and delectable food. This research shows that the variability in annual team revenues decreases (relative to total revenues) once a team moves into a new stadium, all else equal. The increase in predictability lowers financial risk, impacting the cost of financing and other practical operational issues like game-day staffing.

A Method to March Madness? Institutional Logics and the 2006 National Collegiate Athletic Association Division I Men’s Basketball Tournament

For over 100 years baseball has been a popular sport in Japan. It has been the most popular since the founding of professional baseball in Japan. However, over the past 15 years many prominent Japanese players have left Nippon Professional Baseball (NPB) for Major League Baseball (MLB). While franchises in NPB would like to retain the services of their best players, the structure of the league as well as its finances and marketing operations have caused overall league revenues to stagnate despite the sports popularity. In addition to providing an overview and historical analysis of professional baseball in Japan, this paper examines the current issues specifically confronting NPB and its member clubs. Unless significant changes are made to enable NPB to compete in a globalized baseball economy, the leagues influence on professional baseball in Japan will wane.