Stacey L. Brook

Stars at the Gate The Impact of Star Power on NBA Gate Revenues

Investigations into the level of competitive balance within the four major North American professional team sports leagues suggest that the National Basketball Association (NBA) exhibits the lowest level of competitive balance. Given the role competitive balance plays in maintaining consumer demand, the authors examine the role the star attractions of the NBA play in promoting fan interest. The evidence presented suggests the choice of functional form alters the significance of the relationships uncovered. Specifically, the significance of star power is only uncovered in a multiplicative model rather than in the commonly employed linear form. Additional empirical results are reported in the text.

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),

On the Evaluation of the ‘‘Most Important’’ Position in Professional Sports:

This article investigates whether general managers in the National Hockey League (NHL) evaluate the playing talent of goalies efficiently. The authors examine both the voting record for the Vezina Award (Best Goalie) and salary data from free agent goalies to ascertain how the goalie position is evaluated by general managers in the NHL. The authors find that general managers evaluate past performance of goalies efficiently. However, the authors also find observed differences in goalie performance are quite small. Furthermore, NHL goalies are quite inconsistent across time. These aspects of goalie performance are not taken into account by decision makers in the NHL, leading us to conclude that inefficiencies in this labor market exist.

The Payoff to Leadership in Teams

In a recent paper estimating the wage premium to leaders in the NHL, Duetscher (2009) has made what I feel are measurement and specification errors in the estimation of the wage premium to leaders in the NHL. Here I lay out my views as to the problems and possible remedies to the solution.

Teaching Pure & Mixed Bundling using a Spreadsheet

Adams & Yellens (1976) classic analysis of commodity bundling is the backbone of most discussions of pure and mixed bundling in undergraduate economic texts. This paper incorporates a spreadsheet based on Adams & Yellens bundling model that quickly calculates total revenue or total profit using a variety of pricing tactics. This frees up a lot of time doing repetitious calculations, and can be better used discussing different pure and mixed bundling examples compared to other pricing tactics.