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The Pricing of Sports Events: Do Teams Maximize Profit?

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  • Ferguson, D G, , et al

Abstract

A model of price setting behavior by National Hockey League teams, based on the assumption of profit maximization, is developed, estimated, and tested. The model implies parameter restrictions across equations of a two-equation simultaneous nonlinear econometric model, tested by a likelihood ratio test, and implies restrictions on the first and second derivatives of the revenue function, tested with Wald tests. The results, in large measure, support the hypothesis that hockey teams are profit maximizers, in contrast to some suggestions in the literature. The analysis provides an attractive example of the potential of sports data for testing behavioral hypotheses in economics. Coauthors are Kenneth G. Stewart, J. C. H. Jones, and Andre Le Dressay. Copyright 1991 by Blackwell Publishing Ltd.

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  • Ferguson, D G, , et al, 1991. "The Pricing of Sports Events: Do Teams Maximize Profit?," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 297-310, March.
    • Handle: RePEc:bla:jindec:v:39:y:1991:i:3:p:297-310
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    Cited by:

    1. Lehmann, Erik & Weigand, Jürgen, 1997. "Fußball als ökonomisches Phänomen: Money Makes the Ball Go Round," Thuenen-Series of Applied Economic Theory 08, University of Rostock, Institute of Economics.
    2. Helmut M. Dietl & Markus Lang & Stephan Werner, 2009. "Social Welfare in Sports Leagues with Profit‐Maximizing and/or Win‐Maximizing Clubs," Southern Economic Journal, John Wiley & Sons, vol. 76(2), pages 375-396, October.
    3. Richard J. Cebula, 2009. "Teaching How Private Enterprise Works Using Professional Sports: A Brief Note on the Case of Individual NHL Players' Salaries," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 24(Spring 20), pages 165-174.
    4. Kevin E. Henrickson, 2012. "Spatial Competition And Strategic Firm Relocation," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 364-379, April.
    5. Andrew Zimbalist, 2003. "Sport as Business," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(4), pages 503-511, Winter.
    6. Jakee, Keith & Kenneally, Martin & Mitchell, Hamish, 2010. "Asymmetries in scheduling slots and game-day revenues: An example from the Australian Football League," Sport Management Review, Elsevier, vol. 13(1), pages 50-64, February.
    7. Jaume García & Plácido Rodríguez, 2002. "The Determinants of Football Match Attendance Revisited," Journal of Sports Economics, , vol. 3(1), pages 18-38, February.
    8. BALOGH Renátó & BÁCSNÉ BÁBA Éva, 2020. "Analysis Of Consumer Market In Central European Football," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 325-335, July.
    9. Stefan Kesenne & Wilfried Pauwels, 2006. "Club Objectives and Ticket Pricing in Professional Team Sports," Eastern Economic Journal, Eastern Economic Association, vol. 32(3), pages 549-560, Summer.
    10. Alexandro Barbosa & Marke Geisy da Silva Dantas & Yuri Gomes Paiva Azevedo & Victor Branco de Holanda, 2017. "Fiscal Responsibility Strategy in Brazilian Football Clubs: A Dynamic Efficiency Analysis," Brazilian Business Review, Fucape Business School, vol. 14(Special I), pages 45-66, January.
    11. Anthony C. Krautmann & David J. Berri, 2007. "Can We Find It at the Concessions? Understanding Price Elasticity in Professional Sports," Journal of Sports Economics, , vol. 8(2), pages 183-191, May.
    12. Kunz-Kaltenhäuser, Philipp, 2021. "Is the NFL's Pro Bowl broken? Considering the players' perspective," Ilmenau Economics Discussion Papers 149, Ilmenau University of Technology, Institute of Economics.
    13. Nyberg, Sten & Priks, Mikael, 2017. "Public order and private payments: Evidence from the Swedish soccer league," Journal of Public Economics, Elsevier, vol. 153(C), pages 1-8.
    14. David Boyd & Laura Boyd, 1998. "The home field advantage: Implications for the pricing of tickets to professional team sporting events," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 22(2), pages 169-179, June.
    15. Pedro Garcia-del-Barrio & Stefan Szymanski, 2009. "Goal! Profit Maximization Versus Win Maximization in Soccer," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(1), pages 45-68, February.
    16. Regina Madalozzo & Rodrigo Berber Villar, 2009. "Brazilian Football," Journal of Sports Economics, , vol. 10(6), pages 639-650, December.
    17. Stefan Késenne, 2006. "The Win Maximization Model Reconsidered," Journal of Sports Economics, , vol. 7(4), pages 416-427, November.
    18. Cyrenne, Philippe, 2001. "A Quality-of-Play Model of a Professional Sports League," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 444-452, July.

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