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Determinants of Franchise Values in North American Professional Sports Leagues: Evidence from a Hedonic Price Model

Author

Listed:
  • Brad R. Humphreys

    (University of Alberta)

  • Michael Mondello

    (The Florida State University)

Abstract

Professional sports teams in North America are privately held corporations. Consequently, they are not required to make audited financial statements publicly available. We use a hedonic price model to analyze transaction prices for professional sports teams from 1969 to 2006. Results indicate that franchise age, facility ownership, number of local competitors, and metropolitan population all have significant hedonic prices. A quality-adjusted price index based on these results indicates the average annual increase in prices over the period exceeded 15%. Long-term sports team owners have experienced significant capital appreciation over the past 40 years, an outcome inconsistent with operating losses.

Suggested Citation

  • Brad R. Humphreys & Michael Mondello, 2008. "Determinants of Franchise Values in North American Professional Sports Leagues: Evidence from a Hedonic Price Model," International Journal of Sport Finance, Fitness Information Technology, vol. 3(2), pages 98-105, May.
    • Handle: RePEc:jsf:intjsf:v:3:y:2008:i:2:p:98-105
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Motivation for Team Ownership: Tom Ricketts and the Cubs
      by brhumphreys in International Journal of Sport Finance Blog on 2009-10-31 22:23:16
    2. 2009 NHL Franchise Values Released
      by brhumphreys in International Journal of Sport Finance Blog on 2009-11-15 23:38:39
    3. More on the Liverpool Sale
      by Brad Humphreys in International Journal of Sport Finance Blog on 2010-10-16 19:31:19

    More about this item

    Keywords

    Franchise valuation; hedonic price model;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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