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The Utility of Sport and Returns to Ownership

Author

Listed:
  • Frank A. Gamrat

    (Allegheny Institute)

  • Raymond D. Sauer

    (Clemson University, sauerr@clemson.edu)

Abstract

The rate of return to investment in thoroughbred racehorses is widely believed to be negative on average. In a world of fully informed market participants, this implies that ownership of a racehorse is motivated in part by nonfinancial attributes, perhaps a taste for sport. This article presents simple models of the utility derived from sporting competition. The models differ in their implications for the rate of return to racehorse ownership and its variation with the level of talent. Evidence from thoroughbred auctions and racing earnings are used to test between the models.

Suggested Citation

  • Frank A. Gamrat & Raymond D. Sauer, 2000. "The Utility of Sport and Returns to Ownership," Journal of Sports Economics, , vol. 1(3), pages 219-235, August.
    • Handle: RePEc:sae:jospec:v:1:y:2000:i:3:p:219-235
    DOI: 10.1177/152700250000100302
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    References listed on IDEAS

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    Cited by:

    1. Paul Madden, 2012. "Welfare Economics of "Financial Fair Play" in a Sports League With Benefactor Owners," Economics Discussion Paper Series 1221, Economics, The University of Manchester.
    2. Alexander D. Binder & Paul W. Grimes & Russell G. Winterbotham, 2021. "In the Money: Gender and Jockey Success on the Thoroughbred Racetrack," Journal of Sports Economics, , vol. 22(3), pages 295-328, April.
    3. Hartmann, Laura & Spiller, Achim, 2015. "Luxusaffinität deutscher Reitsportler: Implikationen für das Marketing im Reitsportsegment," DARE Discussion Papers 1501, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    4. Conor Parsons & Ian Smith, 2008. "The Price of Thoroughbred Yearlings in Britain," Journal of Sports Economics, , vol. 9(1), pages 43-66, February.
    5. David Butler & Robert Butler & Robert Simmons, 2022. "Contracts, pay and performance in the sport of kings: Evidence from horse racing," British Journal of Industrial Relations, London School of Economics, vol. 60(1), pages 152-175, March.
    6. Brad R. Humphreys & Jane E. Ruseski, 2010. "Problems With Data on the Sport Industry," Journal of Sports Economics, , vol. 11(1), pages 60-76, February.
    7. Margaret A. Ray, 2001. "“The Utility of Sport and Returns to Ownership: Evidence From the Thoroughbred Marketâ€," Journal of Sports Economics, , vol. 2(2), pages 201-203, May.
    8. Emily J. Plant & C. Jill Stowe, 2019. "Is Moneyball Relevant on the Racetrack? A New Approach to Evaluating Future Racehorses," Journal of Sports Economics, , vol. 20(3), pages 428-447, April.
    9. Paul Madden, 2015. "Welfare Economics of “Financial Fair Play†in a Sports League With Benefactor Owners," Journal of Sports Economics, , vol. 16(2), pages 159-184, February.
    10. Rodney Fort, 2015. "Managerial Objectives: A Retrospective on Utility Maximization in Pro Team Sports," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(1), pages 75-89, February.
    11. Ramon P. DeGennaro, 2003. "The Utility of Sport and Returns to Ownership," Journal of Sports Economics, , vol. 4(2), pages 145-153, May.

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