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The Utility of Sport and Returns to Ownership

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  • Ramon P. DeGennaro

Abstract

Previous research demonstrates conclusively that owning thoroughbred racehorses tends to be a losing financial proposition. Owners pay a premium to enter the game of racing. Recent evidence has concluded that this premium is approximately constant across thoroughbred prices. This article generalizes recent work by allowing multiple determinants of the premium rather than one. It concludes that although the premium is approximately constant for relatively low-priced horses, it increases with the cost of the animal, at least for the most expensive ones. Evidently, a sizable number of owners are willing to pay increasing prices for talent in the quest to own a champion. To the extent this preference for champions generalizes to other sports, it has important implications for public policy and social welfare.

Suggested Citation

  • Ramon P. DeGennaro, 2003. "The Utility of Sport and Returns to Ownership," Journal of Sports Economics, , vol. 4(2), pages 145-153, May.
    • Handle: RePEc:sae:jospec:v:4:y:2003:i:2:p:145-153
    DOI: 10.1177/1527002503004002004
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    References listed on IDEAS

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    1. Walter C. Neale, 1964. "The Peculiar Economics of Professional Sports," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 78(1), pages 1-14.
    2. Frank A. Gamrat & Raymond D. Sauer, 2001. "Reply: “The Utility of Sport and Returns to Ownership: Evidence from the Thoroughbred Marketâ€," Journal of Sports Economics, , vol. 2(2), pages 204-205, May.
    3. Schofield, J A, 1982. "The Development of First-Class Cricket in England: An Economic Analysis," Journal of Industrial Economics, Wiley Blackwell, vol. 30(4), pages 337-360, June.
    4. 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.
    5. Whitney, James D, 1993. "Bidding Till Bankrupt: Destructive Competition in Professional Team Sports," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 100-115, January.
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    Cited by:

    1. Glenn Boyle & Gerald Ward, 2016. "Do Better Informed Investors Always Do Better?," Working Papers in Economics 16/29, University of Canterbury, Department of Economics and Finance.
    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. Glenn Boyle & Gerald Ward, 2018. "Do Better Informed Investors Always Do Better? A Buyback Puzzle," Economic Inquiry, Western Economic Association International, vol. 56(4), pages 2137-2157, October.
    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. 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.
    6. 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.
    7. 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.

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