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The Economic Determinants of Professional Sports Franchise Values

Author

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  • Donald L. Alexander
  • William Kern

Abstract

This article examines the effect of team nomenclature, team relocation, and new stadiums on franchise values for the four major professional sports. The results indicate that market size, team performance, and the presence of a new facility increase a team’s franchise value, as many would expect. Moreover, the authors find that the use of a regional identity increases franchise value in Major League Baseball (MLB) but not in the other professional sports. The authors believe this may reflect the fact that the other sports have institutional arrangements that minimize any differences among the various teams, unlike MLB.

Suggested Citation

  • Donald L. Alexander & William Kern, 2004. "The Economic Determinants of Professional Sports Franchise Values," Journal of Sports Economics, , vol. 5(1), pages 51-66, February.
    • Handle: RePEc:sae:jospec:v:5:y:2004:i:1:p:51-66
    DOI: 10.1177/1527002503251715
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    References listed on IDEAS

    as
    1. Donald L. Alexander, 2001. "Major League Baseball," Journal of Sports Economics, , vol. 2(4), pages 341-355, November.
    2. Scully, Gerald W., 1995. "The Market Structure of Sports," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226743950, October.
    3. Jordan Rappaport & Chad R. Wilkerson, 2001. "What are the benefits of hosting a major league sports franchise?," Economic Review, Federal Reserve Bank of Kansas City, vol. 86(Q I), pages 55-86.
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    Cited by:

    1. Gerald T. Healy III & Jing Ru Tan & Peter F. Orazem, 2020. "Measuring Market Power in Professional Baseball, Basketball, Football, and Hockey," The American Economist, Sage Publications, vol. 65(2), pages 214-231, October.
    2. Nicolas Scelles & Boris Helleu & Christophe Durand & Liliane Bonnal, 2013. "Determinants of Professional Sports Firm Values in the United States and Europe: A Comparison Between Sports Over the Period 2004-2011," International Journal of Sport Finance, Fitness Information Technology, vol. 8(4), pages 290-293, November.
    3. Geoffrey Propheter, 2017. "Subsidies and Stadia’ Opulence," Journal of Sports Economics, , vol. 18(1), pages 3-18, January.
    4. Daniel A. Rascher & Matthew T. Brown & Mark S. Nagel & Chad D. McEvoy, 2012. "Financial Risk Management," Journal of Sports Economics, , vol. 13(4), pages 431-450, August.
    5. Zelenkov, Yu. & Solntsev, I., 2022. "Predicting the value of professional sport clubs. A study of European soccer, 2005-2018," Journal of the New Economic Association, New Economic Association, vol. 56(4), pages 28-46.
    6. Matt Andrews, 2015. "Being Special: The Rise of Super Clubs in European Football," CID Working Papers 299, Center for International Development at Harvard University.
    7. Chris Judde & Ross Booth & Robert Brooks, 2013. "Second Place Is First of the Losers," Journal of Sports Economics, , vol. 14(4), pages 411-439, August.
    8. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    9. Phillip Miller, 2007. "Private Financing and Sports Franchise Values," Journal of Sports Economics, , vol. 8(5), pages 449-467, October.
    10. Duane W. Rockerbie & Stephen T. Easton, 2010. "The Ebbs and Flows of the Game: Multiple Equilibria in a Sports League Model," Journal of Sports Economics, , vol. 11(2), pages 172-185, April.
    11. Efehan Ulas, 2021. "Examination of National Basketball Association (NBA) team values based on dynamic linear mixed models," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-16, June.
    12. Eric Joseph van Holm, 2019. "Minor stadiums, major effects? Patterns and sources of redevelopment surrounding minor league baseball stadiums," Urban Studies, Urban Studies Journal Limited, vol. 56(4), pages 672-688, March.
    13. Nicolas Scelles & Boris Helleu & Christophe Durand & Liliane Bonnal, 2016. "Professional Sports Firm Values," Journal of Sports Economics, , vol. 17(7), pages 688-715, October.

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