14 - Public Intro to Public Econ of Sports Flashcards
What is the formula used to express potential inequality in women’s spor
Bundling =
the practice of selling multiple products as if they were a single product.
– I.e. in a single-purchase
What is ‘bundling’ in the context of sports?
Bundling is the practice of selling multiple products together as a single unit. In sports, it’s used to promote less popular games or leagues (e.g., bundling WNBA tickets with NBA tickets).
In some instances, bundling may even be mandated by regulation.
– E.g. TV cable packages requiring the inclusion of local channels
How might bundling be used to promote women’s sports?
Bundling women’s games with men’s games in ticket or media packages can increase viewership and exposure for women’s sports.
What is a radical proposal to increase integration between men’s and women’s leagues?
In the Olympics, country medal counts are totalled across both men’s and women’s sports.
–Perhaps a similar idea could be applied elsewhere, that is a form of bundling.
Combine leagues (e.g., NBA and WNBA) into a single league.
– Each “club” would consist of two teams – a men’s team and a women’s team.
– Men’s teams would play against men’s teams, and similarly for women’s teams.
– However, wins would be totalled across both teams to determine the standings of clubs.
– Could be applied in playoffs as well.
Perhaps greater integration is one possible way of generating additional interest and opportunities.
Why was Kendra Harrison excluded from the 2016 Olympics despite being world-class?
Olympic rules limited participation by nationality. Although she had one of the best times globally, she didn’t qualify through the U.S. trials, so she was excluded.
Kendra Harrison was clearly among the top hurdlers in the world, but was excluded from Olympic competition due to her nationality. (bc in Olympic track & field, a country may send a maximum of three athletes who have met the qualifying standard)
What is the trade-off in Olympic contest design?
Balancing global representation (more countries) vs. showcasing top talent (potentially fewer countries).
The contest design features a difficult trade-off:
– Wider country representation may promote greater global interest.
– Excluded athletes lose out on potentially highly lucrative endorsements, sponsorships, etc.
How might Coase’s Theorem relate to Olympic qualifying?
Although spots aren’t tradable, allowing athletes to trade qualifying spots (with compensation) could lead to Pareto improvements — where both parties benefit without harming others.
Why are sports labor markets less competitive?
Restrictions like reserve clauses and entry drafts limit player mobility and bargaining power. Salaries are set through one-on-one negotiations, not open markets.
Labor markets within sports are even more imperfect.
Other industries generally do not feature similar labor market restrictions that are common in major pro sports.
– E.g. reserve clause, entry drafts, etc.
Such labor market restrictions are often publicly justified on the grounds of competitive balance, but that often isn’t the sole reason.
Why do owners have bargaining power over players?
Owners have infinite time horizons and resources, while athletes have short, finite careers.
How does discrimination persist in sports labor markets?
Imperfect competition allows biases to influence hiring and compensation. Lack of competition means market forces don’t always eliminate discrimination.
What’s unique about labor markets in amateur sports?
Athletes are usually unpaid, yet they generate large economic rents — these benefits accrue to institutions rather than the athletes themselves.
What are the four main government functions in economics?
Provide institutions (laws, enforcement), supply public goods (non-rivalrous, non-excludable), address externalities (positive and negative), regulate/operate natural monopolies.
What economic role do sports play?
Sports provide entertainment, generating consumer and producer surplus. They also drive direct and indirect spending and contribute to overall economic activity.
What are spillover economic effects of sports?
Tourism, merchandise, restaurants & bars, media & broadcasting, local transportation.
What is the Sports Fiscal Multiplier?
It’s the concept that initial sports spending leads to further economic activity. Each round of spending becomes someone else’s income, amplifying the total economic impact.
Why might sports’ aggregate economic impact be smaller than expected?
Spending may displace other activity, jobs may be part-time or seasonal, stadiums may not generate long-term returns, public subsidies don’t always yield significant net benefits.
Are there situations where forms of discrimination are part of contest design?
yes!
Case Study: Kendra Harrison, 2016 Olympics
She was a U.S. hurdler who:
* Placed 6th at the U.S. Olympic Trials → did not qualify
* Had run the 2nd fastest time in history before the trials
* Broke the world record just weeks later — before the Olympics
Still, she did not compete at the 2016 Olympics.
⚖️ The Discriminatory Feature
Olympic contest design restricts athlete entries by nationality, not solely by ability:
Most countries can only send a maximum of three athletes per event if they meet qualifying standards.
This means **elite athletes **from “superpower” countries can be left out — while weaker athletes from smaller nations still qualify.
🎯 Why is this done?
Goal: Ensure global representation and increase international appeal.
Trade-off: Sacrifices having all the best athletes for the sake of diversity and inclusion.
Implication: Discrimination by nationality — even when it excludes top performers — is an intentional design choice.
Is there a way to redesign Olympic qualification to balance the objectives of (i) allowing and rewarding athletes from a variety of countries to compete, and (ii) ensuring that high calibre athletes from superpower countries do not lose out on worthwhile opportunities? Can we use economic ideas to help with this re-design?
🎯 The Challenge
Balance two key objectives:
Inclusivity – Let athletes from a diverse range of countries participate.
Meritocracy – Ensure top-performing athletes, even from dominant countries, aren’t unfairly excluded.
💡 Possible Redesigns Using Economic Ideas
1. Quota + Global Ranking Hybrid System
How it works:
- Each country still gets a quota (e.g. max 3 athletes).
- But a small number of wildcard spots are allocated to the top global performers, regardless of nationality.
Economic Concept:
* Marginal Benefit Analysis: The marginal benefit of including world-class athletes (from anywhere) can outweigh the cost of slightly less representation.
Pros:
* Maintains country representation
* Ensures that elite athletes aren’t excluded
2. Tradable Qualification Spots (Hypothetical Market)
Inspired by: Coase Theorem
* Normally applies when parties can negotiate over rights or resources to achieve efficiency.
How it would work:
* Countries receive spots as usual.
* Athletes who meet qualifying standards can trade spots — for example, an athlete from a less competitive country might** sell their spot** to a top-tier athlete from another country (e.g., Kendra Harrison).
Assumptions:
* All trades are Pareto improving (no one is worse off)
* Compensation ensures fairness
Pros:
* Allocates spots to those who value them most (or generate highest value)
* Uses market efficiency logic
Cons:
* Could be seen as undermining the Olympic spirit
* Risk of excess commercialization or coercion
3. Weighted Lottery Based on Performance
How it works:
* All athletes who meet qualifying standards are entered into a lottery
* The probability of being selected is proportional to performance
Economic Concept:
* Similar to expected utility models or auction theory where better bids (performance) improve odds.
Pros:
* Still offers global opportunity
* Rewards better performance with higher probability
* Reduces arbitrary cutoffs
4. Tiered Events or Qualification Rounds
How it works:
* Create a global pre-Olympic qualifier open to all top athletes who didn’t qualify through national trials.
* Top finishers in this round earn “performance spots” at the Olympics.
Economic Idea:
* Market entry with performance screening – similar to competitive bidding in procurement or project grants.
Olympic qualifying spots are not a tradeable good, so Coase’s Theorem doesn’t apply. But what would happen if they were a tradeable good?
- The qualifying spots could be initially allocated as they currently are. But then further allow monetary exchanges for the spots (with athletes that meet minimum qualifying standards).
- Only Pareto improving trades would occur – i.e. an athlete would only give up a qualifying spot if they were satisfactorily compensated. Trades will likely occur with athletes that especially would benefit from making the games (e.g. Kendra Harrison).
Why do team owners often have an advantage over athletes in labor negotiations?
Because owners have infinite time horizons, while athletes have short, finite careers, making athletes more pressured in negotiations.
How are sports salaries typically determined, and how does this differ from most markets?
Sports salaries are often the result of bargaining between a single buyer (team) and a single seller (athlete), not a broad competitive market of many buyers and sellers.
What effect does imperfect competition have on sports labor markets?
It allows discrimination to persist, as lack of market forces means biases aren’t naturally corrected through competition.
What role do non-market forces play in sports labor markets?
Non-market forces play a major role in both creating and alleviating discrimination due to underlying market imperfections.
