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The impact of government subsidies in professional team sports leagues


Dietl, Helmut; Lang, Markus; Nesseler, Cornel (2017). The impact of government subsidies in professional team sports leagues. UZH Business Working Paper Series 366, University of Zurich.

Abstract

This article develops a game-theoretical model to analyze the effect of subsidies on player salaries, competitive balance, club profits, and welfare. Within this model, fan demand depends on win percentage, competitive balance, and aggregate talent. The results show that if a large market club receives a subsidy and fans have a relatively strong preference for aggregate talent, compared to competitive balance and own team winning percentage, club rofits and welfare increase for both clubs. If the small-market club is subsidized, a small subsidy increases competitive balance and player salaries of both clubs.

Abstract

This article develops a game-theoretical model to analyze the effect of subsidies on player salaries, competitive balance, club profits, and welfare. Within this model, fan demand depends on win percentage, competitive balance, and aggregate talent. The results show that if a large market club receives a subsidy and fans have a relatively strong preference for aggregate talent, compared to competitive balance and own team winning percentage, club rofits and welfare increase for both clubs. If the small-market club is subsidized, a small subsidy increases competitive balance and player salaries of both clubs.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:16 January 2017
Deposited On:11 Sep 2019 12:19
Last Modified:05 Oct 2019 03:31
Series Name:UZH Business Working Paper Series
Number of Pages:28
ISSN:2296-0422
OA Status:Green
Other Identification Number:merlin-id:18184

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