Sport Economics Chapter 10, Rodney

Sport Economics Chapter 10, Rodney - Rodney Fort, Sports...

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Rodney Fort, Sports Economics, Ch. 10 Sports Economics Chapter 10 – Subsidies and Economic Impact Analysis I. Sports Team Subsidies a) Equity/political arguments against subsidies i. The money could be spent on some other, worthier endeavor such as education or other social service ii. Subsidies go to billionaire team owners to enhance the income of millionaire players. Locally, this benefits very few taxpayers except those who are fans – unfair. iii. Subsidies are needed to keep a team competitive. If the stadium increases revenues, which are spent on better talent to field winning teams, the increase in quality may cause fans to spend more on the team (tickets & merchandise). However, if the team is already putting out the talent level that fans will pay the most to see, then there’s no merit in terms of increasing quality. b) Economic explanations for how the absence of a subsidy may hurt society i. If owners cannot collect all of the value their team generates, they will choose a level of quality and attendance that doesn’t reflect the true net value of those commodities to society. 1. External benefits inefficiency due to benefits owners can’t capture – level of team quality and level of attendance don’t reflect the true value that fans place on these sports outputs. a)
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Sport Economics Chapter 10, Rodney - Rodney Fort, Sports...

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