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Stadiums and Scheduling: Measuring Deadweight Losses in Professional Sports Leagues, 1920-1970

Author

Listed:
  • Lional Frost
  • Luc Borrowman
  • Abdel K. Halabi

Abstract

In studies of professional sports leagues it has not been possible to quantify losses of economic welfare (deadweight losses) because of the absence of a counterfactual. Before 1970, Australian Football’s major league, the Melbourne-based Victorian Football League (VFL) set standard admission prices for all games and scheduled matches to distribute revenue evenly between clubs. Almost all of the League’s teams were based in one city, with all but one playing home (or regular season) games at small stadiums with limited facilities, while the city’s largest and best equipped stadium lay vacant every second weekend. By estimating demand for matches between the five highest drawing clubs over a 50-year period, we specify the size of revenue losses that resulted from different schedules and venues. The results show significant losses in League revenue and attendances, but these were not sufficient to threaten the survival of a distance-protected cartel. Fixed pricing created welfare gains for supporters of the larger clubs and welfare losses for supporters of the smaller clubs, and was not conducive to an even competition.

Suggested Citation

  • Lional Frost & Luc Borrowman & Abdel K. Halabi, 2015. "Stadiums and Scheduling: Measuring Deadweight Losses in Professional Sports Leagues, 1920-1970," Monash Economics Working Papers 07-15, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2015-07
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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2015/0715stadiumsschedulingfrostborrowmanhalabi.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Sports; football; cartels; stadiums; scheduling; pricing;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • N97 - Economic History - - Regional and Urban History - - - Africa; Oceania

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