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The Economics of Professional Boxing Contracts

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  • Rafael Tenorio

    (DePaul University)

Abstract

This article analyzes the characteristics and incentive effects of contractual practices in professional boxing. A boxer’s “purse†is linked to past rather than contemporaneous performance, thereby creating an incentives problem. Although consumption-smoothing considerations alleviate this problem, savings act as further insurance, and the likelihood of moral hazard increases. Observation of a boxer being poorly prepared for a fight after earning a very large purse is consistent with this prediction. These disappointing outcomes are likely driven by the absence of a strategic principal in the boxing market and by the prevalence of “casual†boxing fans.

Suggested Citation

  • Rafael Tenorio, 2000. "The Economics of Professional Boxing Contracts," Journal of Sports Economics, , vol. 1(4), pages 363-384, November.
    • Handle: RePEc:sae:jospec:v:1:y:2000:i:4:p:363-384
    DOI: 10.1177/152700250000100403
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    References listed on IDEAS

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    Cited by:

    1. J. Atsu Amegashie & Edward Kutsoati, 2005. "Rematches in Boxing and Other Sporting Events," Journal of Sports Economics, , vol. 6(4), pages 401-411, November.
    2. Markus LANG & Alexander RATHKE & Marco RUNKEL, 2010. "The Economic Consequences Of Foreigner Rules In National Sports Leagues," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 31, pages 47-64.
    3. Paul Gift, 2019. "Performance Bonuses and Effort: Evidence from Fight Night Awards in Mixed Martial Arts," IJFS, MDPI, vol. 7(1), pages 1-15, February.
    4. Helmut Dietl & Egon Franck & Martin Grossmann & Markus Lang, 2009. "Contest Theory and its Applications in Sports," Working Papers 0029, University of Zurich, Center for Research in Sports Administration (CRSA).
    5. Paul Gift, 2018. "Performance Evaluation and Favoritism," Journal of Sports Economics, , vol. 19(8), pages 1147-1173, December.

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