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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
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    Cited by:

    1. 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.
    2. 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).

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