IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Loss Aversion, Team Relocations, and Major League Expansion

  • Humphreys, Brad

    ()

    (University of Alberta, Department of Economics)

  • Zhou, Li

    ()

    (University of Alberta, Department of Economics)

Professional sports teams receive large public subsidies for new facility construction. Empirical research suggests that these subsidies cannot be justified by tangible or intangible economic benefits. We develop a model of bargaining between local governments and teams over subsidies that includes league expansion decisions. The model features loss aversion by fans that captures lost utility when a team leaves a city. The model predicts that teams exploit this loss aversion to extract larger than expected subsidies from local governments, providing an explanation for these large subsidies and highlighting the importance of anti-trust exemptions in enhancing teams' bargaining positions.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.economics.ualberta.ca/~/media/economics/FacultyAndStaff/WPs/WP2014-03-Humphreys-Zhou
File Function: Full text
Download Restriction: no

Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2014-3.

as
in new window

Length: 28 pages
Date of creation: 02 Mar 2014
Date of revision:
Handle: RePEc:ris:albaec:2014_003
Contact details of provider: Postal: 8-14 HM Tory, Edmonton, Alberta, T6G 2H4
Phone: (780) 492-3406
Fax: (780) 492-3300
Web page: http://www.economics.ualberta.ca/

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1133-1165, November.
  2. Alexander, Donald L. & Kern, William & Neill, Jon, 2000. "Valuing the Consumption Benefits from Professional Sports Franchises," Journal of Urban Economics, Elsevier, vol. 48(2), pages 321-337, September.
  3. Che, XiaoGang & Humphreys, Brad, 2012. "Competition Between Sports Leagues: Theory and Evidence on Rival League Formation in North America," Working Papers 2012-23, University of Alberta, Department of Economics.
  4. Dennis Coates & Brad R. Humphreys, 2008. "Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums, and Mega-Events?," Econ Journal Watch, Econ Journal Watch, vol. 5(3), pages 294-315, September.
  5. Bruce K. Johnson & Peter A. Groothuis & John C. Whitehead, 2000. "“The Value of Public Goods Generated by a Major League Sports Team: The CVM Approach,”," Working Papers 0014, East Carolina University, Department of Economics.
  6. Angelo Cocco & J. C. H. Jones, 1997. "On going south: the economics of survival and relocation of small market NHL franchises in Canada," Applied Economics, Taylor & Francis Journals, vol. 29(11), pages 1537-1552.
  7. N. Edward Coulson & Rodney Fort, 2010. "Tax Revisions Of 2004 And Pro Sports Team Ownership," Contemporary Economic Policy, Western Economic Association International, vol. 28(4), pages 464-473, October.
  8. Bruce K. Johnson & Peter A. Groothuis & John C. Whitehead, 2001. "The Value of Public Goods Generated by a Major League Sports Team: The CVM Approach," Journal of Sports Economics, , vol. 2(1), pages 6-21, February.
  9. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
  10. Dennis Coates, 2007. "Stadiums And Arenas: Economic Development Or Economic Redistribution?," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 565-577, October.
  11. Philip K. Porter & Christopher R. Thomas, 2010. "Public Subsidies and the Location and Pricing of Sports," Southern Economic Journal, Southern Economic Association, vol. 76(3), pages 693-710, January.
  12. Aju J. Fenn & John R. Crooker, 2009. "Estimating Local Welfare Generated by an NFL Team under Credible Threat of Relocation," Southern Economic Journal, Southern Economic Association, vol. 76(1), pages 198-223, July.
  13. Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November.
  14. Jeffrey G. Owen & William J. Polley, 2007. "Cities and Professional Sports Teams: A Dynamic Bargaining Model," International Journal of Sport Finance, Fitness Information Technology, vol. 2(2), pages 64-78, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ris:albaec:2014_003. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Brenda Carrier)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.