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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:

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    2. Paul Gift, 2018. "Performance Evaluation and Favoritism," Journal of Sports Economics, , vol. 19(8), pages 1147-1173, December.
    3. J. Atsu Amegashie & Edward Kutsoati, 2005. "Rematches in Boxing and Other Sporting Events," Journal of Sports Economics, , vol. 6(4), pages 401-411, November.
    4. 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.
    5. Helmut Dietl & Egon Franck & Martin Grossmann & Markus Lang, 2009. "Contest Theory and its Applications in Sports," Working Papers 0105, University of Zurich, Institute for Strategy and Business Economics (ISU).

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