Running head: Do Professional Sports benefit the economy?
Do Professional Sports benefit the economy?
William S. Cooper
Directed Study in Management (MNA4704)
December 20, 2009
Do professional sports have a “major league” impact on the US economy? Most professional sports such as the National Football League, the National Basketball Association, the Major League Baseball and the National Hockey League have teams that are associated with a city of the United States. Most of these professional sports teams have lower level teams that they are associated with so they can groom up and coming professionals. Across the United States, there are millions of dollars being spent on these professional sports teams and their stadiums. Where is the money coming from and how is the US economy being affected by their revenues?
Do Professional Sports benefit the economy?
Table of Contents
In order to grasp comprehension of this research paper, an insertion of the defined terms has been applied throughout the reading to ensure basic understanding of the text.
Public Funding- A stock or capital of national debt; public securities; evidences (Stocks or Bonds) of money lent from the government, for which interest is paid at prescribed intervals. Multiplier Effect- An effect in economic in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent. For example, if a corporation builds a factory, it will employ construction workers and their suppliers as well as those who work in the factory. Indirectly, the new factory will stimulate employment in laundries, restaurants, and service industries in the factory's vicinity.
Direct/ Indirect Impact- Actual value of construction outlays, operating expenses, associated on-site and off-site spending by visitors to the cultural facility. Indirect – Monetary and employment flows generated as a result of the direct spending (construction, operations, visitor-related) including the re-spending of wages and salaries of the personnel working at the cultural facilities and for its suppliers. Substitution Effect- is always negative: consumers always switch from spending on higher-priced goods to lower-priced ones as they struggle to maintain their living standards in face of rising prices. There is always a tendency to substitute towards inferior goods, because at the lower prices one can apparently get more value. However many substitute’s find that the better quality goods were satisfactory in ways that the inferior goods. Literature Review
Recent years sports franchises have frequently used their monopoly power to extract rents from state and local governments. Typically, a franchise owner declares an existing facility unsuitable. Perhaps it is too old, or too small, or lacks enough luxury boxes or suites to raise the necessary revenues to field a competitive team. The owner reminds the local government and business community that many other cities would like to have a team and those cities would also build a new stadium. This issue has become a relevant topic of discussion throughout the years; Sports analysis John Thompson of NBA fast break quotes “The Cities all over the country, desperate for a professional sports team, gear up to convince the owner to move. Often, the promise of a new stadium and a flexible lease convinces the owner to stay, but some franchises move”. What justification exists for the...
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Dennis Coates and Brad R. Humphreys. “The Growth Effects of Sport Franchises, Stadia and Arenas.” Journal of Policy Analysis and Management 18 (1999): 601.
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