The Economics of Sports Industry @ SUNY Binghamton

I'm all squared away with my rented room in a private home in Vestal, NY. The host family has a newish chocolate lab that is still in puppy mode which gets annoying but it's nice to be able to hang out with animals again. They've got a 12lb fat cat too but I don't see much of him. And there are horses in the field next door that are out and about most of the time.


So I've survived a week of taking a summer course at SUNY Binghamton: The Economics of Sports Industry.

So far it's not boring compared to regular economics. Although what I like about it despite not being that into sports is that it is a glimpse into applied economics. We're taking what is a billion dollar industry and many people's hobbies and applying microeconomic theory to help shed some light on to why prices in sports (tickets, player's wages, rich Yankees vs. poor Oakland A's. etc.) are they way they are.

Economists are a weird bunch. They have a silly double-handedness way of answering most questions. "On the one hand, blah and on the other hand blah......" Here's a very cheap and easy solution: Cut off just one hand of all the economists. Then they'll think whilest thumbing their new stumps before opening their mouths. It's too bad the general public points the blame at them when they open their mouths to say things and if they don't open their mouths when the public feels they should i.e. "We're in a reccession, all economists are bad because they should have told us that we were going to be in a reccission." Or...."The economists said we'd be out of the recession by now but I still don't have a job, what gives?"

Purely looking at markets and how they function with certain assumptions made that all consummers and producers are rational utility maximizers, i.e. not stupid, is not a very accurate measure of what's going on. That's why we have booms and busts, simply because not everyone thinks alike or at all for that matter and they don't all rationalize the same way.

Now back to the sports part. If we could imagine each induvidual sports league: NFL, NHL, NBA, NBL ect. behaves like one giant multi-plant monopoly. All each induvidual baseball team for instance is a separate plant that produces a particular product for the consummer. The products is competition, people pay so see teams compete against one another. So the worst thing that could poetentiall happen is for a team to become too good and win all the games. People would stop going becuse it would no longer be sporting. However teams are in the business of victory and the best teams are the one's that can afford the most expensive free agents. So hence the Yankess are one of the best simply because they shell out the big bucks to have all the best supposed players. Not suggesting that they really are the best (remember I'm not a sports fan.) Cetaris Paribus: Bigger budget = better team. Now here's where it get's interesting. When you can get a really lousy underfunded team to get cheap players that are good enough to actually stand a chance against the big guys you will se much more turn out at games and ticket prices will go up as an effect of increased demand because the competition became very intersting.

So that's it so far for the course, hopefully I won't have to get a new glasses prescription at the end of the semester due to reading PDFs off my laptop screen.