
Contents
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Profits Profits
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Player Salaries Player Salaries
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Competitive Balance Competitive Balance
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Revenue Sharing Revenue Sharing
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Relocation and Expansion Relocation and Expansion
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Increasing Demand by Innovating Increasing Demand by Innovating
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Discrimination Discrimination
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Increasing Demand by Using Technology Increasing Demand by Using Technology
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American Economy American Economy
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Conclusion Conclusion
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1 Economics of Sports Leagues
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Published:October 2012
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Abstract
This chapter is a general overview of the economic aspects of professional team sports leagues as well as the American economy. The NBA's turbulent birth as the BAA demonstrated that professional sports team owners' twin advantages of price-setting power over ticket prices and enhanced bargaining power over players were not sufficient conditions to ensure profitability. Price-setting power without sufficient demand could still lead to losses. The challenge was to increase demand, which would have led to higher ticket prices, more attendance, and greater revenues and profits. Greater profits would have enabled owners to pay higher salaries and to improve conditions, helping to erase any fly-by-night image. Thus the chapter looks at the issues surrounding profits, player salaries, technology, expansions, discrimination, and so on; as well as how the American economy performed during the years 1945–61 and how it affected attendance and demand for professional team sports leagues.
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