IJSF Issue 2:1

Contents for IJSF Issue 2:1

Executive Interview pp. 3-9
Authors: Daniel Rascher
Abstract:An interview with Dan Champeau and Chad Lewis of Fitch Ratings

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What Drives the Value of Stadium Naming Rights? A Hedonic-Pricing Approach to the Valuation of Sporting Intangible Assets pp. 10-24
Authors: Bill Gerrard, Milena M. Parent, and Trevor Slack
Abstract:This study adopts a multi-attribute hedonic-pricing benchmark valuation approach to the determination of the observed market value of stadium naming rights. Using a sample of 112 naming rights deals covering both major-league and non-major-league facilities in North America over the period of 1979-2002, a hedonic-pricing model is estimated using regression analysis. It is found that the value of stadium naming rights is highly systematic and information-efficient. Naming rights value is principally related to variables reflecting the size of potential target audiences including the economic size of the host city, the facility’s capacity, the league status of the resident teams, and the diversity of the facility usage. It is also found that sponsors are prepared to pay a significant premium for virgin sites with no previous name associations.

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Pay and Performance in Professional Road Racing: The Case of City Marathons pp. 25-35
Authors: Bernd Frick and Joachim Prinz
Abstract:In a world of asymmetric information and non-trivial monitoring costs, the design and implementation of a compensation and reward system that maximizes the individual athlete’s performance is one of the critical variables affecting the reputation of a specific sports event. Assuming that the relationship between a race organizer and a professional runner can be characterized as a principal agent-relationship, we use detailed data from 57 city marathons to test various hypotheses derived from tournament theory. Controlling for a large number of other possible determinants of race quality, we find that the level of the prize money as well as its distribution influence the participants’ performance in the predicted way. When examined in more detail, however, the incentive effects diminish.

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Stadium Alcohol Availability and Baseball Attendance: Evidence from a Natural Experiment pp. 36-44
Authors: Andrew Chupp, E. Frank Stephenson, and Ron Taylor
Abstract:Although conventional wisdom holds that alcohol availability increases baseball attendance, little evidence exists on the complementarity between attendance and alcohol availability. To address this gap in the literature, we examine the effect of Rome, Georgia’s November 2004 legalization of Sunday alcohol sales on a minor league baseball team’s attendance. OLS and Tobit estimates of an attendance model find no statistically significant effect of alcohol availability on attendance. In addition to analyzing the relationship between attendance and alcohol availability, we also perform back-of-the-envelope calculations of the additional concession revenue generated by Sunday beer sales.

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Treatment of Travel Expenses by Golf Course Patrons: Sunk or Bundled Costs and the First and Third Laws of Demand pp. 45-53
Authors: Matthew T. Brown, Daniel A. Rascher, Chad D. McEvoy, and Mark S. Nagel
Abstract:To attract golf patrons, sport managers must understand consumption patterns of the golfer. Importantly, the treatment of travel costs must be understood. According to the Alchian-Allen (1964) theorem, golfers treat travel costs as bundled costs (third law of economic demand) whereas classical consumer theory indicates that golfers treat travel costs as sunk costs (first law of economic demand). The purpose of this study was to determine if golf patrons treated travel costs as sunk costs or if they treated travel costs as a bundled cost. Data from a survey of course patrons in Ohio support the treatment of travel costs as bundled costs by golf course patrons, especially those classified as tourists. The strong, positive correlation found between distance traveled and the cost of greens fees enables managers to utilize geographic segmentation in choosing to whom to market their course based upon their product’s price compared to area competitors.

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