IJSF Issue 3:2

Contents for IJSF Issue 3:2

Executive Interview, pp. 79-83
Authors: Norm O’Reilly
Abstract:An Interview with Greg Beadles, CFO, Atlanta Falcons

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Race, Technical Efficiency, and Retention: The Case of NBA Coaches, pp. 84-97
Authors:
Abstract:Despite the common perception that African-American coaches face discrimination obstacles, only two rigorous statistical studies exist that actually address the issue of racial variation in retention of coaches. Neither study accounts for variation in the level of talent across coaches and the production of wins. We examine the difference between retention of African-American and white NBA coaches based on technical efficiency calculations from stochastic production frontier estimates of team win production. First, we detect no difference in technical efficiency by race of the coach. Second, the evidence is consistent with the idea that coaches are retained based on their technical efficiency. Finally, the evidence fails to support any difference in retention of NBA coaches by race. These results offer finance insights for practitioners and raise methodology questions about retention discrimination findings in the NFL.

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Determinants of Franchise Values in North American Professional Sports Leagues: Evidence from a Hedonic Price Model, pp. 98-105
Authors:
Abstract:Professional sports teams in North America are privately held corporations. Consequently, they are not required to make audited financial statements publicly available. We use a hedonic price model to analyze transaction prices for professional sports teams from 1969 to 2006. Results indicate that franchise age, facility ownership, number of local competitors, and metropolitan population all have significant hedonic prices. A quality-adjusted price index based on these results indicates the average annual increase in prices over the period exceeded 15%. Long-term sports team owners have experienced significant capital appreciation over the past 40 years, an outcome inconsistent with operating losses.

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“If You Can’t Win, Why Should I Buy a Ticket?”: Hope, Fan Welfare, and Competitive Balance, pp. 106-118
Authors: Norm O’Reilly, Alan Kaplan, Ryan Rahinel, and John Nadeau
Abstract:Competitive balance is highly desired in professional sports leagues, yet measurement of the concept is not well established. The definition of firm/team goals in a professional sports league and its connection with competitive balance has typically been assumed rather than studied. Using fan welfare as the goal of the firm, the current research attempts to link competitive balance with fan welfare through the use of what is termed the ¡°hope¡± construct. A market survey of 367 individuals in a Major League Baseball market empirically supports the use of the hope construct in competitive balance. Suggestions for future research are presented.

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Competitive Balance and Attendance in Major League Baseball: An Empirical Test of the Uncertainty of Outcome Hypothesis, pp. 119-126
Authors: Brian P. Soebbing
Abstract:Competitive balance research partitions into two areas: analyzing sports policy and its effect on competitive balance and the uncertainty of outcome hypothesis. This paper examines the latter section. No formal analysis of the relationship between competitive balance and regular season average attendance in Major League Baseball (MLB) using the actual to idealized standard deviation ratio exits. This paper examines the effect that competitive balance has on MLB attendance between the seasons 1920 and 2006. Additionally, this paper incorporates a games-behind variable to examine if fans are sensitive to team performance. The empirical model in this paper is a fixed-effects OLS model that corrects for heteroscedasticity. The results show a significant inverse relationship between the ratio, games behind, and regular season average attendance. This confirms the uncertainty of outcome hypothesis and shows that fans are sensitive to both league and team performance.

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Book Review: Baseball, Inc: The National Pastime as Big Business, by Frank P. Jozsa, pp. 127-129
Authors: E. Frank Stephenson
Abstract:Over the past decade, Pfeiffer University’s Frank P. Jozsa, Jr., has authored or co-authored Relocating Teams and Expanding Leagues in Professional Sports, American Sports Empire, and Sports Capitalism. In his latest book, Baseball, Inc., Jozsa examines “a number of the most important and controversial … commercial elements of organized baseball” (p. 2).

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