The Sugar Daddy Game: How Wealthy Investors Change Competition in Professional Team Sports

Markus Lang, Martin Grossmann and Philipp Theiler

Journal of Institutional and Theoretical Economics (JITE), 2011, vol. 167, issue 4, 557-577

Abstract: Professional sports leagues have witnessed the appearance of sugar daddies - people who invest enormous amounts of money in clubs and become their owners. This paper presents a contest model of a professional sports league that incorporates this phenomenon. We analyze how the appearance of a sugar daddy alters competitive balance and social welfare with respect to a league with purely profit-maximizing club owners. We further show that the welfare effect of revenue sharing in a sugar daddy league is ambiguous and depends on the degree of redistribution and on whether the sugar daddy invests in a small or a large club.

JEL-codes: C72 D43 L20 L83 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (26)

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Working Paper: The Sugar Daddy's Game: How Wealthy Investors Change Competition in Professional Team Sports (2011)
Working Paper: The Sugar Daddy's Game: How Wealthy Investors Change Competition in Professional Team Sports (2010)
Working Paper: The Sugar Daddy's Game: How Wealthy Investors Change Competition in Professional Team Sports (2010)
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