The Economics of Professional Boxing Contracts

Rafael Tenorio
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Rafael Tenorio: DePaul University

Journal of Sports Economics, 2000, vol. 1, issue 4, 363-384

Abstract: This article analyzes the characteristics and incentive effects of contractual practices in professional boxing. A boxer’s “purse†is linked to past rather than contemporaneous performance, thereby creating an incentives problem. Although consumption-smoothing considerations alleviate this problem, savings act as further insurance, and the likelihood of moral hazard increases. Observation of a boxer being poorly prepared for a fight after earning a very large purse is consistent with this prediction. These disappointing outcomes are likely driven by the absence of a strategic principal in the boxing market and by the prevalence of “casual†boxing fans.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:1:y:2000:i:4:p:363-384

DOI: 10.1177/152700250000100403

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