Sports teams as business firms

Thomas Miceli ()

Chapter 2 in Topics in Sports Economics, 2025, pp 11-26 from Edward Elgar Publishing

Abstract: This chapter views professional sports teams as business firms. It initially assumes that teams act to maximize profits. In pursuing this objective, they exercise monopoly power given their spatial monopoly and the loyalty of fans. An alternative assumption is that teams maximize wins subject to a budget constraint—in other words, they act like non-profit firms. The choice in this case is talent, which teams can purchase in the players’ labor market at a fixed wage. Although large market teams potentially generate more revenue to spend on talent, small market teams that maximize wins can compete on the field with large market teams that maximize profits. The chapter concludes by considering the behavior of hybrid teams that maximize profits with respect to business decisions and wins with respect to talent acquisition.

Keywords: Profit maximization; Win maximization; Market size (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035339389
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