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

Martin Grossmann, Markus Lang () and Philipp Theiler

No 128, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: Professional sports leagues have witnessed the appearance of so-called "sugar daddies" - people who invest enormous amounts of money into 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 compared 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 large club.

Keywords: Competitive balance; contest model; social welfare; sports leagues; sugar daddy (search for similar items in EconPapers)
JEL-codes: L83 L2 D43 C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 2010-05, Revised 2010-10
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http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/128_ISU_full.pdf (application/pdf)

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