Premium Essay

Making Money from Football

In:

Submitted By omega30
Words 7880
Pages 32
Making money out of football

Stefan Szymanski[1]
Stephen Hall

The Business School, Imperial College London

April 2003

Abstract: In the US most economists have argued that professional sports teams are profit maximising businesses, but it is a widely held view in Europe that professional football clubs are not run on a profit maximising basis. This belief has important implications for the impact of policy measures such as income redistribution that are widely advocated. This paper looks at the performance of sixteen English football clubs that acquired a stock exchange listing in the mid 1990s. If the European story is true, we should have observed a shift toward profit maximising behaviour at these clubs. This paper finds no evidence of any shift in this direction. This result is consistent with the view that football clubs in England have been much more oriented toward profit objectives than is normally allowed.

Keywords: economics of sport, objective functions
JEL classification number: L21, L83

We thank to Dirk Nitzsche for assistance with data collection. We thank Peter Sloane and seminar participants at the CARR Outreach workshop on business history for helpful comments.

“Those clubs which have floated to become public companies – Manchester United, Newcastle United, Aston Villa, Chelsea, Tottenham- now have as their principal objective the making of money for their shareholders.”

-David Conn, The Football Business, p154.

1. Introduction

In North America it is commonplace, especially among economists, to think of the owners of professional sports teams as profit maximisers (see e.g. Fort and Quirk (1995)). In Europe, however, this assumption has been treated somewhat sceptically. In an influential paper Sloane (1971) argued that a plausible characterisation of the owners of

Similar Documents

Premium Essay

The Importance Of Paying College Athletes Paid

...Have you ever wondered how much money professional athletes make annually? What about college athletes? There is not one college football player that is being paid right now. This is a problem because it is taking up their time that they need to use towards education and jobs. By paying all of the professional football players it will give them money for their life outside of school football if they do not make it to the NFL. Most college football players do not make it to the NFL leaving them nowhere because there education is poor and they do not have any money.Businesses won't hire them because they have not specialized in a subject such as business. The average professional athlete in America makes between $1.9 million and $5.15 million...

Words: 655 - Pages: 3

Premium Essay

Nfl Lockout Analysis

...gambling is one of the top ways to make money with economics because football is the most watched sport in America. But after a weird ending to a football game early in the lockout season people stopped gambling. Therefore, the NFL needed to make a change because along with the NFL lockout people were losing money because the NFL is a huge business for the Country it brings in so much money for our government. Now, if we lost a season due to lockout then...

Words: 1659 - Pages: 7

Premium Essay

Pros And Cons Of Getting Paid

...In a world where money is the driving force of life for some people, is it worth the risk of not getting your college degree? I personally am not biased towards either side. I can think of a lot of benefits and disadvantages to players getting paid. Many people fight against it they don’t think kids should be making that much money because they’re already basically getting a full ride to whatever college they’re attending. Then again it could be the only hope for some kids that grew up with nothing and have enough talent to make it pro and their ultimate decision to go pro is to have money when they had nothing growing up. I also think though that if I were in their shoes I would want the money. I mean who wouldn’t love to be paid to play a...

Words: 1587 - Pages: 7

Free Essay

Television's Impacet on College Football

...College Reading and Writing 16 February 2010 Television’s Influence on College Football Due to the growing and changing landscape of college sports there have been questions raised about the integrity of academics above athletics. This is a very large issue within college football programs. College football coaches and athletic directors are getting paid more then college presidents and chancellors (“Television’s Impact on College Sports”), football revenues for individual schools have peaked at over $87 million (Fish), and networks are requesting that big time college football games be played on Thursday nights for prime-time viewing. College professors and the Coalition on Intercollegiate Athletics are strongly opposed to the control that television networks have over college football. The belief that academic integrity is a higher priority is an argument that has been fighting a losing battle to network dollars. Big football market universities make a lot of money from major contracts with television networks. In a recent episode of ESPN’s Outside the Lines it stated that the Big Ten football conference makes $242 million average annual income from television revenue (“Television’s Impact on College Sports”). That’s not pocket change. A $242 million dollar payday to split between the eleven schools in the Big Ten for merely letting CBS, FOX, ESPN, etc., come in and record their schools football games? That can’t be right. Unfortunately, it’s not right, there is much more...

Words: 1545 - Pages: 7

Premium Essay

Why College Athletes Should Be Paid

...Athletes: Compensation Deserved but not Given Everyone loves to watch their favorite college basketball or football players play in a game, yet college athletes do not get paid for the entertainment they provide. Athletes put in around forty hours of work a week, when including both practices and games. Colleges should pay their athletes so that they can have less stress and focus more on their performance. There are many benefits to paying college athletes, and there are many reasons why they should be paid. College athletes should be paid because they put their lives at risk for entertainment, they need money for personal needs, and they should be able to get some of the spoils of their work, instead of coaches and administrators making all the money. College athletes should be paid because they put their lives at risk for entertainment. In football there are many chances for a player to get a concussion, one...

Words: 1175 - Pages: 5

Premium Essay

Pay College Athletes

...student at the school. The fact of the matter is that these athletes are not actually like every other average student. These athletes for some of these big name schools aren’t just helping the NCAA rake in small chunks of money; in fact they are helping the NCAA make billions of dollars every single year. It seems like only the NCAA is benefiting from the money who are the people in charge, and the workers, the athletes, are working for such a large profit, with no compensation towards them. To some this is the way it should be, but to others, they feels as if the athletes are being abused in a way that they are unable to fight back about. Therefore, do scholarships and free-living expenses make up for the billions of dollars these top tier athletes are bringing in? Or are these college athletes being abused by the billion-dollar industry that they help fuel? Some people view college sports as students at a school, representing their school through the act of a sport. However, the truth is that these college students fuel a billion dollar business that has no income for the actual “employees.” In Taylor Branch’s article, “The Shame of College Sports”, he continuously shows how these students are making so much money for the NCAA. According to Branch, “the football teams alone at some of the bigger schools rake in between $40 and $80 million in profits each year, even after paying the coaches multimillion-dollar salaries” (222). As he says, with these massive profits, corruption...

Words: 1759 - Pages: 8

Premium Essay

Pay Student Athletes

...rewards and benefits since the college, the conferences and the NCAA are making billions of dollars off of them. To be in a nationally televised game or making deep runs in tournaments can bring in a lot of money for the colleges and universities. But the colleges and the sponsors collect all of the profits and not a single penny goes to the student-athlete and that is unfair. Colleges and the NCAA are making these students basically their unpaid employees. The student-athlete put so much work into the current sport they are playing, in return they get nothing. In my opinion, the student athletes should get a stipend with the scholarship they are getting. The system of college sports is at fault; the student-athletes are making colleges and private companies billions of dollars while not getting anything for themselves. People do not see that the student-athletes have to go practice every day and only have a little time to study. According to Amy McCormick, a law professor at Michigan State, "Athletes don't have free choice of what major they take if the classes conflict with practice schedules. That’s one fact that flies in the face of the idea that they're primarily students and secondarily athletes” (Cooper, Kenneth J). And if they want to get a job and have some kind of money to spend, they cannot because of all their athletic obligations. I think the student-athletes should get paid for the money they are generating for the colleges. It is unfair to not pay them and make...

Words: 3075 - Pages: 13

Premium Essay

College Athletes Get Paid

...Madness and the College Football Playoffs are some of the most exciting sports events to view. The Super Bowl and NBA playoffs may be exciting too, but the key difference between professional athletes and collegiate athletes is that college athletes do not get paid. Many professional athletes play for money, so the passion may not be there. College athletes on the other hand, play for pride, their school, and for their team. The passion is obviously there, so it makes the game more intense, more energetic, and more intense. In recent years, a conflict has occurred as in deciding if college athletes should receive a salary or not. College athletes should not get paid...

Words: 1457 - Pages: 6

Premium Essay

Why Colleges Should Get Paid

...SPM 210 Why should College Athletes Get Paid? By Calvin Mainor E013280 11/20/2013   Under current NCAA regulations, "all student athletes are prohibited from receiving any payment for their efforts". Exploited athletes generate millions of dollars for their schools, and never see a dime. Is this fair? The universities, coaches, boosters, scouts for recruiting purpose are all getting paid off the players. But the major reasons why the stadiums and arenas are filled up are because of the players but they don’t see a penny of the money. Some universities build academic buildings on campus with the money that the players make for the school. Some coaches even get a percentage of the tickets revenue from the home games the players get nothing. The school pays coaches millions of dollars to coach the player who do the work. The college athletes are slaves to the schools and the coaches. The coaches treat the players as workhorses; the student-athletes can’t even choose their own major sometimes. The student-athletes can’t have a job so where are they supposed to get money from. People say that student-athletes get four-year scholarship, or a free education, but that is not true. Student-athletes only get a year to year scholarship which they can be dropped from the scholarship for a number of reasons. The idea of college athletes being slaves have to get settled for the greater good of athletes and institutions graduation rates. College sports are big business...

Words: 2093 - Pages: 9

Premium Essay

Summary: Should College Football Players Be Paid

...Alabama Crimson tide from 2011 to 2013, college football players should be paid because “In some way they’re (The NCAA) taking advantage of college athletes that sign their name to a certain school.” A few other reasons college football players should be paid is that they could get hurt and might not have enough money to get a good start on life after college, colleges have extra money for equipment, coaches, and fields, and college football players spend a lot of time playing their sport and don’t have time to get a full-time job. One reason that college football players should be paid is that they could get hurt and might not have enough money to get a good start on life after college. Health. US News says Former college football players were more than twice as likely to have physical problems that limited their daily activities and exercise. Sixty-seven percent of these former athletes said they had suffered a major injury. (“For Many College Athletes, the Payoff Is Lifelong Disabilities: Study”). These players focus all of their time on football, sometimes forty hours a week, and they blow out a knee, or roll an ankle, ruining their chance in the NFL. Shouldn’t they at least have a little money to cushion them out of college and get them on their feet? That’s the first reason college...

Words: 728 - Pages: 3

Premium Essay

Business Unit 3

...(M1) – Explain the points of view of different stakeholders seeking to influence the aims and objectives of the two contrasting organisations Task 4 * (D1) - Evaluate the influence different stakeholders exert in one organisation Task 1 * (P1) – Describe the type of business, purpose and ownership of two contrasting businesses The two businesses I have chosen are the Football Factory (private sector) and Maendy way Post office (public sector). The Football Factory is a private business. A private business is a business that is owned by public citizens, private businesses are owned by shareholders. Private owners risk their own money in trying to make as much money as possible. The purpose of the Football factory is to supply the public with its service which is indoor football pitches. A business that supplies a product or service like the football factory is normally a business that supplies a service or product to someone else with the return of payment. It is privately owned. A privately owned business is owned by individuals or shareholders and it tries to make as much money as possible. It is a private...

Words: 2336 - Pages: 10

Premium Essay

Paying College Athletes

...A Much Needed Stipend Your boss is making 7 million dollars per year and driving a luxury car. You, on the other hand, are working hard every day for free and living in poverty. Sure, you have a free place to live with meals and education included, but you have no extra money for other necessities. You did not save enough money in high school and your family does not have money to give you. You are a college athlete. Athletic boosters tempt the athletes with illegal benefits because most do not have money for their own use. The NCAA makes millions of dollars off a college athlete’s performance. The NCAA is a not-for-profit agency that does not operate like one. If college athletes received a yearly stipend from the NCAA, then they might not be lured to take illegal benefits and would have spending money to enjoy the college life experience and pay for needed college items, such as a computer or supplies. For those reasons, college athletes should be paid by the NCAA for the services they provide to their schools. Critics against student athletes being paid believe in the benefits of the athletic scholarship. However, past athletes received improper benefits, financial and otherwise. Reggie Bush accepted improper benefits when he played football for University of Sothern California. According to the article, “Paying College Athletes,” “…current NFL star Reggie Bush-had violated its amateurism rules when his family moved into an expensive home owned by a local...

Words: 1754 - Pages: 8

Free Essay

Gambling

...like Deal or No Deal, World Series of Poker, Celebrity Poker, Black Jack, some of these shows may not seem like gambling but as long as there is a risk there is a gamble. How many people knew of Texas Hold’em before ESPN started covering tournaments? And now you can’t go a day flipping through the channels without seeing some kind of poker or celebrity blackjack on television. As technology has improved our world by making things easier and more convenient, it has also made the gambling world easier and more convenient. With the rise of Internet gambling web sites, it is easier today more than ever to place a bet. You can see gambling every time you watch television. Whether it be game shows, card games, or just commercials, you see it. I love sports, so I watch ESPN to catch up on news and to see what is going on in the sports world. One day about 4 years ago I turned to EPSN and I saw a card game going on. I had no idea what it was, but I was interested and kept watching. Then, in between hands, the broadcaster introduced the game. The screen changed from a full casino with a lot of people, to just a table and a dealer showing how the game was played. After the overview of how to play the game, the...

Words: 1629 - Pages: 7

Free Essay

Movies

...teaching or giving the audience some type of understanding or knowledge of something that is new to them from the movie that was produced. In my personally opinion, when I first looked at the cover and tried to analyze the movie Jerry Maguire, I thought it is going to basically about a man playing football. But, when I looked at the movie I noticed that Tom Cruise’s costume was very flashy at the beginning of the movie and then towards the middle and at the end he started to dress down and appeared to be poorer than he was in the beginning. In the beginning he wore nice suits with his hair slicked down and in the middle and the end he wore jeans, a tee shirt, gym shoes, a khaki colored jacket, and his hair was kind of all over his head. What the movie meant to me is that Tom Cruise was trying to get his professionally and personally life together throughout the entire movie, by playing a sports agent. Then he realized that he had to make a choice between being honest and/or dishonest throughout his career. By him making the choice of being honest he end up losing his job and all of his cliental, except of one at his job. When he made that choice of being honest, I was thrilled because he chose the right thing to do. Even, though he lost his job in the process of being honest. The movie was mainly about a sports agent getting his life together and making some mistakes in the process. Tom Cruise started off...

Words: 1022 - Pages: 5

Premium Essay

Sports and Money

... Sports Now a Business Sports is now a money making business in the human culture. In the United States, Every day millions of office and break time conversations center on the local team’s most recent performance, an upcoming game, the impending draft, the current coach, the future coach, and so on. according to the existing records, in United States of America, there are less than 110 Teams of the 4 main organized professional sports, basketball, baseball, hockey, and, football participating in the main League level fixtures annually. There are less than 90 Stadiums spread over 25 States. Today, sports has become a money making alternative for not only players but also the coaches or managers, the media, and schools participating in sports. Salaries for professional athletes continue to escalate each year. From Alex Rodriguez’s record, $252 million contract to David Beckham’s $50 million per year enticement to join the LA Galaxy soccer team, most sports fans believe that professional athletes, in general, are overpaid and not worth their salaries. Yet for the professional athlete, maximizing compensation is critical, given the short careers and health risks associated with the sports profession. Thus, athletes and their agents often look to see what others within their sport are paid in an effort to negotiate for more money. Few, if any, have compared athlete compensation across sports (Rod Hilpirt, Scott Wysong, Sheila...

Words: 1816 - Pages: 8