Professional sports have undergone a lot of changes from the past decades relative to the present eras. There are many noticeable changes in various aspects: in the teams’ location, the people who own the team, in the structure of management matters, in the stadium buildings, names of the teams and many more others. Impact on the economy for these changes has been the center for the recent search related to sports by the sports economists. There is money that is put aside by the sports economists to cater for sport-related agendas such as motivating team relocation and construction of new stadiums which has generated considerable attention. The logic behind the movement of franchises and the construction of new stadiums has been considered, and the economist has attempted to measure the impact of these changes upon outcomes. This includes how employment is going to rise and how it is going to affect the economic growth generated locally and in regional economies.
Professional sports franchise values are however increased by the market size, how a team performs, and the presence of a new facility. In Major League Baseball (MLB), franchise value is increased by the use of regional identity and not in other professional sports. This is because the other sports have an institutional arrangement. An institutional arrangement always minimizes any differences that might be experienced among the various teams which are not the case of the major league baseball (MLB). Through this, it is advisable to use the regional identity as it has a positive impact on the professional sports franchise value.
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Surprisingly, the impacts generated from team relocation, construction of new stadiums and regional identities have the small magnitude to the franchise value considering the size of the public subsidies teams receiving the new revenues brought about by these changes. Putting into consideration the claims Hamilton and Khan 1997, and Noll and Zimbalist 1997 too, the results have been proven to be consistent over time. The Noll and Zimbalist argue that they raise the salaries of the players each time whenever the new stadiums enhance the net franchise revenues that forces them to raise costs. They further argue that the net franchise values are almost proportional to the revenues that they generate and any revenue received from the new stadiums should automatically go to the players. Complains have reached the relevant authorities that the additional revenues obtained from the new facilities have been used to put players away from each other rather than putting them together thus, raising the overall payment levels in the professional sports. Hamilton and Kahn have demonstrated this regarding Baltimore Orioles moving to Camden Yards making the net revenues to increase by $23 million per year. It allowed more spending on the players resulting to salaries to increase by $22 million annually which is consistent to the claim that Noll and Zimbalist's players captured a larger percentage of the economic rents that were generated by the changes made. That is not the only outcome. For instance, Washington Redskins and the Cleveland Indians recent sales suggest that even the former owners are in a position to capture some economic rents as well. It is hard to determine the amount captured by the players and that of the owners depending on the change captured by the franchise value.
Forbes valuations done in the year 2018 for the National Football League (NFL) which is the most powerful sports league in the world shows that the American football team, Dallas Cowboys is at the top and the most recognized team for the 12 th straight year. The NFL has unmatched broadcast contracts having twenty-nine teams out of the fifty known most valuable sports franchises. The Cowboys are the first franchise to partner with a casino after they inked a partnership with the Win Star casino. Dallas Cowboys is valued at $4.8 billion. This is a fourteen percent increase from the previous $4.2 billion.
For this reason, Dallas Cowboys has remained the most valued sports franchise in the entire world for the third year consecutively. The Dallas Cowboys have revenue of $840 million which is considered as the highest. Their earnings are $350 which is also the highest of any franchise. The owner and the general manager of Dallas Cowboys is Jerry Jones whose net worth is $ 7.0 billion as per last year. There operating income is $350 million with Dallas having five championships. They played and won Super Bowls VI, XII, XXVII, XXVIII, and XXX. The Dallas Cowboys players’ expenses differ from year to year. In 2016 the player expenses were $196 million, 2015 it was $190 million, 2014 and 2013 were $148 million and $ 164 million respectively. Their gate receipts also changed yearly. For instance, in 2013 the gate receipts were $89 million, in 2014 the gate receipts were $98 million, 2015 the gate receipt was 98, 2016 and 2017 it was $103 million and $108 million respectively. As per the year 2018, the price paid to Cowboys was $150 million. Their revenue was at $864 million, the operating income $365 million, debt value of the team 7%, player expenses $190 million, the gate receipts at $108 million, the wins to player cost ratio at 115, the revenue per fan $81, and the metro per fan at 7.2 million.
References
Frantz, J. B., & Julian Ernest, J. (2016). The American cowboy: The myth and the reality . University of Oklahoma Press.
Gonzales, S. (2018). Are NFL teams getting the most out of their wins? The Efficiency of Year-End Revenues of Ten NFL Teams (Doctoral dissertation, Augusta University).
Leeds, M. A., Von Allmen, P., & Matheson, V. A. (2018). The economics of sports . Routledge.
Scelles, N., Helleu, B., Durand, C., & Bonnal, L. (2016). Professional sports firm values: bringing new determinants to the foreground? A study of European soccer, 2005-2013. Journal of Sports Economics , 17 (7), 688-715.
