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Monday, April 21, 2003

The Economics of Relegation

Ranked divisions in sports are all but unheard of in American sports--while minor leagues do exist, there is no "promotion" or "demotion" based on regular-season performance as is common in Europe. Much analysis has been written on the impact of this on the economics of sports leagues and sports teams. How does it affect local communities and economies, though?

Arnold Kling last week posted on the economics of sports stadiums, arguing "that cities should own sports franchises, so that both the benefits and the costs of sports teams would be socialized." A story in the Guardian about soon-to-be relegated English Premiership football (soccer) club Sunderland makes for depressing reading on this score. The cases are different, it must be conceded, but the shows that impact of socialized sports teams in a community need not always be favourable.