must read it...The Arena of Sports Economics-An overview

The Arena of Sports Economics-An overview
A familiarity with some basic economic concepts would be useful.
1. The first economic issue is one of limited means and unlimited needs.
All the more true for a country such as India which even today has a large number of diverse economic needs to satisfy. There may be need for food for survival for a large number of people.
At the same time needs of industry and of other sectors have to met. Again, many wish to enjoy whatever comforts that are possible to enjoy within their earning capacity. For eg. Leisure goods like tourism, sports.
2. A basic approach in economics is to take the case of an individual consumer and then generalise. An individual human being tries to balance the satisfaction deprived/sacrificed of money paid as price with the satisfaction level achieved through consumption/purchase of a good. ‘Good’ being defined as a product [result of production] which satisfies human demand.
For us it could be ‘sports’. So for us sports is a product.
3. For any product there has to be demand and to meet/satisfy this demand there must be production which results in supplying the product to the consumer/user.
So, in the product market there are forces of demand and supply.
4. Demand is determined by price of the good, income available/disposable with the user/consumer, social values, ‘fashion’, relative prices of other goods [substitutes and complementary] and so on.
For eg. Why is one going to see a cricket match or viewing it on TV or listening to commentary or reading about it? Well probably because it is an important part of social conversation/interaction. Similarly, if the cost of transport [complementary good] is high then one may not view it and use a cheaper mode of enjoying the match.
5. Supply is determined to a great extent by the existence of consumer demand as expressed through the price consumers are willing to offer.
For eg. If a spectator is willing to pay the same price for a soccer match in India that is the same/higher than for a cricket match then plenty of soccer matches would result.
Supply is also determined by cost of producing the product, profitability of investment, govt./authorities’ rules and regulations etc.
6. If we consider sports to be product then we have to also take into account the market structure. For eg. Is the market less or more competitive?
The degree of competition is important. In sports increasing competitiveness attracts more viewership/spectators for players/teams closely matched and revenues increase. There is the possibility of designing competitive events to see whether players perform differently based on prize structure.
However, each sport would have its own market structure depending on demand, profitability and resources.
7. Firms/companies/clubs/teams produce in the hope of gains which we can broadly describe as ‘profits’. That is, what is left for the owners after meeting all costs of production.
However, profits and winning may not be the only objective.
8. An important aspect apart from consumption and production is DISTRIBUTION of produced goods and services. Through the market or otherwise whatever is produced reaches the final users/consumers usually unequally. In economic theory there may be the eventual equalisation of earnings, theoretically, due to movement between regions/occupations/clubs. In the real world of course this never occurs.
Opportunities differ between regions and social groups. If these differ then earnings would differ. And so would abilities to earn more and also to enjoy more consumption.
In case of many countries ‘race’ is an important social group discrimination basis. Another is region. This gets reflected in access to sports as players/participants. In India apart from region there are other issues like language [state-wise], culture, religion, caste etc.
9. A related issue is the role of the govt. and private companies/clubs/teams in the supply/provision of goods and services.
Govt. or state support may help in reducing certain equalities. However, govt. role brings along with it bureaucratic control/intervention and red-tapism. Govt. role is not favourably looked upon and may result in arbitrary and discriminatory decisions. On the other hand in the EU group of countries the state is trying its best to consciously end racial and regional discrimination in and through the medium of sports.
10. Sports economics also includes the topic of Development Economics.
The issue of inequality/relative backwardness is therefore not only relevant at intra-nation level but also between nations. The UNO is giving special attention to this issue. Producing/promoting sports is a means of helping in the development process.
11. Statistical techniques used in economics for analysis, data presentation are very useful for those administering sports. For eg. While ‘rating’ a player it is desirable to analyse performance and even ‘glam’ values, which may be measured in viewer response to sports events.
12. ‘Commercialisation’ of sports is given as an argument to focus on performance without linking it to earnings of sport-persons. Business executives’ earnings are driven by the same logic tournaments. In companies and tournaments, rewards are based on relative, not absolute performance — one player needs to play better than another to win. The more money at stake, the harder people play.
Why should not sports persons, players and others not profit/benefit monetarily? What about acting or other arts?
13. Advertising and marketing are areas in which sports economics has many applications. Rather gathering information casually data can be analysed with statistical analysis. This would help in getting more revenue.
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Issues related with sports economics course:

1. There are as one can see enough opportunities for those with knowledge of this discipline. Administrators, policy-makers, ad agencies and others need qualified people.
2. Sports economics developed mainly after WW II. Prior to that sports was considered important for humanitarian and social reasons. Sports economics helps the business of sports.
3. In India for a long time hospitality and tourism were considered useful for other reasons like foreign tourists visiting India for its historical sites. Domestic tourism has now developed in a big way. Leisure activities like sports are now getting increasing response from citizens in India. This indicates the growing market for sporting events. Moreover, India has to have a better position in sports than it currently has. Sponsorship by companies is vital and sports economics matters in this context.
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Project:
1. Analyse the role of sports economics in the field of marketing.
Or
2. Suggest ways in which sports economics can help policy-makers.
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