I am doing an economics assignment called Economics in Sports. I need to identify factors of supply and demand, elasticity and non monetary costs of economics in sports.
There are a tremendous number of factors involved in sports that have to do with supply, demand, elasticity, and non-monetary costs. These factors can have to do with the choices made by team owners, by players, by fans, and by others such as city governments and television networks. Let us examine a few of these factors.
The supply of various types of players can fluctuate. For example, there is a very low supply of classic centers in NBA basketball. This is because of cultural trends as larger players want to play facing the basket more than they once did. The supply of teams is also rather tight. There are only a set amount of teams in each league and many leagues are wary of expanding. This helps bring about situations such as the one in which Steve Ballmer paid a reported $2 billion to buy the LA Clippers NBA team. We can also look at factors that affect the supply of college bowl games. The number of bowl games has increased dramatically in the past decade. This is largely because outlets like ESPN have perceived that they can make money by staging and airing these games. All of these are factors that have to do with supply in various areas of sports in the US.
The demand for various kinds of players fluctuates just as the supply does. As passing has become more important in the NFL, talented left tackles, who protect the blind side of right-handed quarterbacks, have come to be in greater demand. This has helped to increase the salaries paid to such players. Conversely, as power running disappears from the game, there are fewer fullbacks than ever and salaries for fullbacks are low. Of course, demand for sports on TV is a major driver of the economics of sports. Because people want to watch sports so much, sports networks can thrive and they can charge high prices to cable systems that want to carry them. One factor that affects demand is consumer tastes. The NFL right now has to worry about whether consumer tastes will turn away from football as we learn more about the damage that is done to players by the game. This could potentially reduce the demand for football in the future.
Elasticity of demand is generally connected to how badly people want a certain product. This goes for elasticity of demand in sports as well. People are generally willing to endure price hikes if they want a sporting product badly enough. This is why popular sports teams can increase the prices that they charge for admission to their games. It is also why leagues can command high prices for the rights to broadcast their games on TV. There are no substitutes (in the minds of the consumers) for these products and so they are willing to pay high prices.
There are non-monetary costs involved in sports. Perhaps the most obvious of these is the time that it takes fans to “consume” the product. Fans who go to games have to spend time in traffic getting to the game. They have to get from the parking lot to the stadium and wait in line to enter. They have to do all of this in reverse after the game. Fans who stay home have fewer costs, but they too have to take the time to watch the game, time which is increased by the presence of so many commercials in broadcasts. This issue is one factor that causes ruling bodies of many sports (Major League Baseball, for example) to seek ways to shorten their games.
All of these are examples of economics in sports, but there are a practically unlimited number of further examples that could be put forward.