Economics of sports

Stadium Ownership and Incentives to Relocate

One economic model to determine why and how teams relocate uses three agents. The three factors that are used are: the franchise owner, the stadium owner, and the local government. The assumptions that are made are that the franchise owner is primarily concerned with the net revenues of his team, and that the goal is profit maximization. The major determinants of net revenue are players salaries, stadium rent, television income, ticket revenue, capital gains from franchise value, and subsidies from the local government. The stadium owner is also concerned about net revenue and the local government is concerned with two things: the presence of the team and the cost of subsidies to the taxpayer.

P(Mi = 1) = ZiBn + B1Si + Ei