The Sports Business in The Pacific Rim: Economics and Policy

385 Pages·2015·4.709 MB·English

by  Young Hoon Lee, Rodney Fort (eds.)

Sports Economics, Management and Policy
Volume 10
Series Editor
Dennis Coates
University of Maryland, Baltimore County Dept. Economics,
Baltimore, Maryland, USA
The aim of this series is to provide academics, students, sports business executives,
and policy makers with information and analysis on the cutting edge of sports eco-
nomics, sport management, and public policy on sporting issues.
Volumes in this series can focus on individual sports, issues that cut across sports,
issues unique to professional sports, or topics in amateur sports. Each volume will
provide rigorous analysis with the purpose of advancing understanding of the sport
and the sport business, improving decision making within the sport business and
regarding policy toward sports, or both. Volumes may include any or all of the fol-
lowing: theoretical modelling and analysis, empirical investigations, or description
and interpretation of institutions, policies, regulations, and law.
More information about this series at http://www.springer.com/series/8343
Young Hoon Lee • Rodney Fort
Editors
The Sports Business
in The Pacific Rim
Economics and Policy
1 3
Editors
Young Hoon Lee Rodney Fort
Seoul Ann Arbor
Korea, Republic of (South Korea) Michigan
USA
ISSN 2191-298X ISSN 2191-2998 (electronic)
ISBN 978-3-319-10036-4 ISBN 978-3-319-10037-1 (eBook)
DOI 10.1007/978-3-319-10037-1
Springer Cham Heidelberg New York Dordrecht London
Library of Congress Control Number: 2014950159
© Springer International Publishing Switzerland 2015
This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part
of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or
information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar
methodology now known or hereafter developed. Exempted from this legal reservation are brief e xcerpts
in connection with reviews or scholarly analysis or material supplied specifically for the purpose of
being entered and executed on a computer system, for exclusive use by the purchaser of the work.
Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright
Law of the Publisher’s location, in its current version, and permission for use must always be obtained
from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance
Center. Violations are liable to prosecution under the respective Copyright Law.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
While the advice and information in this book are believed to be true and accurate at the date of
publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for
any errors or omissions that may be made. The publisher makes no warranty, express or implied, with
respect to the material contained herein.
Printed on acid-free paper
Springer is part of Springer Science+Business Media (www.springer.com)
Preface
Pacific Rim sports institutions are not well understood and academic research on
sports business in the Pacific Rim appears only occasionally. Thus, academically,
the sports business in the Pacific Rim presents an extremely fertile yet relatively
untouched area of analysis. But there is also a growing (and we believe pressing)
need for understanding the sports business in this portion of the world based on the
rapid growth of the sports business sector in these economies. Following consistent
and rapid general economic growth, Pacific Rim countries have grown and joined
other major international forces in sports.
For example, four countries (Australia, China, Japan, Korea) populated the top
ten medals list at the 2012 London Olympics. Moreover, Pacific Rim countries
are major consumers of international sports and domestic professional sports have
expanded continuously over time. Nippon Professional Baseball and the Korean
Baseball Organization are the second and third largest baseball leagues, measured
by attendance and revenue, behind Major League Baseball in the USA. This growth
in size and stature assures that there is already demand for the types of comprehen-
sive study of the sports business in the Pacific Rim in this volume.
This volume of collected industry studies, The Sports Business in the Pacific
Rim is the first comprehensive effort in this direction. It covers sports industries
in five different countries (Australia, China, Japan, South Korea, and Taiwan) and
it was our express purpose to cover a wide variety of sports. Industry studies of
well-known team sports (baseball, soccer, and basketball) comprise part of this
book. However, sport is just as varied (and at times unique) in the Pacific Rim as in
the rest of the world and other chapters will also cover horse racing, bowling, and
rugby. Sports unique to this region are also special features—Sumo and Australian
Rules football. At the same time, the volume does not shirk on the issues of highest
interest to those studying sports, from competitive balance in Pacific Rim leagues
to sports governance structure.
The studies in this volume use economic and business analysis to examine the
institutions that exist in the Pacific Rim sporting world. These include descriptive
analyses of professional sports leagues that discuss history, regulations, attendance,
competitive balance, and revenue. In addition, there are chapters containing in-
depth analysis of the relationship between attendance and competitive balance,
v
vi Preface
the components of fan demand in common the world over, and business decisions
concerning attendance and pricing. There are overviews of the different ownership
models in Pacific Rim sports and the interaction between business and government.
There also are event studies of team ownership, assessment of human capital mar-
kets, sports participation, and community impacts of sports. Of course, the interna-
tional championship component, shared with the rest of the non-American world,
is covered as well.
Specifically, Part I includes studies on competitive balance, attendance and rev-
enue. Humphreys and Watanabe kick off the volume with a comprehensive intro-
duction that includes the foundation and growth of professional sports leagues in
East Asia, their hybrid use of North American and European methods of business,
and their regulation of sport leagues. Hirata and Szymanski examine the impact of
World Cup on league attendance in European countries compared with the 2002
Cup held in Japan and Korea. Joo and Oh overview the history of Korean Basketball
League (KBL) and analyze the impact of influx of foreign players on fan demand
and competitive balance in KBL. Jang and Lee consider the attendance determi-
nants of the Korean Professional Football League. They examine the heterogeneity
of governance structure, dynamic changes in territorial definition, and competitive
balance and their effects on attendance. Kim and Lee explore the evolution of the
sports broadcast market in Korea, identifying both common and unique features of
the Korean case and others around the world. Jane considers television viewership
of the World Baseball Classic held recently in Taiwan. In particular, Jane assesses
empirical evidence of Taiwanese consumer discrimination and the uncertainty out-
come hypothesis in that international competition. The Zheng and Fort chapter fo-
cuses on the highest-level professional basketball league in China. In addition to
providing an economic characterization of the evolution of that league, they also
track the behavior of competitive balance, with and without promotion and relega-
tion. Watanabe and Soebbing analyze attendance for professional football in China.
The Chinese Super League has introduced pricing structures unique in China and
the empirical analysis investigates how that pricing strategy affects attendance.
Part II focuses on sports governance structures in the Pacific Rim, which vary
dramatically from their counterparts around the rest of the world. Generally speak-
ing, major corporations support most professional sports teams in the Pacific Rim;
only a few teams operate business independently. In addition, international com-
petition is of growing importance and government oversight is often in play. This
heterogeneity provides some “natural experiments” for studying the relationship
between governance structure and fan demand. Leeds and Sakata estimates the ad-
vertising value of teams for parent companies by evaluating the impact of purchase
and sale of Japanese baseball teams on the profits of their parent companies. Fort,
Kang, and Lee provide an overview of the economic and business evolution of pro-
fessional baseball in Korea, with highlight comparisons to Major League Baseball.
They cover the state of revenues, costs, profits, team values, and the player labor
market as well as the state of competitive balance. Chen and Chen provide event
studies on Taiwanese sports leagues, as well as regression analysis, to analyze the
effect of sports teams on the value of parent companies. Macdonald and Burton
Preface vii
provide the legal and economic evolution of sports governance for the Australian
National Basketball League (NBL). They argue that continual financial instability,
along with power struggles between powerful individuals in the Australian sports
scene, has produced ineffective governance to date. Booth, Gilligan, de Zwart, and
Gordon-Brown move the analysis of sports governance in Australia to the level of
generic models, concluding that sports do not really provide a “special case” for
these models but that specific governance forms have had more influence in that
country’s sports non-profits.
Part III assesses human capital markets. Saito considers the effect of educational
background on players’ careers in Japanese professional baseball. A Mincer-type
salary regression provides evidence that educational background influences not
only player salary, but also eventual coaching careers for those players that move
on to that occupation. Lee and La Croix attempt to draw implications relevant to
human capital development from sumo wrestling. Their analysis supports labor
market theories on the relationship between worker performance and their portfolio
of skills; sumo wrestlers possessing a diverse portfolio of techniques that utilize
those techniques in unpredictable ways win more matches. Nakamuro, Yamasaki,
and Inui are interested in the question of whether investment in sports and athletics
matter for adulthood outcomes. Using a sample of Japanese twins to control for
innate ability and family environment, they find that sports participation during
childhood and adolescence can enhance likelihood of future employment, reduce
adulthood obesity, and improve health status. The Dabscheck chapter examines the
labor market environment for jockeys in Australia. Dabscheck offers two quite dif-
ferent contributions. In the first, Dabscheck shows how the labor market institutions
governing jockeys in Australia harm both jockeys and the evolution of the sport,
suggesting that jockeys should be employees rather than independent contractors.
In the second, the evolution and impacts of collective bargaining are presented for
two different Australian leagues in soccer and rugby; the soccer bargaining agree-
ment evolved before rugby, providing a historical panorama of learning by one
league from another.
Part IV on Sports and Community contains two chapters. The Yamamura con-
tribution compares two professional sports leagues (one with a short history and
another with a long history) for their enhancement of social capital formation. Even
though it was formed decades later, Yamamura’s bivariate probit regression sug-
gests that the Japanese Professional Football League (JPFL) has contributed more
to social capital formation than has the Japanese Professional Baseball League
(JPBL); people in the home city of JPFL teams play football with their neighbors
more than people in the home city of JPBL teams play baseball. Kim and Kwak
provide the history of the Korean professional football league (K-League) and a
case study focusing on the first supporter-owned club, Daejeon Citizen. The chap-
ter presents how local and regional identity helps construct team identification and
team loyalty from a social identity perspective.
Covering a novel sports business geographic location, a wide variety of gover-
nance structures, from a wide variety of academic perspectives, for a wide variety
of sports proved challenging. We hope that the reader new to this area is treated
viii Preface
to quick and easy access to sports business in a fascinating part of the world and
that old hands to the analysis of sports find that stimulates additional interesting
research questions, expanding their analytical horizons. In any event, we had fun
collating the work of so many esteemed colleagues and learned much in the process.
Contents
Part I Competitive Balance, Attendance and Revenue
The History and Formation of East Asian Sports Leagues .......................... 3
Brad Humphreys and Nicholas M. Watanabe
The J. League and the World Cup ................................................................. 25
Takeo Hirata and Stefan Szymanski
Foreign Players, Competitive Balance, and Fan Demand
in the Korean Basketball League .................................................................... 43
Hailey Hayeon Joo and Taeyeon Oh
Outcome Uncertainty, Governance Structure, and Attendance:
A Study of the Korean Professional Football League ................................... 59
Hayley Jang and Young Hoon Lee
The Sports Broadcasting Market in Korea ................................................... 83
Kihan Kim and Kimoon Lee
Customer Discrimination and Outcome Uncertainty
in the World Baseball Classic: The Case of the Taiwanese
Television Audience .......................................................................................... 103
Wen-jhan Jane
Uncertainty of Outcome and Promotion and Relegation
in the Chinese Basketball Association ............................................................ 123
Fang Zheng and Rodney Fort
Ticket Price Behavior and Attendance Demand in Chinese
Professional Soccer .......................................................................................... 139
Nicholas M. Watanabe and Brian P. Soebbing
ix