Sports economics are a large part of the economy at the local level and at the national level. Why is this aspect of the economy so overlooked? Sports are only a successful venture when the fans are doing well. When regular base jobs and can afford to go to the games – that is when sports do well because they have more money to put into it.
Sports generate revenue from ticket sales, merchandising, and television/radio airtime. The ticket sales fluctuate with how well the team is doing. Likewise, merchandise sales are affected by whether there is a star player on a team or if it is a lot of new players. All of these variables make it difficult to foresee how much a team or league will make per year.
Television and radio airtime is a whole different ballgame (no pun intended). Teams make money when they make contracts on the local level to have every game picked up. The national level is when it starts to get fuzzy. On some occasions the league has a deal with a major cable network, then all of that money goes right back into the league and is disbursed to the bad teams. In this practice, the good teams are shorted because they are the teams that bring the most viewers to the games but they do not receive the revenue unless they make the contract themselves.
An example of how well a team did do with a network contract would be the Atlanta Braves and TBS network. The Atlanta Braves have spread their fan-base very well because they reached out to the entire south instead of just focusing on Atlanta and Georgia. By making a contract with TBS, the Braves et themselves up to be seen across the country on a regular base. This synergy helped to bring the Braves more revenue to put back into their club and into their local economy.
With the economy all hazy and in turmoil, people are looking for someone to blame. Sports are certainly not to blame because sports have been putting the money back into the economy and helping to grow it. This is just a reminder that the economy is not all about Wall Street.