Book Review: Topics in Sports Economics by Miceli,T. J.

Topics in Sports Economics by Thomas Miceli offers a textbook introduction to sports economics that is targeted primarily at upper-level undergraduate economics students.

Sports have many economic applications, which is why the subject is useful for introducing the economic way of thinking to students, and Miceli's version covers many topics that instructors will want to explore in their courses. An asset of this book's approach to the subject is its succinctness, more so than most traditional modern textbooks. There are no side vignettes with applications or anecdotal detours, just getting down to business. It is a straightforward approach that I appreciate.

The book begins with an introduction to the business of sports, examining professional teams as firms, with profit-maximizing (or perhaps win-maximizing) owners who adopt appropriate pricing strategies to achieve their goals. There are plenty of mathematical models and graphs that will challenge economics majors who expect more than a general review of basic economic applications. Miceli presumes that readers possess an understanding of calculus and game theory, which makes it suited for advanced elective versions of sports economics courses that many economics departments offer.

From there, the text naturally progresses to the examination of leagues, using models of imperfect competition, which are highly applicable to the sports marketplace. The unique aspects of sports, such as the differences in market sizes, the role of visiting fans, public-good spillovers, and extensive market power are unique attributes of the market environment in which teams operate. As Neal (1964) famously described, the “peculiar economics of professional sports” requires teams to simultaneously compete with each other for profits, but they need each other to compete on the field by providing a compelling on-field product, which requires a degree of cooperation that is not found in other industries.

As such, there is extensive discussion of the role of competitive balance among teams, as well as regulations that leagues often implement with the stated goal of promoting equality of playing strengths, such as salary caps, revenue sharing, and the reserve clause. However, these restrictions are also imposed for the nefarious purpose of extracting wealth from teams’ chief input, labor. Player salaries are pushed up as owners seek to buy wins—whether for personal glory or profit—and thus teams seek means to keep wages down or by finding innovative new ways to succeed by playing “moneyball” to identify new avenues for on-field success.

Miceli examines not only the role of rules that determine labor compensation, but also how on-field rules affect player choices in games, which includes examination of models of criminal behavior, informal enforcement among players, and mandated safety equipment. Just like in all walks of life, sports examples demonstrate that incentives matter for predicting human behavior, which is easy to observe within the controlled settings that games provide. For this reason, sports have proved to be a valuable laboratory for economics researchers.

Given the location of the author, the book unsurprisingly has a North American focus. However, concepts with which most U.S. students are not intimately familiar, like promotion/relegation, are discussed in ways that they can stimulate interesting classroom discussions. It is always useful to consider alternative institutions to better understand the structures we have, and I think some questions are best left open for students and instructors to explore freely.

Miceli's U.S. focus also has the attribute of examining sports organizations that most of the world considers odd, such as college athletics, which has largely operated as an unchecked monopsony cartel for much of its existence. The vertically integrated structure of the minor leagues for talent identification and development is another American feature that the book describes.

The last chapter is devoted to policy issues, with brief explorations of gambling, public financing of sports venues, and racial/gender discrimination. It is understandable that not every issue that instructors might wish to be covered can be thoroughly examined in one book, but all these subjects have become more prominent recently, particularly gambling, which instructors and students will likely wish to explore. As with any course, supplementary content is needed, and the wealth of additional materials means that professors seeking to plan their courses around this book can easily cover these relevant subjects.

On the whole, Miceli has provided a concise review of sports economics that could be used as a main text for an undergraduate sports economics course or assigned as a complement to a more traditional long-form textbook. No matter how instructors may choose to use it, Topics in Sports Economics is a useful addition to the economics of sports library.