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The Economics of Sports FIFTH EDITION Chapter 6 The Public Finance of Sports: Who The Economics of Sports FIFTH EDITION Chapter 6 The Public Finance of Sports: Who Benefits and How? MICHAEL A. LEEDS | PETER VON ALLMEN

Building Stadiums • Cities dream that a new stadium will work wonders • They Building Stadiums • Cities dream that a new stadium will work wonders • They hope that it will attract new tourists who will – Generously spend before, during, and after the game and see other points of interest in the city • They see this as a way to revitalize old cities • They hope that fans will identify with the team • “New” is a key word Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -2

Learning Objectives • Show a new facility can increase a team’s revenue stream • Learning Objectives • Show a new facility can increase a team’s revenue stream • Recognize how new facilities might make fans better off even if they never attend a game • Appreciate how new facilities, new teams, or new events might contribute to a local economy—and why they generally add little. Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -3

6. 1 Teams Benefit From New Facilities • Construction costs for football and baseball 6. 1 Teams Benefit From New Facilities • Construction costs for football and baseball stadiums now approach or exceed $1 billion – Even basketball arenas cost over $600 million • Ebbets Field, a extravagant structure, cost $750, 000 when it was built in 1913 – Accounting for inflation, this is equivalent to a little over $17 million in 2011 – Something has changed! Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -4

Facilities, Attendance, And Profits • New facilities could attract people to the city • Facilities, Attendance, And Profits • New facilities could attract people to the city • Baltimore Orioles and Cleveland Indians attendance surged at first – Their retro parks became very fashionable • The surge did not last for either team – Attendance in 2011 was lower than in its last year at the previous park Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -5

The “Honeymoon Effect” • Studies show that a new park brings higher attendance for The “Honeymoon Effect” • Studies show that a new park brings higher attendance for about 10 years in baseball • The effect is shorter for other sports – Baseball games do not typically sell out, so there is more room for growth • Eventually, attendance is a result of wins Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -6

Facilities, Attendance, And Profits • The new Yankee Stadium drew fewer fans when it Facilities, Attendance, And Profits • The new Yankee Stadium drew fewer fans when it opened in 2009 – The depths of the recession – Nevertheless, ticket revenue rose • Ticket prices were much higher • This indicates low price and income elasticities • The biggest impact of a new facility is typically on the number, size, and price of luxury boxes and other special seating Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -7

LUXURY BOXES • NFL teams retain most of the revenue from luxury boxes • LUXURY BOXES • NFL teams retain most of the revenue from luxury boxes • The average NFL team has 140 luxury boxes, – Over 50 percent more than in the NHL, which has the second most boxes • The NFL’s reliance on luxury seating is still growing – Table 6. 1 shows financial and luxury seating information for the five most valuable NFL teams in 2010 – They also have the five highest revenue streams Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -8

Table 6. 1 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -9 Table 6. 1 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -9

6. 2 How Fans Benefit • We distinguish between fans and cities – Cities 6. 2 How Fans Benefit • We distinguish between fans and cities – Cities benefit from jobs, income, and tax revenue – Fans benefit from rooting for the home team • Fans’ benefits are often intangible – Attending a game in a new facility – Following the team even if they never attend a game Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -10

Size And Shape Of Baseball And Football Stadiums • In this section, we show Size And Shape Of Baseball And Football Stadiums • In this section, we show the size and shape of baseball and football have changed over the last 30 years • Baseball stadiums have shrunk • Football stadiums have grown • Baseball and football now have separate facilities • Table 6. 2 a lists capacities of shared stadiums in 19611982 • These large facilities were all similar and round – Cookie-cutter shape Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -11

Table 6. 2 A Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 Table 6. 2 A Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -12

Separate Facilities • Table 6. 2 b lists capacities of separate facilities • The Separate Facilities • Table 6. 2 b lists capacities of separate facilities • The size of baseball stadiums fell by about 10, 000 • The size of football stadiums rose by about 10, 000 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -13

Table 6. 2 B Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 Table 6. 2 B Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -14

Sea Change • Until the 1960 s, most football teams were tenants in stadiums Sea Change • Until the 1960 s, most football teams were tenants in stadiums built by baseball team owners specifically to house their teams • By the 1960 s, football had become increasingly popular, and municipalities were paying much or all of the construction cost – They chose to construct multipurpose stadiums – The size of the multipurpose stadiums was thus a compromise , too large for baseball and too small for football Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -15

Shape Depends On The Game • Football teams play on a standardized, rectangular field Shape Depends On The Game • Football teams play on a standardized, rectangular field • The bulk of the action takes place in the middle of the field • Seats at either end of the field give little perspective on the action and provide a poor view of most plays • See Figure 6. 1 for an ideal shape of a football stadium Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -16

Shape of a Baseball Field • Most of the action on a baseball field Shape of a Baseball Field • Most of the action on a baseball field takes place within the diamond that forms the infield • Best view is from a grandstand that extends outward from home plate along the foul lines • Figure 6. 2 shows the ideal shape for a baseball field • In contrast, Figures 6. 3 show a multipurpose stadium – It satisfies neither the football nor the baseball fan – Figure 6. 3 a shows the facility configured for baseball – Figure 6. 3 b shows the facility configured for football Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -17

Figure 6. 3 A Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 Figure 6. 3 A Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -18

Figure 6. 3 B Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 Figure 6. 3 B Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -19

Size And Shape of Basketball and Hockey Arenas • In the early years of Size And Shape of Basketball and Hockey Arenas • In the early years of professional basketball, hockey team owners frequently rented out their buildings to basketball teams when their teams were on the road • Table 6. 3 a shows that, as of the 2011– 2012 season, 11 basketball teams still shared arenas with 10 hockey teams • As seen in Table 6. 3 b, only four teams shared a city or location and did not share a facility Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -20

Table 6. 3 A Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 Table 6. 3 A Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -21

Table 6. 3 B Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 Table 6. 3 B Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -22

Shape of the Game • Hockey and basketball arenas have similar sizes and shapes Shape of the Game • Hockey and basketball arenas have similar sizes and shapes • Basketball and hockey teams move up and down rectangular surfaces, and scoring occurs at opposite ends of the rectangle • Conflict between basketball and hockey teams has been financial, not aesthetic – NBA teams tend to be primary tenants in their facilities – The most profitable hockey teams are all primary tenants in their facilities Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -23

Do New Facilities Create Better Teams? • Profit = R(w, A) - C 0 Do New Facilities Create Better Teams? • Profit = R(w, A) - C 0 - C(w) – Revenue (R) increases with wins, w, and decreases with the age of the team’s facility, A, as fans prefer to watch games in new facilities. – Cost has two components, • C 0 is independent of wins • C(w) increases with additional wins • C 0 rises with the new stadium, but C(w) does not • A new stadium increases profit if the added revenue exceeds the fixed cost C 0 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -24

A New Facility And Wins • When does a new facility increase wins? – A New Facility And Wins • When does a new facility increase wins? – When it increases the impact of an added win on revenue – That is, if fans are more attracted to a winning team when it plays in a nice new facility • Figure 6. 4 shows that if marginal revenue of a win is higher in a new facility – Teams with new facilities have a greater incentive to win • This is not observed in reality (Hakes & Clapp) • New facilities do not lead to more wins (Quinn et al. ) Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -25

FIGURE 6. 4 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -26 FIGURE 6. 4 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -26

Teams as Public Goods • Recall from Chapter 3 that a public good is Teams as Public Goods • Recall from Chapter 3 that a public good is nonexcludable and nonrival in consumption • Game attendance is not a public good • Being a fan of the team and feeling pride in it is – Teams are local public goods in the sense that the feelings they generate apply to a particular geographic area – “Red Sox Nation” • Local sports teams sometimes reflect the aspirations of rival ethnic groups – French Canada has long identified with the Canadiens – FC Barcelona fans fought for it during the Spanish Civil War • Providing public goods is one role of government Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -27

6. 3 How Cities Benefit from Teams, Facilities, and Events • One function of 6. 3 How Cities Benefit from Teams, Facilities, and Events • One function of government is to mitigate market failure that occur when – Markets fail to provide the right amount of public goods, – Markets overstimulate consumption of common resources – Markets become monopolized • In this section we focus on externalities Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -28

Externalities and Sports Facilities • Externalities are the uncompensated impacts of an action on Externalities and Sports Facilities • Externalities are the uncompensated impacts of an action on a third party – The firm does not take third party into account – It might not even know there was an impact • Externalities can be positive and negative • The rationale for public funding of a stadium or arena rests largely on the belief that the positive externalities of sports franchises outweigh the negative externalities for their communities Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -29

Figure 6. 5 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -30 Figure 6. 5 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -30

Negative Externalities • When a team plays a game, the spectators generate noise, overcrowding, Negative Externalities • When a team plays a game, the spectators generate noise, overcrowding, pollution, and traffic congestion – This has a negative impact on innocent bystanders – For example, nearby residents • The external costs are the health problems and inconvenience of those people who are affected by the noise, overcrowding, pollution, and traffic Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -31

The Impact of a Negative Externality • Firms’ have a private supply curve Sp The Impact of a Negative Externality • Firms’ have a private supply curve Sp P – Based on the cost of inputs • Intersection with D yields market outcome: Pp and Qp • Sp understates costs Sp – Some costs are borne by 3 rd Pp parties – Firm does not compensate them D QP Copyright © 2014 Pearson Education, Inc. All rights reserved. Q 6 -32

The Impact of a Negative Externality • Pollution is a social cost P – The Impact of a Negative Externality • Pollution is a social cost P – Imposed on third party – Not part of supply decision Ss Sp • Social supply curve: Ss – Includes private & social costs • Socially optimal outcome is (Ps, Qs) Ps Pp D Qs Copyright © 2014 Pearson Education, Inc. All rights reserved. QP Q 6 -33

The Market Fails • Quantity is too high (QP>QS) • Price is too low The Market Fails • Quantity is too high (QP>QS) • Price is too low (PP

Positive Externality • Facilities can become landmarks over time and generate pride of the Positive Externality • Facilities can become landmarks over time and generate pride of the residents • Sports facilities also bring benefits to the neighborhoods, cities, and metropolitan areas in which they are located • Many firms and households that have no direct connection to the facility see their incomes rise as a result of its construction • Because they do not compensate the team for locating in the city, local firms and households benefit from a positive externality Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -35

Figure 6. 6 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -36 Figure 6. 6 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -36

The Impact of a Positive Externality P • Again, producers weigh private costs and The Impact of a Positive Externality P • Again, producers weigh private costs and benefits S – Private benefits accrue to the firm’s customers – Set demand at Dp • Market outcome is PP, QP Pp Dp QP Copyright © 2014 Pearson Education, Inc. All rights reserved. Q 6 -37

The Impact of a Positive Externality • Social benefits might exceed private benefits • The Impact of a Positive Externality • Social benefits might exceed private benefits • Demand curve is actually DS – Quantity is too low (QP

The Market Fails Again • Too little is produced • The government can – The Market Fails Again • Too little is produced • The government can – Provide tax breaks – Subsidize production • This is the justification for stadium subsidies P S PS PP Ds Dp QP Copyright © 2014 Pearson Education, Inc. All rights reserved. QS Q 6 -39

Facilities, Spending, and Tax Revenue • New facilities generate many different forms of spending Facilities, Spending, and Tax Revenue • New facilities generate many different forms of spending – Constructing even the simplest of major league facilities produces hundreds of millions of dollars in spending and income – Once the facility opens, fans spend tens of millions of dollars to attend and enjoy a game – The spending by fans has a broad impact throughout the city Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -40

Table 6. 4 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -41 Table 6. 4 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -41

Direct Benefits • The direct benefit of the Cubs to Chicago is the new Direct Benefits • The direct benefit of the Cubs to Chicago is the new spending the team generates • New spending takes one of two forms – The Cubs might cause Chicagoans to spend more—and save less—than they otherwise would – More importantly, the Cubs stimulate net exports by Chicago • The Cubs sell their games to “foreigners”—residents from outside of Chicago Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -42

Estimating the Size of Benefits • According to the Fan Cost Index, a family Estimating the Size of Benefits • According to the Fan Cost Index, a family of four would spend ~$300 on a trip to Wrigley Field in 2012 • If the renovations to Wrigley Field attract 250, 000 additional fans and the index remains unchanged – They will generate over $18 million in additional spending per year • This overstates the impact on Chicago – Cubs fans would have spent much of that money elsewhere in Chicago if there had been no renovation to Wrigley Field or even if Wrigley Field did not exist Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -43

Direct Impacts are Often Overstated • Proper evaluation must count only new spending – Direct Impacts are Often Overstated • Proper evaluation must count only new spending – Much spending on teams is just reallocated – It would have been spent on another local activity • Teams are often conduits – not magnets – Revenue comes in – but it also goes out – Team pays salaries to players who live elsewhere – Items sold at concessions are typically made elsewhere Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -44

The Direct Benefits are Small • MLB generates less revenue than Fruit of the The Direct Benefits are Small • MLB generates less revenue than Fruit of the Loom • Three cities have all 4 major sports within city limits – Chicago, Denver, and Philadelphia – Chicago has 5 teams inside the city – The 4 sports combined account for less than ½ of 1% of total personal income in each city • The immediate effect of a new stadium on a city is thus small Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -45

Multiplier Effects • The direct effect is amplified by indirect effects – More spending Multiplier Effects • The direct effect is amplified by indirect effects – More spending generates additional income – Higher incomes increase spending • It is like throwing a pebble in a lake – The pebble generates ripples across the lake – The impact of a team spreads through the economy • Ripples in a lake slowly fade away – The impact on the economy also fades to zero – What determines the size of the ripples? Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -46

The Marginal Propensity to Consume (Mpc) • The MPC shows how much of the The Marginal Propensity to Consume (Mpc) • The MPC shows how much of the added income a consumer spends (DC/DY) – MPS = marginal propensity to save – MPC +MPS = 1 • A bigger MPC means bigger ripples – Added income generates more spending • Bigger ripples mean a bigger multiplier • The multiplier adds the ripple effects – It includes direct and indirect effects – The total effect is a multiple of the direct effect Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -47

The Arithmetic of the Multiplier • Let X = initial expenditure Y = total The Arithmetic of the Multiplier • Let X = initial expenditure Y = total change in income Then DY=$X+$MPC*X+MPC*X+… DY=$X*(1+MPC 2+MPC 3+MPC 4+…) – We know that MPC<1 – Therefore MPC > MPC 2 > MPC 3 etc. • The sum (1+MPC 2+MPC 3+MPC 4+…) is the multiplier – The sum equals 1/(1 -MPC) – If the MPC=0. 9 then the multiplier=10 • A $43 M direct impact has a total impact of $430 M Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -48

The Open Economy Multiplier • In a closed economy, a person either consumes domestically The Open Economy Multiplier • In a closed economy, a person either consumes domestically or saves • In an open economy, a person can purchase goods from abroad • Purchases of imports do not have a domestic ripple effect • MPI = marginal propensity to import • In a city, imports come from outside the city – The multiplier becomes 1/(1 -MPC+MPI) Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -49

The Multiplier for a Sports Franchise • Players get much of a franchise’s income The Multiplier for a Sports Franchise • Players get much of a franchise’s income – Players have more reason to save than others • Their high incomes last only a few years • The wealthy have lower MPCs – Athletes’ low MPC reduces ripples & multiplier • Much income leaks out of the local area – Few players & executives live in town – Leakages are especially severe in smaller cities • People spend their added income elsewhere • Local multipliers are closer to 1 than to 10 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -50

Studies of Economic Impact • Most studies examine how stadiums or teams affect economic Studies of Economic Impact • Most studies examine how stadiums or teams affect economic variables – Median income, employment, or wages – They find little or no impact • Recent studies have looked at property values – Property values reflect the desirability of a city to residents – Some studies find a positive impact • These findings now seem to stem from unique features of the data they used – Recent studies find a small impact that drops off rapidly as one moves away from the facility Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -51

Interest Groups & Public Choice • Public choice (PC) was developed by James Buchanan Interest Groups & Public Choice • Public choice (PC) was developed by James Buchanan – It won him a Nobel Prize • The central assumption of public choice is that politicians “economically” – They pursue their own self-interest – They act to maximize their political fortunes • PC helps to explain public funding of stadiums – Why funding happens even if it is economically inefficient – Why funding might be economically efficient Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -52

The Power of Interest Groups • Interest groups have: – Well-defined goals – Access The Power of Interest Groups • Interest groups have: – Well-defined goals – Access to political power – The advantages of interest groups • They can identify beneficial policies – They can organize to lobby for those policies – Individuals do not have the same incentives • They find it harder to identify the impact of a policy – The cost of individual action exceeds the benefit – Example: construction unions and stadiums Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -53

Majority Rule is not Always Efficient • Consider Pennsylvania’s dilemma in 2000 – Philadelphia Majority Rule is not Always Efficient • Consider Pennsylvania’s dilemma in 2000 – Philadelphia and Pittsburgh wanted stadiums – Assume a stadium brings large local benefits – It brings slightly higher taxes throughout the state • For simplicity – assume 3 sets of legislators – East, Central, and West – Eastern legislators want a facility in Philadelphia – Western legislators want a facility in Pittsburgh – Central legislators oppose any facility Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -54

The Bill Fails with Majority Rule • Western & Central legislators oppose a stadium The Bill Fails with Majority Rule • Western & Central legislators oppose a stadium in Philadelphia • Eastern & Central legislators oppose a stadium in Pittsburgh • 2/3 of legislators vote against each stadium • Even if the overall benefits outweigh the overall costs, the bill fails Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -55

The Benefits of Logrolling • By trading votes – logrolling – voters can express The Benefits of Logrolling • By trading votes – logrolling – voters can express how strongly they feel • Legislators from East and West agree to vote for the other’s stadium • Both stadiums are built even though 2/3 actually oppose each project Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -56

Location, Location • A city maximizes the positive externalities associated with a sports franchise Location, Location • A city maximizes the positive externalities associated with a sports franchise if it integrates the facilities into the urban fabric – Baltimore tried it with Camden Yards – Cleveland tried it with Jacobs (Progressive) Field as well as with Gund (Quicken Loans) Arena • These attempts were not resounding successes – The best is not very good • The construction of these new stadia started a “retro” craze Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -57

The Urban Ballpark • Nostalgic fans today want downtown facilities – – They complain The Urban Ballpark • Nostalgic fans today want downtown facilities – – They complain about facilities on the outskirts Or even outside the “home” city Sometimes they were not even in the “home” city The Arlington Cowboys play the East Rutherford Giants • Nostalgia is not what it used to be – The old ballparks were not built downtown – Yankee Stadium was built in “Goatville” – Philadelphians felt that Shibe Park was too far away • It was on the site of a hospital for communicable diseases – Cities grew up around the old ballparks Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -58

Cars and Costs • Suburbanization created a new need – Where to park the Cars and Costs • Suburbanization created a new need – Where to park the cars? – Connie Mack Stadium had only 200 spots • The result in later eras: “a sea of asphalt” • Stadiums are “space intensive” – Create problems for a downtown location – Space costs money we will see why in Chapter 7 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -59

The Impact of Special Events • Special events are large, one-time events – They The Impact of Special Events • Special events are large, one-time events – They are also called mega-events because they tend to be larger than regular season games – Examples include the Super Bowl, World Cup, or the Olympics – There are not ongoing events, like a franchise • A special event is more likely to draw tourists from outside the region and thus have a greater impact on the local economy Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -60

Retrospective Studies of Mega-events • Does the Super Bowl bring in new money? – Retrospective Studies of Mega-events • Does the Super Bowl bring in new money? – It is often held in tourist areas (e. g. , Miami ) – Does it just displace other tourists? • Porter’s study of the Super Bowl – Compares spending in counties with Super Bowls to those in counties that did not host one – Finds little or no impact Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -61

Retrospective Studies of the Olympics • Baade and Matheson studied the 1984 Olympics – Retrospective Studies of the Olympics • Baade and Matheson studied the 1984 Olympics – They found little effect on the Los Angeles economy – The Games brought some tourists in but kept others away • Conflicting findings for the 1996 Atlanta Games – Hotchkiss et al. find they increased employment and pay – Baade and Matheson claim the impact was transitory – Fedderson and Maenning confirm Baade and Matheson’s results Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -62

Prospective Studies of Mega-events • Event studies look at investors’ expectations – How does Prospective Studies of Mega-events • Event studies look at investors’ expectations – How does an event affect expected profits? – Can measure using stock market data – Can apply to specific firms or to entire economies • Several studies ask how the announcement that a country will host the Olympics affects stock markets • The findings are mixed – No impact found for Sydney Games in 2000 – Positive effect found for Athens Games in 2004 – Small, temporary effect found for Beijing Games in 2008 Copyright © 2014 Pearson Education, Inc. All rights reserved. 6 -63