The Economic Determinants of Professional Sports Franchise Values

Abstract

This article examines the effect of team nomenclature, team relocation, and new stadiums on franchise values for the four major professional sports. The results indicate that market size, team performance, and the presence of a new facility increase a team’s franchise value, as many would expect. Moreover, the authors find that the use of a regional identity increases franchise value in Major League Baseball (MLB) but not in the other professional sports. The authors believe this may reflect the fact that the other sports have institutional arrangements that minimize any differences among the various teams, unlike MLB.