Sports at all levels involves interesting governance issues. Sports involves many types of organizations including corporations, privately held companies, nonprofit organizations and international organizations. Sport contains many examples of the private provision of public goods. For example, games played by professional and college sports teams have some aspects of public goods. Local public policies, for example the subsidization of professional sports facilities, directly involve sport and represent important national issues. Organizational outcomes in sport can be readily observed and quantified facilitating empirical analysis. These aspects of sport make the topic an excellent fit for Economics of Governance, which motivates this special issue on the Politics of Sports.

The special issue, co-edited by Brad Humphreys and Yang Zhou, contains nine papers addressing interesting governance issues in sport. Two address high-profile athletic competitions that involve international organizations and the enforcement of international agreements: the Olympic Games. Two address a high-profile and current local public policy issue: the public subsidization of construction of new professional sports facilities. Three examine the relationship between state level politics and policies and the sports industry. One paper undertakes a theoretical analysis of an important economic governance issue in intercollegiate athletics: the enforcement of amateurism regulations. A final paper addresses a governance issue common to teams and leagues around the world: how to regulate interactions between fans of different teams before, during, and after competitions. Taken together, the papers in this special issue address a number of topics of interest to economists studying issues in governance and provide new insight into a number of important research areas in the economics of governance.

The subsidization of new professional sports facility construction represents a pervasive governance issue in cities across North America. Despite the private activities that take place in these facilities, state and local governments provided tens of billions of dollars in taxpayer funds to new facility construction since 1970. Proponents of these subsidies argue that new facilities generate tangible economic benefits and provide exhaustive lists of potential economic benefits but no credible evidence that they actually occur. A large body of peer-reviewed research finds no evidence such benefits exist, highlighting the importance of a comprehensive analysis of these claims. Two papers in this special issue empirically address novel areas in this debate.

Arif, Hoffer, Humphreys, and Style analyze the impact of new professional sports facilities on inter-city migration. Facility subsidy proponents often claim that a new stadium will act as a magnet to draw new residents to cities. This paper debunks such claims, finding no evidence of any changes in migration flows in or out of cities following the opening of a new professional sports facility using a rich data set based on Internal Revenue Service tax filing information and a difference-in-differences approach.

Subsidy proponents also frequently claim that economic redevelopment around new sports facilities will increase the value of nearby property values, adding to local property tax collections. John Charles Bradbury analyzes assessed property values around a new baseball stadium in suburban Atlanta using a synthetic control approach. The paper finds no evidence of increased assessed value of nearby property, again debunking a common, but previously unanalyzed claim made by subsidy proponents. Both papers use causal inference methods, strengthening the results.

The Olympic Games represent one of the most prominent sporting events in the world. The governing body for the Game, the International Olympic Committee (IOC), is an international nongovernmental agency with substantial regulatory power and no oversight. The IOC regulates athletes and coordinates activities among hundreds of National Olympic Committees providing an interesting environment for research on governance. Two papers explore important issues associated with IOC regulations and the hosting of the Games.

Schneider, von Allmen and Munk develop evidence that IOC regulations generate spillover effects in economic activity outside Olympic-related activities. The paper exploits a change in the IOCs regulation of Olympic participation by ice hockey players in a difference-in-differences model to analyze the impact of its rule change on attendance at professional ice hockey games in North America. The results show that the rule change generated statistically and economically significant increases in attendance following the rule change, suggesting a broader impact of IOC regulations than previously believed.

Matti and Zhou analyze the impact of hosting the Games, and success of national teams in the Games, on political ideology in individual countries. The paper analyzes a series of global surveys over a forty year time frame in a regression model containing variables reflecting success of national teams in the Games and identifying countries that hosted the Games. The results show no impact of national team success, but hosting the games produced a negative impact on several forms of political ideology towards government, including confidence in the local government. The Olympic Games can affect national political beliefs.

Rodney Fort undertakes a theoretical analysis of an important aspect of the regulation of intercollegiate athletics by its governing body, the National Collegiate Athletic Association (NCAA). Like the IOC, the NCAA, a nongovernmental organization, wields substantial regulatory power over a high-profile and economically significant economic sector, big-time college sports. Regulation of amateurism in college sports, effectively restricting the earnings of college athletes to include only college tuition and fees, room and board, and a small stipend (euphemistically called “laundry money”), represents a controversial action because the games played by these athletes generate enormous revenues for collegiate athletic departments.

Critics of NCAA amateurism regulations, while numerous, typically make unfocused, non-economic arguments in their criticism. Fort develops a political economy model to provide a solid economic foundation for this regulation and to understand the nature of the criticism leveled against these regulations. Fort also develops a model to explain how NCAA enforcement of amateurism works, which also sheds important light on NCAA governance. The key insight in the model – enforcement of amateurism regulations creates an economic transfer from athletes (including many minorities from impoverished backgrounds) to university administrators, provides important evidence supporting the need for reform of the NCAA’s governance of college sports. The model also develops testable predictions that will inform future empirical research.

Institutions matter, and this also holds true for sports. Bykova and Coates investigate the relationship between state-level economic and personal freedom and match outcomes in Major League Soccer (MLS) from 2004 to 2018 seasons in the United States, to examine the role of economic and personal freedom in determining team performance. The paper argues that when players and teams operate in an institutional environment with more freedom, it is easier for them to negotiate the contracts and execute certain strategies in the best way they deem appropriate. The authors find evidence supporting a positive effect of economic freedom on team performance, in the form of a negative effect of less freedom. High personal freedom is not found to have statistically significant effects on team performance, but low freedom is found to reduce it. These results have broader implications than just for MLS. MLS has the most control over players among the major leagues in the U.S., thus teams in other leagues may receive an even larger benefit by being located in a state with more economic freedom.

Politics shape the institutional environment for all economic activities, including sports industry. But evidence suggests that individuals and organizations in the sports industry can play a significant role in politics. In democracies, elections are affected by many factors, including donations. Political economy models predict that elected officials represent the preferences of median voters, thus demographic characteristics of political sectors represent and influence the other sectors like sports, and not necessarily via policy channels. The following two papers examine the relationship between politics and sports in two democracies, the United States and Germany.

Hayduk contributes to the literature on political donations and election cycles. In this study, Hayduk analyzes about 2,800 donations made by nearly 160 sports team owners across six professional sports leagues in the United States during the 2016, 2018, and 2020 election cycles. It finds not only donation heterogeneity across different leagues but also different effects of these donations across elections cycles. In particular, team owners’ donations accurately reflect their ideological preferences. For example WNBA owners’ donations tend to be made to more progressive candidates. Meanwhile, team owners on average make more moderate donations during presidential elections than during midterms, which can be viewed as a strategy of the owners, since the two types of elections have different donor pool sizes.

Lesch, Kerwin, and Wicker investigate the relationship between state politics and sports governance at the federal state level in Germany. The authors find that only 20.1% of the board members in sport governing bodies are women, which suggests a lack of diversity and may generate economic inefficiencies. Regression analysis finds that the share of women in sport governing bodies is positively related to the share of parliamentarians from the Social Democrats and the Green party, and the opposite relationship is found for the share of Liberals and Social party in the parliament and for the number of Conservative ministers in the state. Finding a relationship between the share of women in state political bodies and the share of women in sports governance in each state, this study identifies spillover effects from the political sector which impact the institutional environment.

Finally, Depken, Hoffer, and Kidwai analyze the impact of group identity on discrimination in an experimental setting. The paper employs power-to-take dictator games using fans of rival sports teams to generate in-groups and rival groups and finds evidence of strong differences between takings ratios for in-group and out-group members. Since sports fans frequently interact, and these interactions can generate substantial frictions, the results can help to inform sports league policy making and governance.

We thank the editors of Economics of Governance, Ami Glazer and Marko Koethenbuerger, for this opportunity to extend the governance literature to include research on governance in sport, and to highlight the important connections between governance, institutions, and sports. We believe that this special issue will be of interest to economists engaged in research in governance and in sport, and we hope these papers spur additional research in this area.