Marginal Revenue and Over-Paid Athletes

Paper Summary:

The writer of the paper contends that a celebrity enjoys a potential revenue fetching force that has to be exploited by the firms or institutions that market the fame of the celebrity. The author then examines and discusses the question that, if we accept that a celebrity can and will fetch revenue by his or her participation, is the very high premium paid for their endorsement or participation justified? The writer uses examples from both the world of entertainment and sports to illustrate and support his conclusions. The paper is heavily annotated.

Outline:
Introduction
The celebrity Endorsement and Profits
Looking at the Model
The Economics of Endorsement
Conclusion
Citations

From the Paper:

"The public which is enamored of a person, and a person who creates successfully a following for himself or herself in the chosen activity commands the power of bargaining for not only participation, but for the use of the image, endorsements of products, news worthiness and corporate advertising and marketing. In considering such activities, particularly sports, there are two aspects of the financial implications and there is evidence to show that team sports like cricket or football have lesser profitability and small clubs with marginal operations cannot compete with famous ones and the monopoly in profits is always held by the popular city club. A sports club cannot generate a positive cash flow for the reason that there is a potential fear of political involvement and therefore such clubs show the balances in negative. Sports franchisees fare better with the capital appreciation of the stock."

Sample of Sources Used:

• Ackerman, Frank. The Political Economy of Inequality. Island Press.
• Dogan, Stacey L. Lemley, Mark A. What the right of publicity can learn from trademark law. Stanford Law Review, vol. 58, no.5. February, 2006. p. 1161-1164.
• Goff, Brian. How Seriously Do Teams Take the NFL Combine? 26 February, 2007. <http://www.thesportseconomist.com/archive/2007_02_01__arch_file.htm>
• Grandpre, Vincent M. de. Understanding the Market for Celebrity: An Economic Analysis of the Right of Publicity. <http://law.fordham.edu/publications/articles/200flspub6506.pdf>
• N. A. Measuring the competitiveness of sport: are the top teams getting too strong?<http://www.economicsnetwork.ac.uk/archive/maths_worksheets/competitiveness_in_sport1.doc>

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