Edited by Eva Marikova Leeds and Michael A. Leeds
The creation and evolution of a sports league give sports economists an opportunity to examine the nature of institutions that they otherwise accept as given. One new league to enter the sports entertainment business is the Women’s National Basketball Association (WNBA). Motivated by the gold medal won by the US women’s basketball team in the 1996 Olympics, the league began organizing in 1996 and playing in 1997. The original league was composed of eight teams – four of which have since folded. Expansion, relocations, and bankruptcies have all followed in the subsequent 14 years. In 2011, the WNBA consisted of 12 teams located in markets all across the United States. Not surprisingly, the league has experienced considerable growing pains. Obtaining reliable data on the profitability of any sports franchise is always difficult, but according to USA Today the typical WNBA club was losing about $1.5 to $2 million per year in 2006 (Steeg, 2007). Thus, the league was still losing millions of dollars per year as recently as 2007. While the WNBA was finally expected to turn a profit in 2009 (TVNZ, 2009), it has yet to publicly confirm that it has done so. Many of the WNBA’s claims about its finances appear overly optimistic. For example, while the league claimed that its most recent long-term broadcast contract would be worth ‘millions and millions of dollars’, it refused to disclose any details of its financial impact on teams (Evans, 2007).
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