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A model of professional sport franchises is introduced and used to explore the locational and other determi nants of profitability. Particular attention is paid to the effect of location on attendance, market power, and long-run team quality. Whe n estimated using data for the National Hockey League in 1977-78, the model indicates that location has an effect on each of these and tha t their combined effect on profitability is effective in explaining p rior and subsequent decisions concerning league expansion and franchi se relocation. A number of other matters are also addressed, includin g league arguments for antitrust exemption and league policies to res trict expansion.
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Jones et al. (1988) studied this question.
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