Market Power, Exclusive Rights, and Substitution Effects in Sports

In: The Antitrust bulletin: the journal of American and foreign antitrust and trade regulation, Volume 61, Issue 3, p. 423-433

Abstract

This articles argues that consumers of professional sports leagues are not always better off with more sellers because market power can be exerted in many ways. In the presence of one governing body, allowing individual firms to sell a product can be more harmful than a monopoly. Some recent antitrust lawsuits dealing with North American sports leagues have focused on collective sales through the league compared with competitive sales through teams. This paper gives examples where it is not clear that team sales are better than league sales. Furthermore, we argue that market power depends largely on fan substitution within and across leagues, including NCAA sports. We give a summary of recent research in the area of fan substitution, and suggest directions for future work on understanding substitutability and impacts on market power of professional and collegiate sports teams.