nep-spo New Economics Papers
on Sports and Economics
Issue of 2004‒12‒20
two papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior, Portugal

  1. The College Football Association Television Broadcase Cartel By John J. Siegfried; Molly Gardner Burba
  2. Thinking About Competitive Balance By Allen R. Sanderson; John J. Siegfried

  1. By: John J. Siegfried (Department of Economics, Vanderbilt University; American Economics Association); Molly Gardner Burba (Private Investment Banking Company LLC, New York)
    Abstract: The College Football Association (CFA) sold rights to broadcast live games of its members from 1984 through 1995. It competed directly with the Big Ten and Pac Ten universities that sold an alternative broadcast package. Each of the duopolists dominated certain geographic areas, so that they retained much of the monopoly power of the single NCAA cartel that they replaced. The CFA restricted output in order to elevate rights fees, and limited entry into the Association. The broadcast rights fees it collected substantially exceeded marginal cost. This article examines how the number of sellers, entry conditions, product homogeneity, and the elasticity of demand fostered the cartel, and how the cartel prevented cheating on the agreement. Eventually, disputes over the distribution of the rents led to defections. Penn State and Notre Dame left in 1990 and 1991. When the Southeastern Conference struck out independently after 1995, the CFA collapsed. It sealed its books on June 30, 1997.
    Keywords: Cartels, CFA, College football, football television broadcasting, NCAA
    JEL: L83
    Date: 2003–09
  2. By: Allen R. Sanderson (University of Chicago); John J. Siegfried (Department of Economics, Vanderbilt University)
    Abstract: Simon Rottenberg long ago noted that the nature of sports is such that competitors must be of approximately equal ability if any are to be financially successful. In recent years, sports commentators and fans, Major League Baseball itself, and even some economists have expressed growing concern about the widening disparities among team expenditures and the growing concentrations of postseason contenders and championships. In this article we compare different concepts of competitive balance, review the theoretical and empirical scholarship on competitive balance and the relationship between payrolls and performance, describe the natural forces and institutional rules and regulations that contribute to observed distributions of playing performances, and evaluate the likely impact of several popular proposals ‚ payroll and salary caps, luxury taxes, and increased revenue sharing ‚ on competitive balance. Although the focus is on baseball, we make frequent comparisons to other sports leagues, including collegiate athletics and individual sports.
    Keywords: baseball, competitive balance, sports leagues
    JEL: L83
    Date: 2003–09

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