Collective versus Individual Sale of Television Rights in League Sports

Abstract

In many countries, the collective sale of television rights by sports leagues has been challenged by the antitrust authorities. In several cases, however, the leagues won in court, on the ground that sport is not a standard good. In this paper, we investigate the conditions under which the sale of television rights collectively by sports leagues, rather than individually by teams, is preferred from a social welfare point of view. We find that collective sale is socially preferable when (a) leagues are small and relatively homogeneous in terms of clout and (b) teams get little performance‐related revenues. (JEL: L10, L83)

Supporter Influence on Club Governance in a Sports League: A 'Utility Maximization' Model

“…18 The fan utility microfoundation essentially generalises that of Falconieri et al (2004) who assume the specific Cobb-Douglas form…”

“…Given the supply assumption, this seems appropriate, but differs from the social welfare specifications analysed in Falconieri et al (2004) who also have the perfectly elastic supply assumption. Also, with quasilinear utility for fans (footnote 11), maximization of this aggregate surplus equates in the usual way to Pareto efficiency, legitimising the use of If one thinks of an aggregate surplus maximizing planner with the power to influence the nature of club governance via the utility weights, then the optimum for this planner will imply that for each club either the weight on win percentage is zero, or profits are zero in the resulting U-league equilibrium.…”

The Effect of Salary Caps in Professional Team Sports on Social Welfare

“…Furthermore, we assume a constant marginal utility of quality and define the net-utility of fan θ k as max{θ k q − p, 0}. At price p the fan who is indifferent 7 We derive league demand in exactly the same manner as Falconieri et al (2004). Our approach, however, differs in an important aspect.…”

“…Instead we use a slightly different quality function. The quality function q in Falconieri et al (2004) is always increasing in own talent investments, i.e. ∂q ∂x i > 0, no matter how unbalanced the league becomes.…”

Antitrust Analysis of Sports Leagues

“…each game by one party." (p. 18) Falconieri, Palomino, and Sákovics (2004) compare social welfare under the individual and collective sale of broadcast rights. They argue that social welfare depends on three effects: a bargaining power effect, a prize effect, and a free-riding effect.…”