CORE Metadata, citation and similar papers at core.ac.uk Provided by Munich RePEc Personal Archive MPRA Munich Personal RePEc Archive Antitrust Analysis of Sports Leagues Gregory Pelnar Lexecon 12. October 2007 Online at http://mpra.ub.uni-muenchen.de/5382/ MPRA Paper No. 5382, posted 20. October 2007 Antitrust Analysis of Sports Leagues Gregory J. Pelnar Lexecon 332 S. Michigan Ave. Suite 1300 Chicago, IL 60604 (312) 322-0238
[email protected] Draft: October 12, 2007 Table of Contents Introduction 7 Chapter 1: What Is a Sports League? 9 A Brief History of the Major Sports Leagues in the United States 9 National Football League 10 Major League Baseball 12 National Basketball Association 13 National Hockey League 14 National Collegiate Athletic Association 16 Major League Soccer 18 Women’s National Basketball Association 19 Key Differences Between Sports Leagues 20 Sanctioning Bodies as a Form of Sports League 22 Economic Theories of Sports Leagues 23 Sports leagues as natural monopolies 23 Sports leagues as joint ventures 25 Sports leagues as cartels 27 Chapter 2: Basics of Antitrust Analysis 29 The Antitrust Laws 29 Exceptions to the Antitrust Laws 30 Judicial ‘interstate commerce’ exemption 30 Judicial ‘single-entity’ exemption 34 Statutory exemptions 37 Non-statutory exemptions 39 Proving Antitrust Violations 41 Proving violations of section 1 of the Sherman Act 41 Proving violations of section 2 of the Sherman Act 43 Proving violations of section 7 of the Clayton Act 49 - - 2 Chapter 3: Sports Leagues vs. Their Own Member Teams 51 Basics of Cartels 51 Basics of Joint Ventures 53 Externalities 56 Organizational problems 56 Joint venture instability 57 Team Antitrust Challenges to Sports League Rules and Policies 57 Public ownership restrictions 58 Sponsorship and licensing arrangements 61 Dallas Cowboys 61 New York Yankees 64 Television restrictions 67 NCAA 68 Chicago Bulls 72 Team relocation 75 San Francisco Seals 76 Oakland Raiders 77 San Diego Clippers 80 New England Patriots 81 Chapter 4: Sports Leagues vs.