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Australia Suggests New Professional Sports Leagues for the Twenty-First Century James B Marquette Sports Law Review Volume 12 Article 8 Issue 2 Spring Media Leagues: Australia Suggests New Professional Sports Leagues for the Twenty-First Century James B. Perrine Follow this and additional works at: http://scholarship.law.marquette.edu/sportslaw Part of the Entertainment and Sports Law Commons Repository Citation James B. Perrine, Media Leagues: Australia Suggests New Professional Sports Leagues for the Twenty-First Century, 12 Marq. Sports L. Rev. 703 (2002) Available at: http://scholarship.law.marquette.edu/sportslaw/vol12/iss2/8 This International Perspective is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. For more information, please contact [email protected]. MEDIA LEAGUES: AUSTRALIA SUGGESTS NEW PROFESSIONAL SPORTS LEAGUES FOR THE TWENTY-FIRST CENTURY JAMES B. PERRINE* INTRODUCTION .............................................................................................. 707 CHAPTER ONE-DEVELOPMENT AND STRUCTURE OF TRADITIONAL PROFESSIONAL SPORTS LEAGUES: THE NEED FOR COLLECTIVE ACTION AMONG INDEPENDENT CLUBS .............................................. 710 I. TRADITIONAL PROFESSIONAL SPORTS LEAGUES IN THE UNITED. STATES ................................................................................................ 710 A. BarnstormingTeams ................................................................... 710 B. TraditionalProfessional Sports Leagues .................................... 710 II. TRADITIONAL PROFESSIONAL SPORTS LEAGUES IN AUSTRALIA ....... 713 III. COOPERATION AMONG INDEPENDENT CLUBS IS THE CORNERSTONE OF TRADITIONAL PROFESSIONAL SPORTS LEAGUES IN THE UNITED STATES AND AUSTRALIA ........................................... 715 IV. PRODUCTS OF A TRADITIONAL PROFESSIONAL SPORTS LEAGUE ....... 717 CHAPTER TWO-PROBLEMS AFFECTING TRADITIONAL AMERICAN AND AUSTRALIAN LEAGUES ATTRIBUTABLE TO THEIR STRUCTURAL ORGANIZATION ................................................................................... 720 I. PROBLEMS RELATED TO ACHIEVING COMPETITIVE BALANCE IN A TRADITIONAL LEAGUE ....................................................................... 721 * Associate, Covington & Burling; J.D., University of Alabama School of Law; LL.M., Yale Law School; J.S.D., Yale Law School. This article was written to fulfill the academic requirements for the J.S.D. degree from Yale Law School. Through his involvement with Covington & Burling, the author has represented the National Football League on various litigation and corporate matters. The views expressed in this article, however, are solely those of the author and not of the NFL or Covington & Burling. All errors are the author's alone. Though a recipient of many favors and much support during the writing of this article, the author especially acknowledges the assistance provided by the following individuals and institutions, without which this work would never have been completed: Dr. William H. and Shirley Perrine, George Priest, Stanton Wheeler, Quintin Johnstone, the late Ralph Brown, Barbara Safiriet, Judy Couture, Kathryn McMahon, Rodney Stenlake, Lisa Epifani, Dr. Howard K. Bowman, Yale Law School, University of Sydney Faculty of Law, and the American-Australian Fulbright Commission. MARQUETTE SPORTS LA W REVIEW [Vol. 12:703 A. Lack of Competitive Balance in Major League Baseball............ 721 B. FranchiseFree Agency in the NFL ............................................. 727 II. LABOR MARKET PROBLEM: MINIMUM AGE REQUIREMENT IN THE N B A .................................................................................................... 732 III. CONFLICT BETWEEN INDIVIDUAL CLUBS AND A CENTRAL COMPETITION ORGANIZER: REDUCTION OF INDIVIDUAL CLUBS IN THE NATIONAL RUGBY LEAGUE ......................................................... 736 IV. COLLECTIVE ACTION PROBLEMS IN AMERICAN AND AUSTRALIAN TRADITIONAL PROFESSIONAL SPORTS LEAGUES REDUCE THE QUALITY OF THE LEAGUES' PRODUCTS TO THE DETRIMENT OF PURCHASERS ....................................................................................... 748 CHAPTER THREE-MEDIA LEAGUES: AN ALTERNATIVE TO PURCHASING PRODUCTS FROM TRADITIONAL LEAGUES ......................................... 753 I. EXPLANATION OF THE MEDIA LEAGUE CONCEPT .............................. 753 II. FACTORS FAVORING MEDIA LEAGUE FORMATION ............................ 757 A. The Relationship Between ProfessionalSports Leagues and Mega-Media Companies and the Effect of the Integration of the Media and Telecommunications Markets .......................... 758 1. Importance of mega-media companies to professional sports leagues ......................................................................... 758 2. Importance of professional sports leagues to mega-media com panies .............................................................................. 758 3. Convergence of the media and telecommunications markets ................................................................................... 76 1 4. Convergence increases mega-media companies' demand for professional sports programming ..................................... 763 5. Mega-media companies' attempts to secure access to professional sports league content ......................................... 764 a. Mega-media companies' ownership of individual clubs in traditionalprofessional sports leagues ....................... 764 b. Mega-media companies' equity investment in playing facilities........................................................................... 767 6. A media league provides a mega-media company with advantages over traditional means of procuring professional sports league programming ............................... 769 a. A media league reduces uncertaintycosts associated with contractingwith traditionalleagues for transmission rights .......................................................... 769 b. A media league enables a mega-media company to create multiple brands ofprofessionalsports 2002] MEDIA LEA GUES programmingaccording to its needs ............................... 773 c. A media league provides synergy to a mega-media company .......................................................................... 775 B. Globalizationof ProfessionalSports Leagues ............................ 778 C. Single Economic Entity Structure of a Media League Reduces the Threat ofAntitrust Law Challenges to its Operations....... 780 D. A Mega-Media Company's Ability to Innovate in Response to Changing Consumer Preferences ............................................ 782 E. Availability ofPlayers for a Media League................................. 783 III. A MEDIA LEAGUE HAS THE CAPABILITY TO AvoID THE PROBLEMS PLAGUING TRADITIONAL LEAGUES IN THE UNITED STATES AND AUSTRALIA ....................................................................785 A. Single Entity StructureAllows a Media League to Avoid the Collective Action Problems Associated with Traditional Leagues .................................................................................... 785 B. A Mega-Media Company's Ability to Address Problems Particularto TraditionalLeagues: FranchiseFree Agency and Community Ownership of Clubs in a Media League ..... 786 IV. OBSTACLES TO MEDIA LEAGUE FORMATION AND SUCCESS .............. 789 A. Government Regulation of a Mega-Media Company's Production,Distribution and Exhibition of Sports ProgrammingOver Multiple Media Plaforms........................ 789 1. Restrictions in the United States on vertical integration of producing, distributing and exhibiting programming content ................................................................................... 790 a. Vertical integrationin the motion picture industry: Paramount Pictures and its progeny................................ 790 b. Vertical integrationof the production, distributionand exhibition of television programming: FCC'sfinancial interest and syndicationrules ......................................... 792 c. Absence of restrictionson a mega-media company's verticalintegration of a professionalsports league........ 795 2. Anti-siphoning regulations .................................................... 796 a. Review of anti-siphoningregulations .............................. 796 i. United States ......................................................... 796 ii. Australia ................................................................ 801 b. Constitutionallaw challenges a mega-media company may assertagainst anti-siphoning rules appliedto a m edia league ................................................................... 804 i. United States ......................................................... 804 ii.A ustralia ................................................................806 MARQUETTE SPORTS LAW REVIEW [Vol. 12:703 B. Players' Challenges to Restrictive Employment Conditions in a M edia League ....................................................................... 809 1. Single economic entity structure of a media league limits the legal bases in the United States and Australia upon which players can challenge restrictive employment conditions ............................................................................... 810 a. UnitedStates .................................................................... 810 b. A ustralia........................................................................... 812 2. Fragmented ownership of a media league may endanger its single entity structure: Fraserv. Major League Soccer ........ 816 C. Acquisition
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