Letting Time Serve You: Boot Camps and Alternative
LEAGUE STRUCTURE & STADIUM RENT-SEEKING—THE ROLE OF ANTITRUST REVISITED David Haddock, Tonja Jacobi & Matthew Sag* ―O wad some Power the giftie gie us‖† Abstract Professional North American sporting teams receive enormous public funding for new and renovated stadiums after threatening to depart their hometowns, or by actually moving elsewhere. In contrast, English sporting teams neither receive much public money for such projects, nor move towns. This Article argues that no inherent cultural or political transatlantic variations cause the differences; rather, it is the industrial organization of sports in the two countries—the structure of league control—that enables rent-seeking by American teams but not by their English counterparts. Cross-country time series data contrasting American professional football and baseball stadiums with English soccer grounds support our claim, as does data contrasting the stadiums of geographically flexible National Football League teams with those of functionally immobile major collegiate football teams. North American sports leagues are cartels: they control entry of teams, then collaborate to maximize effective rent-seeking, stave off competition, and keep prices high. In most of the world, competitive merit determines entrance into leagues via a system known as promotion and relegation, which demotes the worst performing teams in one competitive tier to the next lower tier at season‘s end, simultaneously promoting an equivalent number of top teams from the division below. The fluidity created by promotion and relegation severely undermines the credibility of a team‘s threat to leave town by creating alternative, less costly entry points into the league. Open entry * Professor, Northwestern University School of Law & Department of Economics; Professor, Northwestern University School of Law; Associate Professor, Loyola University Chicago and Visiting Fellow at Northwestern‘s Searle Center on Law, Regulation, and Economic Growth.
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