Thursday, January 05, 2006

(Just another) reason to love football, not baseball

Am now reading this interesting book. Love to read the passage (pp.3-4):

U.S. sport leagues are closed. Team owners carefully control the number of franchises and their locations. Generally, each team is granted a monopoly over a given territory. Teams extract substantial public subsidies for their facilities. When leagues expand, existing owners charge a handsome entry fee to new owners. Limits are set on roster size. Leagues benefit from a variety of antitrust exceptions.

In the English model, leagues are open. In each country where soccer is played (save the United States), there is a hierarchy of leagues. Poorly performing teams from higher leagues can be relegated to a lower league, and strong teams from lower leagues can be promoted. New teams can enter leagues at the bottom of the hierarchy without paying an entry fee to existing owners and work their way up to hugher leagues. Teams are not conferred territorial monopolies and usually can not extort public subsidies from local governments to support facility construction.

Well, monopoly, high rent suprlus and limited competition on the one hand, versus greater competition and lesser rent surplus on the other hand. As an economist, I know which one to choose...

P.S. I made another entry regarding this book in "A Gallery of Mind."

2 comments:

Anonymous said...

But remember in NBA they have several rules to keep the big team dominating the game simply because they have the money (salary cap, draft system). Whereas in football (soccer if you prefer) as long as you have the money you can buy any player you want. Which one is more “market friendly” then?

Ujang said...

I commented elsewhere that the length to which the US pro-sports try to level the playing field is bordering on ridiculous.

At the risk of being repetitive, let me quote again "...when you look at the business of professional sports—in both Europe and the United States—American sports are virtually all socialistic while the European soccer leagues more closely resemble the entrepreneurial capitalism we Americans fetishize...."(full article).