ADV 378S Lecture Notes - Lecture 4: Luxury Box, Naming Rights, Profit Sharing

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10 May 2016
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ADV 378 Feb 8:
What needs do Leagues fulfill?
Player and owner discipline
Revenue control/sharing
Evolution of activities to maximize revenue and fan interest
Foster competitive balance for long term common good
Expansion and relocation of league franchises
Organizing seasons and championships
Unifying rules of play
Set conditions of entry, location, relocation
Negotiate pooled broadcast rights
Protect the “closed structure” of the league
Allows independent owners to realize gains unavailable unilaterally
Triangle of Tension
Commissioner, Owners, Players
Famous Socialists?
Central planning
Redistribution of income
Collective strength more important than that of individual teams
Cartels
An association of supplies that maintain high prices to restrict competition
How do owners limit competition?
Control the number of teams and players
Share certain revenues
Centralized league wide negation strategy for labor, media, licensing
Cooperation is a condition of membership
Define and grant territorial rights
Is it legal?
Anti trust issues
oSherman anti-trust law
No one can limit competition that hurts consumers
oUnreasonable restraint of trade
o“two or more”
oare sports leagues
Single organization?
Multiple members with a single aggregation of economic power
Who can legally limit competition?
Single Entity Model
Drawbacks to the traditional model
Disparity of revenues and payrools
Antitrust vulnerability
Labor issues
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