ADV 378S Lecture Notes - Lecture 1: Quasi, Revenue Sharing, A.D. Vision

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10 May 2016
School
Department
Course
ADV 378 Jan 27:
Uniqueness of Sports
oLike entertainment, it’s a want not a need
oFocus is on the person, not the property
oAgents negotiate and market their players
oPlayers work under the ruses of unions
oAthletes have highly variable careers
oAmateurism concept (unlike entertainment)
oMedia expansion has evolved sports into a large/complex industry
oCartel Structure (owners)
oCompetition is intentionally limited (OPEC)
oExclusive franchises (One team one market)
oMembership is limited, the product is controlled
oLeagues control how many teams play in which cities, how many players play,
how revenue is divided
Despite fierce on the field competition, close cooperation on important matters
oLabor issues
oBroadcasting
oMerchandising
oRevenue sharing
Teams, league governing bodies and athletes are always wrestling with the balance of
power, causing fairly constant issues and controversy
Courts have been asked to determine the impact of anti competitive actions of leagues
and organizations. These challenges have yielded complex and often inconsistent legal
conclusions
Cartel structure: restricts free and open competition
Cartels are not just for professional sports
By agreement, sports organizations and leagues have centralized power over facets of
the business
oFranchise Authority
oMarketing and Licensing
oBroadcasting (affects competitive balance in MLB)
oRelationship with Government
oRestrictions on player salaries and movement
oTax Advantages/depreciation
oExclusive right to rent or own stadiums/arenas
oQuasi public nature/taking on the character of the market (community asset)
oFan loyalty. Un-businesslike, intense, withstands lack of success
How do sports limit competition?
oLoyalty of the fan
Not rational, emotionally based compared to a loyal customer
Entertainment leisure
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