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Broadcasting, Attendance and the Inefficiency of Cartels

Author

Listed:
  • David Forrest
  • Rob Simmons

    (Department of Economics, The Management School, Lancaster University, LA1 4YX, UK. Tel.: +44-1524-594234; Fax: +44-1524-594244)

  • Stefan Szymanski

Abstract

The English Premier League is a cartel of soccer teams that collectively sells the rights to broadcast its matches. Despite considerable demand for their product from broadcasters, the clubs agreed to sell only a small fraction of the broadcast rights (60 out of 380 matches played each season between 1992 and 2001). The clubs have explained this reluctance by claiming that increased broadcasting would reduce attendance at matches and therefore reduce cartel income. However, this paper produces detailed econometric evidence to show that broadcasting has a negligible effect on attendance and that additional broadcast fees would be likely to exceed any plausible opportunity cost. The paper concludes that a more likely explanation for the reluctance to market their rights is the failure of the cartel to reach agreement on compensation for individual teams.

Suggested Citation

  • David Forrest & Rob Simmons & Stefan Szymanski, 2004. "Broadcasting, Attendance and the Inefficiency of Cartels," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(3), pages 243-265, May.
    • Handle: RePEc:kap:revind:v:24:y:2004:i:3:p:243-265
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    References listed on IDEAS

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    1. Cramton, Peter C & Palfrey, Thomas R, 1990. "Cartel Enforcement with Uncertainty about Costs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 17-47, February.
    2. Roberts, Kevin, 1985. "Cartel Behaviour and Adverse Selection," Journal of Industrial Economics, Wiley Blackwell, vol. 33(4), pages 401-413, June.
    3. Fiona Carmichael & Janet Millington & Roberts Simmons, 1999. "Elasticity of demand for Rugby League attendance and the impact of BskyB," Applied Economics Letters, Taylor & Francis Journals, vol. 6(12), pages 797-800.
    4. Jaume García & Plácido Rodríguez, 2002. "The Determinants of Football Match Attendance Revisited," Journal of Sports Economics, , vol. 3(1), pages 18-38, February.
    5. Baimbridge, Mark & Cameron, Samuel & Dawson, Peter, 1996. "Satellite Television and the Demand for Football: A Whole New Ball Game?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(3), pages 317-333, August.
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