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Optimal gate revenue sharing in sports leagues

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  • PEETERS, Thomas

Abstract

Sports leagues constitute one of the few examples of legally operating cartels. In this paper I examine how gate revenue sharing may serve to coordinate talent investments within these cartels. I show that sharing revenues has the potential to raise cartel profits, because it decreases the incentive to invest in playing talent. Leagues consisting of teams with heterogeneous local markets should share less revenues to maximize profits, whereas homogeneous teams should share more.

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File URL: https://www.uantwerpen.be/images/uantwerpen/container1244/files/TEW%20-%20Onderzoek/Working%20Papers/RPS/2011/RPS-2011-015.pdf
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Bibliographic Info

Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2011015.

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Length: 23 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:ant:wpaper:2011015

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Postal: Prinsstraat 13, B-2000 Antwerpen
Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/
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Keywords: Cartel behavior; Revenue sharing; Sports leagues;

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  1. Frederic Palomino & Jozsef Sakovics, 2004. "Inter-league competition for talent vs. competitive balance," ESE Discussion Papers 96, Edinburgh School of Economics, University of Edinburgh.
  2. Eberhard Feess & Frank Stähler, 2009. "Revenue Sharing In Professional Sports Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(2), pages 255-265, 05.
  3. David Forrest & Robert Simmons & Babatunde Buraimo, 2005. "Outcome Uncertainty And The Couch Potato Audience," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(4), pages 641-661, 09.
  4. El-Hodiri, Mohamed & Quirk, James, 1971. "An Economic Model of a Professional Sports League," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1302-19, Nov.-Dec..
  5. PEETERS, Thomas, 2010. "TV revenue sharing as a coordination device in sports," Working Papers 2010005, University of Antwerp, Faculty of Applied Economics.
  6. Amy Farmer & Paul Pecorino, 2010. "Is the Coach Paid too Much?: Coaching Salaries and the NCAA Cartel," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 841-862, 09.
  7. SZYMANSKI, Stefan & KÉSENNE, Stefan, 2003. "Competitive balance and gate revenue sharing in team sports," Working Papers 2003003, University of Antwerp, Faculty of Applied Economics.
  8. Lawrence M. Kahn, 2007. "Markets: Cartel Behavior and Amateurism in College Sports," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 209-226, Winter.
  9. Scott E. Atkinson & Linda R. Stanley & John Tschirhart, 1988. "Revenue Sharing as an Incentive in an Agency Problem: An example from the National Football League," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 27-43, Spring.
  10. Szymanski, Stefan, 2001. "Income Inequality, Competitive Balance and the Attractiveness of Team Sports: Some Evidence and a Natural Experiment from English Soccer," Economic Journal, Royal Economic Society, vol. 111(469), pages F69-84, February.
  11. Donald G. Ferguson & J. C. H. Jones & Kenneth G. Stewart, 2000. "Competition Within A Cartel: League Conduct And Team Conduct In The Market For Baseball Player Services," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 422-430, August.
  12. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
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