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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.

Suggested Citation

  • PEETERS, Thomas, 2011. "Optimal gate revenue sharing in sports leagues," Working Papers 2011015, University of Antwerp, Faculty of Business and Economics.
    • Handle: RePEc:ant:wpaper:2011015
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    References listed on IDEAS

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    1. 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.
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    More about this item

    Keywords

    Cartel behavior; Revenue sharing; Sports leagues;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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