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Cross-ownership, league policies and player investment across sports leagues

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  • Mongeon, Kevin
  • Winfree, Jason

Abstract

Although many sports leagues are viewed as monopolies, research suggests that some economic competition exists between teams in dierent sports leagues. If fans make consumption choices based on the quality of all teams that are present in their region, then economic competition and ownership structure can impact an owner's incentive to invest in talent. This article examines dierences between monopolists, duopolists and cross-ownership. Consumer preferences and fan loyalty are allowed to vary across sports, and the winning percentages of teams in other leagues aects demand. Our model shows that economic competition results in an ambiguous level of investment compared to a monopolist. A rm that engages in cross-ownership will invest less in talent compared to a duopolist, but the dierence in prots is ambiguous. League policies are studied and are shown to aect the quality of teams in other leagues.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39218.

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Date of creation: 21 Jan 2012
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Handle: RePEc:pra:mprapa:39218

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Keywords: Sports Leagues; Talent Investment; Ownership Structures;

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  1. Jason Winfree & Jill McCluskey & Ron Mittelhammer & Rodney Fort, 2004. "Location and attendance in major league baseball," Applied Economics, Taylor & Francis Journals, vol. 36(19), pages 2117-2124.
  2. Jason Winfree, 2009. "Owners incentives during the 2004-05 National Hockey League lockout," Applied Economics, Taylor & Francis Journals, vol. 41(25), pages 3275-3285.
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  8. Craig A. Depken, II, 2001. "Fan Loyalty in Professional Sports: An Extension to the National Football League," Journal of Sports Economics, , vol. 2(3), pages 275-284, August.
  9. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
  10. Rodney J. Paul, 2003. "Variations in NHL Attendance," American Journal of Economics and Sociology, Wiley Blackwell, vol. 62(2), pages 345-364, 04.
  11. Daniel, Rascher & Matt, Brown & Mark, Nagel & Chad, McEvoy, 2009. "Where did National Hockey League Fans go During the 2004-2005 Lockout?: An Analysis of Economic Competition Between Leagues," MPRA Paper 25804, University Library of Munich, Germany.
  12. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer, vol. 7(2), pages 283-290.
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  14. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
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