Cross-ownership, league policies and player investment across sports leagues
AbstractAlthough 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 InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39218.
Date of creation: 21 Jan 2012
Date of revision:
Sports Leagues; Talent Investment; Ownership Structures;
Find related papers by JEL classification:
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-13 (All new papers)
- NEP-COM-2012-06-13 (Industrial Competition)
- NEP-SPO-2012-06-13 (Sports & Economics)
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