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TV Revenue Sharing as a Coordination Device in Sports Leagues

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Author Info

  • Thomas Peeters

    () (University of Antwerp)

Abstract

As sports clubs jointly produce contests, they cannot determine contest quality through their private talent investments. Sports leagues therefore try to coordinate talent investments towards the profit-maximizing contest quality. In this paper I analyze how revenue sharing mechanisms may serve this goal when demand comes from hard-core club and neutral sports fans. Performance-based sharing turns out to be an inefficient sharing rule for the cartel, although it is not harmful for social welfare. This inefficient cartel behavior can be rationalized as the result of bargaining with asymmetric outside options. Data from US and European sports leagues illustrate the theoretical findings.

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File URL: http://college.holycross.edu/RePEc/spe/Peeters_TVRevenueSharing.pdf
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Bibliographic Info

Paper provided by International Association of Sports Economists & North American Association of Sports Economists in its series Working Papers with number 1109.

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Length: 29 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:spe:wpaper:1109

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Web page: http://www.cdes.fr/index.php?id=fr69
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Web page: http://www.kennesaw.edu/naase
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Related research

Keywords: cartel behavior; revenue sharing; sports leagues; TV rights;

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Cited by:
  1. Egon Franck & Markus Lang, 2013. "A Theoretical Analysis of the Influence of Money Injections on Risk Taking in Football Clubs," Working Papers 0046, University of Zurich, Center for Research in Sports Administration (CRSA).

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