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Optimal gate revenue sharing in sports leagues

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  • Thomas Peeters

    (University of Antwerp
    Flanders Research Foundation)

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 investmentswithin 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

  • Thomas Peeters, 2011. "Optimal gate revenue sharing in sports leagues," Working Papers 1122, International Association of Sports Economists;North American Association of Sports Economists.
    • Handle: RePEc:spe:wpaper:1122
    as

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    File URL: http://college.holycross.edu/RePEc/spe/Peeters_OptimalRevenueSharing.pdf
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    References listed on IDEAS

    as
    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.
    2. Peeters, Thomas, 2012. "Media revenue sharing as a coordination device in sports leagues," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 153-163.
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    More about this item

    Keywords

    contests; contest success functions; sports;
    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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