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TV Revenue Sharing as a Coordination Device in Sports Leagues

Author

Listed:
  • 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.

Suggested Citation

  • Thomas Peeters, 2011. "TV Revenue Sharing as a Coordination Device in Sports Leagues," Working Papers 1109, International Association of Sports Economists;North American Association of Sports Economists.
    • Handle: RePEc:spe:wpaper:1109
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    File URL: http://college.holycross.edu/RePEc/spe/Peeters_TVRevenueSharing.pdf
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    Cited by:

    1. is not listed on IDEAS
    2. Yvon Rocaboy, 2017. "Competition Among National Football Leagues. Does It Exist? Should We Regulate?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(1), pages 88-114, February.
    3. Budzinski, Oliver & Gänßle, Sophia & Kunz-Kaltenhäuser, Philipp, 2019. "How does online streaming affect antitrust remedies to centralized marketing? The case of European football broadcasting rights," Ilmenau Economics Discussion Papers 128, Ilmenau University of Technology, Institute of Economics.
    4. Oliver Budzinski & Anika Müller‐Kock, 2018. "Is The Revenue Allocation Scheme Of Formula One Motor Racing A Case For European Competition Policy?," Contemporary Economic Policy, Western Economic Association International, vol. 36(1), pages 215-233, January.
    5. Budzinski, Oliver & Gänßle, Sophia & Lindstädt-Dreusicke, Nadine, 2021. "Wettbewerb und Antitrust in Unterhaltungsmärkten," Ilmenau Economics Discussion Papers 147, Ilmenau University of Technology, Institute of Economics.
    6. Budzinski, Oliver, 2017. "Market-internal financial regulation in sports as an anticompetitive institution," Ilmenau Economics Discussion Papers 110, Ilmenau University of Technology, Institute of Economics.
    7. Brian M. Mills & Michael Mondello & Scott Tainsky, 2016. "Competition in shared markets and Major League Baseball broadcast viewership," Applied Economics, Taylor & Francis Journals, vol. 48(32), pages 3020-3032, July.
    8. Bergantiños, Gustavo & Moreno-Ternero, Juan D., 2020. "Broadcasting La Liga," MPRA Paper 104750, University Library of Munich, Germany.
    9. Budzinski, Oliver, 2017. "Four cases in sports competition policy: Baseball, judo, football, and motor racing," Ilmenau Economics Discussion Papers 109, Ilmenau University of Technology, Institute of Economics.
    10. Budzinski, Oliver & Müller-Kock, Anika, 2016. "Market power and media revenue allocation in professonal sports: The case of formula one," Ilmenau Economics Discussion Papers 102, Ilmenau University of Technology, Institute of Economics.
    11. Thomas Peeters, 2015. "Profit-Maximizing Gate Revenue Sharing In Sports Leagues," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 1275-1291, April.
    12. Budzinski, Oliver & Feddersen, Arne, 2022. "Should organizing premier-level European football be a monopoly? And who should run it? - An economists' perspective," Ilmenau Economics Discussion Papers 166, Ilmenau University of Technology, Institute of Economics.
    13. PEETERS, Thomas, 2011. "Optimal gate revenue sharing in sports leagues," Working Papers 2011015, University of Antwerp, Faculty of Business and Economics.
    14. Steven Salaga & Alan Ostfield & Jason Winfree, 2014. "Revenue Sharing with Heterogeneous Investments in Sports Leagues: Share Media, Not Stadiums," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(1), pages 1-19, August.
    15. Budzinski, Oliver, 2025. "Sports governing bodies vs. antitrust 0 - 4? Sport and competition economics comments on the recent judgements of the European Court of Justice," Ilmenau Economics Discussion Papers 205, Ilmenau University of Technology, Institute of Economics.
    16. Oliver Gürtler & Markus Lang & Tim Pawlowski, 2015. "On the Release of Players to National Teams," Journal of Sports Economics, , vol. 16(7), pages 695-713, October.
    17. Bergantiños, Gustavo & Moreno-Ternero, Juan D., 2021. "Compromising to share the revenues from broadcasting sports leagues," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 57-74.
    18. Budzinski, Oliver & Feddersen, Arne & Kunz-Kaltenhäuser, Philipp, 2023. "Zwischen Wettbewerbsorganisation und Wettbewerbsverzerrungen - Regelsetzungen durch europäische Fußballverbände," Ilmenau Economics Discussion Papers 174, Ilmenau University of Technology, Institute of Economics.
    19. Gustavo Berganti~nos & Juan D. Moreno-Ternero, 2026. "The economics of sportscast revenue sharing," Papers 2601.02039, arXiv.org.
    20. Budzinski, Oliver, 2017. "Sind Wettbewerbe im Profisport Rattenrennen?," Ilmenau Economics Discussion Papers 104, Ilmenau University of Technology, Institute of Economics.
    21. Rocaboy Yvon, 2023. "Inter-league Competition and the Optimal Broadcasting Revenue-Sharing Rule," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 23(2), pages 723-756, June.
    22. Egon Franck & Markus Lang, 2014. "A Theoretical Analysis of the Influence of Money Injections on Risk Taking in Football Clubs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(4), pages 430-454, September.
    23. Hoey, Sam & Peeters, Thomas & Principe, Francesco, 2021. "The transfer system in European football: A pro-competitive no-poaching agreement?," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    24. Budzinski, Oliver, 2024. "Financial regulation in sport championships as an anticompetitive institution," Ilmenau Economics Discussion Papers 187, Ilmenau University of Technology, Institute of Economics.
    25. Budzinski, Oliver & Kunz-Kaltenhäuser, Philipp, 2020. "Promoting or restricting competition? - The 50plus1-rule in German football," Ilmenau Economics Discussion Papers 141, Ilmenau University of Technology, Institute of Economics.

    More about this item

    Keywords

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    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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