Friday, October 23, 2009
Posted by D. Daniel Sokol
Greg Pelnar (Compass Lexecon) explains Competition and Cooperation between Professional Sports Franchises: The Impact on Ticket Prices.
ABSTRACT: An important issue in many antitrust lawsuits involving professional sports leagues and their member teams is the extent to which franchises within the same, and across different, professional sports leagues compete with one another for fans and advertisers. Complicating the issue is the fact that some sports franchises also cooperate with other franchises in the same or different leagues by, for example, participating in a joint venture to build and operate the stadium in which they will play their games or a regional sports network joint venture to televise their games. An extreme form of cooperation is common ownership: some franchises in different sports leagues have common ownership. This study investigates the impact of competition and cooperation among the franchises of the four major professional sports leagues (i.e., the National Football League, National Basketball Association, National Hockey League, and Major! League Baseball) on ticket prices for the 2008 season. The regression results suggest that the existence of one or more rival sports franchises in the same metropolitan area does not have a statistically significant impact on ticket prices. On the other hand, there is at best weak evidence that cooperation between sports franchises impacts ticket prices. These findings are consistent with a number of alternative hypotheses.