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Monday, January 25, 2010

The Organization of Professional Sports Leagues: A Comparison of European and North-American Leagues from the Perspective of Platform Organization

Posted by D. Daniel Sokol

Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich) and Tobias Duschl (Institute for Strategy and Business Economics, University of Zurich) ponder The Organization of Professional Sports Leagues: A Comparison of European and North-American Leagues from the Perspective of Platform Organization.

ABSTRACT: In this paper, we compare European and North-American sports leagues from the perspective of platform organization. We find that European leagues can be characterized as open, not only in the sense of promotion and relegation, but also in the sense of attenuated/dispersed property rights and free access on all market sides. North American leagues, on the other hand, are organized as closed platforms with exclusive/concentrated property rights and high entry barriers on all market sides. This difference explains why European clubs outperform their North American counterparts in terms of revenue generation, i.e. value creation, and why North American clubs are much more profitable than most European clubs. European leagues are organized as open platforms, which invite and facilitate participation from all relevant market sides. The absence of concentrated property rights and the possibility of free market entry, however, limit the opportunities of value appropriation.

http://lawprofessors.typepad.com/antitrustprof_blog/2010/01/the-organization-of-professional-sports-leagues-a-comparison-of-european-and-northamerican-leagues-f.html

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