John Vrooman

The Economics of American Sports Leagues

Player mobility in North American sports leagues is limited by labour market constraints designed ostensibly to allow teams to recoup player development costs and to maintain competitive balance within leagues. Theory holds that the distribution of talent will be invariant under any institutional configuration, and that while rules to constrain movement will serve to enhance monopsonistic exploitation of talent, they will have no effect on competitive balance. This paper reprises a general theory through which the effects of the labour market constraints can be comparatively analysed for American sports leagues. The economics of sports has been relegated to the realm of labour theory by the unnecessarily limiting assumption that owners of sports clubs are single-minded profit maximisers. This paper also presents a theory that seeks to unify capital market decisions of financial leverage and ownership syndication with operational labour market decisions for athletic talent and an owners desire to win. Copyright 2000 by Scottish Economic Society.

Theory of the Beautiful Game: The Unification of European Football

European football is in a spiral of intra-league and inter-league polarization of talent and wealth. The invariance proposition is revisited with adaptations for win-maximizing sportsman owners facing an uncertain Champions League prize. Sportsman and champion effects have driven European football clubs to the edge of insolvency and polarized competition throughout Europe. Revenue revolutions and financial crises of the Big Five leagues are examined and estimates of competitive balance are compared. The European Super League completes the open-market solution after Bosman. A 30-team Super League is proposed based on the National Football League.

The Economic Structure of the NFL

Sports leagues are unique in that individual clubs are mutually interdependent in their cooperative production of competitive games. As joint members of natural cartels each sports team is only as strong as its weakest opponent. Over the last half-century the National Football League (NFL) has become the most economically powerful sports league in the world largely because it has also been the most egalitarian. In 2010 NFL clubs pooled and shared two-thirds of over

It's not over 'til the fat lady sings: game-theoretic analyses of sports leagues.

8 billion in revenues among 32 franchises. The underlying source of NFL economic strength has been a survivalist “league-think” mentality that developed from the outset of the NFL-AFL war 1960–1966. Evenly shared national media money has grown at a compound rate of 12% from

Talent Versus Payroll as Strategic Variables in Game Theoretic Models of Sports Leagues: Response to Madden

47 million annually at the time of the actual NFL merger in 1970 to

A general theory of professional sports leagues.

4 billion under 2012–2013 TV contract extensions. Over the last 2 decades, however, a major threat to league-thinking solidarity has emerged from an individualist counterrevolution in unshared venue revenue. During the luxury-seat stadium building frenzy that followed the watershed 1993 Collective Bargaining Agreement (CBA), the proportion of team-specific venue revenue has doubled from 10 to 20% of total revenue. This once-tight syndicate now finds itself split into those teams with new venues and those without.

The Baseball Players' Labor Market Reconsidered

There have been major disputes about the appropriate game-theoretic analyses of sports leagues. The basic sports-league model assumes a two-team league where each team is seen as a monopolist in its product market and a passive price taker in a duopsony talent market. For simplicity, these models assume talent supply is either perfectly inelastic or perfectly elastic. It has been argued that perfectly inelastic supply is ill suited for duopsony analysis. This article solves the problem of multiple equilibria by proposing a selection criterion that finds a unique equilibrium in a duopsony limit game as talent supply approaches perfect inelasticity.

Theory of the Perfect Game: Competitive Balance in Monopoly Sports Leagues

This is a response to Madden’s comment on our original article: It’s Not Over ‘til the Fat Lady Sings: Game-Theoretic Analyses of Sports Leagues.