The Effects of Cross-Ownership and League Policies Across Sports Leagues Within a City

The Effects of Cross-Ownership and League Policies Across Sports Leagues Within a City Since prior research suggests that some economic competition exists between teams in different sports leagues, economic competition and ownership structure can affect an owner’s incentive to invest in talent. This paper uses a theoretical model to examine the differences in owners’ incentives to invest in talent when they are operating as monopolists, as duopolists, or as a cross-owned team. Our model shows that economic competition results in an ambiguous level of investment compared to that of a monopolist. A firm that engages in cross-ownership will invest less in talent compared to a duopolist, but the difference in profits is ambiguous. League policies are studied and are shown to affect the quality of teams in other leagues. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The Effects of Cross-Ownership and League Policies Across Sports Leagues Within a City

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Publisher
Springer US
Copyright
Copyright © 2013 by Springer Science+Business Media New York
Subject
Economics / Management Science; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-013-9374-z
Publisher site
See Article on Publisher Site

Abstract

Since prior research suggests that some economic competition exists between teams in different sports leagues, economic competition and ownership structure can affect an owner’s incentive to invest in talent. This paper uses a theoretical model to examine the differences in owners’ incentives to invest in talent when they are operating as monopolists, as duopolists, or as a cross-owned team. Our model shows that economic competition results in an ambiguous level of investment compared to that of a monopolist. A firm that engages in cross-ownership will invest less in talent compared to a duopolist, but the difference in profits is ambiguous. League policies are studied and are shown to affect the quality of teams in other leagues.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Feb 2, 2013

References

  • Where did National Hockey League fans go during the 2004–2005 lockout? An analysis of economic competition between leagues
    Rascher, D; Brown, M; Nagel, M; McEvoy, C
  • The economic design of sporting contests
    Szymanski, S
  • Competitive balance and gate revenue sharing in team sports
    Szymanski, S; Kesenne, S

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