Review of Industrial Organization 24: 51–72, 2004.
© 2004 Kluwer Academic Publishers. Printed in the Netherlands.
Wherein Lies the Beneﬁt of the Second Referee in
CRAIG A. DEPKEN, II and DENNIS P. WILSON
Department of Economics, University of Texas – Arlington, Arlington, TX 76019, U.S.A.
Abstract. This paper investigates the impact of the second referee in the National Hockey League,
including the indirect impact of the second referee on in-arena attendance and national television
audiences. During the 1998–1999 and 1999–2000 seasons, the second referee improved scoring,
reduced ﬁghting and penalty minutes but had no measurable impact on closeness of competition.
In-arena attendance, a source of non-shared revenue for team owners, was not inﬂuenced by im-
proved scoring or reduced ﬁghting. On the other hand, national television viewership increased with
expected scoring. The empirical results allow for an initial comparison of the beneﬁts and costs of
the second referees to the league. While it seems unlikely that any team would have unilaterally paid
for all of the second referees, the beneﬁts of the second referee seemed to have outweighed the costs.
Therefore, the NHL’s decision to introduce a second referee may have solved a free-rider problem
while providing proﬁt potential for NHL franchises.
Key words: Crime enforcement, National Hockey League, public goods, revenue sharing, sports
JEL Classiﬁcations: L13, D43, L83
Sports leagues are cartels that exist, at least in part, to enhance the proﬁtability
of their member franchises (Leeds and von Allmen, 2001). Unlike other cartels
in the United States, sports leagues remain relatively immune from antitrust lit-
igation. Sports leagues enhance the proﬁts of their member franchises in many
ways, including limiting franchise relocation, limiting and controlling expansion,
distributing labor resources, and limiting internal competition. However, certain
decisions by sports cartels (and others) may be welfare enhancing for both ﬁrms
and consumers if centralized decision-making internalizes public-good and free
rider effects. Rules enforcement may be such a situation.
Rules enforcement is a common topic of discussion amongst fans in many
sports. Is the strike zone consistent in Major League Baseball? Do superstars in
the NBA receive different treatment than average players? Is there a net gain to
instant replay in the NFL? A natural rules-enforcement experiment recently oc-
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