Major League Team Sports
The major league sports industry is an exceptionally interesting subject for economic study. Its al lure for economists does not lie in its size, for by any reasonable measure the team sports industry is not big business. The total revenue of all teams in the five major team sports—baseball, basketball, football, hockey, and soccer—is less than half the revenue of such mundane endeavors as the manufacture of cardboard boxes or the canning of fruits and vegetables. Pro teams have revenues ranging approximately from those of a large gas station to those of a department store or large supermarket. The team sports business is interesting to economists primarily because of the complex operating rules and special legal status of the industry. Nearly every phase of the operations of a team or a league is influenced by practices and rules that limit economic competition within the industry. In most cases, government has either sanctioned or failed to attack effectively these anticompetitive practices. Consequently, professional team sports provides economists with a unique opportunity to study the operation and performance of an effective, well-organized cartel.
Additional InformationRevised. Originally dated to May 1976. Published in The Structure of American Industry, 6th ed., edited by Walter Adams. New York: Macmillan, 1981.
Submitted - sswp125_-_revised.pdf