Research Paper:
Market Structure
Professional Sports
ABSTRACT
Economic theory introduces us to four different types of markets: perfect competition, monopolistic competition, oligopoly, and monopoly. Professional sports teams operate in an environment that is different than the typical business structure. The goal of this paper is to look at this industry, in particular the NFL, in an economics context and gain an understanding of the market structure of this unique industry. To do this I will discuss a brief history of the National Football League in the U.S. and how this organization is structured. I will also discuss typical market structures and type of
…show more content…
Today, the National Football League (NFL) is the largest professional American football league, consisting of thirty-two teams from major American cities and regions. The league was formed in 1920 as the American Professional Football Association, and adopted the name "National Football League" in 1922. The NFL is one of the major professional sports leagues of North America.
Organizational Structure Professional sports league such as the NFL are unique organizations. These sports leagues are organized and operate under an organizational structure that is unique to this industry. By their very nature, sports leagues are cartels that exclude competition from other companies. You cannot start a baseball team and hope to play the Yankees unless you can get Major League Baseball (the cartel) to grant you a franchise. The antitrust laws prohibit cartels, but professional sports are the only private business in the United States that is largely exempt from those laws. Ever since a 1922 court decision (Federal Baseball Club of Baltimore v. National League et al.), baseball has been totally exempt. No other sport enjoys such a blanket exemption from antitrust, but all professional team sports have a labor exemption and, since the
Another way to increase the amount of teams and leagues could be possible if the government took away any league to sell the broadcast rights to its games to several networks without fear. “The power to do this without fear of violating antitrust laws was part of the 1961 Sports Broadcast Act, the first law passed by Congress that protected the market position of sports leagues.Prior to the passage of the Sports Broadcast Act, leagues could not have their games telecast by more than one network” (Rosentaub 16). With television being an important part of teams bringing in revenue to their organizations it's quite simple why they sell to multiple tv networks. But if they were to only use one service provider then things wouldn't be the same.
The NFL was founded on September 17, 1920 and was known as the American Professional Football Association (APFA). It was renamed in 1922 as the National Football League or NFL. In 1920 there were eleven football franchises to form the first professional football league compared to the 32 teams that form the league now. The original teams are: Canton Bulldogs, Cleveland Tigers, Dayton Triangles, Akron Professionals, Rochester (N.Y.) Jeffersons, Rock Island Independents, Muncie Flyers, Decatur Staleys, Chicago Cardinals, and Hammond Pros. Jim Thorpe was elected as the league's first president. In 1970 NFL's rival league AFL merged their schedules and formed two conferences in which the AFL became AFC and NFL became NFC.
The National Football League (NFL) is a professional American football league consisting of 32 teams. The NFL is based in North America having 16 games for the season followed by 6 teams from each conference advancing to the playoffs. The NFL was formed in 1920 as the American Professional Football Association (APFA) before renaming itself the NFL in 1922.
Most people around the world enjoy sporting events. These events are considered great entertainment options. So what does professional baseball, football, basketball, and most other companies around the United States have in common? If you guessed Collective Bargaining Agreements (CBA), Unions, arbitration and strikes/work stoppages you are absolutely correct. In the coming paragraphs, labor relations within the world of sports will be discussed from their unions to how collective bargaining agreements effect both the players and the owners. What is a Collective Bargaining Agreement?
On January 12, 2010 the National Football League (NFL) went before the Supreme Court seeking immunity under the antitrust laws. The Court had a seemingly easy question presented to them. When the NFL and its thirty-two franchises get together and make business decisions like intellectual property licensing, are they a group of competitors subject to the antitrust laws, or are they more like a board of directors incapable of illegally conspiring with themselves. Writing for a unanimous Court, Justice Stevens rejected the NFL’s single entity argument. The Court viewed the thirty-two teams as separate economic entities, and is exemplified by competing interests of the teams on and off the field. In the market for intellectual
sport as a result invest must more interest into it. The NFL is able to leverage the fact that
There is no question that the National Football League (NFL) and the National Basketball Association (NBA) are different and similar in many aspects. Discovering the comparisons and contractions in value, revenue, and operating income of these professional sports teams, can help shed light on the tremendous amount of money these leagues withhold. In calculating the value is divided between four separate classes, which are the sport value, the market values, stadium value, and the brand value. Surprisingly, When looking into the values one may find that some of these categories are more valuable then those of the other league, showing how these two leagues are both structured uniquely. The only element that makes this business possible is the
Athletes and the sports industry have turned into a multi-billion dollar business annually. Stacked on top of that is that leagues and educational institutions receive multi-million dollar media contracts each year. This is so that broadcasters such as NBC, FOX, and TNT have the rights to broadcast that team or leagues games. The surge of money in the sports industry has led to an influx of agents into the world of agent athletes.
While growing up in the state of Texas I was introduced to National Football League (NFL) at a very young age. Not only was I obsessed with great players like Emmitt Smith and Michael Irving, I had a more finical appreciation for the lucrativeness associated with the NFL. My young adulthood as well as my teenage years was spent playing and learning football with the aspirations of hopefully making it to the NFL. Unfortunately, my playing days ended with tryouts at Texas Tech University, but my love for the game has remained stagnant over the years even till this day. The NFL today is Americas most watched sports league and has taken the crown as the most lucrative and unique economic force in sports. Forbes offered approximations stating that on average, the NFL generates more than $6-9 billion a year in revenues alone. A third of the individual franchises in the league were appraised at over more than $1 billion while the other franchises average nine figures or higher. The NFL as an organization generates its revenues through a multitude of ways ranging from huge television contracts, in-stadium ticket sales, advertising ads paid for by sponsors and merchandise. Their business model unlike most other leagues, is centered on a hard salary cap on player contracts which provides cost certainty with its sponsors. In this paper, I will examine the economic and historical narrative associated with the growth of the NFL’s
The NFL’ market has a long history regarding to general market data, inluding television and commercials, ticket sales and online streaming. The NFL was a pioneer of broadcasting alond with boxing and professional wrestling during the time when baseball and college football were more popular then professional football. The NFL was able to surpass Major League Baseball at an earlier time due to understanding television in the 1960’s and right know is the most popular sport in the United States. Since then, all regular season and playoff games have been aired by national television networks. CBS, NBC, Fox and ESPN paid a combined total of $20.4 billion to braodcast the NFL games and lenghten their contract to 2020 for another $39.6 for the same broadcast rights. Currently the NFL holds broadcast contracts with four companies alongside with the television and cable networks. The vast majority of the country’s television product comes from these companies; CBS Corporation, Comcast, 21st Century Fox and The
The National Football League and the National Basketball Association are very alike but different in their own ways. Although both the leagues have contracts, a salary cap, and revenue sharing they are both very different. Both leagues have a championship game game where they score high ratings because of their high market players. Curry and Lebron playing against each other in the NBA finals last year generated ratings up to 19.94 million viewers the most all time other than the 1998 Jordan’s Bulls finals. Brady and Wilson playing against each other in the super bowl generated ratings up to 112 million dollars the most all time. This shows the both sports are big but are different. While both are wildly successful major sports leagues, they are very different when it comes to player contracts, revenue sharing, and the salary cap.
Sports organizations are almost obligated to abide by the antitrust law. While the NFL, NBA,and NHL are subjected to the Sherman Act, The MLB has been exempt from federal antitrust law since 1922. “...Indeed, the Sherman Act...is almost seen useless to them because the individual teams within each league must work closely together to coordinate their competitive athletic events, courts have struggled to apply section 1’s anti collusion restrictions in a consistent and coherent manner to curtail the league's anti competitive practices” (Grow 10). With the organizations being so intertwined with each other, the teams within each organization can't really compete against each other financially, thus not really creating a monopoly where one franchise
Wealthy sports owners aren't entitled to all of the profits. They're required share revenue with they're players. Often times a large portion of the revenue comes from one stream. Sports fashion merchandise. The ** made ___ last year. That's only one team imagine how much revenue a league could generate. Profits that high are destined to spawn wealth and conflict. Thanks to the magnification of sports gaming and the internet the balance is even more
The second factor was the development of competing leagues. “Competing leagues such as the American Football League, the American Baseball Association, the World Hockey Association, and the United States Football League offered an alternative to athletes (Masteralexis, 246).” These leagues offered higher salaries to induce players to move from their original teams. When players left a team to for more money, it also increased the salaries of players who stayed on the team. Agents played a crucial role in determining what was best for athletes, and which league they should choose.
In the united states and canada it is often called gridiron or American football. It evoled from football and the first game was played in 1809 between princton and rutgers.There are 32 teams in the NFL,team for the superBowl win the end of the season.The first game to be on televised was between the philadelphia Eagles and the Brooklyhn.