Market Structure of Professional Sports Essay

1982 Words Feb 23rd, 2013 8 Pages
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
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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