ch. 2 notes

Ch 2 notes - Ch 2 notes Ch 2 Leagues Structure and Background Introduction o Cartel behavior of leagues Leagues have adopted many socialist

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Ch. 2 notes Ch. 2 Leagues: Structure and Background Introduction o Cartel behavior of leagues Leagues have adopted many socialist elements such as… Revenue sharing The Sports Industry’s Resistance to Bear Markets o 5 bear markets occurred from 1970 to 2001 Sports industry performed better during the broader effects of a declining economy And is therefore an attractive investment during both robust and declining economies o Part I: Professional Sports Franchise Values Currently at their highest levels ever A. Attendance Since 1970, overall attendance grew 163% in the big 4 leagues (in 2001) o Reasons for increase Entrance of expansion teams Larger body of consumers attending than ever before Ticket Prices o Average ticket prices have risen at a rate of 8.7% annually since 1995 Attendance Trends and Ticket Prices o Even during bear markets, sports teams benefit from 2 trends An expanding fan base Increasing ticket prices o More fans attends sports events during declining economies despite rising ticket prices B. Franchise Sale Values Have increased consistently since 1970 o Conclusion Business in the sports industry maintains an attractive resistance to the broader market declines that occur during bear markets Attendance has grown consistently every year While ticket prices have simultaneously increased Sports appear to be an entertaining distraction from the regularities of life The Market Structure of Sports o Prospects for robust revenue and salary growth have dimmed Attendance has reached a plateau
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Though it may continue to increase slightly Ticket prices tend to rise at roughly the inflation rate Network audience shares have declined drastically Bringing down ad revenues o Club costs have been rising more rapidly than revenue in recent years Player share of revenue has been climbing Not much more room for growth of average player salaries beyond revenue growth o Anticomptetiveness Owners have always claimed that restrictions on competition are necessary for the protection of their investment and for competitive balance o Restrictions in League Product Markets in the Modern Period All leagues restrict entry, assign exclusive franchise territory and collude on a revenue-sharing formula Baseball is exempt from antitrust statues Since Federal Baseball v. National League et al. in 1922 o Ruled that baseball wasn’t involved in interstate commerce and thus exempt from antitrust law o Reaffirmed multiple times since then Player-league disputes are exempt from antitrust laws under the labor exemption Leagues establish constitutional agreements governing the geographical markets of their franchises, conditions of entry and franchise relocation, the market for players and playing rules League operating rules tend to be… o Privately joint-wealth maximizing o Collusive Teams need permission from other teams to relocate
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This note was uploaded on 02/10/2012 for the course MGT 101 taught by Professor Staff during the Fall '10 term at Texas State.

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Ch 2 notes - Ch 2 notes Ch 2 Leagues Structure and Background Introduction o Cartel behavior of leagues Leagues have adopted many socialist

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