International and Australian Experiences
New Horizons in the Economics of Sport series
The organization of professional team sports has many similarities across sports and across countries. The overwhelming tendency is for a single competition which produces a champion either on the basis of wins and losses over the season or after an end-of-season play-off series. Thus, one of the fundamental aspects of public policy in the context of sport is the propensity to permit monopoly behaviour. The very nature of sporting contests requires the need to establish rules of play which are consistent across contests and coordination between rival teams in order to produce an output. Moreover, due to the number of teams involved in a league, centralized administering bodies lower the transaction costs associated with negotiations over rules, setting fixture lists, champion determination, etc. These governing bodies, however, as discussed in Chapter 8, have often evolved into far more than simple coordination devices. The question arises as to what extent anti-competition laws should be set aside in the case of sport. The key to the answer is an evaluation of possible structures in various sports. There is a striking contrast in determining who can play in elite competition: is it a closed cartel with new members only admitted by a joint decision of the incumbent teams, or is there entry and exit via promotion and relegation based on results? This chapter provides a discussion of these structures, and thus sets up the context for the evaluation of sports policy.
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