International and Australian Experiences
Sport has become big business, first by attracting large crowds of paying spectators and then through radio and later TV audiences. Beyond those direct revenues, merchandise and other add-ons bring further revenue, companies pay to sponsor the top clubs and mega-events, and sports stars earn big fees from endorsements and other activities. Some peculiar features drive economic analysis of the sports industry. Although sport thrives on competition, in the organization of professional sports monopoly is pervasive, as customers demand a single champion. The consequences of monopoly power are most clearly seen in labour markets, but monopoly also underpins rent-seeking and raises questions of ethical behaviour and good governance. Professional sports leagues also require a measure of collaboration – at a minimum in agreeing rules, determining fixture lists, selecting referees – that is delegated to a management board, which will typically deal with disciplinary matters. Leagues, and indeed all sports organizations, go to great lengths to keep their distance from government regulation or the legal system, even when common criminal offences are committed such as fraud or grievous bodily harm. In the first part of the book we focused on the main organizational patterns of professional team sports. The principal difference is between the closed cartels that characterize North American and Australian leagues and the promotion and relegation system of European soccer.
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