Tackling Monopolies
Fans are paying more to watch sport every year. Is it time for governments to intervene?MONOPOLY in sport is suddenly a sensitive issue. The escalating cost of watching games is pushing anti-trust authorities to examine the deals between sporting bodies and broadcasters. Britain's competition watchdog is scrutinising English football. The European Commission now has several investigations under way into restrictive practices in European football and monopolistic behaviour in Formula One motor racing. And an American court recently ruled that the National Basketball Association (NBA) could not prevent the Chicago Bulls selling rights to games that are not broadcast as part of the NBA's exclusive television deal.Money is pouring into sport because viewers are willing to cough up a lot to watch it. They pay for it in different-and mainly indirect-ways: through taxes to finance public-service television; through time spent watching additional advertising during matches broadcast on commercial networks; in subscription fees to cable or satellite channels; or directly, on a pay-per-view basis. But viewers are paying over the odds because sporting authorities are able to use their control over the s
This suggests that the purveyors of sport are exercising monopoly power. Competition may work well where viewers' loyalties to a particular team are primarily based on how good it is and how well it is marketed-as in most American sports. Striking down exclusive broadcasting deals might somewhat lower the cost of watching sport. Perhaps the solution is competition-among teams. But this would not solve the problem entirely; in the case of the NFL, the league has managed to apportion rights among several broadcasters in such a way as to maximise its profits. For example, Manchester United, an English football club, has attracted many new fans in recent years, most of whom have no connection with Manchester. They are fed up with the endless punch-ups between the four boxing organisations, which rarely deliver the bouts that would establish undisputed "world champions". But selling rights individually may work less well where fans' support is more tribal-as is still mainly the case in European football. Because viewers pay mainly in indirect ways, the price is difficult to determine and hence hard to cap. Although team owners often assert that they compete not just with other teams but with other forms of entertainment, that is true only to a limited extent. Sustained competition has been rare. Competition among teams would boost the number of games shown and keep broadcast fees low. That process would speed up, Mr Noll says, if teams could sell their rights individually, because they would gain wider audiences of more fickle television fans.
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