1

Market Power in Pro Sports
Problems and Solutions

Rodney Fort

Washington State University

Many Americans are completely carried away with sports. During the last baseball strike in 1994, Henry Aaron of the Brookings Institution (yes, there really is an economist with that famous baseball name) tried to put sports into perspective during his testimony before Congress. He pointed out that while the Major League Baseball (MLB) as an industry was just under $2 billion a year, the envelope industry topped the $2 billion mark. In a slightly broader view, the cardboard box industry generated well over triple that amount annually. He proceeded to lightly scold the subcommittee for spending its scarce and valuable time on such small potatoes.

Watching this testimony on C-SPAN, I was (very briefly) ashamed. After all, the importance with which I view sports is neatly summarized in one of my favorite Far Side cartoons. Artist Gary Larson shows a group of primordial sea-dwellers just off shore. One of the group holds a bat, and their baseball lies on the beach, just out of reach. The caption reads, “Great Moments in Evolution.” The clear implication is that baseball is the reason we waddled out of the ooze in the first place. And here before Congress was an economist of no small renown pointing out that this inflated enthusiasm is over an industry that is dwarfed by only a small share of the paper products industry.

But my shame faded when I remembered that there is no cardboard box page in the daily paper. And it never has been the case that massive public subsidies for cardboard box companies have been on a referendum ballot. Sports really are different than cardboard boxes. Many of us enjoy benefits from sports that are vastly beyond what we spend on them. Whole other media industries thrive on its output, and it can be a consuming passion, this love of sports shared by so many. I think I might mail a copy of that Far Side cartoon to Professor Aaron.

-7-

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