This depth of feeling generates the concern of so many fans over the current state of pro sports. Talk to any sports fan and you will get at least one of the following opinions. Rising ticket prices threaten to slam the door on the average fan. Growing revenue imbalance leaves most teams out of contention before the season even starts. Stratospheric player salaries make it impossible to identify with players and introduces skepticism about whether or not they really lay it on the line every play. And do not even get a fan started about labor-management relations! MLB fans have recently lost their play-offs and a World Series because of them, and National Basketball Association (NBA) fans just lost half a season to labor unrest.

All of these outcomes are for the fans lucky enough to have a team. Many other fans have spent what seems an eternity waiting for an expansion team to arrive in their area. Others have seen their existing team threaten relocation at the drop of a hat. Team owners put all-or- nothing demands on their host cities and balk at every hint of intrusion into the power they wield over their sport. No other industry in the United States has such control over 1) exclusive geographical franchise rights over the entire industry, 2) team movement and location, 3) gate and TV revenue sharing, 4) TV contracts as a joint venture, and 5) entering talent through rookie drafts.

In the midst of all this unrest, you'll find economists nosing around. In our book, Hardball (1999), James Quirk and I organize the questions surrounding this fan frustration into a few chapters. Are the media and big TV money to blame? Is it player unions? Owners? Sports leagues? State and local politicians? Or what? As you can probably guess, we point our finger at “or what, ” which we define as market power.

Almost all economists see the ultimate culprit as market power, which derives from the special legal treatment of leagues. The outcomes are exclusive franchise rights for teams, management of sports leagues as cartels, and a complete stifling of any competing leagues, precisely those indicated by the basic economic theory of market power. In what follows, I will run through this logic and suggest what can be done about these outcomes.

Not much of what I am presenting here is new. Many of the issues were raised during the Federal Baseball decision of 1922, MLB's so- called antitrust exemption, enjoying its 75th anniversary this year.

-8-

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