TV Revenue Sharing as a Coordination Device in Sports Leagues

Thomas Peeters

No 1109, Working Papers from International Association of Sports Economists, North American Association of Sports Economists

Abstract: As sports clubs jointly produce contests, they cannot determine contest quality through their private talent investments. Sports leagues therefore try to coordinate talent investments towards the profit-maximizing contest quality. In this paper I analyze how revenue sharing mechanisms may serve this goal when demand comes from hard-core club and neutral sports fans. Performance-based sharing turns out to be an inefficient sharing rule for the cartel, although it is not harmful for social welfare. This inefficient cartel behavior can be rationalized as the result of bargaining with asymmetric outside options. Data from US and European sports leagues illustrate the theoretical findings.

Keywords: cartel behavior; revenue sharing; sports leagues; TV rights (search for similar items in EconPapers)
JEL-codes: L41 L83 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2011-03
New Economics Papers: this item is included in nep-com and nep-spo
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http://college.holycross.edu/RePEc/spe/Peeters_TVRevenueSharing.pdf (application/pdf)

Related works:
Journal Article: Media revenue sharing as a coordination device in sports leagues (2012)
Working Paper: TV revenue sharing as a coordination device in sports (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:spe:wpaper:1109

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