Question

Econ 3030- Sports Economics

1. Do you think professional sports leagues are better viewed as cartels made up of independent firms or as a single, multiplant firm? Why might this matter?

Answer 1

According to me, the professional sports leagues are better viewed as cartels made up of independent firms and not as a single multi plant firm. This may be seen from the following points -

• There are different owners of different teams.
• All the teams form and live independently and just participate in the league.
• A single team may participate in different leagues.
• All teams invest their own money in teams and earn their own profit and league earns its own profit.

All the above points shows that they are all different entities but only come together for the profit of all the members.

This is important to see whether they are a cartel with independent firms of a single multi plant firm because it decides their profit. If they are independent firms in cartel they may act together to gain higher profit but if a particular team incurs loss it can't be compensated by others, but if they are a single multi plant firm, the loss of one of the teams would not matter much if others have high profit because overall profit is high but this is not the case as each firms profit matters for their survival.