The Economics Of Sports – Profit Maximization Within The Frame Of Professional Sport Leagues Of North America

Ondřej Chwasczc, Tomáš Pětivlas

Abstract

This work examines the professional sports league in North America in comparison with sports organisations in Europe. Based on that comparison, significant differences were found, which resulted in different behaviour of clubs in North America and Europe. Clubs in North America achieve a monopoly position in relation to its surroundings due to the nature of the league. While these separate entities mutually cooperate having implemented organisational rules that prevent the dominance of one club. The combination of monopoly power and mutual cooperation results in the possibility of economic gain, which is for the clubs in Europe or for normal economic subjects operating in market environment unapproachable. Abuse of a monopoly position of the clubs is noticeable mostly in the subsidies provided by local governments or towns to local sports club. These public funds are not the most efficient investments for the locations mentioned above, as demonstrated by a case analysis of the Miami Heat basketball club.

Keywords

professional sport leagues; monopoly; monopoly position; sports multiplier; public investments

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