The American Sports Plutocracy Is Bullshit

American sports laws amount to a kind of out-in-the-open conspiracy to help a lucky few billionaires get much, much richer

Photo by Kyle Richards on Unsplash

This week, the businessman Mark Walter agreed to sell the Los Angeles Lakers to venture capitalist Josh Kushner and former Disney CEO Bob Iger. Walter had agreed to buy a majority stake in the Lakers just last summer, in a deal that valued the team at $10 billion. The latest deal values the iconic franchise at $12.5 billion, a 25 percent premium for roughly a year of Walter doing pretty much nothing, other than getting himself investigated for potential fraud.

Since last summer, federal agents have seized Walter’s phones and computers, and federal investigators have combed through transactions involving his insurance companies and the rest of his business holdings. Under pressure to raise billions in capital to clean up his books, Walter went looking for liquidity, and it came pouring from the heavens. From the Wall Street Journal:

With his business empire under scrutiny from federal investigators, Mark Walter was on the hunt for cash when, out of nowhere, he was about to be offered an enormous pile of money …

Joshua Kushner, the chief executive of Thrive Capital, was reaching out with a potentially gigantic offer. All he wanted to know was, would Walter be willing to sell the Los Angeles Lakers?

Over the following days, they ironed out one of the most sudden and shocking deals in sports. By Wednesday, Kushner and former Disney chief executive Bob Iger had agreed to buy a controlling stake in the storied franchise at a $12.5 billion valuation, the highest price ever paid for any sports team.

That Mark Walter is getting an Everest-sized pile of cash for doing less than nothing while perched atop an iconic asset is bullshit. But its rank putrescence is merely one piece of a larger societal turd: Billionaire sports ownership is, as a general matter, a cavalcade bullshit.

In an age of surging wealth inequality, where stock market valuations routinely outpace median income growth by surreal factors, there is a live debate over whether billionaires should exist at all. The strongest argument for their rightfulness is that some people amass ten-figure wealth by building companies; by working within free markets to invent new technologies that millions or billions of people choose to use; and by managing complex enterprises that create billions or trillions of dollars in consumer welfare and investor value. But even this steelman case for billionaires presents as a kind of taunting insult to what often passes for sports ownership today. Professional-sports ownership offers the already-impossibly-rich a unique opportunity to become vastly richer, not necessarily by working, building, inventing, or doing anything positive at all, but rather by merely sitting on top of an asset that American law has conspired to make absurdly scarce and luridly profitable.

The American Sports Conspiracy

A thought experiment. Imagine if a diabolical oligarchic elite wanted to build an efficient and low-risk machine for turning their already-elevated wealth into exospherically extreme wealth. What might such a devious group of self-serving plutocrats want?

• Unleash the forces of capitalism! you might think. But no, absolutely not. Capitalism is markets, and markets are ruthless. What you should want is legal permission to create a monopoly that builds a moat deep enough to keep all competition out. That way, you’ve got something much better than capitalism: artificial scarcity and pricing power without the risk of unwanted rivals.

• Get the government off your back! you might say. Wrong again. You know what’s nicer than getting the government off your back? Getting the government on your side. You should crave dependable government subsidies to pad your profits.

So say, for example, that you wanted to set up this money machine in American professional sports. Your devious plan: shield leagues from antitrust law so owners can enjoy monopoly profits; use that market power to extract money from local governments; and rewrite the tax code to hand sports owners special advantages.

Lo and behold, all of this exists.

1. Sports leagues are basically legal oligopolies: It’s perfectly legal to open the 31st grocery store or ice cream shop in your city. But you cannot declare yourself the 31st NBA franchise and join the NBA. The league’s existing owners control whether the NBA expands and who receives a franchise. Major sports leagues are de facto cartels with the power to block entry and competition. This artificial scarcity drives up the value of every existing franchise by insulating it from unwanted rivals who might apply market pressure.
   
   What’s more, the league’s broadcast TV revenue is partly cartelized by law. Imagine if the major airlines made a deal to stop selling tickets independently and instead negotiated prices collectively, pooled the revenue, and split the proceeds among themselves. This would be textbook cartel behavior—coordination over competition—that might be struck down under the Sherman Act, or some other antitrust law. But the Sports Broadcasting Act of 1961 exempts professional sports leagues, such as the NBA, NFL, and MLB, from some features of antitrust litigation. Legal revenue-sharing agreements might sound like a form of corporate socialism, which benefits the poorest small-market teams. But they also create a revenue floor for every team, which protects franchise values from the risk of decline.

2. Labor law makes sports ownership even sweeter: Most industries can’t collude on worker salaries and employment. For example, Apple, Google, and Meta cannot get together and decide that Stanford’s top comp-sci grad must work for Microsoft because Microsoft’s stock had the worst 2025 performance and thus earned the top draft pick. In sports, however, this is standard practice. US labor law allows teams and player unions to collectively bargain over employment terms—drafts, salary caps, free-agency restrictions, etc—outside typical antitrust rules. The result is nice for fans, since the worse your team does, the better the odds that you’ll get the best draft picks. But it’s just as nice for owners, since competitive balance, like revenue sharing, can increase the value of every franchise by protecting the asset from the risk of decline.

3. Sports stadiums have become legal ransom: A normal company that needs a billion-dollar factory has to build the thing on their own. But nothing about American sports is normal.
   
   Since the leagues restrict the number of franchises, while states compete against one another for a small number of teams, cities often feel pressured to subsidize the construction of stadiums to keep team owners from running toward some other town whose mayor is dangling a wad of money. (This happens despite the fact that economic research has repeatedly found that they rarely generate enough marginally income, employment, or tax revenue to justify the subsidy.) Until the middle of the 20th century, it was common for stadiums to be privately financed. But a Congressional Research Service report found that about three-quarters of stadiums completed in the 21st century were at least partly financed by local governments, typically with tax-exempt municipal bonds.
   
   One instructive example is the 2009 construction bill for Yankee Stadium. The total cost: about $2.5 billion. But nearly $1.7 billion of it was financed with tax-exempt municipal bonds. Since interest on those bonds avoids federal taxation, the federal government effectively offered the stadium an additional subsidy of more than $400 million, according to Brookings researchers. Add it up across the leagues, and Brookings puts the federal subsidy to professional sports stadiums since 2000 at more than $4 billion.

4. Team-owner tax benefits put the cherry on top: Billionaires who buy sports franchises can “amortize” the price of their acquisition over more than a decade, which is normal for most businesses but a bit strange for sports. This often allows team owners to deduct hundreds of millions of dollars from their annual taxable income, allowing them to consistently pay a lower effective tax rate than the janitors who clean their municipally financed bathrooms, as ProPublica reported. So, for example, a typical owner buying a multibillion-dollar team today can often claim $100 million or more in deductions. A team that generates $90 million in profit could still report a tax loss after the deduction.

In short, American sports teams are among the most valuable assets in modern capitalism in part because we don’t treat them at all like capitalist businesses. The law raises the ceiling of team valuations by restricting competition while protecting the floor of valuations by collectivizing television revenue and limiting labor flexibility. Then we subsidize the stadiums and draw up the tax code to let billionaire owners minimize their checks to the IRS, even when their exquisitely coddled organizations pull in ginormous profits.

The Law Is the Law, and It’s Bad

People sometimes compare buying sports franchises to buying works of fine art—say, a Monet, a Calder, or a Rodin. In both cases, the simplest answer to the common question “Why is that thing worth so much?” is always “Because someone rich was willing to pay it.”

But there is an important difference between the factors that push up the value of Monet paintings and those of sports franchises. Think about why a Monet painting is so valuable. Setting aside the irresolvable debate about the ineffable nature of beauty and quality and artistic pleasure, the underlying fact is that a Monet painting is valuable because it was painted by Claude Monet, a famous individual who once lived, and is now dead. The finality and scarcity of the Impressionist oeuvre—the fact that one can buy a painting from Monet’s Rouen Cathedral series and not worry that he will paint 100 more tomorrow—is a function of his mortality. There is no scientific or technological means by which anyone can exhume and reanimate Monet’s skeleton, sit the zombie upright in a chair, hand him a paintbrush, an easel, and a cup of tea, and say, “Now that you’re all settled, I’d like 500 additions to the Rouen Cathedral series.”

But the scarcity of sports franchises emerges from the laws of mankind, not the laws of nature. It benefits from a set of rules, laws, and customs that we made up and that can be redrawn in a way that Rouen’s facade never will be.

I am not a fan of conspiracies, and I am not a socialist. But nothing makes me feel more socialist than the public, out-in-the-open conspiracy to buttress the value of sports assets, whose lush beneficiaries tend to be impossibly rich already. Solutions here are hard. Many fans like the weird, market-warping rules of professional sports, which often promote parity and competition and keep favorite players on long contracts; plus I don’t think doubling the number of NBA or NFL teams is particularly desirable among most fans. But ameliorations are possible. Tax law could further restrict the ability to team owners to amortize. And honestly, I don’t know why some local governments shouldn’t own stakes in the professional sports teams that they often directly finance. I’m not sure exactly how this would work, and I’m sure that there would be some negative side effects of literally socializing the already-kinda-socialist dynamic of professional sports. But the status quo is vile enough to justify some experiments. What we have today is a handful of lucky, franchise-owning billionaires who get to sit at a poker table where every card they turn over has a face or an ace. I wouldn’t call it cheating. I wouldn’t call the legal structure of American sports cheating or corrupt. I would call it … the law. But the law is bad.