I am somewhat confused by the comparison to art. Are serious people even making it? Sports franchises are valuable because they are cultural mainstays which provide tremendous entertainment value; they sell tickets, they get TV broadcasting rights, they are massive on social media, they sell merchandise, they get tons of sponsorship deals… That’s what they are: commoditized entertainment, while art is often way less commoditized, has none of those characteristics from before, and can be much more clearly argued to have “value” in a more ineffable way.
On the oligopoly point, yes, certainly. One can also include the lack of relegation and serious lower leagues in major US professional sports. And also the preferential treatment in draft lotteries given to the worst-performing teams. And all the revenue sharing. Very socialistic in nature.
Funnily enough, in Europe, it’s much more capitalistic. Teams are allowed to fail and go out of business. They are allowed to relegate. They are allowed to build massive academy networks that nab promising players from a young age, instead of having to obtain them through a draft.
On the other hand, in Europe, fan support seems to be far more concentrated on a rather rigid set of high-performing teams. Approximately 57% of Spanish football watchers are fans of either Barca or Real Madrid, for example. It’s not that way for the NBA, or the NFL, or the MLB.
American sports fans really care about “parity.” This was especially prominent in NBA discourse around 2015-2019, when the Warriors and Cavs were going up against each other in the Finals remarkably often. In Europe, “Bayern keeps winning the Bundesliga” is not seen as a problem at all.
I certainly have heard others make the simile. While I can’t peg its genesis, my memory is that it originated in the 1990s when noted art collector Jeffrey Lurie purchased the Eagles. Perhaps it was later, but I do think he was part of the reason that idea emerged.
I’d also add that JPMorgan released a study of billionaires shifting their preference from art (passive) to pro spots (active) investments.
The naked hostage taking is best seen in Tom “El Cheapo” Dundon (to steal from Bill Simmons). It’s yet another example of a public good (what it means to a city to have a team - and I live in Oklahoma City and having a team means something to a significant number of people in the community) being “disrupted” for profit and power.
What does it mean if the Portland Trail Blazers are an asset on a spreadsheet and nothing else? Maybe it’s not that big of a deal. But if everything is just a line item, that is a bad outcome for the health of a society.
I understand that, and I might agree with a lot of it. But I do still think that running it for “profit and power” is incompatible with it being “like art.” Little profit, little power in the latter.
The need for competitors puts sports in a different league, ahem, compared to regular business. There’s plenty of industries where one company or several companies have 90% of the market. But the Yankees can’t be 70% of the market for baseball, every team needs a competitor for each game.
That being said we need to stop with the public subsidies for stadiums. If teams can cartelize to reduce new entrants, states must band together to resist demands for public subsidies.
There's a lot of fervor around this deal, but I'm finding it hard to care. I don't watch basketball and I have never paid for tickets to a game. I'll watch it at a bar for the price of other goods I'm buying anyway (like lunch/dinner), but I spend exactly $0 on this part of American society. I don't know who is funding the lucrativeness of these institutions but it's not me. Whether they make a gazillion dollars off it or zero — I feel like there are more important things to figure out.
You use analogies to grocery stores and Apple, Meta, and Google when talking about a legal monopoly and employee salary collusion, respectively. But isn’t the better analogy that the sports league is the business, not the teams, and the teams are (as they are literally called) “franchises?”
It’s true that someone can’t just “open” a 31st NBA team. But I also can’t just open a McDonalds operating out of my basement. Saying that is unfair monopolistic behavior would be laughable. What I CAN do is open my own fast food restaurant, or try to. It will very likely fail, in part because McDonald’s would kick my ass. But that is ALSO not de facto proof of malfeasance.
Continuing this analogy, it’s true that Apple, Meta, and Google could not legally collude on salaries or pricing for similar products/service. But keeping my analogy, McDonald’s, despite having franchise owners operating one or multiple stores, absolutely CAN do this. No McDonald’s franchise is allowed by corporate to charge $1 or $40 for a Big Mac, for example. But one can become wealthy from owning a few McDonald’s locations even if that person didn’t “do anything” other than buy low or happen to own one in a hot location before it was hot etc.
I am not saying the outcomes of the professional sports league ownership situation are always good. They aren’t! There is plenty to be pissed about for sure. And I agree on several fronts that the tax code should not be nearly as beneficial and that cities should stop paying for stadiums.
I just think the framing is off. Someone could absolutely try to “open” a competing league!
The lack of relegation is a very weird part of the US sports scene -that and the related scarcity of profession sports across the nation. ( which why “college” sports thrive.
In England, over a 10 year period, over a 1,000 teams could be candidates to win the Premier League - assuming promotion from the lower divisions over that time period.
Excellent points identifying what’s wrong with how owners are allowed to get away with sticking it to the public. As smart and insightful as you are, though, Derek, I was disappointed that you offered no solutions, no matter how “out there” they might be. Here’s one maybe partial solution: make it illegal, or subject to a heavy FEDERAL tax (no way a state would be likely to undertake this on its own), for a local government to finance in whole or in part a stadium or arena used significantly for sports teams
Derek, I love your analysis of almost everything, but this reeks of someone who didn't play sports and hates professional sports, most especially football.
Freakonomics had a great two-part series on if CFB should be a minor league for the NFL and talked about the difference in European soccer and US sports. Much of it is on the same thread as this.
Worse than having a bad law, perhaps, is having a good or at least serviceable law that is not enforced by a government that is itself corrupt. Such is the case with our antitrust laws generally. The anticompetitive dynamic in professional sports that Derek describes is similar to the dynamic in many if not most American industries, where the goal is more to eliminate competition than it is to innovate toward greater market share. Yet we allow this to occur and, in the case of the current administration, actively facilitate the elimination of real competition.
Capitalism is not a law of nature or a constitutional mandate. It is a manmade construct that humans have determined is the least bad economic system. It achieves the greatest good where it is regulated appropriately to ensure incentives and outcomes that create the greatest benefit to society. But increasingly, it is mostly a tool for generating massive gains for a small sliver of society.
I have less of a problem with pro sports leagues, as I am a fan and still enjoy the product on the whole, despite the sort of disgusting legal protections team owners enjoy. I have more of a problem in many other concentrated industries where innovation is no longer creating better or more socially useful products, profits are being hoarded by the already extremely wealthy, government is in on the scam, and I experience new forms of enshittification daily.
Well said, Derek. I grew up as a sports fan as a kid in the 70s, but it's gotten harder to care every year for the reasons you cite. The Lakers deal is the grossest owner transaction I've ever seen, and the fact that it's tied to the Trump network makes it all the more repulsive.
Great column Derek. Legalised socialism by billionaires is no one’s idea of a well functioning efficient market structure. But that’s the NFL, MLB, NBA and NHL in a nutshell.
Can I recommend an examination of the Australian Football League: a salary cap in place as well as a draft, but no private ownership, membership based ownership.
It’s not perfect but a lot better overall I think.
It seems clear this is where college football and basketball are headed. Why else are private equity firms interested. Why else set up LLC’s separate from the school to manage the revenue? Your thoughts?
I am somewhat confused by the comparison to art. Are serious people even making it? Sports franchises are valuable because they are cultural mainstays which provide tremendous entertainment value; they sell tickets, they get TV broadcasting rights, they are massive on social media, they sell merchandise, they get tons of sponsorship deals… That’s what they are: commoditized entertainment, while art is often way less commoditized, has none of those characteristics from before, and can be much more clearly argued to have “value” in a more ineffable way.
On the oligopoly point, yes, certainly. One can also include the lack of relegation and serious lower leagues in major US professional sports. And also the preferential treatment in draft lotteries given to the worst-performing teams. And all the revenue sharing. Very socialistic in nature.
Funnily enough, in Europe, it’s much more capitalistic. Teams are allowed to fail and go out of business. They are allowed to relegate. They are allowed to build massive academy networks that nab promising players from a young age, instead of having to obtain them through a draft.
On the other hand, in Europe, fan support seems to be far more concentrated on a rather rigid set of high-performing teams. Approximately 57% of Spanish football watchers are fans of either Barca or Real Madrid, for example. It’s not that way for the NBA, or the NFL, or the MLB.
American sports fans really care about “parity.” This was especially prominent in NBA discourse around 2015-2019, when the Warriors and Cavs were going up against each other in the Finals remarkably often. In Europe, “Bayern keeps winning the Bundesliga” is not seen as a problem at all.
I certainly have heard others make the simile. While I can’t peg its genesis, my memory is that it originated in the 1990s when noted art collector Jeffrey Lurie purchased the Eagles. Perhaps it was later, but I do think he was part of the reason that idea emerged.
I’d also add that JPMorgan released a study of billionaires shifting their preference from art (passive) to pro spots (active) investments.
The naked hostage taking is best seen in Tom “El Cheapo” Dundon (to steal from Bill Simmons). It’s yet another example of a public good (what it means to a city to have a team - and I live in Oklahoma City and having a team means something to a significant number of people in the community) being “disrupted” for profit and power.
What does it mean if the Portland Trail Blazers are an asset on a spreadsheet and nothing else? Maybe it’s not that big of a deal. But if everything is just a line item, that is a bad outcome for the health of a society.
I understand that, and I might agree with a lot of it. But I do still think that running it for “profit and power” is incompatible with it being “like art.” Little profit, little power in the latter.
True enough for being an artist. But investing in art? Plenty of profit and rich people pushing each other around.
Right. That’s the shift from passive investment to active investment.
It’s not enough to conspicuously consume. Now you conspicuously consume AND make billions off that consumption.
How do you feel about European soccer dynamics? (Which are much, much closer to raw market capitalism, and do sustain a strong sporting product)
The need for competitors puts sports in a different league, ahem, compared to regular business. There’s plenty of industries where one company or several companies have 90% of the market. But the Yankees can’t be 70% of the market for baseball, every team needs a competitor for each game.
That being said we need to stop with the public subsidies for stadiums. If teams can cartelize to reduce new entrants, states must band together to resist demands for public subsidies.
Can we all agree Derick is really, really good at his job. I love to read him and listen to too hosnj
Wwmmerrrranfdnsrounfn says
There's a lot of fervor around this deal, but I'm finding it hard to care. I don't watch basketball and I have never paid for tickets to a game. I'll watch it at a bar for the price of other goods I'm buying anyway (like lunch/dinner), but I spend exactly $0 on this part of American society. I don't know who is funding the lucrativeness of these institutions but it's not me. Whether they make a gazillion dollars off it or zero — I feel like there are more important things to figure out.
You use analogies to grocery stores and Apple, Meta, and Google when talking about a legal monopoly and employee salary collusion, respectively. But isn’t the better analogy that the sports league is the business, not the teams, and the teams are (as they are literally called) “franchises?”
It’s true that someone can’t just “open” a 31st NBA team. But I also can’t just open a McDonalds operating out of my basement. Saying that is unfair monopolistic behavior would be laughable. What I CAN do is open my own fast food restaurant, or try to. It will very likely fail, in part because McDonald’s would kick my ass. But that is ALSO not de facto proof of malfeasance.
Continuing this analogy, it’s true that Apple, Meta, and Google could not legally collude on salaries or pricing for similar products/service. But keeping my analogy, McDonald’s, despite having franchise owners operating one or multiple stores, absolutely CAN do this. No McDonald’s franchise is allowed by corporate to charge $1 or $40 for a Big Mac, for example. But one can become wealthy from owning a few McDonald’s locations even if that person didn’t “do anything” other than buy low or happen to own one in a hot location before it was hot etc.
I am not saying the outcomes of the professional sports league ownership situation are always good. They aren’t! There is plenty to be pissed about for sure. And I agree on several fronts that the tax code should not be nearly as beneficial and that cities should stop paying for stadiums.
I just think the framing is off. Someone could absolutely try to “open” a competing league!
The lack of relegation is a very weird part of the US sports scene -that and the related scarcity of profession sports across the nation. ( which why “college” sports thrive.
In England, over a 10 year period, over a 1,000 teams could be candidates to win the Premier League - assuming promotion from the lower divisions over that time period.
Excellent points identifying what’s wrong with how owners are allowed to get away with sticking it to the public. As smart and insightful as you are, though, Derek, I was disappointed that you offered no solutions, no matter how “out there” they might be. Here’s one maybe partial solution: make it illegal, or subject to a heavy FEDERAL tax (no way a state would be likely to undertake this on its own), for a local government to finance in whole or in part a stadium or arena used significantly for sports teams
Derek, I love your analysis of almost everything, but this reeks of someone who didn't play sports and hates professional sports, most especially football.
Freakonomics had a great two-part series on if CFB should be a minor league for the NFL and talked about the difference in European soccer and US sports. Much of it is on the same thread as this.
This is like they gave Matt Taibbi an econ degree.
Worse than having a bad law, perhaps, is having a good or at least serviceable law that is not enforced by a government that is itself corrupt. Such is the case with our antitrust laws generally. The anticompetitive dynamic in professional sports that Derek describes is similar to the dynamic in many if not most American industries, where the goal is more to eliminate competition than it is to innovate toward greater market share. Yet we allow this to occur and, in the case of the current administration, actively facilitate the elimination of real competition.
Capitalism is not a law of nature or a constitutional mandate. It is a manmade construct that humans have determined is the least bad economic system. It achieves the greatest good where it is regulated appropriately to ensure incentives and outcomes that create the greatest benefit to society. But increasingly, it is mostly a tool for generating massive gains for a small sliver of society.
I have less of a problem with pro sports leagues, as I am a fan and still enjoy the product on the whole, despite the sort of disgusting legal protections team owners enjoy. I have more of a problem in many other concentrated industries where innovation is no longer creating better or more socially useful products, profits are being hoarded by the already extremely wealthy, government is in on the scam, and I experience new forms of enshittification daily.
Well said, Derek. I grew up as a sports fan as a kid in the 70s, but it's gotten harder to care every year for the reasons you cite. The Lakers deal is the grossest owner transaction I've ever seen, and the fact that it's tied to the Trump network makes it all the more repulsive.
Great column Derek. Legalised socialism by billionaires is no one’s idea of a well functioning efficient market structure. But that’s the NFL, MLB, NBA and NHL in a nutshell.
Can I recommend an examination of the Australian Football League: a salary cap in place as well as a draft, but no private ownership, membership based ownership.
It’s not perfect but a lot better overall I think.
I can't believe there's no league with relegation and a salary cap. How could that be so hard?
It seems clear this is where college football and basketball are headed. Why else are private equity firms interested. Why else set up LLC’s separate from the school to manage the revenue? Your thoughts?