Collective versus Individual Sale of Television Rights in League Sports

Abstract

In many countries, the collective sale of television rights by sports leagues has been challenged by the antitrust authorities. In several cases, however, the leagues won in court, on the ground that sport is not a standard good. In this paper, we investigate the conditions under which the sale of television rights collectively by sports leagues, rather than individually by teams, is preferred from a social welfare point of view. We find that collective sale is socially preferable when (a) leagues are small and relatively homogeneous in terms of clout and (b) teams get little performance-related revenues.