Tackling Monopolies

A detailed Summary of Tackling Monopolies

Fans are paying more to watch sport every year. Is it time for governments to intervene?

MONOPOLY in sport is suddenly a sensitive issue. The escalating cost of watching games is pushing anti-trust authorities to examine the deals between sporting bodies and broadcasters. Britain's competition watchdog is scrutinising English football. The European Commission now has several investigations under way into restrictive practices in European football and monopolistic behaviour in Formula One motor racing. And an American court recently ruled that the National Basketball Association (NBA) could not prevent the Chicago Bulls selling rights to games that are not broadcast as part of the NBA's exclusive television deal.

Money is pouring into sport because viewers are willing to cough up a lot to watch it. They pay for it in different-and mainly indirect-ways: through taxes to finance public-service television; through time spent watching additional advertising during matches broadcast on commercial networks; in subscription fees to cable or satellite channels; or directly, on a pay-per-view basis. But viewers are paying over the odds because sporting authorities are able to use their control over the s

Regulation is a more plausible option. In a paper* published by Demos, a British think-tank, Julian Le Grand and Bill New, both of the London School of Economics, recommend a government agency to control the prices broadcasters charge viewers. That, in turn, would hold down the fees broadcasters would pay for sports rights. As in other regulated industries, prices could be set to ensure a reasonable return for teams and broadcasters.

This would not be as simple as it sounds. Because viewers pay mainly in indirect ways, the price is difficult to determine and hence hard to cap. Some broadcasters would surely find clever ways around the rules. Moreover, there is no obvious way to determine the "right" price. If it is too high, consumers will not benefit. If it is set low and teams' revenues fall, fans may moan if top stars move abroad to earn higher wages.

Competition between authorities within a particular sport is also a non-starter. Fans prefer a single World Cup because they want to know which country's football team is the best in the world; a rival tournament would defeat that purpose. Just ask boxing fans. They are fed up with the endless punch-ups between the four boxing organisations, which rarely deliver the bouts that would establish undisputed "world champions". Sustained competition has been rare. Once the American Football League gained a foothold, the NF

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Approximate Word count = 929
Approximate Pages = 4 (250 words per page double spaced)

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