Economic Analysis of Antitrust Law and Player Restraints反垄断法的经济分析和球员的限制.pptVIP

SPORTS LAW FALL 2010 Economic Analysis of Antitrust Law and Player Restraints SPORTS LAW FALL 2010 Employer’s Motivation for Salary Payments If you were president of a manufacturing company looking to expand, would you rather purchase a plant expected to earn $26m in revenues and cost $25m to operate, or a plant expected to earn $3m in revenues and cost $500,000 to operate? SPORTS LAW FALL 2010 /2 Employer Motivations If you were President of a ball-club owned by a charitable trust (i.e. solely interested in making money for a worthy cause), would you rather have A-Rod or Dodger outfielder Andre Ethier? SPORTS LAW FALL 2010 Basic Economics of Player Salaries Player’s value to team = Marginal Revenue Product (MRP) – Salary MRP = A-B, where A = annual club revenue with X on team B = annual club revenue with club’s next best alternative to X SPORTS LAW FALL 2010 Effect of Player Restraints Do player restraints harm players? Do player restraints harm sports fans? SPORTS LAW FALL 2010 Justifications for Player Restraints Holds down salaries → holds down ticket prices Allows teams in small markets to compete Allows teams to recoup investment in developing young players Promotes team continuity Promotes competitive balance SPORTS LAW FALL 2010 Economic Analysis of the Relationship Between Ticket Prices and Player Payroll Avg Ticket Price | Concessions profits Estimated Attendance Revenue ? ? ? 45 65,000 2925000 75 65,000 4875000 100 55,000 5500000 125 50,000 6250000 150 45,000 6750000 200 30,000 6000000 SPORTS LAW FALL 2010 Why is Competitive Balance a Desirable Goal? SPORTS LAW FALL 2010 Essential Elements to Claim that Competitive Balance is Good for Sports 1) fans prefer a more balanced competition 2) player restraints actually improve competitive balance 3) player restraints necessary to facilitate the degree of balance fans prefer SPORTS LAW FALL 2010 Economically Irrational Owners? Why would clubs spend