Sports Cartels and Competition

Professional sports leagues are supposed to be organized for purposes of scheduling games, preserving the rules of the game, establishing organizational administration, judging critical issues, and maintaining competitive balance. However, as cash hippos, they continually collect enormous revenues. Pro sports leagues, with this wealth can create their own agenda, distort the rules, fix competition, and allocate resources for their benefit. In this sense sports leagues are cartels organizing, implementing and inflicting rules on the business activities of the owners, policies that are executed to maximize cartel profits. Mirriam Websters defines cartel as a combination of independent commercial or industrial enterprises designed to limit competition or fix prices. Team owners fit this mold, collectively assembling at league meetings to exercise their granted power. This monopoly power is what restricts competition and thwarts entry into their respective leagues. Paul Tagliabue, commissioner of the NFL, said in Sports Illustrated, Sept. 16, 1996, "Free market economics is the process of driving enterprises out of business. Sports leagues economics is the process of keeping enterprises in business."

The best example I can give of the monopoly power exerted by sports leagues is from my own experience in Wisconsin. Just moving here from Ohio, in mid-August I began pursuing a start-up amateur soccer club for high school males, ages U-15, U-16, and U-17 in East/Central Wisconsin. Being that it was August, all high schools currently play soccer in the fall, and it was our goal to host try-outs in November of 2007 after the state tournament due to conflict of seasons and a would be small talent pool. Our plan was then to begin play outdoors starting in the spring (Just to note, the spring season does not officially start until the last week in April or the first week in May and applications for new teams isn't due until Jan. 1^st, 2008). I had just moved to the area and applied to the Wisconsin Youth Soccer Association (WYSA) for approval to be recognized as an official registered club within Wisconsin in late August. I was turned down after being contacted by the president because the cartel's rule is that new club applications must be filed before August 1 on that calendar year to be admitted for acceptance. I filed for admission in mid-August, unaware of the rule, and totally irritated by my rejection. Yes, there is always next year, and we can wait another 335 days to get accepted, but it's just wrong. It is wrong because it is detrimental to the sport, to the betterment of the kids who would be playing, and to competition as a whole. Maybe this is why we are so far behind other countries in the "beautiful game." I question our sports structures in America, especially our youth soccer design. We are not only being shackled by not being allowed to form a new soccer club, but I think it is unreasonable and a violation of our civil rights and values to do so. If we want to start a soccer club, we should be able to start a soccer club, anytime, anywhere – no questions asked. Yes, I think to play in a league, there should be a deadline, due to scheduling and enrollment issues. I think 90 days notice is reasonable time (statute of frauds), approximately 3 months, but why do I need my application in the hands of the WYSA, 8 months in advance. It is foolish, unreasonable and unjustifiable. The rules need to change, especially if America ever wants to win a World Cup. This is on a small scale, but can be applied to similar pro sports cartels, like the NCAA, NFL, MLB, NBA, NHL and MLS whom consistently control everything from entry in leagues to competition to franchise location. Contrast this with our successful system of small businesses in the United States, which allows for free enterprise, capitalism and entrepreneurship.

When you are starting a new business, you may apply and be accepted on a rolling basis, as applications come in by the Secretary of State. Colleges use the too, for example, to accept the best students, while breeding competition. Unlike sports league cartels, most colleges and the entire Small Business Administration make their leagues extremely open, providing access to all entrants and fostering all competitors. The independence that comes with owning a team or business remains our country's distinct sustainable competitive advantage over other nations. It helps explain why millions of people seek to immigrate to America every year. It provides opportunity. Our government's U.S. Chamber of Commerce, explicitly notes, "Governments (i.e. sports leagues, the American Bar Association, the Board of Education) at all levels must shape laws and regulations that provide workers and businesses with maximum flexibility to meet the changes and realities of 21^st century economy and craft rules that help all succeed." And further says, "Workers and companies must be free to create and select from a wide range of business solutions and working arrangements to meet the demands of today's market."

I whole heartedly believe that sports leagues and all leagues in general, a priori, should be non-profit organizations designed to preserve the values of competition, freedom, the pursuit of happiness, common good, justice, equality, liberty, diversity, truth, sovereignty, and patriotism. We should have the opportunity to improve the well being of our athletes and of society. Cartels, like the WYSA, NCAA, and any other sports league warrant their immoral character, and it is expected that owners in cartels emphasize their advantageous arrangement. The purpose of these cartels is not in the fans best interest or it could be, as long as it is congruent with the profit maximization efforts of the league. Geoffrey Rapp's article on Sports Law Blog, strikes at the heart of this issue. Rapp explains, "The NCAA, a cartel if I ever saw one, has long argued that competitive balance justified its various restrictive trade arrangements, including limitations on broadcasts of television games as well as all manner of eligibility rules." He goes on to explain how the NCAA uses its authority to the detriment of competitive balance and questions its impact it has on fan equity. I know I definitely favor great competition, which explains my love for sports, but when cartel leagues and sports monopolies exert their force unreasonably it hurts the integrity of the game and sets us back in terms of development. I think most sports fans do have tremendous equity invested in sports teams and especially with competitive balance because without it, there would be no reason to keep playing or watching games. It becomes too predictable, plain and boring. This "sameness" would inevitably lead to disinterest for the fans, loss of revenues, and league shutdown as more and more people become skeptical and lose interest.