Optimal gate revenue sharing in sports leagues
Faculty of Applied Economics
Antwerp :UA, 2011
Research paper / UA, Faculty of Applied Economics ; 2011:015
University of Antwerp
Sports leagues constitute one of the few examples of legally operating cartels. In this paper I examine how gate revenue sharing may serve to coordinate talent investments within these cartels. I show that sharing revenues has the potential to raise cartel pro…ts, because it decreases the incentive to invest in playing talent. Leagues consisting of teams with heterogeneous local markets should share less revenues to maximize pro…ts, whereas homogeneous teams should share more.