Striking Out 'Competitive Balance' in Sports, Antitrust and Intellectual Property
74 Pages Posted: 1 Sep 2006
Professional sports leagues enjoy a unique justification in defending their seemingly anticompetitive practices under the antitrust laws: They allegedly need to maintain competitive balance. According to the argument, sports leagues need to do anticompetitive things to enhance their competitive standing vis-a-vis other sports leagues or other forms of entertainment. The argument is on the leading side of a circuit split, with only the D.C. Circuit rejecting it. Additionally, sports leagues have been adept at getting this argument into public discourse and legislative consideration.
This Article argues that antitrust should reject the competitive balance argument on its face. The competitive balance argument makes the assumptions that there can only be one championship competition per sports league, that leagues can and will engineer balance in that unique competition, and that fan interest is directly related to that singular competition. This Article draws on comparative data and recent economic research to conclude that each of these assumptions is wrong and that judicial endorsement of the competitive balance argument may simply be an aesthetic preference without empirical support. Instead, a solution lies in reconceiving the league competition envisioned by the competitive balance argument. In particular, a sports league can be subject to several different "competing competitions" among its constituent teams; it could thus maintain fan interest even in the absence of competitive balance. This view draws support from the experience of the decade-old English Premier League and also helps to illuminate Major League Baseball's litigation attempting to expand its intellectual property rights to limit fantasy baseball league operators.
Keywords: antitrust, sports, intellectual property, competitive balance, sports economics
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By Marc Edelman