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2013 | Book

Introduction Read chapter Read first chapter

An Absence of Competition

The Sustained Competitive Advantage of the Monopoly Sports Leagues

Author: Neil Longley

Publisher: Springer New York

Book Series : Sports Economics, Management and Policy

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book takes a multi-disciplinary approach to analyzing the nature of ‘competition’ and ‘competitive advantage’ within the U.S. pro sport industry. By many measures, the four major pro sports leagues in the U.S. – the National Football League (NFL), National Basketball Association (NBA), National Hockey League (NHL), and Major League Baseball (MLB) – are now some of the most successful business entities in the country. While these established leagues have generally been highly profitable throughout their respective existences, the past two decades have been particularly lucrative, with franchise values in all four leagues growing rapidly, and at levels well beyond market rates of return. Within this context, the book seeks to explore the nature of the competitive advantage that these leagues apparently possess. The purpose is to identify not only how these leagues have been able to get to where they are today, but also to examine the competitive threats and opportunities that these leagues face as they move forward. A key contribution of the book is that it analyzes these issues from a multi-disciplinary approach including a traditional economics perspective, public policy and public choice theory and strategic management, to provide a parallel explanation for the success of each of the four major leagues. It argues that no single conceptual approach can, in itself, adequately explain the full richness of the issue. Its stresses that these various approaches should generally be viewed as complements, rather than as being mutually exclusive, and that a full understanding of the issue requires one to adopt a multi-disciplinary perspective, making it of interest to scholars in strategic management, sport management, and economics. It can serve as an effective teaching tool in both graduate and upper-level undergraduate courses for students in these fields, and is particularly useful for faculties seeking to emphasize to their students the importance of a multi-disciplinary, integrative, approach when analyzing business and management issues. The book may also be of interest to leaders within the sport industry itself, and will help to provide insight and perspective as leagues seek to enhance their competitive advantage in the marketplace.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
The book will take a multidisciplinary approach to analyzing the nature of “competition” and “competitive advantage” within the US pro sport industry.
Neil Longley
Chapter 2. Some Conceptual Foundations: A Primer on the Economic Structure of Professional Sport
Abstract
The notion of competition is fundamentally at the core of a capitalist society. When firms actively compete against each other in a market, several social benefits are generated. In general, competition tends to lower costs, reduces production inefficiency, and leads to a more efficient allocation of societal resources. In other words, resources flow to their most productive uses. Competition is a dynamic process in that it is inherently forward looking, leading to innovation and creativity amongst producers. These benefits ultimately flow through to consumers, who enjoy a more wide range of product choices, higher-quality products, and lower prices. In general, the lower the degree of competition in a given market, the less present are these array of benefits—all else equal, less competitive markets can result in greater production inefficiencies, reduced innovation, fewer product choices, and higher prices for consumers, with the latter directly resulting in higher profits for producers.
Neil Longley
Chapter 3. The USFL as a Case Study
Abstract
As a rival league, the USFL was quite unremarkable. It lasted only 3 years, had numerous franchise and ownership changes, and lost tens of millions of dollars. Perhaps more importantly, it failed to gain the merger with the NFL that so many of the upstart league’s owners desperately sought.
Neil Longley
Chapter 4. A Brief History of Post-World War II Rival Leagues
Abstract
The USFL marked the end of the “Golden Era” of rival leagues, in that it was the last in a line of several rival leagues that had arisen in the post-World War II era to challenge the established leagues. With the USFL as a more modern-day benchmark, this chapter delves into the experiences of earlier rival leagues, some more successful than the USFL and others equally unsuccessful. Ultimately, the question is this: what drives the relative success or failure of rivals? For example, why was the USFL so unsuccessful, when it appeared to have many factors working in its favor? Did the external conditions facing the USFL at the time preclude any chance of success for the league, or was the USFL’s failure entirely of its own making? Contrast this with the resounding success of the AFL or the more limited success of the ABA and WHA—what was it about these leagues that allowed them to be more successful challengers to the established leagues? Were they at the right place at the right time, or was it something more complex than this? Answers to these questions not only are important in a historical sense but can also provide valuable insights into the viability of interleague competition in the future.
Neil Longley
Chapter 5. Explaining Competitiveness: Alternate Theoretical Frameworks
Abstract
The case histories of rival leagues presented in the previous two chapters are critical to understanding the nature of competition and competiveness in the major professional sport industry. These histories raise several important questions:
Neil Longley
Chapter 6. Property-Based Resources: Franchise Locations, Stadiums, and Players
Abstract
For the purposes of the analysis in this book, the RBT has some advantages over both the traditional economics approach and the public choice approach in that it allows one to more explicitly consider the possible role of managerial choice as a variable influencing competitiveness in the pro sport industry. Relatedly, it allows one to more directly consider the notion of resources and, more importantly, the inimitability of these resources, as a source of competitive advantage. While it is clear that, by the very nature of the issue, established leagues possess certain resources that rival leagues do not, it is less clear as to why rival leagues have had such difficulty in imitating these resources. The first task in the analysis is to delineate the set of resources that are critical to pro sports leagues.
Neil Longley
Chapter 7. Knowledge-Based Resources: Managerial Competencies
Abstract
In contrast to property-based resources examined in the previous chapter, this chapter examines the extent to which knowledge-based resources may be a source of sustained competitive advantage for established leagues. Following the discussion of Chap. 5, knowledge-based resources in sports leagues might take many possible forms. In general, knowledge may be embodied either in some type of technical know-how or in the form of managerial capabilities.
Neil Longley
Chapter 8. The Way Ahead: The Prospects for the Reemergence of Rival Leagues
Abstract
This book has taken the premise that studying the history of past rival leagues allows one to gain critical insights into the nature of competition and competitiveness in the spectator sport industry; in turn, this allows one to assess whether the current monopoly position of the Big Four will ever be challenged again. In this final chapter, the goal is to identify the unifying themes amongst the specific case studies presented and to begin to build a more general theory as to why established leagues have been able to maintain such absolute dominance.
Neil Longley
Backmatter
Metadata
Title
An Absence of Competition
Author
Neil Longley
Copyright Year
2013
Publisher
Springer New York
Electronic ISBN
978-1-4614-9485-0
Print ISBN
978-1-4614-9484-3
DOI
https://doi.org/10.1007/978-1-4614-9485-0

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