Broadcasting, Attendance and the Inefficiency of Cartels

Abstract

The English Premier League is a cartel of soccer teams that collectively sells the rights to broadcast its matches. Despite considerable demand for their product from broadcasters, the clubs agreed to sell only a small fraction of the broadcast rights (60 out of 380 matches played each season between 1992 and 2001). The clubs have explained this reluctance by claiming that increased broadcasting would reduce attendance at matches and therefore reduce cartel income. However, this chapter produces detailed econometric evidence to show that broadcasting has a negligible effect on attendance and that additional broadcast fees would be likely to exceed any plausible opportunity cost. The chapter concludes that a more likely explanation for the reluctance to market their rights is the failure of the cartel to reach agreement on compensation for individual teams.

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