I am attending an antitrust conference hosted by the Searle Center at Northwestern University. In my attempt to Americanize, I am drawn to any paper involving sport. And if British sport is thrown in for comparison, resistance is impossible.
Haddock, Jacobi and Sag offer an analysis of American NFL football stadiums versus English soccer stadiums. Their thesis is simple: the NFL controls entry of new teams in the league and teams can move from one city to another. So, if the New Jersey government does not cough up $1 billion for the New Meadowlands, teams can threaten to move and the NFL can refuse to allocate another team to the state. For example:
When the Houston Oilers threatened to move to Jacksonville, Florida in 1987 Harris County, Texas, responded with $67 million in improvements to the funded by property tax increases, doubling the county’s hotel tax, and underwriting bonds to be paid over the next 30 years. Within six years the Oilers began lobbying for a new stadium with club seating. Rather than opposing the Oilers rent seeking, NFL Commissioner Paul Tagliabue warned Houston that “If the Oilers’ situation doesn’t work down there, I don’t see any circumstances in which we’re going to guarantee a team, especially when one team’s already found it unsatisfactory.” The message was clear, if Houston lost the Oilers because it refused to accede to the team’s demands, it was unlikely to receive a prompt replacement. At the end of the 1996 season the Oilers left Houston for Nashville where city officials had promised to contribute $144 million toward a new stadium.
In England, entry is easy. If a team attempts to hold up a city, it can create its own new team. This reduces the bargaining power of the team.
Jerry Hausman, the discussant, found much to disagree with. Hausman claimed many British teams were simply no-hopers. Very few teams are actually competitive. Arsenal is not one of them and hence no-one would fund a stadium for them. In the NFL, many teams are competitive. Hence, they can extract rents from the local community. He thought politics was an the center of problem: Why did Massachusetts fund a new high school in Newton rather than soend money in poorer areas? He displayed a surprising amount of knowledge about English soccer and claimed to have worked for the Chicago Bulls (I didn’t catch what he did for them). He speaks fast so I may have missed some details.