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» Varsity Numbers: Honing in

Bill Connelly again looks at which college football teams the F/+ ratings are sure about, and which teams remain a mystery (led by Appalachian State).

24 Jan 2007

Extra Innings Move Could Challenge Sunday Ticket

Guest column by Maury Brown

A week until the Colts and Bears square off and you're going through withdrawals. "Next year will be different," you say. "Next year I'm getting hooked up for as many out-of-market games as I can by getting Sunday Ticket." Ahh... football bliss, right? That depends.

There's a steady shift going on with how out-of-market games are being delivered to your home. It's the NFL now, but MLB, NASCAR, and possibly the NHL have come into play. What's the shift? DirecTV being the exclusive provider for such packages as Sunday Ticket, and -- as became public this week -- MLB Extra Innings. DirecTV is bidding $100 million over seven years to be the exclusive provider of the Extra Innings package, $30 million more than current provider InDemand. It will cut access to Extra Innings from roughly 75 million households to roughly 15 million households.

Many football fans have criticized the NFL for not making Sunday Ticket available anywhere but DirecTV. But there's a chance that an exclusive with MLB for Extra Innings might elevate the monopoly aspect of DirecTV to get members of Congress into the mix, more than they already have.

In an overall sports business sense, DirecTV looms large. It may be one thing to deal with the NFL and missing out on 16 out-of-market days to watch games. It's another when you add baseball into the mix and have fans missing as many as 150 games or more (those interested in the MLB aspect can read articles on Baseball Prospectus and The Biz of Baseball). The NFL went with DirecTV from the get go on Sunday Ticket, and therefore fans have never known anything different. But while MLB Extra Innings was initially only offered on DirecTV in 1996, the package has been available on cable since 2001, and on Dish Network since 2004.

In other words, there is a growing legion of fans that are none too pleased with this paradigm: one, and only one option for getting out-of-market games. Satellite is satellite, which means not all can make the technology fly at their domicile due to mundane forces of nature such as trees blocking the line of sight of the southern sky. Some may think that by being in apartment that your landlord won't go for the dish being mounted on your deck. Fear not, the FCC ruled that you have the right to have a dish on your deck -- what have you -- just as long as you adhere to any rules surrounding how it is mounted. Metal strapping? Check. Drilling into the apartment? Better check with the landlord.

All that minutia aside, there's a larger issue in play which has politicians jumping into the fray. In early December of last year, Sen. Arlen Specter (R-PA) said he would introduce legislation in the next session aimed at eliminating the NFL's freedom from antitrust laws over how NFL Sunday Ticket is only available via DirecTV. If you're scratching your head saying, "I thought only MLB had an antitrust exemption," you're not alone. Specter's bill would repeal the NFL's antitrust exemption under the Sports Broadcasting Act of 1961. Currently, the NFL negotiates the broadcast rights for all of its 32 teams. Specter's bill would repeal that ability and set up a scenario in which teams would negotiate television deals separately. If it were to become law, wave bye-bye to one of the strongest methods for creating parity in the NFL: centralized television revenues. There's a lot at stake here, as the Sports Business Journal reports that there are 2 million Sunday Ticket subscribers and DirecTV pays the NFL about $700 million for a seven-year package beginning in 2007.

As with nearly every instance where Congress gets into the mix, there are other political forces at play. As mentioned, Specter is from Pennsylvania. Where is Comcast headquartered? Philadelphia. Is it possible that Specter is trying to support a large and influential business constituency from his state? You can pretty much bet on it.

Here's something to consider within that political mix: Specter is out as the Chairman of the Senate Judiciary Committee, a very powerful force in Congress. This is due to the November elections, and now the Democrats control the committee. Sen. Patrick Leahy will take his place, but Specter still wields a considerable amount of power. Time will tell if he is simply trying to strong-arm the NFL into making the decision on their own to make Sunday Ticket available on cable.

Here's the thing... at least for one more game you don't have to think about such matters. Happily, Superbowl XLI is on CBS. No dish required.

Maury Brown covers the business of baseball for our partners at Baseball Prospectus and on his own site, The Biz of Baseball. This is a good time to remind everyone that Football Outsiders does publish guest columns, and the off-season is a great time to submit your idea.

Posted by: Guest on 24 Jan 2007

142 comments, Last at 02 May 2007, 4:39pm by Travis

Comments

1
by Pat (not verified) :: Wed, 01/24/2007 - 12:11pm

Happily, Superbowl XLI is on CBS.

The one, and only time, that someone could say this phrase seriously.

Nantz and Simms. Super Bowl. With Manning and Grossman at quarterback. Oh, God.

2
by zlionsfan (not verified) :: Wed, 01/24/2007 - 12:25pm

Well, that just gives me an excuse to cancel Extra Innings. I was considering it anyway, but if DirecTV does get exclusive rights, I'm out.

For some reason, exclusivity seems to be the current fad in sports and technology these days, whether it's pay-per-view packages or video games. I have yet to see an example of an exclusive deal between a league and a company that was in the best interests of the customers. I doubt MLB-DirecTV would be any different.

3
by Trieu (not verified) :: Wed, 01/24/2007 - 12:37pm

DirecTV pays the NFL $700m per year, and it's going to pay MLB $100m per year. Am I getting these numbers right? I know that the football long surpassed baseball as America's favorite sport, but do these numbers suggest that the NFL is seven times more popular than MLB? Perhaps there's a better way to read those figures.

4
by Walt E (not verified) :: Wed, 01/24/2007 - 12:42pm

Just wanted to add that according to the NY Times (link is in my name), the DirecTV bid is not $100 million over 7 years, but $700 million over 7 years. So thats $100 million per year for 7 years.

It also says the InDemand bid was $70 million, more than triple the current deal, but doesn't say for what length of time.

5
by admin :: Wed, 01/24/2007 - 12:50pm

The DirecTV football number is now fixed.

6
by Diane (not verified) :: Wed, 01/24/2007 - 12:55pm

MLB doesn't care about growing its fan base ... it just wants the $$$

7
by Trieu (not verified) :: Wed, 01/24/2007 - 12:55pm

Ah, that makes more sense.

8
by Mark R (not verified) :: Wed, 01/24/2007 - 1:00pm

Um, don't the numbers still indicate that football is 7 times more popular than baseball?

The MLB package is $100 million over 7 years.

The NFL package is $700 million over 7 years.

9
by BadgerT1000 (not verified) :: Wed, 01/24/2007 - 1:01pm

zlions:

As you will likely read elsewhere, the market research into the folks who buy these packages are the hard-core fans. Or in the case of football, hard-core gamblers. These folks are going to purchase these plans in whatever form is available.

Also, the nation as a whole is much wealthier than anyone cares to admit. There is a LOT of disposable income out there. Care to recall around Xmas how it seemed on TV that everyone was getting a Lexus SUV?

Especially for baseball which has a history of being a bad TV sport this is a fab deal. The dedicated fans are still going to buy unless they are willing to watch games via MLBtv. (which has its plusses but it's still a monitor as your viewing vehicle). MLB gets some serious cash that almost certainly wasn't going to come from cable providers.

More and more companies are going the route of focussing on their really devoted customer base who are willing to pay extra for access to whatever.

The casual users don't justify the additional costs associated with making something available on a larger scale.

The key is having something that X number of users really, REALLY want.

Me? I enjoy sports but I cannot justify the expense. Radio feed by NFL.com works just fine. And the MLB.com deal is OUTSTANDING. $15 for the entire season and ALL games. That's pretty sweet for a poor sap like myself.

10
by Trieu (not verified) :: Wed, 01/24/2007 - 1:06pm

#7 -

The MLB deal is $100m/yr for seven years. At least according to a couple of things I've read. For example:

http://baseballprospectus.com/article.php?articleid=5820

From that piece:

DirecTV is paying a whopping $100 million a year over seven years for these rights. Based on the information in the Sports Business Journal, that represents a five-fold increase over what inDemand was paying for the rights to EI.

11
by Dennis (not verified) :: Wed, 01/24/2007 - 1:06pm

Currently, the NFL negotiates the broadcast rights for all of its 32 teams. Specter’s bill would repeal that ability and set up a scenario in which teams would negotiate television deals separately. If it were to become law, wave bye-bye to one of the strongest methods for creating parity in the NFL: centralized television revenues.

I don't see why this necessarily follows. Without an antitrust exemption, the NFL can still require all teams to participate in the league-negotiated TV contracts.

As for the whole exclusivity thing, I don't understand why people think they have a civil right to buy the Sunday Ticket or Extra Innings. If you accept the argument that the NFL should be required to allow any provider to carry the Sunday Ticket, then can't you make the same argument that it should be available for free? After all, if it's anti-consumer to require people to get dirctv to get the ST, then it's anti-consumer to require people to pay for it. The NFL is a private enterprise and they can sell their product however they choose.

12
by Andrew (not verified) :: Wed, 01/24/2007 - 1:12pm

DirectTV is no more a monopoly than my company's contracts with clients to provide "all engineering services" needed by the client are to the exclusion of all of our competitors.

The NFL said we want to offer our games out of market in a package, what will you bid to broadcast this? Comcast has consistently lost out on the bidding, mostly because Comcast does not have the national market reach of DirectTV (somethign inherent in the nature of cable, which requires local franchises and wires running to every home), and therefore cannot afford to bid what DirectTV can bid, which simply beams satellite signals out of the sky blanketing the whole country.

There is also a great deal of logic in DirectTV becoming more and more an exclusive provider of these types of broadcast packages. Many people go to watch games in bars and clubs. It makes financial sense to bars qand clubs to subscribe to just one TV service to access all sports packages, rather than having to subscribe to multiple sattelite and cable services.

What the Cable companies cannot get over is that they are really technologically obsolete and on the way out due to the nature of satellite TV services, just like satellite using cell phones are inexoriably and inevitably replacing land-line phone use. Some lawsuits and congressional laws may delay the inevitable, but its inherently cheaper and easier to maintain a handful of satellites and satellite broadcast dishes than it is to maintain cable lines to 100+ million houses and businesses across the country.

This is the same reasoning behind the popularity of wifi and other wireless internet networks.

13
by Maury (not verified) :: Wed, 01/24/2007 - 1:16pm

One thing on the DirecTV deal... it isn't available in Canada. I've heard from several people that they will get locked out of MLB out-of-market games in totality because of the new deal. Looks like the Blue Jays for them.

14
by Trieu (not verified) :: Wed, 01/24/2007 - 1:18pm

DirecTV has agreed to pay $700 million over seven years, according to three executives briefed on the details of the contract but not authorized to speak about them publicly.

http://www.nytimes.com/2007/01/20/sports/baseball/20base.html

15
by MJK (not verified) :: Wed, 01/24/2007 - 1:52pm

I don’t see why this necessarily follows. Without an antitrust exemption, the NFL can still require all teams to participate in the league-negotiated TV contracts.

I don't think so. Without the antitrust exemption, the different teams I believe would have to be considered to be independent businesses. Therefore, the different teams negotiating as a block with potential customers (the TV stations, not the fans) would probably amount to collusion as defined in the Sherman act--a coordinated effort by entitities in competition to circumvent market forces. It's been a while since I've taken a law course, though, so maybe other people could confirm this?

16
by Diane (not verified) :: Wed, 01/24/2007 - 2:00pm

Contact Senator Arlen Specter, who has been threatening the NFL's anti-trust exemption over their "Sunday Ticket" exclusive package.

(clink link for his website)

17
by Nick Evans (not verified) :: Wed, 01/24/2007 - 2:03pm

re: 14, that's my understanding too. By requiring the teams to act collectively, rather than compete for TV contracts, the NFL breaches anti-trust law, so requires an exemption from that law.

18
by MJK (not verified) :: Wed, 01/24/2007 - 2:05pm

As for the whole exclusivity thing, I don’t understand why people think they have a civil right to buy the Sunday Ticket or Extra Innings. If you accept the argument that the NFL should be required to allow any provider to carry the Sunday Ticket, then can’t you make the same argument that it should be available for free?

It's not a question of civil rights. It's a question of contract law. According to my understanding, the NFL currently operates in a manner that suppresses natural market forces--e.g. they use the fact that they have a near monopoly (close to 100% market share) on football entertainment to control player salaries (through the draft and the salary cap), negotiate collective TV contracts, and offer barriers to entry to other startup leagues. They have been doing so since the AFL-NFL merger. In general, a business entity would not be allowed to do these things, under Sherman. However, the NFL successfully argued that these monopolistic practices allow them to deliver a better product to the consumer than would otherwise be possible (or they just had really good lobbyists), and so Congress passed a law that specifically gives them an examption to antitrust law. However, a condition of that exemption is that their product be made available to the public without bias. (I haven't actually read the law, but that is my understanding on it based on reading the news articles about Specter's initiative. If anyone has more information, it would be appreicated.)

My understanding is that the chief argument against the Sunday Ticket on DirectTV deal is that it does not offer the NFL's product to the public without bias--namely because people who physically cannot reciever a satellite signal cannot legally in any way gain access to out-of-market games.

I agree with Andrew in principal that if it were not for this specific law mandating the NFL's requirement to make their product available universally in exchange for the antitrust exemption, the NFL should be theoretically allowed to control its product's distribution the way any company can control its product's distribution. However, you do need to be careful drawing parallels to service or physical products. The NFL does not sell a physical product, like a widget or a razor blade (which can, in theory, be re-sold by the buyer without legal barriers), nor does it provide a contractual service, like an engineering firm that mandates an exclusivity service contract. The NFL produces a copyrighted entertainment product, and then sells a license to show that product--not the product itself. Therefore, it's governed by slightly different laws--more akin to a software developer than an engineering consultant or a widget-maker.

19
by MJK (not verified) :: Wed, 01/24/2007 - 2:15pm

A bigger issue to my mind is the fact that cable and satellite providers themselves are not legally allowed (by the FCC) to broadcase out-of-market broadcasts. For example, if I live in Oakland CA but am from Boston, MA, and want to keep up with local news and such, I can subscribe to the Boston Globe (provided the Globe is willing to deliver to CA--I know some news papers will deliver out of area and some won't, but the point is that it is up to the newspaper--there are no legal barriers to doing so). But I cannot get Comcast or DirectTV to deliver me the local Boston channels (the Boston CBS affiliate, for example), either in addition to or instead of the Oakland channels, even for an extra charge, even if they wanted to provide that service, because they are not legally allowed to do so. I fail to understand how this is not a suppression of free speech or an abuse of government authority. What it is is a very valuable law to advertisers and big business, because it enables geographically based advertisement targeting and entertainment market control.

If these laws weren't there (and I think you can make a civil rights argument that they shouldn't be), then the DirectTV thing wouldn't be as much of an issue, for me or for the NFL. I'm not a gambler or a hardcore enough fan to want to watch every game (my fiancee wouldn't let me for one thing). But I am a lifelong Patriots fan now stuck in the middle of Riader country, with no interest in watching the local football teams play but a lot of interest in watching the Pats.

20
by Pat (not verified) :: Wed, 01/24/2007 - 2:18pm

DirectTV is no more a monopoly than my company’s contracts with clients to provide “all engineering services� needed by the client are to the exclusion of all of our competitors.

You're right. But the NFL is a monopoly (and hey, there's courtroom proof, too!), and your firm is not. And exclusivity contracts with a monopoly are a market extension of the monopoly. Without that antitrust exemption, poof.

But even then, it's still awfully close to a tying restraint, considering you can't get Sunday Ticket without the rest of the DirecTV broadcast anymore. I'm surprised they did that, actually.

21
by Andrew (not verified) :: Wed, 01/24/2007 - 2:25pm

MJK:

e.g. they use the fact that they have a near monopoly (close to 100% market share) on football entertainment

Last I checked, High School Football, College Football, the CFL, AFL, Australian Rules Football and Rugby were all entertaining games played with oblong brown balls.

The NFL has a monopoly on NFL Football. As the existence in the past of the USFL, WFL, AFL, AAFL, and others shows, they have no monopoly on football itself.

Theoretically, there is no reason the Football Factory Universities couldn't get together and turn themselves into a the Football Factory League. They certainly have the money, personnel, and stadiums to pull it off.

22
by Greg (not verified) :: Wed, 01/24/2007 - 2:27pm

I think that one unique factor in all of this (for both football and baseball) is the ability of DirecTV to broadcast games in high definition. In our area, Comcast is lagging way behind (as I suspect it is elsewhere), and I seriously doubt if they have the bandwidth to handle broadcasting 15 hi def games simultaneously.

I had Extra Innings on my high definition TV last year (on Comcast) and it looked terrible. MLB.TV would have been far superior (and cheaper).

I know I'm in the minority on this, but it makes a lot more sense push the high end users into an HD friendly format (DirecTV) and the midlevel users into MLB.TV.

23
by Pat (not verified) :: Wed, 01/24/2007 - 2:40pm

My understanding is that the chief argument against the Sunday Ticket on DirectTV deal is that it does not offer the NFL’s product to the public without bias

Well, that's one of many reasons - like I mentioned above, it's basically a tying restraint. The only provider of DirecTV is DirecTV, period, and they're requiring you to get a certain service in order to get Sunday Ticket. Sunday Ticket has enough market power to convince people to do it, and the NFL benefits from higher total effective pricing (because DirecTV can pay more in subscriber fees). Only problem is, only the NFL could be sued for that. It wouldn't be that clear cut, though, because DirecTV's doing the tying, but you could probably argue it anyway, considering the economics.

24
by Andrew (not verified) :: Wed, 01/24/2007 - 2:41pm

Pat:

But the NFL is a monopoly (and hey, there’s courtroom proof, too!), and your firm is not.

You are confusing the analogy. My client is analgous to the NFL. My firm is analagous to DirectTV. The NFL offered up an exclusive business opportunity for bid. DirectTV won. My firm's client offered up an exclusive business opportunity for bid. My firm won. DirectTV has just as much or as little of a monopoly on broadcasting NFL football as any firm with an exclusive contract to provide a service to another firm does.

A Steel Mill can hire Harsco MultiServ (http://www.harsco.com/) to be the exclusive processor of their scrap steel, in essence forcing everyone who wants to sell scrap metal to the mill to do business with Harsco. There is absolutely no contractual difference between that sort of arrangement, and the NFL forcing everyone who wants to see out of market games to go through DirectTV.

But even then, it’s still awfully close to a tying restraint, considering you can’t get Sunday Ticket without the rest of the DirecTV broadcast anymore.

You can't get OnStar without buying a GM. You can't get a Victoria's Secret Pink Shopping Bag to use as a little tote bag without buying one of their lacy unmentionables. You can't get a Happy Meal Toy for your kids without buying a Happy Meal. A Beer Bottle Collector cannot get a new Budweiser Rolling Rock bottle without buying Budweiser produced Rolling Rock Beer. "Tying restraints" as you are trying to define them, are everywhere.

Unless Cable and Satellite TV goes to a per channel pay package, there are always going to be tying restraints of this sort. It's almost impossible to subscribe to pay TV services without being forced to buy channels you have no interest in. Sunday Ticket being a voluntary add-on is almost the exact opposite of the normal tying restraint practice of the industry. You CAN buy DirectTV without Sunday Ticket.

25
by Pat (not verified) :: Wed, 01/24/2007 - 2:56pm

As the existence in the past of the USFL, WFL, AFL, AAFL, and others shows, they have no monopoly on football itself.

The USFL sued the NFL, claiming it was a monopoly. The USFL won. The courts specifically said that the NFL was an illegal monopoly.

Theoretically, there is no reason the Football Factory Universities couldn’t get together and turn themselves into a the Football Factory League. They certainly have the money, personnel, and stadiums to pull it off.

Monopolies don't mean that you can't have competitors (Microsoft's a monopoly, and it has competitors). It just means that in the marketplace, you have enough market power to do anticompetitive things that you couldn't do without said market power.

The NCAA bowl conferences have pathetic market power in the broadcast arena compared to the NFL - and remember, you can't merge all of them, as they themselves can't merge (1984 court ruling) to negotiate. Same antitrust problem. You know what the 10-year extension of the Big Ten to ABC/ESPN cost? $100M/year. That's the size of Sunday Ticket's broadcast.

It's also about 2% of the NFL's per-year TV contracts.

The NCAA conferences, individually, are chump change.

26
by Pat (not verified) :: Wed, 01/24/2007 - 2:58pm

“Tying restraints� as you are trying to define them, are everywhere.

No, because you ignored the first statement I made: Sunday Ticket (i.e. the NFL) has enough market power to force it. None of the things you listed do.

Tying two things together is fine. Tying a monopoly with another product is illegal.

27
by Pat (not verified) :: Wed, 01/24/2007 - 3:08pm

It’s almost impossible to subscribe to pay TV services without being forced to buy channels you have no interest in.

That's the cable company's doing, not the NFL's. For ESPN, for example, when the NFL signs an exclusivity agreement with them for MNF, that's no big deal. ESPN isn't tying anything with MNF - the cable companies are.

The dicey part of the argument, though, is saying that the NFL, in dealing with DirecTV, is implicitly tying Sunday Ticket with a TotalChoice package. I don't think it's that dicey, but I've read otherwise, too.

28
by Wanker79 (not verified) :: Wed, 01/24/2007 - 3:35pm

You are confusing the analogy. My client is analgous to the NFL. My firm is analagous to DirectTV. The NFL offered up an exclusive business opportunity for bid. DirectTV won. My firm’s client offered up an exclusive business opportunity for bid. My firm won.

Right, so if your client holds enough market-share to be considered a monopoly (as the NFL is), then it is illegal for them to offer an exclusive business opportunity for bid. The only reason it wasn't illegal for the NFL to offer such a deal is their Monopoly Exemption.

29
by emcee fleshy (atl/sd) (not verified) :: Wed, 01/24/2007 - 3:37pm

Tying MLB and Sunday Ticket together could be a great political strategy for DirectTV opponents. It would add plenty of disgruntled MLB fans to the cause, and the only added opposition would come from MLB team-owners and their friends.

DirectTV is totally screwed, unless some MLB team-owner (or former owner) gets the power to veto legislation.

But that's terribly unlikely, right?

30
by Andrew (not verified) :: Wed, 01/24/2007 - 4:13pm

Pat:

The courts specifically said that the NFL was an illegal monopoly.

The Federal Courts are full of idiots who do not understand the basic principals of the Constitution, Anglo-American Common Law, and the principles of natural rights and natural law, let alone the meaning of such plain words as "Interstate Commerce". I really doubt such maleducated people could tell if an enterprise is a monopoly or not, and if so, whether or not Congress has a real authority to regulate said monopolies.

31
by Andrew (not verified) :: Wed, 01/24/2007 - 4:18pm

Pat #24:

Monopolies don’t mean that you can’t have competitors (Microsoft’s a monopoly, and it has competitors).

If you have competitors, you are not a monopoly except by a massacre of the English language.

monopoly n. exclusive possession of the selling of some commodity or service; this conferred as privilege by the State (Concise Oxford English Dictionary)

Microsoft, quite obviously, is not a monopoly, since there are alternative manufacturers of all its products, and there is free entrance into business competition with Microsoft without legal distraint. You too can start a business in your garage to compete with them, just as others have done.

32
by Pat (not verified) :: Wed, 01/24/2007 - 4:21pm

except by a massacre of the English language.

I believe that massacre is known as "the US Judicial System."

Legal definitions and dictionary definitions are two totally separate things.

I really doubt such maleducated people could tell if an enterprise is a monopoly or not, and if so, whether or not Congress has a real authority to regulate said monopolies.

Sure! I can tell you're not biased here.

33
by Andrew (not verified) :: Wed, 01/24/2007 - 4:35pm

Wanker79:

Right, so if your client holds enough market-share to be considered a monopoly (as the NFL is), then it is illegal for them to offer an exclusive business opportunity for bid.

Last I checked, Boeing is the only manufacturer of large comemrcial aircraft in this country, and they have exclusive supplier arrangements for various parts.

34
by Pat (not verified) :: Wed, 01/24/2007 - 4:35pm

And, to actually be fair: the government typically uses the phrase monopoly to mean "possessing monopoly power". True dictionary monopolies possess monopoly power, but the reverse isn't necessarily true.

You can possess monopoly power over a market while still having competitors. It just means you've chosen not to eliminate said competitors.

In terms of the NFL, the NFL could completely kill off college football on TV in a completely free market. They have way, way more market power. The fact that they haven't killed college football doesn't mean they don't have the power to.

35
by Andrew (not verified) :: Wed, 01/24/2007 - 4:36pm

Pat:

Sure! I can tell you’re not biased here.

A-B-S-O-L-U-T-E-L-Y!!!!

36
by Andrew (not verified) :: Wed, 01/24/2007 - 4:38pm

Pat:

Legal definitions and dictionary definitions are two totally separate things.

Hence "The law is an ass" and "First thing we do, lets kill all the lawyers."

37
by Pat (not verified) :: Wed, 01/24/2007 - 4:42pm

Last I checked, Boeing is the only manufacturer of large comemrcial aircraft in this country,

US manufacturers make parts for Airbus, as well.

38
by Pat (not verified) :: Wed, 01/24/2007 - 4:43pm

Hence “The law is an ass� and “First thing we do, lets kill all the lawyers.�

Yup. This is going to be an intelligent, well-reasoned discussion. Have fun.

39
by Wanker79 (not verified) :: Wed, 01/24/2007 - 4:45pm

Re: If you have competitors, you are not a monopoly except by a massacre of the English language.

The Federal Courts seem to disagree. This is from a discussion about the Microsoft case by Orson Swindle, one of the Federal Trade Commissioners in 1999. (click my name for the full discussion)

Courts have defined monopoly power to be "the power to control prices or exclude competition." Because monopoly power is difficult to measure directly, courts have used market share as indirect evidence of the existence of monopoly power. Microsoft allegedly has an 80% or more share of the market for personal computer operating systems, and courts typically have concluded that a 70% or more market share creates an inference of monopoly power absent evidence that overcomes that inference.

40
by Paulo Sanchotene, Brazil (not verified) :: Wed, 01/24/2007 - 5:00pm

Maybe it's true that NFL can destroy competitors that try to create a new football league in US (I have doubts), but they can't destroy college football. First, they need players, and they are developed in college programs. Second, college football emerged with the sport itself. Third, college footbal has millions fans all over america. I think if college football started a NFL-like league, the NFL would be in serious trouble. They don't fight because it's better for both the way they are.

41
by Pat (not verified) :: Wed, 01/24/2007 - 5:08pm

Maybe it’s true that NFL can destroy competitors that try to create a new football league in US (I have doubts), but they can’t destroy college football.

You gave reasons why they won't destroy college football.

I said the NFL can eliminate college football broadcasts on TV. They have the market power to - at best, college football TV contracts are something like 10-15% of the total value of NFL TV contracts. These are two totally different things.

Think about it: if the NFL said to ABC/ESPN "We're not going to renew the NFL contract if you renew the Big Ten contract", you think ABC's going to stick with their $1B contract, or their $11B contract?

The fact that the NFL won't do this (because, um, they'd be sued) doesn't mean they can't.

42
by Paulo Sanchotene, Brazil (not verified) :: Wed, 01/24/2007 - 5:08pm

A question: What NFL can do against some millionaires that decide to create another football league, with teams in L.A., Oklahoma, Las Vegas, Salt Lake, Detroit, etc?

43
by DGL (not verified) :: Wed, 01/24/2007 - 5:10pm

#26: Actually, there are multiple levels here.

First level: the NFL signs an exclusivity agreement with ESPN, saying that only ESPN is licensed to produce a television show of the NFL games played on Monday nights. I doubt the NFL is requiring ESPN to "purchase" anything else with that agreement, though they could - requiring ESPN to televise the NFL draft, for example. I don't think they do.

Second level: ESPN does tie other things to MNF. (IANAL, so I'm using the layperson's definition of "tying", which may not coincide with the legal definition of "tying".) First, ESPN ties the rest of the programming on ESPN to MNF - a cable operator (like Comcast) can't elect to purchase only transmission rights to MNF and show something else on that channel the rest of the week (and year); they have to purchase and show ESPN 24/7/365 if they want to show MNF. Second, Disney Corp. ties other programming to ESPN - if a cable operator wants to purchase ESPN programming, they are generally required to also purchase and transmit all the other Disney Media Networks channels on the same tier - which is why if you want to get ESPN, you also generally get The Disney Channel, ABC Family, Toon Disney, and SOAPNet. So if a cable operator wants to show MNF to its "basic" tier, they have to dedicate 5 channels for this Disney programming.

Finally, at the third level, the cable operator in fact bundles all these channels together and charges you, the sucker-- er, consumer, $45/month for "expanded basic" cable, giving you a dozen channels that you really have no interest in seeing so that you can make fun of the ESPN MNF announcers.

But, generally, it's the content producer (studio) that's behind a subscriber being forced to purchase a bunch of channels you have no interest in. It's in their contract with the cable operator. This is the point that most advocates of a la carte cable miss - requiring operators to offer channels to subscribers on an a la carte basis will either run afoul of existing transmission contracts that the operators have with the studios, or will require studios to offer channels to operators on an a la carte basis. Which is why a la carte will never get anywhere.

44
by DGL (not verified) :: Wed, 01/24/2007 - 5:14pm

#41: You mean like this one?

45
by Maury (not verified) :: Wed, 01/24/2007 - 5:15pm

There are a number of articles out there on the MLB aspect as it pertains to Extra Innings, which could impact Sunday Ticket, if Arlen Specter has his way. I have captured it here today.

46
by Lambo Lou (not verified) :: Wed, 01/24/2007 - 5:20pm

Any valid complaints about the swtich to DirecTV come only from those who currently pay for the programming on cable or on Dish Network. If you werent buying it last year, you are part of the reason MLB went with the DTV dough.

47
by Paulo Sanchotene, Brazil (not verified) :: Wed, 01/24/2007 - 5:26pm

DGL, yes, that's what I mean. When I discovered USFL, I tried to read more about it, but what I found was the story of a new league that didn't know what it want to be. Some of the owners want to stay with the Spring schedule, some of them want to go to Fall. It seems to me that what USFL wanted was NFL to pay for the new league. Come on! They had television. They had attendance. They were growing under the NFL abscense between February and August. And they threw it away...

48
by Wanker79 (not verified) :: Wed, 01/24/2007 - 5:29pm

Re: 41

There's nothing they could do to physically prevent someone from forming another league, but we all know that the real money comes from television. And (like Pat mentioned in #40) if the NFL wanted to give an ultimatum to ESPN/ABC/CBS/Fox that they either exclusively broadcast the NFL or the NFL won't renew their contracts with them next time around, you can bet your life that the up-start league wouldn't be broadcast on any of those stations.

49
by Wanker79 (not verified) :: Wed, 01/24/2007 - 5:31pm

Re: 45

That may be true for Extra Innings, but the same can't be said for Sunday Ticket.

50
by Will Allen (not verified) :: Wed, 01/24/2007 - 5:35pm

The history of antitrust prosecution actually aiding consumers is a dubious one, from the original mega-case, Standard Oil, to the marathon IBM prosecution, to this potential case. I think this instance is an example of how monopoly or monopoly power is too broadly defined by the law. If the NFL is operating a monopoly, or has monopoly power, then so is David Chase's production company when it enters into an exclusive agreement with HBO to distribute first-run Sopranos episodes. The fact that The Sopranos is a unique televison drama doesn't make Chase a monopolist by not selling distribution rights to other entities than HBO, and the fact that the NFL sells exclusive agreements to profesional football shouldn't make them a monopolist either. As much as we love NFL football, it really just is another way to entertain viewers for a few hours on weekends via electronic images. It is no more unique than Oprah Winfrey Shows or Tom Cruise movies.

NFL football is no more different from NBA basketball than James Bond movies are different from Shrek movies.

51
by Paulo Sanchotene, Brazil (not verified) :: Wed, 01/24/2007 - 5:38pm

Wanker, there are NBC and the local channels; there are markets without fooball; there are six months of the year without a single NFL game broadcasted. It's not easy, but it's absolutelly possible...

52
by Will Allen (not verified) :: Wed, 01/24/2007 - 5:42pm

To make mself more clear, unless one can argue that the NFL could force distributers to show nothing but NFL football, it is empirically false, as opposed to legally false, that they have monopoly power. Given t.v ratings become more diffuse with each year, it is plainly false that anyone has monopoly power over what electronic images are used to entertain people sitting on their couches.

53
by Andrew (not verified) :: Wed, 01/24/2007 - 5:43pm

Wanker79:

Courts have defined monopoly power to be “the power to control prices or exclude competition.� Because monopoly power is difficult to measure directly

Only a lawyer would fail to see the humor in this statement.

Let's see, because we've misdefined something to give us an illicit power over business we have no right holding, we have a very difficult task when we actually try to measure the commission of our misdefined crime. Isn't that what the very fittingly named Mr. Swindle is saying?

A sane society and just courts would say such laws are "void for vagueness on their face".

54
by Pat (not verified) :: Wed, 01/24/2007 - 5:47pm

#41:

This.

The USFL claimed that the NFL had bullied ABC, CBS and NBC into not televising USFL games in the fall. It also claimed that the NFL had a specific plan to eliminate the USFL, the "Porter Presentation." In particular, the USFL claimed the NFL conspired to ruin the Invaders and Generals. The USFL sought damages of $567 million, which would have been tripled to $1.7 billion under antitrust law.

And the USFL won (partly).

55
by Zac (not verified) :: Wed, 01/24/2007 - 5:47pm

Re: 45. MLB's decision has nothing to do with who is or isn't buying it. They're getting paid more money to switch, so they switched. Nothing wrong there.

If I understand the deal correctly, the only money MLB gets is the $100 million per year. So they don't really care how many subscribers there are.

Contrariwise, DirecTV must expect enough people to switch to recoup their cost, or they wouldn't be doing it.

As a consumer, I don't like the decision, but I don't really see any business doing anything illegal. Unless MLB offering Extra Innings to one service violates their monopoly protection. Which it very well might, I don't know enough about it.

56
by Pat (not verified) :: Wed, 01/24/2007 - 5:47pm

Let’s see, because we’ve misdefined something

Monopoly power != monopoly. Monopoly power is an economic term, meaning a supplier that does not face an upward sloping supply curve.

57
by Pat (not verified) :: Wed, 01/24/2007 - 5:51pm

To make mself more clear, unless one can argue that the NFL could force distributers to show nothing but NFL football, it is empirically false, as opposed to legally false, that they have monopoly power.

Why? Monopoly power would only require that the NFL could force distributors to show no other football, which I think they can clearly argue.

58
by Wanker79 (not verified) :: Wed, 01/24/2007 - 6:08pm

If the NFL is operating a monopoly, or has monopoly power, then so is David Chase’s production company when it enters into an exclusive agreement with HBO to distribute first-run Sopranos episodes.

That analogy only applies if you substitute "first-run Sopranos" with "all fictional crime drama". And since Chase doesn't have that ability, he's not a monopoly.

Without the monopoly exemption, each individual team would have the right to sell the exclusive rights to the broadcast of their team's games (just like Chase has the right to sell exclusive rights to The Sopranos). But since the NFL was given an exemption to anti-monopoly laws, the broadcast rights for every team were collectively given to the NFL.

Since part of the monopoly exemption agreement called for the broadcast of NFL games to be available to everyone. Since it is physically impossible for many people to get DirectTV, that can be seen as a violation of the terms of the monopoly exemption.

59
by Will Allen (not verified) :: Wed, 01/24/2007 - 6:11pm

Pat, given the large numer of distributors these days (cable companies, two satellite companies, competing broadcast affiliates in most markets)I doubt the NFL could force all other football off the air.

Secondly, why is the NFL any more unique than "The Howard Stern Show"? Is Howard Stern a monopolist because he only allows the "The Howard Stern Show" show to be heard on Sirius? Call Arlen Specter!!!!

60
by Pat (not verified) :: Wed, 01/24/2007 - 6:19pm

Pat, given the large numer of distributors these days (cable companies, two satellite companies, competing broadcast affiliates in most markets)I doubt the NFL could force all other football off the air.

I think you'd be surprised. Even if all they did was severely restrict access to TV markets, that's enough to cause a slow death in most cases.

Besides, the courts generally only look at market share and previous behavior to determine if someone has monopoly power. You can't ask them to infer what a corporation would be capable of, so you just look at something which is a decent analogue.

Secondly, why is the NFL any more unique than “The Howard Stern Show�?

OK, can we stop the little silly analogies? "The Howard Stern Show" is a statutory monopoly generated by copyright law (or trademark law). It's a legal monopoly because there's a law which specifically allows the show to be the only one called "The Howard Stern Show."

As much as people might think the legal system is retarded, I think they might have thought of that.

61
by Pat (not verified) :: Wed, 01/24/2007 - 6:23pm

#58: I forgot the second part of that argument. Sirius has monopoly power on "The Howard Stern Show" market, but they do not have a monopoly on all talk radio shows, or even similar shows.

The NFL has monopoly power over the market for TV broadcasted football games. It happens to be a legally protected monopoly as well, because of a specific law that allows it. Specter's trying to revoke it.

62
by Will Allen (not verified) :: Wed, 01/24/2007 - 6:24pm

Wanker, that argument depends on the view of the NFL franchises being economic competitors, which I think is inaccurate, given they cannot exist without working in concert. Coca Cola can exist if there are no other cola makers. The New York Jets cannot exist without other NFL teams.

There is no more substantive difference between NFL football and NASCAR racing than there is between "The Sopranos" and "24". They are all just moving elecrtonic images used to entertain people, just as a Bentley is not substantively different than an Acura.

63
by Will Allen (not verified) :: Wed, 01/24/2007 - 6:29pm

Pat, when Congress stops writing silly laws, and Courts stop enforcing them in a silly manner, then I'll stop making silly analogies. I'm not disputing your legal analysis, I'm disputing the wisdom of enacting legislation which results in such enforcement.

64
by Pat (not verified) :: Wed, 01/24/2007 - 6:30pm

Wanker, that argument depends on the view of the NFL franchises being economic competitors,

No, it doesn't. In fact, the reason they need antitrust protection is because if they bargain collectively without it, it's collusion. Between essentially all members of a market. We call those things "cartels". Used to call them "trusts". And it's still illegal.

And if you say "well, the NFL's just one big entity" - then, hey! it's a monopoly anyway!

65
by GlennW (not verified) :: Wed, 01/24/2007 - 6:32pm

I know that we've talked about this issue before, and I don't personally like this exclusivity practice by the NFL or MLB, but I don't see Congress doing anything about it. Even if Congress repeals the NFL's broadcasting exemption, then it still remains with the federal courts to decide whether these broadcasting contracts as individual entities are monopolistic in nature and illegal (as categorized as pro football, versus all football versus all sports programming versus any entertainment programming), right? Realistically, is all of this going to happen in our lifetimes?

66
by zlionsfan (not verified) :: Wed, 01/24/2007 - 6:35pm

Badger, I'd guess that disposable income is distributed somewhat unevenly (I'm not sure who the audience was for those Lexus commercials - I don't believe I know anyone who could afford to buy their spouse a Lexus as a surprise, and I know some people who own one), but for this discussion, it does make sense to assume that the people involved have the money to give to whatever providers have the Extra Innings package.

For the record, I'm not trying to suggest that any pay-per-view package must be available to everyone. I just think it's stupid to sign exclusive deals. Maybe that's just what Badger means, that leagues are more likely these days to try to get $1K from 1M fans than to get $100 from 10M fans, and that as a result, more fans "suffer." It doesn't mean I have to like it, though.

My reference to video games isn't entirely appropriate, either, because as has been discussed, it's not like there was a competing service. It's Extra Innings or nothing: it's just been available through multiple providers and may not be for long. With video games, there were multiple "services." After the competing games disappeared, there seems to have been a noticeable drop-off in innovation and quality, but that might not apply to this situation. The only improvement I'd like in Extra Innings itself is the ability to watch either feed for any given game: I'd rather watch the Tigers feed no matter what, but I get that option about half the time.

Andrew (11), it seems to me that it would be better financially for a bar if it could choose from a number of competing services, rather than having to choose DirecTV because it's now the only service that offers the MLB package (leaving aside the NFL issue - of course they'd have to have DirecTV to show all NFL games). If only one service meets your needs, then you're completely at the mercy of that service when it comes to pricing.

Also, cable is far from obsolete, much as it pains me to say that (I hate the local cable monopolies, the one in Indy and the one in the suburbs - they don't overlap). Ask someone who lives in an area that gets heavy rain (like me) or in a city with tall buildings.

Yeah, WiFi is popular, but until it matches the speed and reliability of wired connections, there's going to be a sizable portion of the market that's going to stick at least partly with wired. (My 360 is wired, my laptop is wireless.)

Pat, I think that the NFL might be a large cat to the NCAA's small cat, permitting the small cat to hang around but letting it know who runs the house, but that the large cat also knows that it has to tolerate the small cat. After all, there's a specific reason why we don't see Saturday-afternoon games until the end of the NCAA regular season. The NFL might have the market power to boot the NCAA off its networks, but it wouldn't take long for congressmen from Oklahoma, Nebraska, Texas, Florida, Michigan, Ohio and so on to revoke the NFL's antitrust exemption shortly after that happened.

67
by DGL (not verified) :: Wed, 01/24/2007 - 6:41pm

#58: Actually, I was thinking the exact opposite - if I were an upstart professional football league, I don't know how I well I could do at getting my programming on the air, if the NFL tried to prevent it.

Let's say the NFL played the "if you show their football, you can't show mine" card (assuming for the moment that they could get away with it). What media companies does that lock out?

CBS, Fox, and NBC are out. ABC is out (it's part of Disney, as is ESPN). The CW is 50% owned by CBS, so they would appear to be out. So none of the broadcast networks are options. (I don't think the Upstart Football League would get much money from PBS.)

Cable channels? Well, looking at the 10 most widely distributed cable networks (per the NCTA), you have Discovery (football doesn't seem to fit their mainstream programming), ESPN (out), CNN (wrong programming), USA Network (owned by NBC - out), TNT (could work), Lifetime (wrong demographic - and out anyway, since it's 50% owned by Disney), Weather Channel (I don't think so), ESPN2 (out), Nickelodeon (wrong demographic), and Spike (could work).

Looking farther down the line, you've also got TBS, another Time Warner property.

So among existing media companies, you've basically got two choices - Time Warner (TNT/TBS) or Viacom (Spike). No over-the-air broadcast options; the NFL has those locked up.

So could the NFL force the Upstart Football League off the air? Probably not - TW or Viacom could show the games. But the UFL doesn't have all that many options.

68
by Pat (not verified) :: Wed, 01/24/2007 - 6:45pm

Pat, when Congress stops writing silly laws, and Courts stop enforcing them in a silly manner, then I’ll stop making silly analogies.

Except none of your silly analogies have been anywhere near remotely correct. You haven't been criticizing silly laws, you've been just showing a poor understanding of those laws.

Really. Most of the examples that you've given are listed straight-up on Wikipedia in some of the articles on antitrust laws.

then it still remains with the federal courts to decide whether these broadcasting contracts as individual entities are monopolistic in nature and illegal

Nonono. If the antitrust exemption goes away, the NFL couldn't bargain collectively, and any overt agreements between NFL teams to set prices would be textbook collusion, and the broadcasters would have a field day with them.

Bargaining individually is perfectly legal. The illegal part is if the Patriots say "you'll only get us if you offer the Jaguars the same amount." That's collusion, especially if it would happen on a large scale.

Pat, I think that the NFL might be a large cat to the NCAA’s small cat, permitting the small cat to hang around but letting it know who runs the house, but that the large cat also knows that it has to tolerate the small cat.

Absolutely. But there's no such thing as granting antitrust exemptions for a "benevolent monopoly". Being a monopoly isn't illegal! Remember that! It's utilizing monopoly power that's illegal.

The NFL, as a corporate cartel, clearly has monopoly power. Two courts have found that. Whether or not it uses it legally or not is another thing.

Using it to negotiate broadcast contracts as a single entity is blatantly illegal, but they have a nice little exemption for that.

69
by Will Allen (not verified) :: Wed, 01/24/2007 - 6:46pm

Yes, Pat, and the word "collusion" implies two or more competitors working in concert. If they truly are not competitors, there can be no collusion, just as when two different divisions of Proctor Gamble are seeking one individual to fill a product manager position, whether the two divisions are colluding depends on whether one views the two divisions as competitors.

Again, I'm not disputing your legal analysis, I'm disputing the wisdom of the legislation enacted that produced such jurisprudence. The history of anti-trust enforcement is not nearly as consumer-friendly as is commonly believed.

70
by Pat (not verified) :: Wed, 01/24/2007 - 6:49pm

#66: You're not thinking vindictively enough. The NFL could then start saying "if you want to show my football games, you'll tell your cable distributors to drop Spike/TBS, or else you'll black out the football games. Oh, and if you do that, I'll charge you a factor of 10 less." Go with the little guys first, to make the practice well known and seem reasonable. Maybe send a message to Spike/TBS. Then you take the big guys out.

Cartels suck, huh?

71
by Will Allen (not verified) :: Wed, 01/24/2007 - 6:53pm

Pat, my silly analogies are not meant to accurately reflect the state of the current law, they are meant to accurately reflect the silliness inherent in the laws. You, and the law, fervently believe that there is something unique about being entertained by electronic images of football players. I think that belief is silly.

72
by Pat (not verified) :: Wed, 01/24/2007 - 7:00pm

If they truly are not competitors, there can be no collusion

Collusion happens between two firms who, in some sense, don't compete. They're rivals, but NFL teams are rivals too. The Redskins want you to give them your money, and not give it to the Jaguars.

The fact that the Redskins don't want the Jaguars out of business (or couldn't succeed without them) is immaterial to the discussion. Cartels also didn't want the other businesses out of business - it was easier to appear neutral that way. They're still rivals, and it still would be collusion.

The fact that the Redskins don't want the Jaguars out of business is why Congress gave them an antitrust exemption. Because they said "well, the NFL is really just a league for all football, we'll act in the best interest of all football fans." Specter's saying they violated that.

Really, there are no silly laws here. The NFL, by the book, has monopoly power. It has to be. If you think about what it is, of course it's going to. So Congress wrote up a law allowing it to avoid antitrust laws. That's the way it's supposed to work.

If you think it's silly that the NFL would be stripped of those protections, you think Specter's silly, not the antitrust laws.

73
by Brian (not verified) :: Wed, 01/24/2007 - 7:01pm

Lambo Lou, that's hogwash! MLB clearly is not concerned with the number of Extra Inning subscribers that cable was pulling in compared to what DirecTV might get. Cable has five times the audience as DirecTV (according to the article). MLB in no way even considered the number of subscribers -- or the subscribers themselves, for that matter -- when jumping to DirecTV.

74
by Pat (not verified) :: Wed, 01/24/2007 - 7:04pm

You, and the law, fervently believe that there is something unique about being entertained by electronic images of football players. I think that belief is silly.

Yes. That's because laws are general, and not specific. If there's a specific case that looks silly, then you write another law excluding that case.

Gee! That's exactly what's happened.

75
by GlennW (not verified) :: Wed, 01/24/2007 - 7:12pm

> "Nonono. If the antitrust exemption goes away, the NFL couldn’t bargain collectively, and any overt agreements between NFL teams to set prices would be textbook collusion, and the broadcasters would have a field day with them."

Okay, by "couldn't", you mean the NFL wouldn't try? Or otherwise that their attempt would easily be struck down? That's what I'm skeptical of, especially now that the public knows what it gets (and appears to want) from the NFL with its current TV revenue-sharing system. This "Sports Broadcasting Act of 1961"-- did that legislation settle an existing case that the NFL had lost or was losing, or was it merely a pre-emptive measure-- and do the same practical legal conditions exist today? I'm just trying to separate the intellectual legal debate here from the practical one, i.e. what we can reasonably expect to happen.

76
by Will Allen (not verified) :: Wed, 01/24/2007 - 7:17pm

Pat, I stand corrected, I should have written that the word "collusion" implied the existence of two or more POTENTIAL competitors. Cartels merely prefer that their potential competitors not disappear. In this instance the potential competitors CANNOT exist without each other. They must work in concert, or cease to exist.

Now you, or the law, may say that is immaterial, but that merely was a preference exercised by those who created the law. Whether a law is silly or not is merely a matter of whether or not one thinks that it is an activity that the state should be either prohibiting, regulating, or compelling. I am very suspect about a great deal of antitrust enforcement, on the basis of economic results, or whether it is a morally legitimate use of state power. Thus, I find much of the legislation and jurisprudence to be silly.

By the way, I think Specter is silly as well.

77
by Will Allen (not verified) :: Wed, 01/24/2007 - 7:24pm

I dunno', Pat, howza'bout not writing the laws to begin with, thus negating the need to create legal exceptions to said laws?

Look, I'm jousting with you somewhat. I'm not saying flat-out that all antitrust regulation should be struck down, but merely expressing skepticism regarding the common perception of the goodness or wisdom of antitrust regulation.

78
by Wanker79 (not verified) :: Wed, 01/24/2007 - 7:43pm

You, and the law, fervently believe that there is something unique about being entertained by electronic images of football players. I think that belief is silly.

You honestly can't see the difference between the NFL preventing (or at the very least severely hindering) all competing football broadcasts and Howard Stern being exclusively on Sirius?

If Howard Stern had enough market-share power to prevent (or at the very least severely hinder) all competing talk radio, then you'd have a valid point. But since I listen to Opie & Anthony every day, Stern obviously doesn't have that ability. And if he did, there's absolutely zero doubt that he'd be prosecuted under the anti-trust laws. Unless he was given an exemption because his monopoly is considered a benefit to society. Which brings us right back to the NFL's exemption.

79
by Will Allen (not verified) :: Wed, 01/24/2007 - 8:07pm

Wanker, I just don't see any more substantive difference between the NFL and NASCAR (or Oprah Winfrey, for that matter) than between Howard Stern and Opie & Anthony. I may like Coca Cola better than 7-UP, but that doesn't mean I think there is a substantive difference between the two.

80
by NF (not verified) :: Wed, 01/24/2007 - 10:03pm

Didn't Microsoft lose an anti-trust suit because of the way it was bundling its software with Windows? Isn't DirectTV doing the same thing by bundling Sunday Ticket and now Extra Innings with its satellite TV service?

81
by WookieeBH (not verified) :: Wed, 01/24/2007 - 11:30pm

#66 - I think one option you are forgetting is if a cable company itself decided to take on the burden of airing the new league. Comcast has expressed interest in airing some NFL games on its own sports networks. If they decided to pick up the Upstart League, how could the NFL respond? They can't pull all their programming from Comcast unless they pull out from the networks and ESPN, and I can't imagine they could threaten the networks to get them to pull themselves from Comcast. The cable companies are one of the few groups with enough clout to make an end run around any NFL strong-arm tactics.As for the whole nature of this argument, I don't understand why sports leagues aren't reclassified as something other than a cartel or competitors. The mere fact that the primary product (a game), requires that two teams agree to work together should indicate that this product is different that a standard widget or service. The fact that exemptions have had to exist for baseball and football previously is a glaring sign that the law, as previously written, was not intended to be applied to such circumstances.And how come when referencing other leagues, no one ever brings up the XFL?

82
by WookieeBH (not verified) :: Wed, 01/24/2007 - 11:31pm

Gah! I apologize for my inability to add paragraph breaks...

83
by Pat (not verified) :: Wed, 01/24/2007 - 11:40pm

Cartels merely prefer that their potential competitors not disappear. In this instance the potential competitors CANNOT exist without each other. They must work in concert, or cease to exist.

That's something that the companies in question would have to prove - that the consumer is better off letting them negotiate collectively, because the market conditions prefer collusion. (There are easy examples of stuff like this). Which again, is why there's antitrust exemptions in the first place.

I dunno’, Pat, howza’bout not writing the laws to begin with, thus negating the need to create legal exceptions to said laws?

Yeah, we tried laissez-faire capitalism. It doesn't work too well. In some sense, that's hard for modern consumers to understand, since we've had antitrust legislation for so long that we tend to forget the problems that really did exist.

In other words, you only see failures because the successes never happen, because companies aren't that retarded. Remember, laws are intended to be deterrents, not punishments. (woo, Intro to the US Legal System!)

Wanker, I just don’t see any more substantive difference between the NFL and NASCAR (or Oprah Winfrey, for that matter) than between Howard Stern and Opie & Anthony.

Why do you think there is any? What does it matter? Howard Stern and Opie & Anthony have protected monopolies over their own brand, thanks to the magic of trademarks and copyright. The NFL does not own the sport of football, nor does NASCAR own the sport of racing. If a second racing league attempted to start, and went after TV contracts, and there were rumblings in NASCAR about how to "conquer" this new league (what a freaking stupid idea that was) and get rid of them, NASCAR could likely be considered to have monopoly power as well. And then, gasp, it's pretty much like the Scarlet Letter.

You're not talking about Howard Stern, with a 90% market share over all radio programs (or even some market subset of radio programs), trying to eliminate a direct competitor by convincing all of the radio stations not to carry him.

The NFL's had two court cases where they were declared to have monopoly power. Why? Because they were stupid, and threw their weight around a little too much. When you've got a huge market share in any definable market, and you've got a competitor coming in, you have to be careful.

84
by Pat (not verified) :: Wed, 01/24/2007 - 11:57pm

The fact that exemptions have had to exist for baseball and football previously is a glaring sign that the law, as previously written, was not intended to be applied to such circumstances.

The law was intended to apply in all circumstances other than to those companies with an exemption for reasons Congress deems worthy. And the reason those exemptions exist is because the FTC can actually put conditions on either the merger or the exemption to make sure that the exempted party doesn't overstep their bounds. It really is a perfectly reasonable law. Basically, it says, "don't restrict a free market. If you want to restrict a free market, ask Congress first so you can convince us why we should let you."

85
by Jason Mulgrew (not verified) :: Thu, 01/25/2007 - 12:13am

There are too many posts for me to bother reading them all and then offering an opinion.

86
by Will Allen (not verified) :: Thu, 01/25/2007 - 12:35am

Like I said, Pat, the benefits of antitrust regulation have been highly exaggerrated, from the very start of the mega-cases, like Standard Oil. Laissez faire gets criticized for a lot of things that mostly had to do with the country being much poorer 100 years ago. The country has become much, much, more wealthy since, and like people who think the rooster made the sun rise, a lot of people wrongly think antitrust played a huge role in making those gains in wealth, which is really what has alleviated the problems associated with laissez faire.

In fact, it was the urge to regulate, to supposedly alleviate problems associated with with laissez faire, which cerated the worst economuc disaster of the 20th century, the Great Depression. One could more accurately state that we tried regulation of the economy, and it didn't work out so well.

The point I made in regards to the NFL and NASCAR is that they are all just moving electronic images designed to entertain. Unless the NFL can control all those different types of moving electronic images that are sent through the ether or through cable, they can't be said to have monopoly power, in the real, as opposed to the legal sense of the word.

We don't say that Mercedes has monopoly power because they are the only company that can sell a car with a particular hood ornament, even though technically speaking it is a state-granted monopoly on said ornament, because it is a fairly meaningless one, in regards to the consumer's fundamental desire for a car, which is to get from point A to point B. A Honda serves the purpose every bit as well.

Billions of people get entertained by electronic moving images every day without reference to football, in fact, entertained every bit as well. Do some people say they much prefer football for their electronic moving images-based entertainment? Sure, and some people really prefer to have a certain hood ornament on their car. For some reason, the state grants a monopoly to a company for that hood ornament, and Senators don't threaten it with removal, yet if a collection of individuals try to maintain pricing power on a very,very particular form of electronic moving image, despite litrally hundreds, if not hundreds of thousands, of electronic moving images which are just as viable for the purpose at hand, entertainment, Senators say that such a monopoly is unacceptable.

If the NFL cannot sell it's electronic moving image to whomever it wishes, under whatever conditions it wishes, I see no reason for the state to grant Mercedes a monopoly on their hood ornament. Slap 'em on Hyundais, I say!!

87
by Jack (not verified) :: Thu, 01/25/2007 - 3:42am

RE: 85:

Will, i believe that you may be a geniuus. kepp upp the good work.

88
by Not saying (not verified) :: Thu, 01/25/2007 - 7:57am

Re: 85 The point I made in regards to the NFL and NASCAR is that they are all just moving electronic images designed to entertain.

By your argument, if all sports leagues in existence got together and made a deal that only DirectTV could show sports, that wouldn't be collusion because people could still watch Oprah Winfrey.

If we extend your analogy to transportation, it is like saying that if all car manufacturers got together and agreed on a fixed price for cars, it wouldn't be collusion because people could still buy vans (or semis, if you want to include vans in the monopoly).

If the anti-trust exception was removed from the NFL, the Patriots would own their brand, not the NFL as a whole. Allowing them to make TV deals in cooperation with the Jaguars would be like Mercedes and Honda agreeing together on the prices of cars. The analogy with the hood ornaments doesn't fit with the discussion about TV access; it would only apply if the Jaguars wanted to use the Flying Elvis for their team.

89
by Will Allen (not verified) :: Thu, 01/25/2007 - 9:43am

Not saying, a van has much larger physical differences with a car, than the t.v. program called the Oprah Winfrey Show has with the t.v. program called the Super Bowl.

Like I said, I'm jousting somewhat, and can't spend any time with it today (damned pesky clients), but I wanted to stir the pot a little, given I believe that the public benefits of antitrust regulation have been greatly oversold.

90
by Wanker79 (not verified) :: Thu, 01/25/2007 - 11:19am

Re: 88

Ok, so you want an analogy with a narrow distinction. How about if every automobile manufacture got together and agreed that they would no longer sell 4-door sedans to people who don't have a clear view of the southern sky? Coups aren't included. Station wagons aren't included. Hatchbacks aren't included. Van's aren't included. SUVs aren't included. So there are plenty of other choices that are very similar still available to everyone. But not a single 4-door sedan is going to be sold to someone who doesn't have a clear view of the southern sky. You wanna narrow it down even further? How about this deal only includes 4-door sedans that cost between $20k and $30k. You think the government should just walk away? I mean, there are still sooo many similar choices available to everyone. Or do you think the government should step in?

91
by DGL (not verified) :: Thu, 01/25/2007 - 11:44am

#80: Comcast serves 24M households. No league is going to achieve mass-market success by having broadcasts of its games available to only 24M households (out of about 110M households in the US).

92
by Tarrant (not verified) :: Thu, 01/25/2007 - 11:58am

zlionsfan wrote:

After all, there’s a specific reason why we don’t see Saturday-afternoon games until the end of the NCAA regular season. The NFL might have the market power to boot the NCAA off its networks, but it wouldn’t take long for congressmen from Oklahoma, Nebraska, Texas, Florida, Michigan, Ohio and so on to revoke the NFL’s antitrust exemption shortly after that happened.

Actually, I believe the specific reason is that part of the NFL antitrust exemption is that they cannot compete with Saturday NCAA football save in specific circumstances.

By law, the NFL cannot show on Saturdays during the college football season. It has nothing to do with the NFL being "nice" or worries about congressmen from Oklahoma.

While I would argue that the NFL probably would still avoid Saturdays during college football season, that belief is predicated on the fact that the NFL knows college football is a free and publicity-heavy minor league system for them, and doesn't want to interrupt it. But right now, the NFL has to ask the government for permission to show a game on a Saturday during the college football season (I believe in the past few years permission has been granted a few times when teams wanted to play a game prior to hurricanes arriving in the area - however, generally, such games can only be broadcast in the local markets, and not nationwide).

93
by mactbone (not verified) :: Thu, 01/25/2007 - 12:03pm

Re 91:
Actually, they didn't ask permission and it wasn't granted. The San Diego wild fire game that was played in Arizona was only shown in San Diego and the other team's market. I can't recall the specifics but I think Miami was in the same situation last year or the year before - and again, the game was only shown in the teams' markets.

94
by Wanker79 (not verified) :: Thu, 01/25/2007 - 12:28pm

Comcast has expressed interest in airing some NFL games on its own sports networks. If they decided to pick up the Upstart League, how could the NFL respond?

This program is authorized by written consent of the NFL and is intended for the use of our audience. Any rebroadcast, retransmission or other use of the accounts of this game without written permission of the NFL is strictly prohibited

Care to wager on what Comcast would find more valuable, broadcast rights of an upstart league or broadcast rights of highlight footage from NFL games?

95
by Tarrant (not verified) :: Thu, 01/25/2007 - 12:33pm

The argument that "Microsoft has competitors - lots of people have started up OS work that even has customers! We don't need antitrust law!" to me is bad logic, because in my mind, part of the reason those different OSes and companies even have customers is because of the antitrust law that already exists.

Consider that were it not illegal for Microsoft to tell, say, Dell, "Use our OS, and only our OS, on every single computer you sell - and if you even offer another OS, even once, we will cut you off and never sell to you again", wouldn't they do so? Dell, or any other computer manufacturer for that matter, would be destroyed if they couldn't sell Microsoft products.

One could say "Well, someone could start up their own company that doesn't use Microsoft products." But where would the funding come from (and do the 'funders' use any MS products?)? Who is going to supply the hardware (think pressure couldn't be put on suppliers too? Just say "We'll tell Dell never to buy from you again if you sell to this startup").

If it was legal for such things to happen, let's face it - they would.

This isn't the same type of scenario as there being dozens of consulting firms out there and a company choosing one as its exclusive consultant.

Monopolies (or near-monopolies) themselves are not illegal as long as they arise from having superior products, and as long as the leverage gained from that is not used to try and gain monopoly status in other products. Microsoft having a huge percentage of the OS market is not illegal - people like their products. Microsoft creating a new media player and saying "From now on, you will install our media player, and only our media player, and no one else's" could be. Or if MS said "Any store that sells computers with Windows on it cannot sell any game system but the Xbox".

I'm not trying to single out Microsoft here - they are just the example given most often by others in this thread. Lots of companies would do exactly the same. Would AMD have gained any initial market share if Intel could have told manufacturers that if they even thought of looking in that direction, they'd never get another Intel chip again? Would anyone besides IBM have gained a foothold in the computer market? etc. etc.

There's lots of scenarios out there where one can point to competition and say "See? There's lots of it - we don't need laws." On the other hand, one must ask the question whether some of that competition would even exist, were the laws not around in the first place.

I don't know the answer to that question. If I did, I'd be a Nobel Prize-winning economist or something. It's all speculation, but it's something that, to me, is always worth debating.

96
by Wanker79 (not verified) :: Thu, 01/25/2007 - 12:36pm

By law, the NFL cannot show on Saturdays during the college football season. It has nothing to do with the NFL being “nice� or worries about congressmen from Oklahoma.

Actually, the NFL won't show games on Saturdays because congressmen from Oklahoma and Nebraska would start calling for the NFL's monopoly excemption to be revolked. They also have to provide the games "without bias", but that doesn't seem to have stopped the DirectTV exclusivity deal. Which is exactly why (well, at face value anyway, let's not get into the political motivations) Specter has made a big stink about this whole thing.

97
by Pat (not verified) :: Thu, 01/25/2007 - 12:53pm

Like I said, Pat, the benefits of antitrust regulation have been highly exaggerrated, from the very start of the mega-cases, like Standard Oil.

The benefits of the cases haven't been highly exaggerated at all. They've been criticized left and right straight back to SO/NJ case.

But you're missing the point: the benefits of legislation come not from the prosecution of those who break it, but from the reduction of the illegal act. Most of the criticisms have come in the form of defending those prosecuted. Whatever. The benefit comes in cases where you had a monopoly forming for sane reasons (like Boeing/Lockheed Martin's rocketry company in the past year), and the government can make sure that that monopoly isn't abusive.

Plus, the real cases where you've got a valid antitrust violation are quick and quiet. The DRAM manufacturer's antitrust cases were relatively quick, and with little controversy.

(There were some arguments that companies with monopoly power are beneficial - like, SO's consolidation helped consumers. In some cases, this can be true - but in general, all this is, again, is just controlled capitalism, with the control moving from government to a business. Which is why antitrust legislation is a good thing, again! If monopoly power is beneficial to consumers, SO should've tried to get an antitrust exemption on that basis.)

Unless the NFL can control all those different types of moving electronic images that are sent through the ether or through cable, they can’t be said to have monopoly power, in the real, as opposed to the legal sense of the word.

By that argument, wouldn't no company have any monopoly power unless they can control all the methods of moving small pieces of green paper around? I mean, what's the difference between TV entertainment, as opposed to live entertainment? And what's the difference between entertainment, and, say, luxury sales? And regular sales?

Essentially, you're saying "TV markets don't exist", and that seems a very foolhardy statement to make. It's unsurprising that courts wouldn't take very well to that one.

Especially considering the NFL lost a court case to an upstart league that said "the NFL is forcing broadcasters to not sign with us if they want to retain them."

98
by Andrew (not verified) :: Thu, 01/25/2007 - 12:56pm

mactbone #92:

I can’t recall the specifics but I think Miami was in the same situation last year or the year before - and again, the game was only shown in the teams’ markets.

Actually, the game (Chiefs @ Dolphins) was available nationally on NFL Network on Sunday. I watched it and it was a great game if you are a Chiefs fan.

99
by Pat (not verified) :: Thu, 01/25/2007 - 1:07pm

Actually, the NFL won’t show games on Saturdays because congressmen from Oklahoma and Nebraska would start calling for the NFL’s monopoly excemption to be revolked.

No, he's right - the congressmen wouldn't need to call for the exemption to be revoked, because the NCAA could just have it revoked on its own, because it's written into the exemption.

Which is why antitrust law is smart - the exemptions have conditions in them to make sure the exemption can't be abused. (The reason Specter has to make a big fuss is because the NFL isn't clearly violating the conditions).

100
by Andrew (not verified) :: Thu, 01/25/2007 - 1:11pm

Pat #83:

Basically, it says, “don’t restrict a free market. If you want to restrict a free market, ask Congress first so you can convince us why we should let you.�

Its impossible for anyone besides the government to restrict a free market, absent the use of violent force. Tying arrangements, rebates, discounts, and all the rest usually profeered as evidence of a "restricted" market are merely normal attempts by businessmen to sell as much of their own product as possible. Nothing in those agreements presents another business from selling a competing product to a competing buyer, or attempting to offer a better product and a better price to the first buyer.

The Standard Oil so-called monopoly was undermined not by government fiat and proseuction, but by new competition from the discovery of oil in Texas, and the blossoming of the Gulf of Mexico oil drilling and refining industry, which presented an alternative to Standard Oil and its Pennsylvania crude.

101
by Pat (not verified) :: Thu, 01/25/2007 - 1:27pm

Tying arrangements, rebates, discounts, and all the rest usually profeered as evidence of a “restricted� market are merely normal attempts by businessmen to sell as much of their own product as possible.

Yeah, that's not right. Price fixing, as one example, is an attempt to make as much money as possible, not sell as much product as possible. You're restricting a free market because you're preventing a surplus supply from causing prices to drop due to sagging demand.

The Standard Oil so-called monopoly was undermined not by government fiat and proseuction, but by new competition from the discovery of oil in Texas, and the blossoming of the Gulf of Mexico oil drilling and refining industry, which presented an alternative to Standard Oil and its Pennsylvania crude.

Which just so happened to correspond in time to when the antitrust act made it clearly illegal to do actions which they had been previously doing.

I'm not a big fan of that explanation. Without the antitrust legislation, I don't doubt that SO would've gone after its competitors a bit more viciously than it actually did.

102
by Wanker79 (not verified) :: Thu, 01/25/2007 - 1:34pm

Re: 99

Are you actually trying to argue that it wouldn't be possible for the NFL to eliminate all their competition without the use of force? Or that the government shouldn't interfere in a free market, and therefore shouldn't restrict the NFL from doing so? I really am curious on what point you are trying to make.

103
by Tarrant (not verified) :: Thu, 01/25/2007 - 1:43pm

I’m not a big fan of that explanation. Without the antitrust legislation, I don’t doubt that SO would’ve gone after its competitors a bit more viciously than it actually did.

I agree; hence my argument in one of my earlier posts (in which I used Microsoft as the example). One can't necessarily say "There's competition, so we don't need antitrust law," without considering the phrase "Without the antitrust law, there might not be competition."

For all we know, SO would have gone vigorously after those upstarts and maintained its monopoly power were it not prevented from so doing by the new laws of the era.

104
by Pat (not verified) :: Thu, 01/25/2007 - 3:07pm

#102: Hell, it's entirely likely - SO's modus operandi was to collude with railroads so that he would make more money than competitors, regardless, and prevent pipelines from being built - obviously, if you couldn't ship, you couldn't sell. Texas/Gulf Coast oil would've been heavily dependent upon that, and that's exactly the mechanism that was opened up by the antitrust law occuring.

105
by Paulo Sanchotene, Brazil (not verified) :: Thu, 01/25/2007 - 4:40pm

Pat, The product the NFL sells is the LEAGUE. The game always involves TWO different teams. How could they sell indivudually? Imagine if ESPN bought the right to show the Rams, but they can't show the 49ers because it's sold to CBS. So what happens when comes Rams-49ers matchup?! ESPN shows only the Rams players and CBS, 49ers?!

106
by Pat (not verified) :: Thu, 01/25/2007 - 5:02pm

#104: You do realize that the teams sell the radio rights individually, right? And preseason games, as well. It's only the regular season television rights that are negotiated collectively.

I don't know all the details, but clearly, they sell individually already.

107
by Wanker79 (not verified) :: Thu, 01/25/2007 - 6:01pm

Re: 104 & 105

I would assume (and this is completely an assumption) that each team would have the rights to broadcast their own telecast of the game. So each team would carry their own announcing crew (like in MLB).

108
by Andrew (not verified) :: Thu, 01/25/2007 - 6:20pm

Tarrant #102:

For all we know, SO would have gone vigorously after those upstarts and maintained its monopoly power were it not prevented from so doing by the new laws of the era.

Pat #103:

Hell, it’s entirely likely - SO’s modus operandi was to collude with railroads so that he would make more money than competitors, regardless, and prevent pipelines from being built - obviously, if you couldn’t ship, you couldn’t sell.

How? Texas Oil was cheaper and of a better grade, and it could be shipped by water to the major northeast markets. SO had no way to block its coming to market, especially since Texas oil was much more plentiful than oil from the Pennsylvania oil patch.

109
by Pat (not verified) :: Thu, 01/25/2007 - 6:37pm

and it could be shipped by water to the major northeast markets. SO had no way to block its coming to market

Sure it did. Still need to get inland from a port, and the main way that's going to be done is via railroads and pipelines, both of which SO had easy ability to block.

It didn't really need to block them, though. Just needs to make enough money off of them trying to import oil (through drawbacks) in order to be able to buy them off.

And if it became clear that water shipping was the dominant route, they would've done exactly the same thing through the water shipping companies. They certainly had the assets to handle it.

110
by Zac (not verified) :: Fri, 01/26/2007 - 12:54am

This thread seems to have spiraled out of control, but there's just one thing I want to say. Several people have said that obviously NFL teams have no reason to compete against each other, because they need each other to survive. This is, dare I say, patently false.

The NFL wasn't formed until 1920, yet the Green Bay Packers were formed in 1919. Who do you think they played that first year? They went 10-1 playing a schedule against whatever teams they could find (ranking them second in the state of Wisconsin). Since, as has been pointed out, the teams sell entertainment via a football game, it would not be impossible to go back to those days, or to imagine a football team playing an exhibition schedule a la the Harlem Globetrotters.

111
by joel in providence (not verified) :: Fri, 01/26/2007 - 11:30am

it consistenly amazes me how much faith people put in the NFL (the cartel of franchise owners) to be the stewards of the sport. a situation where the league has monopoly power and individual teams don't need to manage their own finances in any major way due to league tv contracts, a salary cap, revenue sharing, etc. is a complete joke. it makes a mockery of the competition on the field when the underlying business model is designed so that owners bear no financial risk and reap distorted rewards because the cartel has so much power over the marketplace.

112
by joel in providence (not verified) :: Fri, 01/26/2007 - 11:41am

pat, wanker, tarrant, andrew, etc.:
i highly recommend you all read the book "National Pastime: Why Americans Play Baseball and the Rest of the World Plays Soccer." Despite the title, it's not at all a pissing match, but a look at how the FA in England and National League in the USA formed and the different models for sports leagues. There's also a really good chapter devoted to MLB and NFL's antitrust exemptions (the authors are economists). They argue that the exemptions are on shaky legal ground. they also argue that american sports leagues are woefully deficient at developing the overall health of their sports (and are especially bad at exporting them) due to the tightly-focused interests of the ownership cartels. definitely a good read about the business and legal aspects of sports. cheers.

113
by joel in providence (not verified) :: Fri, 01/26/2007 - 11:42am

zac, the best threads are the ones that spiral out of control (unless you-know-who vs. you-know-who is the subject). ;)

114
by Pat (not verified) :: Fri, 01/26/2007 - 12:46pm

a situation where the league has monopoly power and individual teams don’t need to manage their own finances in any major way due to league tv contracts, a salary cap, revenue sharing, etc. is a complete joke.

The entire idea of the NFL's revenue sharing is that an average franchise where you can get relatively enough attendance/local support for a stadium will basically break even. A team which earns no money on its own (merchandising, luxury boxes, etc.) probably won't stick around for very long.

In fact, the entire argument over revenue sharing in the NFL is that the successful teams in high-revenue areas aren't subsidizing poor business practices.

They argue that the exemptions are on shaky legal ground. they also argue that american sports leagues are woefully deficient at developing the overall health of their sports

Wait, wait: the main conclusion of the book pretty much was that soccer's structure led itself to being spread throughout the world easier, but baseball/football's structure led it to form far, far more financially stable environments.

In any case, I don't think that the book's conclusions are actually right - while it's true that open leagues did spread faster throughout the world, the lack of any decent financial organization really made any individual team shaky. Baseball/football have been growing slower, but in some sense it's a "tortoise and the hare" approach (though in all likelihood, both will win) - the closed sports leagues have a lot more stability and staying power.

I mean, it's a bit odd to claim that the NFL and baseball are deficient at spreading the sport internationally - they're pretty much just starting now. The leagues themselves have only been financially stable with disposable income for 10-20 years or so.

In other words, the book seems a bit premature. In 20 years, I wouldn't be surprised if the title would've been "How America's Sports Took Over The World" (in a business-model sense, not suggesting that football would overtake soccer).

115
by DGL (not verified) :: Fri, 01/26/2007 - 2:25pm

Yeah, well, Ida Tarbell was better than John D. Rockefeller because she just won and Rockefeller choked under pressure.

(Schatz's Corrolary to Godwin's Law: As an FO discussion grows longer, the probability of it diverging into an irrational Brady-Manning thread approaches 1.)

116
by Trieu (not verified) :: Fri, 01/26/2007 - 2:33pm

By the way, DirecTV does pay the NFL $700m per year.

http://phx.corporate-ir.net/phoenix.zhtml?c=127160&p=irol-newsArticle&ID...

So, that is seven times more than what they are paying MLB.

117
by joel in providence (not verified) :: Fri, 01/26/2007 - 3:22pm

pat, you're right about the overall focus of that book, but I remember there being a chapter about the antitrust exemption. (it might have been about baseball's though...). as for your prediction, i don't see much change. europeans are extremely attached to their open systems and unlikely to give them up. as a fan, i think the best solution is somewhere in the middle... allow teams to share only tv revenues and ditch the draft. why should I, an eagles fan, have my fan dollars trickling down to other teams? and seeing reggie bush just fall into the hands of the team that beat us in the playoffs really pisses me off. ;)

118
by GlennW (not verified) :: Fri, 01/26/2007 - 3:41pm

> By the way, DirecTV does pay the NFL $700m per year.

Yes. I wouldn't take that to say that the NFL is seven times more popular than MLB though, or anything close to that. These packages are vastly different products, with the NFL Sunday Ticket package being much more attractive imo. Interest in MLB is still more local than with the NFL, and in terms of revenue not even primarily television-based.

I've always thought that the fairest way to rate the "popularity" of a sport is just to add up the total revenues that the sport generates (because for example you simply can't compare NFL's TV ratings with MLB's attendance figures on an equalized basis). In that category the latest estimates I've seen has the NFL at something like $6B+/year and MLB at $5B. It's not the brutal financial mismatch that some would think...

119
by Wanker79 (not verified) :: Fri, 01/26/2007 - 5:22pm

I’ve seen has the NFL at something like $6B+/year and MLB at $5B.

With the huge disparity in number of games, I'm not really sure per year is the fairest way to compare the two. Although per game slants thing way too far in the NFL's favor. Maybe just break it down to per month of actual play (the time frame where revenue is mostly generated).

The NFL is basically a 6 month sport (August through January) and MLB is basically an 8 month sport (March through October). So that makes the NFL $1B/month and MLB $6.23M/month.

120
by Wanker79 (not verified) :: Fri, 01/26/2007 - 5:25pm

That should have been $6.25M/month, not $6.23M/month. Not a big difference, but it was a typing mistake, not a rudimentary math mistake.

121
by Paulo Sanchotene, Brazil (not verified) :: Fri, 01/26/2007 - 5:42pm

You, americans, have no reason to complain. Let me show you what happened with brazilian soccer. Everything began with intrastate leagues in early 1900's. The first time clubs tried to define a national champion was in 1933. Before that the national championship was played by states' "national" squads. The first regular interstate club league started in 1955, when São Paulo FA (FPF) and Rio de Janeiro FA (FERJ) organized a competition. The first time Brazilian FA (CBF) organized a national club championship was in 1959. It was like Champions League: a Cup between state champions. Then, in 1967, FPF and FERJ invited teams from other brazilian main leagues to play their tournament. It was a huge success. So much that CBF stopped with its Cup and started a battle to take control of the new league, what happened in 1971. Today, brazilian soccer has problems to balance the interests of its clubs (major and minor), its states FA and its federal FA. It's a huge mess! That's why I admire the way americans organize their leagues...

122
by GlennW (not verified) :: Fri, 01/26/2007 - 6:25pm

> "Maybe just break it down to per month of actual play (the time frame where revenue is mostly generated)."

Something like this is reasonable, yes, as at least it's based on what fans are willing to spend directly or indirectly to support their favorite sport, either as a monthly rate or in total. As long as you're not just looking at TV ratings where the NFL enjoys a huge inherent advantage having little to do with the sport itself (only one game per week), or at paid attendance, where MLB has the advantage of 81 home games per season. Perhaps sadly, I don't see how you can compare fan interest over such varying metrics in any other way but with the dollar sign.

123
by Pat (not verified) :: Fri, 01/26/2007 - 9:08pm

as for your prediction, i don’t see much change. europeans are extremely attached to their open systems and unlikely to give them up.

I think you're misunderstanding slightly - to Europeans, it wouldn't seem much different. It's just an organizational change, really.

In my mind, it's pretty much a given that it'll morph that way - too many American sports owners have interest in soccer teams. There's likely a lot of untapped financial potential, as well.

I think people will be surprised as to the growth of American football in the next 20 years, too. Money has amazing abilities to make things popular.

124
by Pat (not verified) :: Fri, 01/26/2007 - 11:43pm

#117/118: Actually, I'd imagine that "profits" is better than "revenues." With the huge disparity in games, baseball's going to incur a lot more cost due to those games than football is. Football's total operating profit is $1B/year. Baseball's total operating profit is... uh... a lot less ($360M/year).

125
by Not saying (not verified) :: Sat, 01/27/2007 - 12:04pm

Re: 118/9

Isn't it $625m, not $6.25m?

Re: 123

Where'd you get those numbers?

126
by GlennW (not verified) :: Sat, 01/27/2007 - 4:44pm

> #117/118: Actually, I’d imagine that “profits� is better than “revenues.� With the huge disparity in games, baseball’s going to incur a lot more cost due to those games than football is.

That only tells me which business is more sound, not necessarily which sport is more popular or to what degree. Profit can also be very dependent on the specifics of the CBA in each sport, which has little or nothing to do with the resulting fan support. Sure, profitability is roughly proportionate to the popularity of a sport, but I think total revenues is a better measure (a business can be run sub-optimally, and MLB has certainly been criticized for that over the years and rightly so).

127
by Pat (not verified) :: Sun, 01/28/2007 - 12:43am

#124: Forbes.

That only tells me which business is more sound, not necessarily which sport is more popular or to what degree.

The problem with revenues is that the per-game costs for baseball are going to be nearly an order of magnitude higher than for football. The total costs for the season will necessarily be higher as well.

a business can be run sub-optimally

Well, yeah, but that affects revenues as well. Stupid businesses can price things wrong, negotiate poorly, etc.

and MLB has certainly been criticized for that over the years and rightly so

Not recently, actually. The NFL, business-wise, is still well above baseball, but MLB's done a good job in the past few years of actually building profitable businesses.

128
by Wanker79 (not verified) :: Mon, 01/29/2007 - 11:19am

Re: 124
Yeah, you're right. That should be $625M/month. And sadly that wasn't a typing mistake this time. :-(

Re: 126
Either I'm misunderstanding what you're trying to say, or else I think we're talking about two different thing. Glenn and I were using revenue to guage the relative popularity of each sport. I'm not sure what per game costs have to do with that?

129
by GlennW (not verified) :: Mon, 01/29/2007 - 12:52pm

> "The problem with revenues is that the per-game costs for baseball are going to be nearly an order of magnitude higher than for football. The total costs for the season will necessarily be higher as well."

I agree, but I don't understand what that matters. If I plunk down $40 for a ticket to a Red Sox game (yeah, I've been known to do that), I'm supporting the Red Sox with my $40. What do I care what their costs are?

130
by Pat (not verified) :: Mon, 01/29/2007 - 1:34pm

I agree, but I don’t understand what that matters. If I plunk down $40 for a ticket to a Red Sox game (yeah, I’ve been known to do that), I’m supporting the Red Sox with my $40. What do I care what their costs are?

Because the number of people that plunk down $40 depends on the $40 number. It's unlikely that lowering the price would increase the number of people who'd buy the tickets, otherwise they'd do it, and make more money.

If there were more demand for baseball, they could charge higher prices, and demand higher TV contracts, and make more money.

131
by Pat (not verified) :: Mon, 01/29/2007 - 1:41pm

Glenn and I were using revenue to guage the relative popularity of each sport. I’m not sure what per game costs have to do with that?

If you've got two commodities, A and B, both of finite supply, and people are willing to pay more above-and-beyond the manufacture cost for A than B how isn't A more popular than B, regardless of how many of item A is sold versus item B?

I guess it depends on how you want to define popularity: is it total volume, or relative demand? I could easily see cases for either one.

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by Wanker79 (not verified) :: Mon, 01/29/2007 - 2:15pm

If you’ve got two commodities, A and B, both of finite supply, and people are willing to pay more above-and-beyond the manufacture cost for A than B how isn’t A more popular than B, regardless of how many of item A is sold versus item B?

If 'A' and 'B' were available in the same quantities, I'd completely agree. But since there is a whole crap-ton more of 'B' than there are of 'A', I would assume that would decrease what people are willing to spend on 'B' relative to 'A'.

And am I wrong, or are we both arguing the same point (that the NFL is much more popular than the yearly revenues would indicate).

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by GlennW (not verified) :: Mon, 01/29/2007 - 2:20pm

Right, I was going with "total volume" as a measure of popularity. I just see problems in using profit, which can vary significantly based on external, shortterm factors not having much to do with overall demand (e.g. some NFL owners claim that the latest CBA has cut into their profit margins, but I think the game itself is still every bit as popular as it was before). In other markets, luxury items may carry large profit margins, but that doesn't make them accessible to the masses.

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by GlennW (not verified) :: Mon, 01/29/2007 - 2:27pm

> "And am I wrong, or are we both arguing the same point (that the NFL is much more popular than the yearly revenues would indicate)."

Are you arguing that (not saying that you are, just looking for clarification)? I don't think the latter statement is true; I think the NFL is overpaid by the TV networks if anything, as a lucrative loss leader. Or at the very least the NFL is getting fair value. There are many local markets where more game tickets could be sold, but the marginal revenues there would pale in comparison to existing revenues, imo. With its historically solid business model I think the NFL is coming pretty close to maximizing its revenues.

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by Pat (not verified) :: Mon, 01/29/2007 - 2:36pm

And am I wrong, or are we both arguing the same point (that the NFL is much more popular than the yearly revenues would indicate).

You're right.

I just see problems in using profit, which can vary significantly based on external, shortterm factors not having much to do with overall demand

I don't see how total revenue wouldn't, either. In exactly the same way. In fact, profit probably mitigates a bit of that because teams will likely attempt to raise more money when their costs are higher.

I mean, it's a bit like looking at total attendance figures rather than per-game attendance figures. Sure, baseball has more attendance than football does, but that's only because football really couldn't have much more attendance. Every game was sold out last year what, through week 7 or something silly like that?

Sure, baseball's making comparable money to the NFL, but that's likely only because the NFL couldn't make much more money from more increasing demand. They're already turning a ridiculous profit - at some point it just comes down to the fact that you only have so many games per year of interest.

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by Wanker79 (not verified) :: Mon, 01/29/2007 - 2:36pm

Re: 133

Well, this whole tangent started when you wrote that the NFL and MLB are only about $1B/year apart in revenues, insinuating that the disparity in popularity between the two leagues wasn't as great as most people think. But if you break down the yearly revenues to show how much each league takes in per month of actual play, MLB comes out to about 2/3 of the NFL. So I'll stand by my statement that the NFL is more popular than the yearly revenues would indicate.

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by Pat (not verified) :: Mon, 01/29/2007 - 2:37pm

With its historically solid business model I think the NFL is coming pretty close to maximizing its revenues.

Exactly. Whereas MLB is nowhere near. And the reason that's true is because of the popularity difference between the two.

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by GlennW (not verified) :: Mon, 01/29/2007 - 3:55pm

> "But if you break down the yearly revenues to show how much each league takes in per month of actual play, MLB comes out to about 2/3 of the NFL. So I’ll stand by my statement that the NFL is more popular than the yearly revenues would indicate."

I'm fine with using the monthly (rate-based) revenue numbers. There's still not nearly as big a difference as some would make it sound. We're talking something less than a factor of 2 (you're saying 1.5), not an order of magnitude or anything.

Pat, MLB has roughly ten times the games to sell than the NFL does, but that's an inherent reality of the respective sports which should still be accounted for in determing their overall "popularity", in my opinion. A TV show like "The Sopranos" may be immensely popular, but the fact that on average less than 10 episodes are produced per calendar year shouldn't count in its favor, in my mind. I don't think it's fair to simply use the show's per-episode ratings as a straight measure, when the show's supply is limited either by design or by some inherent factor (HBO can't make any more shows than that without compromising quality, etc.), and on a per-show basis greatly in its favor when compared against more prolific network programs.

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by Wanker79 (not verified) :: Mon, 01/29/2007 - 4:08pm

Re: 137

I agree with everything you said there. I'm not trying to say that football dwarfs baseball in popularity, I'm just saying that the gap isn't an insignificant one.

And you're right, the size of the respective schedules of the NFL and MLB will always tilt per game numbers in the NFL's favor. That's why I thought looking at total revenue per month of play was a decent compromise.

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by Pat (not verified) :: Mon, 01/29/2007 - 4:42pm

Pat, MLB has roughly ten times the games to sell than the NFL does, but that’s an inherent reality of the respective sports which should still be accounted for in determing their overall “popularity�, in my opinion.

Um. I agree? That's why I figured that total profit, rather than revenue per game, or attendance per game, is the best way to look at it. The NFL isn't turning more of a profit just because they've only got a factor of 10 fewer games. They're turning more of a profit because they can bring in more money than MLB on a factor of 10 fewer games. And that's because they're quite a bit more popular.

You're not benefitting the NFL by using total profit: MLB's total attendance is about 4.5 times higher than the NFL's total attendance, so there's definitely money to be made in volume. If baseball was near football's popularity, they should be able to kill the NFL in terms of total profit.

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by GlennW (not verified) :: Mon, 01/29/2007 - 5:03pm

> If baseball was near football’s popularity, they should be able to kill the NFL in terms of total profit.

Maybe; there is the issue of higher costs which you've referred to. By the same logic MLB should/could be killing the NFL in total revenues too (I know you've also pointed this out). I see where you're coming from with economic theory as a basis; I just think using pure profit is problematic, especially with sports leagues where I don't think all teams are operating on strict economic principles in being profit-driven. I already gave the example of the sports' respective CBAs; historically the NFL has taken a much harder line with its player employee base than MLB has. For decades MLB was flat-out incompetent in its dealings with the MLBPA, and I don't think the resulting loss in potential profits speaks at all towards the more vague notion of "fan popularity". MLB revenues exploded in an era where its players disproportionately derived the financial benefit (as opposed to the NFL), for example.

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by Travis (not verified) :: Wed, 05/02/2007 - 4:39pm

If the NFL wants to make more money then make the NFL sunday ticket availble to all providers. I'm sorry I had direct TV and the service was just bad,so i said goodbye to direct tv. Now fans like me have to suffer because of big business. give me a break.