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The Power Of The League

Earlier this month, the ATP Tour successfully defended itself in an antitrust lawsuit filed by the organizers of a Hamburg, Germany, event that was downgraded to second-tier status next season. In the case, Hamburg argued that the ATP is a cartel that illegally manipulates event sanctions and controls player movements, but a judge disagreed.


The decision was the second such ruling in favor of a professional sports league in the United States this year. In January, a judge dismissed Kentucky Speedway's $400 million antitrust lawsuit against NASCAR and International Speedway Corp.

The rulings would seem to solidify the powers of pro leagues to schedule events and/or games as they see fit. Factors such as sponsorship, attendance, competitive balance or any number of reasons can play a role in the schedule-making process for various leagues as they protect their commercial interests.

Local and state governments, meanwhile, may have little recourse if they’re left out of league plans, a particularly bitter pill to swallow given the amount of public financing that often ensures a league’s financial success.

The ATP-Hamburg trial was somewhat unique in that it addressed the question of antitrust issues as they apply to individual sports rather than team sports, which have U.S. antitrust law exemptions to varying degrees. The NASCAR case also explored a potential conflict of interest between the ruling body and its publicly traded partner, ISC, which has an ownership stake in many of the places where the races are held.

Clearly, though, the rulings strengthened the hand of professional leagues, and that perhaps is not surprising. Professional sports have long been given special status in the U.S. and have been exempt from many of the regulations that govern other sectors of the economy. The cumulative effect is that today, their power is greater than at any point in history. In addition to the antitrust rulings, pro sports leagues enjoy the benefit of taxpayer-subsidized facilities, unique tax incentives and favorable deregulation of broadcast rights, among other governmental perks.

With all this power, and with their monopolies protected, is the professional sports landscape really better for fans? Is all of the special treatment good for society as a whole, especially as the U.S. economy remains stagnant? Would tickets be more affordable if the pro leagues had competition? Would there be better retirement plans and safer conditions for athletes if these leagues were held to the same workplace safety standards other companies must abide by? Are potential sponsors making risky investments in events that can be so easily manipulated by the leagues?

The answers depend on who is being asked the question.

Posted by: Derick Moss / August 21, 2008 / 7:19 PM / Print Article