August 2011
Intermediate to advanced
500 pages
17h 16m
English
Content preview from Sports Finance and Management
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116 ◾ Sports Finance and Management
The Constrained Supply of Sports Franchises
In the early years of professional sports in the United States, teams and leagues fell
into bankruptcy or ceased operations at about the same rate as other start-up busi-
nesses (Scully, 1995). ese failures, despite the success of numerous other teams,
convinced franchise owners to form leagues that would enhance their chances of
success. ere were several main purposes for these leagues, but a paramount con-
cern was to ensure that each team would retain exclusive control of its designated
local market. Further, to prevent interlopers or competitors from gaining a foothold
in any market, each league member agreed not to schedule games with nonleague
teams. i
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