June 14, 2024

Monopolies in Sports: Impact on Competition, Politics, and Innovation

Most economists and competent individuals would agree that competition is an important force for growth and development. It leads to the betterment of consumers and drives more innovation. Also, competition is fair as it gives freedom of entry and exit which means that anyone can start their own firm and succeed. Nobody has the ultimate power to rule a single industry alone.

Monopolies simply are a single firm, organization, or business involved in selling goods and services. There are no competition and no variety of options. There are two types of monopolies, one is a public monopoly that is under state control, and thus with state coercion, there is no possibility of anyone to challenge in competition. Another is private monopoly where a private firm is alone in the market and faces no competition. All public monopoly is a natural monopoly where there are restrictions of entry and exit whereas private monopolies do have to fear competition as there is free entry and exit in the market. But, we can’t say all private monopolies are not natural too.

In some popular sports, the central organizations aren’t under government control and are private but they are monopolies that cannot be challenged. In football, there is FIFA and bodies like UEFA, AFC, etc. for every continent that is alone deciding about football rules and regulations with no fear of competition. In cricket there’s ICC and in every country, there is a single governing body like BCCI (Board of Control for Cricket in India), PCB (Pakistan Cricket Board) in Pakistan, ECB (England and Wales Cricket Board), etc…

These bodies keep all factors of sports under their control. Are they harmful? Perhaps. Due to the Ukraine-Russia conflict, FIFA went on to ban Russian players and Russian Federation from participating in competitions under FIFA (that means all competitions). On one side we hear that politics shouldn’t be mixed with sports and on another side we see this.

FIFA was free in making such decisions because they feared nothing. The only competition is with other sports and that’s also not very concerning as one wouldn’t change their favorite sport overnight for few incidences. It’s not that people earlier have not been unfairly treated because of politics. Sports got nothing to do with it and it wasn’t the fault of players in Russian national team or league to cause the war and neither it was the fault of viewers of Russia to not see their country play in big stages. Everyone opposes wars or anything that harms peace but these things still happen and have happened earlier but how many teams did FIFA ban then?

Another case is where cricket is like religion as a sport. The craze of sports is on a different level. BCCI is the governing body in India and also the richest cricketing board in the world. In 2008 BCCI launched IPL (Indian Premier League) which is like the league system in cricket played between domestic teams but players around the world play. Now, IPL is one of the highest-earning sports leagues in the world and got one of the most viewers too. The league is very big and earns higher than just broadcasters. But, this wasn’t an original idea. In 2007, ICL (Indian Cricket League) was launched privately and not under BCCI. It did well too and gained a lot of fame. Fearing success of it, BCCI using its monopoly power took it down. BCCI refused to recognize the league and criticized those who were part of it.

BCCI went far stating that it would ban players that would join ICL and thus won’t be able to play World Cup organized by ICC. They started banning stadiums that organized the tournament. BCCI being a private organization itself had all right to do that but how were they able to be so aggressive? It was because of their association with ICC (another monopoly) that supported BCCI in this. Players feared that they won’t be able to play World Cup for the country and the likes of Ambati Rayudu that were part of ICL faced many troubles in the later part of their career too. Now, ICL is forgotten, nobody talks about it and it seems at times that the league never existed.

Like this, there are other sports with central organizations that take control of important factors of the sport. They are definitely monopolies because they make a lot of revenue by organizing tournaments and games. Often this would be supported because everyone wants a single organization to represent their country to keep unity but this kind of belief adds nationalist ideologies to sports too and sports are better when kept away from politics. Even if they want games between different nations it could be done by different organizations. Not only the athletes are more free to change organization and avoid coercion but more importantly viewers can get more options and expect improvements keeping their interests.

Monopolies in sports have rather encouraged more politics in sports. BCCI despite being a private body still has members with political connections and is under the watch of the government. Another example is India-Pakistan rivalry which is a rivalry a result of politics. The problem isn’t much there too but with how politics still fuels this rivalry.

Similar to this, Elclasico, a football rivalry between two Spanish Clubs Real Madrid (representing the capital of Spain) and FC Barcelona (representing the capital of Catalonia) is also a result of politics. But, this rivalry also regarded as the most intense and best rivalry of sport is much far from politics than earlier. This is because there are other teams too that represents these places and team from the same places have rivalry too. In all this, politics is lost. In fact, the President of FCB and Real Madrid Joan Laporta and Florentino Perez have a decent relationship and also got united to build their own league of big teams challenging the monopoly power of UEFA.

Perez said, “The Super League remains in the midst of European court proceedings challenging UEFA’s monopoly in European football”. He also said, “We want to improve the competition and for there to be a reform in the governance model.”

But, there are sports where such a situation is avoided. One good example is Mixed Martial Arts, a combat sport that is a mixture of Boxing, wrestling, jiu-jitsu, karate, etc… There are different organizations or companies that organize tournaments for the sport. UFC (Ultimate Fighting Championship) is currently the most popular but there are others too like ONE Fighting Championship, Bellator, etc… that have their own system of organizing the tournament. Nobody has ultimate control over the sport and each organization is free to make their own rules too.

For the last few years, there have been allegations that UFC, which is the best company at the moment is not paying fighters right. On this the UFC president Dana White said, “Believe me, these guys [UFC fighters] get paid what they’re supposed to get paid. They eat what they kill,” and then further makes a very crucial statement, “If you don’t like it, there’s a simple solution to this problem. Go start your own MMA organization.” He explained in many of his press conferences that if anyone thinks they can do better than UFC can start their own organization too and nobody is stopping them.

Dana White is right here. But, most importantly there is an option for fighters and most importantly the viewers. UFC unlike ICC or FIFA has a fear of competition. They know if they don’t do well then there are other good companies alive too. Fighters mainly represent themselves. Although they try to gain fans with national identity in the end the individual fighting out there is representing themselves and showing their skills and trying to prove themselves better than their competitor which is the essence of sports.

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