Comparative Analysis of MLB and NFL Economic Philosophies and Growth

This assignment provides a comprehensive comparison of the economic structures of Major League Baseball (MLB) and the National Football League (NFL). The first part compares the 'Owner/Team Focused' philosophy of MLB with the 'Corporate/League-Think' philosophy of the NFL, analyzing how these philosophies, along with the economic structures, have impacted their growth. It explores key concepts such as free agency, salary caps, and revenue sharing, and how they differ between the two leagues. The second part defines economic terms like cartel, monopoly, monopsony, oligopoly, and joint venture, and then assigns these terms to various sports entities such as the NFL, NBA, NHL, MLB, and others. Finally, the assignment includes a review of a video discussing the challenges ESPN faces due to changing media habits and the rise of online streaming, particularly how it impacts sports viewership and subscriber numbers. The analysis covers ESPN's financial strategies and its efforts to adapt to the evolving media landscape.

Assignment #1 Directions:
Compare how the Major League Baseball’s “Owner/Team Focused” philosophy with the
National Football League’s "Corporate / League-Think” focused philosophy and their
economic structure have impacted their growth over time.
The major history of the American football league has been filled with the constant battle of the
owners along with the players, in order to get a fair competitive pay for the hard working players
and to generate a profit-maximizing model for the owners. With the constant battle in between
the players and the owners, the fan in between is aiming and wanting to have an enriched
entertainment experience along with the competitive experience. Even after many leaps and
bounds steps taken in improving the collective bargaining to improve the synchronization and
have a fair pay to the players and to the owners, still, negotiations have been major agenda of the
CBA.
In comparison, both the MLB and the NFC share the major focus on the free agency, salary caps,
exceptions, negotiations, and the profit sharing model. Each league has an involvement and
contribution towards improvement in the ideologies of the league and the best benefit which can
be derived for each of the players and the owners. Both the leagues have there share of the legal
ramifications and conflicts coming to an agreement which is termed as major elements of the
CBA. In comparison, both the leagues have gone in-depth to attain a position of the popularity
within the US and are able to generate the major revenue models. In the comparison of the
operating income, NFL has led and earned a total of the $ 35 million while the MLB has earned

an income of the $16 million in 2005. Due to the higher income, it has resulted in the major
conflicts and issues due to demand in the major sharing of revenue model in between the players
and the owners.
All the leagues follow the philosophy of the free agency and it has a predominant contractual
clause of the players playing for the free agency was adopted. The free agency means that the
player is bounded by one team and it ought to play for the one team after signing it. He is not
allowed to play for the other team and the other team needs to pay heavy money and penalties in
order to attain the player.
The MLB was able to attain the status of the reserve system through the antitrust exception,
which was attained during the legal battle in 1992. In the fight, the reserve right was
extinguished and the free agency status was attained. Even in the MLB philosophy of the
owners/team focus, it still allows the clause of the free agency, which is to allow any team player
to play for any team and vice versa. The distinguishing features are the restricted and the
unrestricted free agents. There is a proper procedure to get the free agent. Both in the NFL and
the MLB, there is a restricted free agent which is to allow the team to avail the contracts from the
former team and can refuse it, which can be compensated with a draft pick in the next occurring
players draft (O’Leary, 2017).
The NFL has a salary caps which does not allow the teams to win a player through the sheer
amount of the money which can be paid eventually, but the MLB philosophy of the free agent
has played a major role and attribution in the changing the player teams and movements.
MLB is the only team which does not have a salary cap but it has a taxes which can go above the
salary of the team limit. It is often seen that the MLB has been paying the taxes which go above

the salary caps of the players limit. While the NFL has a philosophy and is said to be the only
team which has a hard salary cap, which means that the team cannot go above the salary caps
and it also does not allow the team to go above the cap. It is also seen that the NFL has certain
loopholes which would result in the salaries to be paid above the amount of the salary decided.
The NFL pays a higher percentage of the designated gross revenues to the players and it also
does not attribute into the sharing the revenue from the concession in luxury boxes which
accounts for the significant amount of the revenue. NFL also has a salary given in the form of the
bonus to the players. As there are no signing fees or there are series of uncertainty within the
football game, hence there is a signing guarantee bonus which is given to the player by the NFL.
It also has a performance incentive bonus which is given to each player. MLB comes in the
major criticism with no salary caps (Kraeutler, 2017). This comes as an individualistic capitalism
which is adopted by the MLB which one can see no union or the owners are able to agree on the
salary caps.
It was observed with the NFL philosophy of the corporate league think, the players were able to
earn more than their salary caps while with the MLB philosophy of the Owner Team focused, the
owners were not able to decide upon the salary caps of the players. Due to this, the MLB has a
harsh criticism of the not applying the caps and hence it makes play more uneven, but there is
still more parity in MLB then there is in the other two leagues which are viewed as a number of
teams which has a more realistic chance to win the world championship. Though one can see the
major differences with the small salary player and the high salary player both playing the same
game, but due to the free agents the MLB team is able to significantly manage its team. It has
been seen with the individual salary caps it would result in the increasingly competitive

imbalances. Due to this, a there economic structure has significantly increased and changed with
over the years of time (Dabscheck, 2015).
References
Dabscheck, B. (2015). An orbit of coercive comparison: Collective bargaining in the Australian
Football League and the National Rugby League. In The Sports Business in The Pacific Rim (pp.
333-352). Springer International Publishing.
Kraeutler, M. J., Carver, T. J., Belk, J. W., & McCarty, E. C. (2017). What is the Value of a
National Football League Draft Pick? An Analysis Based on Changes Made in the Collective
Bargaining Agreement. The Journal of Strength & Conditioning Research.
O’Leary, L. (2017). Introduction. In Employment and Labour Relations Law in the Premier
League, NBA and International Rugby Union (pp. 1-18). TMC Asser Press.

Assignment #2 Directions:
A. Research and define the following economic / business terms:
Cartel
It is associations and the combinations of the high operating ventures to maintain its profits and
to eliminate the competition.
Monopoly
When the specific firm is the only supplier and the dominant in a given market
Monopsony
It is defined as a single buyer of specific products and the services and hence they are the price
determinant of it.
Oligopoly
A state of the limited competition in which one can see that the market is shared by the small
number of producers and the sellers
Joint Venture;
When two operating entities choose to form a combination of the commercial enterprises, along
with retaining the private identities

Corporation
A large company or the group of companies which are authorized to act as a single entity which
is also recognized as per the laws (Greenberg,, 2008).
Single Entity
A single entity is a standalone business or the segment within a given business.
B. Assign one - or more - of the economic / business terms listed above to each of the
following entities:
1. NFL; joint ventures of the unions and the owners.
2. NBA; Monopsony as the various talented players are not allowed to negotiate and given a
chance in the other teams, due to the restricted free agents.
3. NHL; as there are various teams who are playing in the NHL it can be termed under the
Cartel.
4. MLB; perfect competition in which there is large numbers of buyers and sellers and each can
enter and exit at their own will.
5. SEC-: it has a large set of the football teams and can be marked under the Corporation.
6. Big East; culmination and combination of the various games within the one can be termed as a
cartel.
7. ACC-: A small division of the collegiate athletic conference which competes in the 15
members universities within the NCAA division comes under the formation of the cartel. It can
also list under the single entity as it is a small segment within the NCAA division.

8. MMA; small players and trying to dominate the market is part of the Oligopoly.
9. International Olympic Committee-: corporation as it includes the list of the entities which can
operate under the one listed name.
10. PGA. Monopsony as it is a single buyer of the golf related events and is the prime organizer
across the regions (Berry, 2010).

References
Berry, R. C., & Gould, W. B. (2010). A long deep drive to collective bargaining: Of players,
owners, brawls, and strikes. Case W. Res. L. Rev., 31, 685.
Greenberg, M. J., & Gray, J. T. (2008). Sports law practice (Vol. 1). Lexis Law Publishing (Va).

Assignment #4
Read and Review the two research Videos.
 The Economist Explains why ESPN is Losing Subscribers
As per the analysis, the media habits are shifting the online streaming and the sports are majorly
suffering from the rest of the traditional watching of television. The ESPN has been majorly cash
churning machine of the Disney channel which is earning and inculcating the major profits by
collecting billions of dollars which the American subscribers are earning from the company in a
blockbuster. It has been seen now; the viewers are steeply declining in availing the subscriber's
services. It is observed the one of the obvious reason is the overall the viewers are paying less for
the television which is known as a ‘cord cutting'. The offered choices of the channels subscribed
have resulted in the fatter pay cheque of the TV bill. The bill has doubled with so many options,
which has resulted in the low subscribing customers and the low potential customers. The sports
fans are able to get the major highlights on the social media channels at low or no cost. It is duly
noted that the ESPN is by far the highest paid channel with the annual subscriber fees of the $
7.86 in comparison to other channels. Due to the implication of the cord cutting it has resulted in
the heavy loss to the ESPN channel of subscribers of 12 million. If the subscribers continuously
fall in the tremendous rate, it will be hard for the ESPN channel to maintain rights for the live
sports streaming leading to offer of less valuable. As per the estimates, ESPN is paying $ 7.3
billion for the live sports coverage of which it reserves the rights of the $ 1.9 billion of the 17
regular season of the national football league. ESPN is already paying heavily to preserve its

dominant position and to let the subscribers view the live sports coverage. Some of the viewers
have also subscribed to the online streaming services and have an access to the social media,
then to sit and watch the television. For this, the strategic move of the ESPN is, to begin with, the
direct to consumer ESPN branded services which will be available through the internet and can
be supplemented the TV channel. For example the Netflix type services for the sports channel.
But in this arena also, it has to face a stiff competition from the various companies providing
similar services such as the Amazon prime video etc. even though ESPN holds the major market
share is the by the dominant leading sports channel, but as it is evident that the sports channel
and the television is full of uncertainties. ESPN needs to find the suitable strategies and the other
alternatives to grab back and churn its viewership to optimum levels (Jacobs, 1971).
 PBR live streaming select events on Youtube in 2012
PBR elaborated as a professional bull rider which has announced recently that it is providing an
opportunity to its fan who will get a chance to experience the toughest sports on Earth will be
viewing the PBR built ford series and it would be streamed live on the Youtube. As per the
setup, the viewers would be able to view it online through the live streaming on the Youtube on
the PBR website. As per the analysis, the viewers are choosing to view the broadcasting of the
sports events at their point of choice and for this, they opt for the live streaming which can be
viewed either through the computer, tablet or mobile. The viewers these days now chose to view
it through YouTube which is estimated to have an average of 3 billion viewers daily and access
to 800 million global viewers per month. The idea of synchronizing the PBR along with the
YouTube which is considered to be the powerhouse internet can help in enabling the viewers to
view 350 million devices along with the access to the 400 million mobile views per day. The
CEO of the PBR has mentioned that it will be 11 performances which will be live telecasted

through the medium of the YouTube (Dworkin, 1981). There is a strong intention to capture the
viewership that is willing to view it at their time and choice of place. All the episodes which
never have been showcased in the television will show in during the prime time of the website.
The YouTube version of the videos will be broadcasted in the HD version along with the
broadcasting it through the supplements of the CBS sports networks, NBC and the CBS
channels. The main objective will be to record the video, to be aired on the PBR website. As the
website has a global access the viewers from the different parts of the global and their domain
can view their episodes at their convenience. This would help in the viewers been able to view
the broadcasted episodes at their convenient time and the PBR would be able to capitalize the
viewership’s. Through this, as the many users will be visiting the pages, it would help the PBR to
capture the numerous visitors along with gaining the popularity of the website. The social media
would be streamlining the PBR broadcasted videos, which would help in churning the profit
channels. Many advertisers and the content creation company would be contacting to make their
advertisements available during the prime time. All this would help the PBR to capture the
profits and the revenue sharing models. So far PBR has a successful partnership model, which is
able to broadcast the programmes at the 37 international territories, 114 other regions and is
available half-billion households (Deubert, 2012). As the current trend of the broadcasting, the
viewers are not more engaged through the live online streaming and through the social media
updates.

References
Deubert, C., Wong, G. M., & Howe, J. (2012). All four quarters: A retrospective and analysis of
the 2011 collective bargaining process and agreement in the National Football League.
Dworkin, J. B. (1981). Owners versus players: Baseball and collective bargaining. Auburn
House.
Jacobs, M. S., & Winter, R. K. (1971). Antitrust Principles and Collective Bargaining by
Athletes: Of Superstars in Peonage. The Yale Law Journal, 81(1), 1-29.
Assignment #5