A Free Market Solution for American Sports?

Interesting piece from Freakonomics suggesting that a promotion and regulation system currently in place in European soccer leagues might be a fruitful replacement for the current "central planning" system used by the major American sports leagues:

In a league such as the English Premier League, the bottom three teams in each season are demoted to the Championship League (a lesser league). The top three teams from the Championship League are then promoted to the Premier League. Consequently, losers in the Premier League – as we see in a capitalistic market – are punished financially. And success in the Championship League is clearly rewarded.

This type of system would let the markets in each city determine the placement of teams rather than the central planner. Essentially areas could have a team as long as they had enough fans and the team was successful.

It's a fun thought experiment:

For example, let’s imagine that multiple basketball leagues were created in North America. Currently, beneath the NBA is the NBA Development League (which could be the Championship League equivalent). Beneath the NBADL, one could create another league. Any city or part of a city (i.e. Long Island in New York could have their own team) — could enter a team in a lower league. If that team was successful it could eventually join the NBA. And the teams that fail in the NBA would be removed.

Probably never would happen, but as a person who has a passing interest in sports and economics, I felt it was thought provoking.

(thx to Melissa for bringing this to my attention)

Ed

Ed enjoys all forms of entertainment and has an unnatural love for quantitative methodology. He operates out of a basement in Northern Virginia (@edomaniac).

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