An Abundance Agenda for Sports in America

We should have more and it should cost less

The journalists Ezra Klein and Derek Thompson recently published Abundance, a book about how we could have more and cheaper housing, energy, and transportation infrastructure. They argue that laws intended to solve problems from long ago are causing problems for the present. For example, environmental laws were and are needed to protect sensitive habitats from careless development in green spaces. The same environmental laws are now being used to stop careful urban development.

Fans of America’s professional sports are also harmed by laws intended to protect problems that no longer exist. For example, Congress passed the Sports Broadcasting Act of 1961 to enable sports franchises to cooperatively sell the rights to broadcast games. The law was passed in response to a US District Court decision that prohibited, on antitrust grounds, NFL teams from pooling their games together and, collectively, selling the television broadcast rights. At the time, it would have been challenging for each NFL team to sell their broadcast rights individually, given the modest popularity of the NFL.

Today, each NFL team would have no problem selling their rights individually. If there’s enough demand to broadcast University of Texas sporting events on its own network, there is certainly enough demand to broadcast every Dallas Cowboys game. In fact, the NCAA does not enjoy the benefits of the Sports Broadcasting Act (the NCAA sought these protections, but lost in court), but televised college football (and basketball and numerous other sports) has succeeded nonetheless. The NFL is far more popular than it was in 1961 and there are many, many more ways to distribute football media than there were in 1961.

The downside of the Sports Broadcasting Act is that it gives the NFL, acting as a collective, enormous power and influence. In 2021, the NFL signed an 11-year media rights deal for $110 billion. This money is distributed, for the most part, equally among the league’s 32 teams. This means each of the existing franchises receives about $110 billion / 32 = $3.4 billion or $340 million annually. This revenue is an overpayment to teams like the New Orleans Saints, who play in a small media market and garner little national attention, and an underpayment to teams like the Dallas Cowboys, who play in a large media market and garner significant national attention. If the NFL added, say, 10 new franchises in 2026, the television revenue would be diluted down to $110 billion / (32 + 10) = $2.6 billion or $260 million annually. Why would existing NFL owners give up $100 million annually to expand the league? Doing so would be irrational. This way of thinking leads to (a) very high entry fees for expansion franchises and (b) modest expansion over time.

This, in a nutshell, is what keeps professional sports in America from being abundant. In the case of the NFL, 32 extremely wealthy individuals can decide to limit the amount of professional football in America to far, far below what the market demands, which results in scarcity and high prices. The economics and small number of decision makers is nearly identical for the NBA and MLB: America’s sports monopolies. There is perhaps no easier problem in the abundance agenda to solve: you need only convince 32 individuals that they should be founders rather than robber barons.

America's Sports Monopolies

So what can be done? Well, short of convincing NFL owners that they should take on more risk via massive expansion or convincing existing NFL players that they should consider the interests of non-NFL players, the easiest, most elegant, solution would be for Congress to repeal the Sports Broadcasting Act of 1961, thus making it clear that it believes the NFL, NBA, and MLB should not be able to collectively negotiate media rights. In the absence of the Act, each team competing in an event could, independently, sell the broadcast rights to the event. If, say, the Dallas Cowboys were playing the New York Giants, both the Cowboys and the Giants would have the ability to sell the rights to broadcast the game.

This change would, in short order, dramatically change the sports landscape in America. I would expect the following:

• Each NFL team would negotiate its own media rights deals. The rights would garner disparate values, with teams in large markets collecting far more in revenue than teams in small markets.

• Large market teams would then need to either (a) accept a far lower salary cap, i.e., one that the small market teams could afford, as they would now have less revenue from media rights; or (b) do away with the salary cap. Why should the Dallas Cowboys field an inferior team if their fans are willing to pay 2x or 10x or more to watch their games than fans of smaller market teams? The player’s union would of course advocate strongly for (b).

• There would be less incentive for NFL teams to cooperate, rather than compete. The upside of cooperation was the collective media rights revenue.

• Owners of teams in smaller markets would, over time, move to larger markets: New York, Los Angeles, Chicago, Houston. Today, it is only via cooperation among team owners that prevents relocation. The NFL cannot legally prevent teams from relocating.

• If the salary cap is eliminated, the players union would be emboldened and, if they were smart, insist on expansion, ideally expansion by dozens and dozens of teams, operating with a system of promotion and relegation. This could bring professional sports to cities across America, with teams playing in various professional tiers. Abundance, in other words.

Repealing the Sports Broadcasting Act of 1961 would have similar impacts on the NBA and MLB. In a few short years, professional sports would be everywhere in America and start to look more like European soccer. Unlike American sports, European soccer is ruthlessly capitalist, with a strong free market ethos. And this results in abundance. Professional soccer is everywhere in England and France and Spain and Italy and Greece — all levels, all price points. With one simple act of Congress, we could have it here as well.