Fantasies & Externalities

The Supreme Court refused to take up MLB’s and MLBPA’s challenge to the use of players’ names on a fantasy site. Here is the AP Summary via Fort Worth Star-Telegram. The District and 8th Circuit Court had found in favor of the fantasy provider based on first amendment rights. The 8th circuit offered a split decision (Opinion Link). The decision turned on the balancing of first amendment rights against copyright law. The majority wrote:

the information used in CBC’s fantasy baseball games is all readily
available in the public domain, and it would be strange law that a person would not have a first amendment right to use information that is available to everyone.

These kinds of intellectual property rights questions raise difficult tradeoffs. Regardless of the legal tradeoffs and decisions, the case draws attention to the uncompensated benefit generated by sports teams and leagues and their attempts to recoup some of this value. The actual revenues of fantasy sports (put at $1.5 billion in the article) is the value that MLB (and other sports producers) could seek as a basis for compensation in court. That amount, however, vastly understates the total value to fantasy sports consumers of the data generated by sports leagues for their use. The value of the time spent by fantasy players in thinking about their teams swamps the value of the money spent.

I want to be clear here — after all, I’m not suicidal. I’m not saying that these large uncompensated values (positive externalities) justify all sorts of stadium subsidies. I am saying that sports economists and sports analysts do need to consider just how large these values are. Sports is relatively unique in the ratio of the amount of total revenue generated relative to the amount of time spent thinking, talking, reading about it with the latter being much greater than the former than in a typical market, say, breakfast cereal. The interest in a blog like this is evidence in itself.

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Author: Brian Goff

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