Monopoly, Monopsony, and the Parallels between the NCAA and CCA

The National Collegiate Athletic Association (NCAA)in the U.S. and the Canadian Curling Association (CCA) have two important things in common: monopoly and monopsony.

The NCAA controls the U.S. college play-offs in the major sports of football and basketball (along with many others); and the Canadian Curling Association controls the Brier (Canadian men’s championship) and the Scott Tournament of Hearts (Canadian women’s championhsip), and the winning teams have earned the right to compete in the world championships, representing Canada.

Both the NCAA and CCA have seen their monopoly powers challenged. The NCAA has lost its complete monopoly over the sale of television broadcast rights, and the CCA is being challenged by the World Curling Tour in a battle to attract viewers and sponsors. Also, if the CCA keeps buggering up its television broadcast contract negotiations, people will soon be frustrated enough that they demand a Herculean cleansing of the Aegian Stables.

But these challenges are just nibbling at the edges of the monopoly power of these two organizations because they still control the big events. In fact the NCAA just bought out its main tournament challenger, the NIT. (see the update at the end of that item; as Skip Sauer says, “Looks like pure monopoly folks!”)

At the same time, the two organizations have worked assiduously to suppress the earnings of the athletes under their purview. While some athletes have been able to side-step the NCAA unholy alliances with the professional leagues, for the most part college level athletes in the U.S. are not paid anything like their market value. King Banaian at SCSU Scholars is a fine economist with a strong interest in sports economics. He quotes Robert Barro:

The NCAA is impressive partly because its limitations on scholarships and other payments to athletes boost the profitability of college sports programs. But even more impressive is the NCAA’s ability to maintain the moral high ground. For example, many college basketball players come from poor families and are not sufficiently talented to make it to the National Basketball Assn. Absent the NCAA, such a student would be able to amass significant cash during a college career. With the NCAA in charge, this student remains poor. Nevertheless, the athletic association has managed to convince most people that the evildoers are the schools that violate the rules by attempting to pay athletes rather than the cartel enforcers who keep the student-athletes from getting paid.

In curling, one reason the World Curling Tour has emerged was that many curlers were disappointed with the amount of money they could earn from curling in tournaments organized by the CCA. As I have speculated before, it is conceivable that the World Curling Tour could outcompete the CCA tournaments most of the time. But there are four major barriers to this competition: the Brier, the Scott, the right to go to the Worlds, and the Winter Olympics, all controlled by the CCA.

It is at least conceivable that the Brier, the Scott, and the Worlds could be out-competed by the World Curling Tour. If the WCT offered big enough prize money and appearance fees, those tournaments would disappear in the matter of just a few years. And like collegiate basketball in the U.S., we would almost surely see a merger (but this assumes the CCA would not remain intransigent, as it seems to have been in so many of its recent decisions).

But the big kicker — the hammer, so to speak — is that the CCA controls the Winter Olympic selection process. That control gives them considerable power in negotiating with players (Note Colleen Jones’ remark that she might not appeal a fine levied by the CCA because the CCA controls the olympic selection process). The World Curling Tour (and its Canadian counterpart) would have to receive the nod from the Canadian Olympic Association for selecting the olympic curlers, and that would not be at all easy.

[cross-posted at Curling]

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Author: John Palmer

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