As most any sports fan, commercials during sporting events annoy me– not the hawking of wares, per se, but the time it adds to the telecast. The idea that commercials are really the price I must pay to see the program (Gary Becker’s point) is clear enough. Still, I prefer lower prices to higher ones. Because my time is valuable, I’m willing to invest in devices such as TiVo that lower the time cost of watching. Of course, as such items proliferate, alternative institutional arragenments for programming or using commercials are likely to expand.
This brings me to my main point regarding the institutional arragement of commercials and sporting events. One glaring difference between U.S. sports and the dominant European sport of soccer involves the time cost of commercials. Advertisements saturate American televised sports — a commercial after the touchdown followed by one after the kickoff rank up there with Oprhah and Dr. Phil as causes of channel hopping. The ability to watch an entire half without a single commercial break contributed to my growing taste for soccer.
Why does this institutional difference exist? This is a question and not an answer. TV revenues are important to European clubs and their media producers such as Sky Sports just as they are in American sports. Cave and Crandall offered some details on TV markets and revenues across the big pond, but nothing they describe offers much in the way of an explanation for my specific question. Someone may suggest — one is soccer and the others are not, dummy! Maybe the answer is that simple, but one could envision stoppages in soccer too. After all, the number of stoppages in American sports used to be much fewer.
Expanding a bit, sports provides many opportunities for comparing ways of doing things across different institutional structures — “comparative institutional analysis.” The trouble is that such side by side comparisons of institutionals can raise knotty questions. Oh, we might do well enough in explaining differences that alternative setups create. However, the matter of explaining why such institutional differences exist in the first place sometimes creates a circular trap for us as economists. A standard, generic response might be that an institutional structure must be profit maximizing or else we would not observe it. When competing institutional structures are present side-by-side, this fallback position amounts to little more than chasing your own tail. It’s much like the biologist who explains why one spider species devours its mate and another does not by exclaiming that the behavior developed as a survival response to its environment. It’s a one-answer-fits-everything but really explains nothing dilemma.
Ok, there’s the problem. It will be on this fall’s comprehensive exam! I would be interested as to any suggestions that my fellow bloggers might have.
