Part of what makes this interesting is that it’s one of only a few examples that I know of where European countries have more fewer market regulations than the United States. From the time I spent in Scotland as a kid and from what I’ve read since then it seems as though most sports teams are able to have complete freedom in signing and moving players. This is what results in the massive transfer fees that have become more common.
Concerning this Yglesias writes that:
Right now, the New York City Designated media area contains 6.5 percent of households. LA has 5 percent. Chicago has 3 percent. Philadelphia has 2.6 percent. Dallas, San Francisco, Boston, and Atlanta all have about 2.1 percent. And things taper off from there. But considering that New York City has a media market three times the size of large cities like Dallas and Atlanta (and especially considering that it’s nearby to the Hartford media market with 0.9 percent of the population) why doesn’t New York have three baseball teams instead of two?…I think our sports would be a lot more interesting with more free movement of teams, more freedom to negotiate salary arrangements, more freedom to sign whichever young players you can persuade to join you, promotion and relegation of teams that can’t cut the mustard, etc.
Here’s why I don’t think American sports will move to a more free market system in which teams become largely unrestricted in terms of where they play and who they sign: we still like to think of our sports as games.
Turning sports leagues into free market systems would remove a lot of the mystique for Americans. People still like to think that the athletes they pay to see play are down there getting paid to play a game. With contracts like A-Rod’s out there people definitely recognize that there is a business aspect to sports, but the mystique of the game still holds.
Were the NBA, NFL, or MLB to become like the British Premier League then I think Americans would start to think of teams as participating in a business first, and a game second. They might start seeing the Lakers, Yankees, or Raiders as more of a corporation than a sports team.
After the events of the last few months I think that were teams to appear more like corporations people would have a lot less respect for the people leading and playing for them. Just my two cents.