| Abstract: |
Recent allegations from participants of the FIA Formula One World Championship
(F1) suggest that the promoter of F1 (possibly together with the sports
association) violates European competition law in two ways. First, it
alleged-ly abuses its market power by deducting an inappropriate high share
from the rev-enues of the collective sale of media rights in order to boost
the profits of its pri-vate equity parent company (vertical allocation of
media revenue). Second, it alleg-edly forms a cartel with selected top teams
at the detriment of smaller teams by providing both unjustified extra payments
to these teams and enforcing a heavily biased horizontal allocation of media
revenues, benefitting the cartel teams. Pro-fessional sports championships
typically receive common revenue, for instance, from trademark rights and
marketing, but often also from the sale of broadcasting and other media
rights. This common revenue needs to be allocated in two ways: (i) vertical
allocation between the sports authority and the participants, and (ii)
hor-izontal allocation among the participants. Different professional sports
champion-ships employ vastly differing schemes for both types of allocation.
In this paper, we present an empirical assessment whether the current
antitrust allegations against F1 may be valid. We employ concentration
measures from empirical economics, like the Hirshman-Herfindahl-Index (HHI),
the concentration ratio and the standard de-viation in order to assess
different allocation schemes from different commercial sports. With the help
of these indices we show that the allocation scheme em-ployed in F1
considerably differs from such used in other professional sports
championships. We find the empirical picture to be consistent with an
anticompetitive interpretation of F1 media revenue structures and policies. We
conclude that there is merit in starting an in-depth antitrust investigation
of Formula One motor racing, which would also represent an opportunity for the
European Commission to cor-rect earlier mistakes. |
| Keywords: |
competition,antitrust,abuse of market power,sports economics,formula one motor racing,sports business,media revenue,football |