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Mon April 8, 2013
Economist says Sacramento Kings fight may yield antitrust lawsuit
As the NBA weighs whether to allow the Kings basketball team to move to Seattle from Sacramento, the league has to consider the possibility of an antitrust lawsuit.
Why should the Sacramento Kings be worth more than $500 million when they’re nowhere near the top of the league? Sports economist Roger Noll of Stanford University says it’s simple: a scarce supply of teams. That's by design, he says, because NBA owners want to keep their franchises valuable. And that exposes the league to a possible lawsuit.
"Whichever city is going to lose has an antitrust case against the NBA for not having a team in that city," Noll said.
Noll says either city would have a case to make because both cities are viable locations for the team and either one could argue the league is illegally restricting the number of teams. He says it’s kind of like the railroad cartels more than a century ago.
"The crucial issue is whether the purpose and effect of the restriction is simply to enhance the monopoly power of the existing set of teams," Noll said.
He says professional sports leagues have manage to duck this issue by expanding their leagues whenever the issue arose in the past. And he expects the same thing will happen this time. Both Seattle and Sacramento will eventually have their own teams.