Sport Auctions: the Winner's Curse

Wladimir ANDREFF * Professeur honoraire, Université de Paris 1 Panthéon Sorbonne ; président, Conseil scientifique de l'Observatoire national du sport (ministère des Sports). Contact : wladandreff@gmail.com

Sports organizations that hold monopolies (monopsonies) maximize their rent by imposing auctions on their customers (suppliers). The latter suffer from the curse of the auction winner and overpay. This process plays out when: (1) major international sporting events are awarded and candidate cities are encouraged to outbid each other; (2) team owners of North American sports leagues have potential host cities bid for their franchises; (3) TV broadcasting rights are auctioned off among competing networks; (4) acquiring superstar players in the arms race between the richest sports teams.