Posted by John Vrooman on Friday, February 20, 2015 in National Football League.

Interview with LA Times. 

Bolts and Raiders ain’t gonna happen. My money is still riding on Kroenke’s Hollywood Park express.

V. 

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Guessing by now you’ve heard about the Chargers/Raiders stadium plan in Carson.

http://www.latimes.com/sports/la-sp-nfl-stadium-20150220-story.html#page=1

Any thoughts on how the economics of this sort of thing might work out?

The Chargers and Raiders are probably blowing smoke in an attempt to derail Kroenke’s Hollywood Park express.

One of my best theorems (dual market theorem) holds that the NFL (or any league) will always prefer several monopolies to one multiple team market. Multiple or dual markets are negative sum revenue events because a second team in a market (regardless of size) will damage the revenue potential of the first team more than it increases its own value.

So the two teams may split the stadium cost 50/50, but their mutual  competition will shrink the total LA/Orange County/SoCal revenue pie regardless of their relative market shares. Two monopolies are always greater in value than one duopoly, or the Raiders and Bolts are worth more as separate monopolies in separate markets than combined in LA.

Two team markets are superior in terms of fan welfare but inferior in terms of team/league profit. Joint occupation of LA just doesn’t add up from the perspective of the teams and especially the meta-perspective of the League that will tax away most of any possible gains with a hefty relocation fee.

This was the economic core of the original Raiders decision in 1982. The NFL was found guilty of antitrust violation in the Raiders case because it was seen as blocking the Raiders move to LA in order to protect the Rams LA monopoly and damage LA fan welfare in the process. The LA market is now unoccupied so the Raiders case has no precedence but the League will still prefer monopoly over two team duopoly every day and twice on Sundays.

The NFL will always prefer single team markets to avoid negative sum moves. Ironically in the minds of the Chargers it is even possible that San Diego and LA/Orange County already comprise one meta-market that is occupied by the Bolts. This explains Chargers special counsel  Mark Fabiani’s recent relocation threats against San Diego and his own fan base with  claims that adding the Kroenke Rams to LA will damage the 25 percent of Bolts fans that reside in Orange County. If the Chargers ever move to LA/Orange County , it will be without the Rams or the Raiders.

The existence of two team markets in the current NFL does not violate the theorem it reinforces it.  The dual market theorem applies to an existing league but not to a rival league that could care less about the damage to the existing team.  The Raiders and the Jets were both AFL clubs that duplicated the 49ers and Giants in the AFL-NFL merger in 1967. In the merger 9 AFL clubs paid damage fees of $2 million each to the two duplicated teams ($9 million to the Giants and $9 million to 49ers), rather than the rest of the NFL. So two team markets are usually vestiges of rival league mergers in the past.

V