Following the relocation of one club to Sydney in 1982, the Victorian
Football League (VFL) (renamed the Australian Football League in 1990)
expanded to Perth (two clubs), Adelaide (two clubs), and Brisbane (one club,
merged with a Melbourne club), which brought the complement to sixteen by
- The national expansion effectively reduced the West Australian and
South Australian leagues to second-tier events. Ruthless controls to ensure
competitive equality (i.e. a draft and salary caps) ensured that newcomers
could quickly become champions (Perth, Adelaide, Brisbane, and Sydney
teams had all won the AFL by 2005). Meanwhile, rugby league established
teams in Perth, Adelaide, Melbourne, and (unlike the AFL) in Auckland, but,
amid internal divisions between the Australian Rugby League and the Super
League, the Perth and Adelaide clubs folded. As rugby union went professional
and established the Super 12 competition in 1996, rugby league failed to
maintain any hold outside the original two rugby states (NSW and Queens-
land) plus Canberra and Melbourne. In little over a decade, the AFL appeared
to have won the code competition, although rugby league remains popular in
its heartlands of Sydney and Brisbane. This was achieved without sacrificing
the closed cartel organization, largely because Australia’sfive big cities are so
much bigger than the next largest towns that there is limited pressure for new
entrants. The rugby union Super 12 (now Super Rugby) competition and the
soccer A-League, founded in 2004, also adopted a closed cartel structure.
The Australian situation is interesting because, despite the four major foot-
ball codes (AFL, rugby league, rugby union, and soccer) having differing char-
acteristics and histories, all have taken on US-style structures. In the state-based
competitions, the top league constituted a closed cartel of clubs who alone
competed for the championship, and the cartel determined which clubs could
join or would be ejected from the league. Yet despite the US-style closed cartel
structure, in stark contrast to the promotion-relegation system of most British
competitions and soccer worldwide, Australiansportsinthetwentiethcentury
differed from the US model of private ownership and profit-maximizing behav-
iour. Most Australian clubs are membership-based with opaque accounts.
11.2 Sport Labour Markets
The basic economics of professional team sports is simple. A few dozen players
perform in a closed stadium, and other necessary inputs are minimal. Much of
the revenue is economic rent, as greater revenues do not generate increased
output (supply is price inelastic). The size of the rents has substantially
increased over the last half-century with improvements in TV technology.
For example, the AFL generated revenues over $700 million in 2010 (Cook and
Davies 2012, p. 64) that were boosted in 2011 by afive-year TV deal worth
Richard Pomfret