If you read Forbes or Fortune’s wealthiest people, you will notice there seems to be more of them than less. After billionaires have accumulated various monster homes or large homes, they tend to to have some they collect and then they look to owning a sports team. If you think about the era before radio and TV, sports teams were very inexpensive, now some are selling for billions of dollars. This tends to mean besides the expectation the price will rise in the future, by owning teams there are billions of dollars to be made. In addition, sports brings out people to watch and some of those the owner wishes to influence. Who does the owner invite to sit in the owners’ box?

In June, the big announcement regarding sports financing was a merger between the LIV Tour and the PGA Tour. The PGA is the older established league, there are tournaments every week but a few of them offer greater prestige and money for winning. Then the LIV was started with Saudi money and a very large bankroll of money. LIV offered golfers in the top 100 of the PGA, large signing bonuses to play along with more prize money than the PGA. The PGA reacted to LIV with a scorched earth policy, if a player signs with LIV, they could not play in the PGA championship tournaments. Then in June, the scorched earth policy was finished, and the 2 leagues merged together for the good of the game.

In an article by Tony Keller, he notes Adam Smith the economist and writer of In the Wealth of Nations, published in 1776, noted Prices in a monopoly are the highest which can be squeezed out of buyers, in a competitive market they are lowest which the sellers can commonly afford to take.

Monopoly’s benefit by never fully supplying the effectual demand. Keeping supply below demand also allows leagues to set a price for creating or moving teams, including taxpayer funded bidding wars among cities.

In the past, each time a new pro league was created to challenge a monopoly league, the competitor drove up athlete salaries. But those competing leagues were eventually all either crushed by the monopoly or merged with it for mutual benefit.

The history includes the AFL merger with the NFL; the WHA merged with the NHL, the ABA merged with the NBA and the American league baseball merged with the National League baseball.

Linking to dividend paying stocks, as an investor you like monopoly or monopoly like investments because they have the ability to raise prices and maintain market share. If you are customer you might have to pay more, hopefully your dividends cover the increase. In the corporate world there are always competitors and in every industry, people are trying to disrupt the industry one way or another, fortunately for monopoly like companies they have the abilities to buy out the competition and use the tools of the competition to build margins and maintain profits. If the investments you own are not doing mergers and acquisitions, it is time to seek alternatives.

There are more questions than answers, till the next time – to raising questions.