Malcolm Gladwell ponders the idea of free market sports leagues:
Or how about eliminating the draft altogether? I’m at least half-serious here. Think about it. Suppose we let every college player apply for and receive job offers in the same way that, oh, every other human being on the planet does. That doesn’t mean that everyone goes to L.A. and New York, because you still have the constraints of the cap. It does mean, though, that both players and teams would have to make an affirmative case for each other’s services. So you trade for Steve Nash or Jason Kidd, because they make you instantly attractive to every mobile big man coming out of college. Instead of asking the boring question — which team is going to be lucky enough to draft Derrick Rose? — we ask the far more interesting question: Which team, out of every team in the league, should Derrick Rose play for? [...]
The bigger point here is that what consistently drives me crazy about big-time sports is the assumption that sports occupy their own special universe, in which the normal rules of the marketplace and human psychology don’t apply. That’s how you get the idea of a reverse-order draft, which violates every known rule of human behavior.
I would go further than this. My understanding is that in Europe, soccer leagues operate without all this active labor market policy aimed at driving parity. Teams can basically do what they want in terms of hiring personnel. But at the same time, the teams really need to compete against one another. A team isn’t permitted to just monopolize a large media market by planting its flag down and saying “I forbid you to move anywhere near my franchise.”
Right now, the New York City Designated media area contains 6.5 percent of households. LA has 5 percent. Chicago has 3 percent. Philadelphia has 2.6 percent. Dallas, San Francisco, Boston, and Atlanta all have about 2.1 percent. And things taper off from there. But considering that New York City has a media market three times the size of large cities like Dallas and Atlanta (and especially considering that it’s nearby to the Hartford media market with 0.9 percent of the population) why doesn’t New York have three baseball teams instead of two? There’s no iron law written that the number of teams in a given area should be directly proportionate to its population. But it seems like a reasonable strategy to try. Except in baseball there is an iron law saying you can’t try this.
I think our sports would be a lot more interesting with more free movement of teams, more freedom to negotiate salary arrangements, more freedom to sign whichever young players you can persuade to join you, promotion and relegation of teams that can’t cut the mustard, etc. The free market, just like they have in Europe.