Monopoly, Natural and Otherwise

On November 1, 1966, All Saints’ Day, the National Football League awarded its sixteenth franchise to New Orleans. The timing wasn’t a coincidence of the calendar. A few weeks earlier Congress had passed a law exempting the merger of the NFL and the rival American Football League from the antitrust laws. The exemption never went before the House Judiciary Committee, whose chairman, Emanuel Celler, would have held hearings on it. It rode instead as a rider on an unrelated investment tax credit bill, steered by two Louisianans: Senator Russell Long, chairman of Senate Finance, and House Majority Whip Hale Boggs. The league got a merger that ended its only serious competition. Louisiana got a team. The Saints took their name from the day.

Most Americans think of the NFL as a business that won its market. It did win a good part of it. It also had a market handed to it, piece by piece, and the New Orleans franchise is the plainest receipt.

Why monopoly cuts against social liberty

These essays describe liberty as something lived in many small, voluntary institutions: a school a parent chose, a land trust a family chose, a cooperative its members chose. Each choice is real only because the chooser could have gone elsewhere. Exit is what keeps a voluntary association voluntary. Where there is nowhere else to go, the relationship stops being an agreement between parties and becomes the terms one party sets for the other.

That is why monopoly sits uneasily with any philosophy of liberty, and why a free-market argument that stops at “the state is the threat” misses half of it. A firm that controls the only way to get something people need can set prices the way a government sets taxes, write rules the way a legislature writes law, and punish the way a court does, by cutting someone off. It does this without elections, without a constitution, and without a bill of rights. A monopoly is a private government with none of a public one’s restraints. Separation of Currency and State described money as soft capital that hardens when it is hoarded. A monopoly is the same hardening at the scale of a whole market: one shape that refuses to give way to the churn that would otherwise remake it.

So the question for social liberty isn’t whether monopoly is bad. It’s where monopolies come from, because the remedy depends on the answer.

How many monopolies stand on their own?

There is a long argument, running from Adam Smith through the Austrians, that a monopoly without legal protection doesn’t last. A firm that charges monopoly prices invites a rival, and the only durable protection against that rival is a law that keeps it out: a royal patent, a charter, a franchise, a license, a tariff. Smith’s targets were the chartered trading companies and the guilds. The East India Company didn’t win the tea trade, it was granted it, and the tea that went into Boston harbor in 1773 was cargo of a monopoly Parliament had just extended.

The argument isn’t airtight. Some firms have held dominant shares for decades through scale, patents that ran their legal course, or simply being better. But the closer one looks at a famous private monopoly, the more often a public hand turns up holding a door shut.

New York’s ice trust is a good small case. In 1899 Charles W. Morse folded the city’s ice dealers into the American Ice Company, and in the summer of 1900 the price of ice doubled during a heat wave, in tenements where ice was how milk stayed safe for babies. The trust could raise prices because rivals had nowhere to land their ice: the city’s Dock Department had given American Ice the landing slips along the waterfront. When the New York World reported that Mayor Robert Van Wyck and his brother held thousands of shares in the company, the scandal took the price back down within weeks. Ice is about as natural a commodity as there is, cut from Maine rivers and the Hudson, and nothing about it called for a single seller.

De Beers, the textbook example of a cartel that held a world market for most of a century, ran its control of diamond supply through partnerships with governments, from colonial South Africa to Botswana, whose state still owns half of the joint venture that mines its diamonds. Standard Oil was the most feared private monopoly in American history, and its share of refining was already falling, from around ninety percent to the mid-sixties, before the Supreme Court broke it up in 1911. Its rebates from the railroads, which were themselves creatures of state charters and land grants, had done more for it than any refinery.

Are there natural monopolies?

Economists mean something specific by a natural monopoly: a business whose costs fall so steeply with scale that one provider can serve a whole market more cheaply than two. The classic cases are networks with a large fixed cost and a small cost per user. Nobody wants two sets of water mains under the same street, or two sets of power lines on the same poles, or a second railroad laid a hundred feet from the first.

Look at that list again and most of it is land. The water main runs under a street, the power line runs along an easement, and the railroad runs on a right-of-way. Land as Road found the same thing in roads: a street grid with many routes doesn’t need a single owner, but a single bridge over a river or the only pass through the mountains is a chokepoint, and whoever holds it can charge what the traffic will bear. Henry George saw it in 1879. A great deal of what gets called natural monopoly is location monopoly, the rent that comes from holding the one place everything has to pass through. The Georgist answer is to collect that rent for the community whose presence created it, rather than hand a franchise to a single operator and then spend a century regulating the franchise.

There is a second kind of natural pull toward one provider, which comes from the side of the customer rather than the cost. A telephone network is worth more the more people are on it. A marketplace is worth more the more buyers and sellers it gathers. And a sports championship is worth more when it settles who is best. Two leagues each crowning a champion leave the question open, and fans want it closed. This second kind matters for football, because it is the real core of the league’s claim to be a natural monopoly, and it is also where the claim stops working.

The league everyone knows

The NFL is thirty-two teams, owned by thirty-two owners or ownership groups, that act together as one business when they sell television rights, license merchandise, assign incoming players, set the number of teams, and decide where those teams may play. In ordinary commerce, competitors who agree on prices, divide territories, and allocate workers among themselves are a cartel, and the Sherman Act forbids it. Baseball escaped that law early, in 1922, when Justice Holmes wrote in Federal Baseball Club v. National League that exhibitions of baseball were not interstate commerce. Football asked the Supreme Court for the same treatment in Radovich v. NFL in 1957 and was told no. Without a blanket exemption, the NFL got its protections one at a time.

Television. In 1953 a federal judge, Allan Grim, ruled in a Justice Department suit that the league could restrict broadcasts in a home team’s market but not much else. When the league signed a single pooled contract with CBS for all its teams in 1961, Judge Grim voided it as a violation of his decree. Commissioner Pete Rozelle went to Congress, and within months the Sports Broadcasting Act was law, exempting pooled league television contracts from antitrust. Nearly every dollar the league has made since flows through that exemption. In 2024 a Los Angeles jury found that the league’s out-of-market Sunday Ticket package violated antitrust law and awarded subscribers $4.7 billion. The trial judge threw the verdict out a few weeks later.

The merger. The AFL began play in 1960 and survived where earlier rivals hadn’t, mostly because it found its own television money, first from ABC and then from NBC. By 1966 the two leagues were bidding against each other for players, and salaries were rising fast. Merging would end the bidding, and a merger of the only two buyers of football talent in the country was exactly what antitrust law exists to stop. Hence the rider, and hence New Orleans.

The courts. The United States Football League played three spring seasons from 1983 to 1985, moved to the fall, and sued the NFL for monopolizing the sport. In July 1986 the jury agreed that the NFL had monopolized professional football. It awarded one dollar in damages, trebled under the law to three. The USFL never played again. The verdict is often told as a joke about the USFL’s own mismanagement, which was real, but the finding stands: a jury of ordinary people looked at the league and called it a monopoly, and the law had no remedy that mattered.

Players. Since 1936 incoming players have been distributed by draft, worst team first. A college senior can’t choose an employer, the employer is assigned, as surely as a conscript’s regiment. In 1978 a federal appeals court found the draft as it then stood to be an illegal restraint of trade, in a suit brought by a former Washington defensive back named James “Yazoo” Smith, whose career ended with a neck injury in his rookie season. The draft survived anyway, by moving into the collective bargaining agreement, where the Supreme Court’s labor exemption shields it from antitrust.

Stadiums. Here the monopoly meets the taxpayer most directly. Because the league controls how many teams exist, there are always more cities that want a team than teams to go around, and a team can use any of them as a threat against its own city. The Raiders left Oakland for Los Angeles in 1982, went back in 1995, and left again for Las Vegas in 2020, to a stadium with $750 million in Clark County hotel tax money in it. The Rams left Los Angeles for St. Louis and came back. The Chargers left San Diego. The Bills stayed in Buffalo, and the price of staying was $850 million from New York State and Erie County toward a new stadium. For decades much of this was financed with tax-exempt municipal bonds, so taxpayers in every state chipped in for stadiums in other states. Economists at Brookings put the federal cost of tax-exempt stadium bonds since 2000 at more than $3 billion. Until 2015 the league office itself was registered as a tax-exempt trade association.

The natural part, and the rest

Every attempt at a rival league has run into the pull toward one champion. The All-America Football Conference lasted four seasons after the Second World War before three of its teams, the Cleveland Browns, the San Francisco 49ers, and a first version of the Baltimore Colts, were folded into the NFL. The AFL merged. The World Football League, the USFL, the XFL twice, and the Alliance of American Football folded or shrank to spring leagues. Fans want the Super Bowl to mean something, and a sport with one top tier is a reasonable thing for them to want.

But a single top tier is not the same thing as a closed club of thirty-two owners deciding who may join. English football has one top division and one champion every year, and it has never had a fixed membership. Clubs below the Premier League sit in a pyramid of divisions that runs down through semi-professional and amateur leagues to village teams, and a club that finishes high enough goes up while one that finishes low goes down. When Wimbledon’s owners moved the club fifty-six miles north to Milton Keynes in 2003, after the Football Association allowed it, supporters treated it as a scandal rather than a business decision. They had already started a new club, AFC Wimbledon, in 2002, holding open trials on a common to find players. It began in the ninth tier of the pyramid. It climbed six divisions in fourteen years and this season plays in League One, a division above the club that left.

No such club could exist in American football. There is no ladder for it to climb, and the number of places at the top is set by the people who already hold them. That number is the monopoly. The championship’s natural pull only explains why fans want one top tier. The closed membership, the pooled television money, the assigned players, and the threat of moving that pries loose public money all come from somewhere else, and that somewhere is mostly Congress, the courts, and city councils. Those are the walls. They don’t explain why so few people ever try to climb them.

Green Bay is the exception the league keeps on its books. The Packers have been owned by their community of a couple hundred thousand people since 1923, as a nonprofit corporation whose shares pay no dividends and can’t be resold for profit, held today by the local people. No shareholder can own more than a sliver. The team plays in a city of about a hundred thousand, smaller than any other in the league, and it has never been moved, because there is no owner to move it. League rules adopted since then require every other team to have a controlling owner, which forbids any other city from owning its team the way Green Bay does. The Packers are allowed to stay as they are. Nobody is allowed to follow them.

A planned economy that sells competition

Inside its walls the NFL runs something close to a planned economy. Every team receives an equal share of the national television money, a rule Pete Rozelle won from the owners in 1962. Since 1994 a salary cap has set the most any team may spend on players. The draft assigns incoming players worst team first, and roster limits fix how many each team may keep. The draft itself was proposed in 1935 by Bert Bell, owner of a Philadelphia Eagles team that couldn’t win games or sign players. As commissioner after the war he gave the system its motto: on any given Sunday, any team can beat any other. Writers at National Review have teased conservatives who cheer on Sunday for a league run on revenue sharing and central allocation of labor, and pointed out that baseball, with no salary cap, comes nearer a free market.

Economists saw the reason early. Simon Rottenberg argued in 1956 that a league needs rough balance among its teams, because nobody pays to watch a game whose outcome is known. Walter Neale, in “The Peculiar Economics of Professional Sports” in 1964, called it the Louis–Schmeling paradox: Joe Louis, the heavyweight champion, earned nothing from being unbeatable, and needed a Max Schmeling to fight. A team that drove every rival out of business would have no one to play. Neale concluded that the real firm in professional sports is the league, and the teams are more like its plants.

Hayek offers a sharper way to see the arrangement. In “The Meaning of Competition,” a 1946 lecture, he argued that competition in the ordinary sense is a process, a rivalry whose results nobody knows in advance, and that economists’ model of “perfect competition,” in which everything is already known and nobody has to compete, describes its opposite. Later he called competition a discovery procedure: it’s worth having because it turns up facts no one could have known without it. A football game is that process in its purest form. Nobody knows who will win until it’s played, and that uncertainty is the whole product. The league plans everything around the game, from the wages and the hiring to the location of every plant, so that the game itself can stay unplanned.

The planning carries the costs Hayek would have predicted. A draft board’s ranking replaces a young player’s search for the employer who values him most, and a salary cap is a price ceiling set centrally for every team at once. A recent paper in the Review of Austrian Economics, “No Country for Fair Play,” applies Hayek’s dispersed knowledge to the other direction, to European football clubs bought by state funds, such as Saudi Arabia’s at Newcastle United and Abu Dhabi’s at Manchester City. Money that never has to show a profit, it argues, distorts the prices, wages, and reputations through which a sports market learns what anything is worth. The NFL’s plan suppresses the signals and the sovereign funds counterfeit them, and the effect is the same: less is discovered.

The plan also explains much of the league’s stability. Parity keeps every market hopeful. A fan in Detroit or Jacksonville believes, with some reason, that next year could be the year, and the draft hands the worst team the first pick. A losing season in an open market would send fans elsewhere. Under the plan it sends them to the draft, to wait.

The socialization of monopoly

Even Green Bay sells the same product as everyone else. Its shareholders own their team, and they don’t own the game. Open the league to a hundred community-owned clubs and Americans would still want one Sunday, one schedule, one Super Bowl. The laws explain how the walls went up. What holds people inside them is older than the laws, and it starts in towns that will never have a professional team.

In Massillon, Ohio, the booster club of Washington High School gives a miniature football to every boy born in the town’s hospital, left in the bassinet before his family takes him home. Paul Brown coached the Massillon Tigers through the 1930s, went on to coach Ohio State to a national title, and then founded the Cleveland Browns, who began in the All-America Football Conference and joined the NFL when it absorbed them. One career runs the whole route, from a town’s newborns to the professional league, and every step before the last was paid for by a town or a state.

About a million American boys play high school football. A Friday night game is a gathering of nearly the whole town: the band, the cheerleaders, the homecoming court, the booster club at the gate, the old men along the fence who played on the same field forty years before. A star quarterback is known at the grocery store. Twenty years later he’s the insurance agent whose photograph still hangs in the diner, and the network of former players, coaches, and their families is one of the steadier forms of standing a small town hands out. Voters pay for it gladly. In 2009 the voters of Allen, Texas, approved a bond that built a $60 million stadium for a single high school, and in 2017 the Katy school district outside Houston opened one that cost about $70 million.

Above the high schools sit the universities, which serve as the league’s training system. The NFL has run no minor league since NFL Europe closed in 2007. A player can’t enter the draft until three football seasons have passed since his high school class graduated, and when Maurice Clarett challenged that rule in 2004, an appeals court upheld it under the same labor exemption that protects the draft. So a young player’s years between eighteen and twenty-one belong, in practice, to a college, which until a 2025 court settlement paid him no salary. The league inherits a workforce that public schools, state universities, and families spent fifteen years and a great deal of money developing. It pays for none of it.

Congress wrote this arrangement into law. The Sports Broadcasting Act that exempted the league’s pooled television contracts also barred it from televising games on Friday nights and Saturdays during the fall within seventy-five miles of a high school or college game. The price of the exemption was a promise not to compete with the system that supplies it. Friday belongs to the town, Saturday to the college, Sunday to the league, and the schedule carries a boy from one to the next.

Then there’s the ritual. The Detroit Lions have played on Thanksgiving every year since 1934, so for most families the holiday has always had a game in it. Super Bowl Sunday is an unofficial national holiday. Offices run fantasy leagues, bars run pools, and loyalty to a team passes from parent to child like a family name or a church. A rival league can sign players and buy airtime. The USFL signed Jim Kelly, Steve Young, and Herschel Walker, and it lost anyway, because it couldn’t sell anyone a grandfather who took them to a game.

The ritual has a gate. In many cities a season-ticket holder first had to buy a personal seat license, which is only the right to buy season tickets, an idea the Carolina Panthers used in 1993 to pay for their stadium. The ticket itself now exists only on a phone. Since 2013 the league has required that any bag a fan carries be clear plastic and no larger than twelve inches by six by twelve, and since 2015 every fan walks through a metal detector. Outside food and drink are turned back at the gate, along with unapproved banners, and a fan who steps out can’t come back in. Inside, a league code of conduct adopted in 2008 governs language and behavior, and staff may eject anyone who breaks it. Many stadiums no longer take cash. The hot dog comes from a concessionaire under contract with the team, at a price no one inside can shop around. When the Falcons opened their new stadium in Atlanta in 2017 selling two-dollar hot dogs, it made national news.

Often the building belongs to the public. Clark County’s hotel tax put $750 million into the stadium in Las Vegas, and New York State and Erie County put $850 million into Buffalo’s, and many stadiums are owned by a public stadium authority that leases them to the team. A fan inside stands on ground the public paid for, under rules the public had no say in, and every purchase runs through the team. It gathers more people than most American towns, and it has none of a town square’s freedoms. No vendor may set up a cart, no family may bring a basket, nobody may hand out a leaflet. For three hours on a Sunday the stadium is a company town, with the company’s food, the company’s beer, the company’s police, and a company store at every gate.

So football’s monopoly is socialized in three senses. Its costs are carried by the public: the training system, the stadiums, much of the television arrangement. The game itself is woven into the way Americans come of age, gather, and mark the year, until preferring it no longer feels like a choice anyone made. And on game day the public’s money builds a gathering place the public may enter only on the league’s terms. Antonio Gramsci called that kind of rule hegemony: power held less by force than by common sense, by what everyone takes for granted. Debates Within, Mises Versus Hayek pointed toward Alexander Carey’s account of how hegemony settles on top of the reciprocal ties that make communities, and the NFL is about as plain an example as there is.

None of this makes the ties false. A Friday night crowd, a booster club, a team a family has followed for three generations: these are the voluntary, local, face-to-face associations that social liberty values most. The league didn’t build them. It sits at the top of a ladder they built, and it set the ladder so that it leads to one place. In Massillon the miniature footballs still go into the bassinets every year, and the boys who get them grow up in a town that has its own team, its own stadium, and its own history going back to 1891, all of it pointed at a league in which the town will never own a share.

Sources

• F. A. Hayek, “The Meaning of Competition” (1946), in Individualism and Economic Order (1948), reprinted in Econ Journal Watch 13, no. 2 (2016); “Competition as a Discovery Procedure” (1968).
• “No Country for Fair Play: A Hayekian View on Sportswashing,” Review of Austrian Economics (2026).
• Fred Schwarz, “Hayek with a Hot Dog,” National Review (April 2008).
• Simon Rottenberg, “The Baseball Players’ Labor Market,” Journal of Political Economy 64, no. 3 (1956).
• Walter C. Neale, “The Peculiar Economics of Professional Sports,” Quarterly Journal of Economics 78, no. 1 (1964).
• Adam Smith, The Wealth of Nations (1776), bk. 1, ch. 10, and bk. 4, ch. 7.
• Henry George, Progress and Poverty (1879).
• Antonio Gramsci, Prison Notebooks (1929–35).
• Sports Broadcasting Act of 1961, 15 U.S.C. §§ 1291–1295; Public Law 89-800 (1966), the AFL–NFL merger exemption.
• Federal Baseball Club v. National League, 259 U.S. 200 (1922); Radovich v. National Football League, 352 U.S. 445 (1957); Smith v. Pro Football, Inc., 593 F.2d 1173 (D.C. Cir. 1978); Clarett v. National Football League, 369 F.3d 124 (2d Cir. 2004); United States Football League v. National Football League, 842 F.2d 1335 (2d Cir. 1988).
• Michael MacCambridge, America’s Game: The Epic Story of How Pro Football Captured a Nation (2004), on Bell, Rozelle, the 1966 merger and the Saints.
• H. G. Bissinger, Friday Night Lights (1990), on high school football as a town’s institution.
• On the ice trust, the New York World’s 1900 reporting, summarized in Edwin G. Burrows and Mike Wallace, Gotham (1999).

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A note on how this piece was written: the subject, the questions it asks, and the positions it takes are mine. Much of the research, the examples, and the sentences were drafted by an AI model working from that direction, and then edited by hand. I’d rather say that plainly than have a reader guess at it.