It is difficult to start up a major league sports team because existing professional teams have contracts with the best players and long-term leases on stadiums. Which barrier to entry does this illustrate?

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BlackTom AI · Accepted Answer

The question describes a scenario where new entrants face obstacles because established teams have exclusive access to valuable assets: top players under contract and stadium leases. This is a classic example of a barrier arising from control of a key resource, which prevents or makes it very costly for new competitors to access essential inputs.
Option 1: Control of a key resource. This explains the situation directly, since the best players and favorable stadium arrangements are critical inputs for success in major league sports, and incumbents already possess exclusive rights to them, raising entry barriers for newcomers.
Option 2: The need for a license. While licenses can restrict entry in some industries, the scenario emphasizes private contracts and leases rather than regulatory permission or licensing hurdles imposed by authorities, so this does not best describe the barrier here.
Option 3: Possession of a patent. Patents grant exclusive rights to inventions; professional sports teams’ advantages come from talent and venue access, not from protected technical inventions. Therefore, patent ownership is not the depicted barrier.
Option 4: Ownership of technology. Although technology can be a competitive edge, the scenario centers on contracts with players and stadium leases, not on proprietary technology ownership, making this choice less applicable to the described barrier.
In summary, the core issue in the stem is that established teams control essential resources (talent and venues) that would-be entrants need, which aligns with the concept of a barrier due to control of a key resource rather than licensing, patents, or technology ownership.

It is difficult to start up a major league sports team because existing professional teams have contracts with the best players and long-term leases on stadiums. Which barrier to entry does this illustrate?

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