It is the role of economists to figure out why apparently irrational or sub-optimal behavior is in fact rational or optimal. In other words, trust the decision-making or the people with money on the line, and figure out a rational explanation for it.
So, why does the NFL blackout local games that do not sell out? (For those who are not fans, football games are not shown in the television area of the home team if the stadium does not sell out 72 hours or more before game time.)
Landsburg's "The Armchair Economist" (you can buy it from Amazon by clicking the link on the right) discusses a similar case to this. Rock concert tickets are often cheap enough that there are long lines to obtain them before they sellout. Yet, Broadway shows are given a high price and rarely sell out. These are not quite the same as football because of the TV broadcasts, but the answer that Landsburg gives for this pricing paradox may apply here. He notes that the rabid rock concert fans buy a lot of paraphernalia at the shows whereas Broadway audiences don't.
This doesn't tell me everything I need to know about why football has a blackout rule, but it does tell me that it probably has to do with the revenue stream that goes along with the ticket to the game. Since most of this goes to team and stadium owners, the blackout rule is probably in their best interest.
How so? The owners face a prisoner's dilemna. Doing what is best for them as individuals is probably worst for the league as a whole. They can make more profits by acting collusively, and the NFL has been the most successful league because it has the most collusive owners. But collusion is hard to get started, and hard to enforce. My guess is that the blackout rule has a lot do with the owners being unwilling to fully commit to collusion way back when.
Another thought on the collusion idea is that cartels break down because individuals cheat, and then other individuals follow suit. But, cheating by definition is something that occurs in private. Is it still cheating if you do it in the open? Or is that just being less than fully committed? If it is the latter, could the cartel be more stable? My suspicion is yes.
So, after all this, my final answer is that the blackout rule is a way for owners to cheat a little bit on the cartel without being seen as the cheater, and without creating a run to cheating by other owners (thus preserving the cartel so that it can continue to lay golden eggs for them).
Tip of the hat to The Sports Economist for the September 10 post entitled "The NFL Blackout Policy". Read the comments too - there's a lot of good history and economics in there.
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