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Pelle Moda Tan Gali Wood Platforms,Solution to Address Competition, Innovation and Diversity: Implement a “luxury” competitive balance tax on bidding. The size of the “luxury” bidding tax should be imposed according to the total number of uncontested strings each portfolio Applicant has and the number of strings awarded to the same Applicant after contention resolution (e.g. after a private auction).

Adding the “luxury” tax would help incentivize partnerships. Also it would enable portfolio Applicants to prioritize and not overpay for some gTLDs and focus their attentions on those they would like to focus on which also facilitates innovation. By increasingly raising the luxury tax bid for each successive auction, ICANN will help level the playing field. There are many cases of other industries using efficient mechanisms to promote competition, diversity, and innovation, including: i) Salary cap and Luxury Tax Penalties, ii) Professional Sports Draft, and iii) Spectrum Caps:Jeffrey Campbell Brown Suede Ankle Strap Wedges,

(i) Kanna Navy Denim New Blue Espadrille Slide Sandals Wedges,Salary cap and Competitive Balance Luxury Tax Penalties

In professional sports, a salary cap (or wage cap) is an agreement or rule that places a limit on the amount of money that a sporting club can spend on player salaries. The limit exists as a per-player limit or a total limit for the team’s roster, or both. Several sports leagues have implemented salary caps, both as a method of keeping overall costs down, and to ensure parity between teams so wealthy teams cannot entrench dominanceJimmy Choo Pop Yellow Portia 120 Wedges, by signing many more top players than their competitors.There are two main benefits derived from caps – promotion of parity between competitors and control of costs according to studies by:

Marc Jacobs Black Star Ankle Strap Pump Formal Shoes,Dietl, H., Lang, M. and Rathke, A. (2009): “The Effect of Salary Caps in Professional Team Sports on Social Welfare”, The B.E. Journal of Economic Analysis and Policy, Vol. 9, Article 17,

Dietl, H., Franck, E., Lang, M. and Rathke, A. (2008): “Welfare Effects of Salary Caps in Sports Leagues with Win-Maximizing Clubs”, University of Zurich, ISU Working Paper Series No. 86,

Nicholas Kirkwood Black Suede Satin Platforms,Dietl, H., Lang, M. and Rathke, A. (2010): “The Combined Effect of Salary Restrictions and Revenue Sharing in Sports Leagues”, forthcoming in Economic Inquiry,

For example, Major League Baseball implements a luxury tax (also called a competitive balance tax), an arrangement in which teams whose total payroll exceeds a certain figure (determined annually) are taxed on the excess amount in order to discourage large market teams from having a substantially higher payroll than the rest of the league. The tax is paid to the league, which then puts the money into its industry-growth fund (Dietl, H., Lang, M. and Werner, S. (2010): “The Effect of Luxury Taxes on Competitive Balance, Club Profits, and Social Welfare in Sports Leagues”,

2 Chic Brown Hand Maid Platforms,A team that goes over the luxury tax cap for the first time in a five-year period pays a penalty of 22.5% of the amount they were over the cap, second-time violators pay a 30% penalty, and teams that exceed the limit three or more times pay a 50% penalty from 2013 onwards. There is also an incentive to lower payroll; if in any year a team goes under the threshold, the penalty rate decreases to 17.5%, 25% or 40% (depending on prior record over the previous five years) for the next time the tax is paid, which will apply from 2013. The cap limit for 2011-2013 is $178 million, and for 2014-2016 $189 million.Primarily,Tory Burch Navy Bima Espadrille Wedges, caps prevent wealthy teams from certain destructive behaviors, such as signing a multitude of high-paid star players to prevent their competitors from accessing talented players and ensuring victory through superior economic power.Sbicca Navy Blue Platform Sandal Wedges, With a cap, each team has nearly the same economic power to attract players, which contributes to parity by producing roughly equal playing talent in each team in the league, and in turn brings economic benefits, both to the league and to its individual teams.UEFA, the governing body of the Champions League, one the world’s most popular leagues in viewership, has implemented a policy called Financial Fair Play (FFP) to protect the game of soccer and level the playing field. The objective of FFP is to ensure that all sports teams can compete equally, to introduce more discipline and rationality in club football finances and to limit the ability of ultra-wealthy billionaire owners (such as Chelsea’s Roman Abramovich or Manchester City’s Sheikh Mansour) to subsidize team expenses. EU law and US anti-trust law are similar in relation to sports since courts:

(i) require evidence of an actual imbalance of competition in the marketplace,

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(ii) allow sports teams to justify any competitive imbalances by demonstrating their legitimate pro-competitive benefits, and

(iii) to block sports teams from pursuing legitimate goals by overly restrictive means.It is clear that the FFP rules do affect “competitive balance.”

According to studies by the Institutue for Strategy and Business Economics at the University of Zurich (Egon Franck (2010), “Private Firm, Public Corporation or Member’s Association – Governance Structures in European Football”, International Journal of Sport Finance, 5(2), 108-127, other alternatives could also serve the purpose of leveling the playing field. One example is incorporating revenue-sharing, a common mechanism in professional U.S sports leagues. Another approach is imposing a salary cap based on the size of the league average payroll. Studies have shown that imposing a luxury tax increases competitive balance, especially if tax proceeds are distributed evenly between teams.By ensuring a healthy degree of parity between teams, games are more exciting for the fans and not a foregone conclusion. Sports leagues that have adopted caps because they believe letting richer teams accumulate talent affects the quality of the sporting product they want to sell. If only a handful of dominant teams are able to win consistently and challenge for the championship, many of the contests will be blowouts by the superior team, reducing the sport’s attractiveness for fans at the live events and viewers on television.Jimmy Choo Beige Praise Patent Wedges,

(ii) Professional Sports’ Draft

Valentino Brown Garavani Bow D'orsay Snakeskin Formal Shoes,ICANN’s Bylaws clearly highlight the need for implementing rules to foster competition, diversity and innovation and should follow in the footsteps of other popular and highly successful non-for profits such as the National Football League (NFL). ICANN is formally organized as a non-profit corporation “for charitable and public purposes” under the California Nonprofit Public Benefit Corporation Law. ICANN was created in 1998 to oversee a number of Internet-related tasks previously performed directly on behalf of the U.S. government by other organizations, notably the Internet Assigned Numbers Authority (IANA). Before the establishment of ICANN, the United States controlled the Domain Name System (DNS) of the Internet.


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Giuseppe Zanotti Grey Gaga Booty Suede Platforms,ICANN could learn insightful lessons from non-for profits such as the NFL on how to make a League (or in ICANN’s case the DNS) highly successful in relation to competition as mandated by its Bylaws. The NFL has a remarkable track record: they are the most successful sports league in the world with nearly $10 billion of revenues in 2012. Furthermore, NFL teams are on average the most lucrative and highly valued sports teams in the world. The average worth of a NFL team is $1.17 billion while in contrast the world’s top 20 soccer teams have a mean value of $968 million.Charlotte Olympia Pink and Red Priscilla Platforms,As a non-for profit organization the NFL implemented the NFL Draft to increase diversity, innovation and competition between NFL teams. In the NFL Draft, the draft order in the NFL is determined in a reverse-record order (the previous season’s worst team picking first, the Super Bowl winner picking last).Other leagues followed suit. In the AFL Draft, clubs receive picks based on the position in which they finish on the ladder. Therefore, the teams that finish at the bottom of the AFL ladder will get the first draft picks. Also, any team that finishes in a low ladder position for consecutive seasons will receive priority picks. The National Hockey League (NHL), another non-for profit organization, implemented the NHL Draft, which allowed all 14 teams that failed to qualify for the playoffs take part in a weighted lottery with the winner moving up as much as four draft positions and no drop more than one draft position.In the NBA Draft, instead of automatically granting the top pick to the worst team from the year before, the NBA holds a draft lottery to determine who chooses first. The top three picks are allocated by chance among the 14 teams that did not make the playoffs the year before. This discourages a team from losing on purpose to get a better draft pick.In the AFL Draft, clubs receive picks based on the position in which they finish on the ladder. Therefore, the teams that finish at the bottom of the AFL ladder will get the first draft picks. Also, any team that finishes in a low ladder position for consecutive seasons will receive priority picks.

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According to the Kevin B. Grier, Robert D. Tollison, Journal of Economic Behavior and Organization, The rookie draft and competitive balance: The case of professional football, Vol. 25, 1994,

Tory Burch Black Sally Leather Wedges,On average, the draft clearly matters; higher draft choices raise winning percentages significantly over time. The rookie draft tends to promote competitive balance. Further, relative success in the draft is correlated with on-the-field success (pg. 298).

Tahari Blue Flower T A Casey Wedges,The draft tends to balance competition in professional football, as its architects intended it to do (pg.298).According to Ross Booth, Sport Management Review, Comparing Sports Leagues: Does a Salary Cap and Player Draft Measure Up?, 2005, 8, 119–143,

Evidence of competitive balance in the AFL is consistent with Booth’s theoretical argument that the introduction of the team salary cap and player draft has improved competitive balance in the AFL (pg.120)

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