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Governance And Vertical Integration In Team Sports

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  • STEFAN SZYMANSKI
  • STEPHEN F. ROSS

Abstract

"Antitrust law distinguishes vertical and horizontal restraints. A horizontal restraint is one which exists between competing firms supplying rival products in a market, and a vertical restraint is one which exists between firms that jointly contribute to supplying a particular product in a market. Horizontal agreements receive much closer antitrust scrutiny because they often enable firms to limit competition at the expense of consumers, while vertical restraints may be legal or illegal depending on whether they tend to enhance or reduce competition or the exploitation of market power. This paper argues that there are important vertical restraints that operate in sports leagues which have been mostly neglected in the literature but have a significant impact. We focus on intraleague restraints, where member clubs of a league agree to control the organization of league competition, and interleague restraints, where horizontal agreement such as the Reserve Clause relies on agreements not to compete for players competing in senior or junior leagues. "("JEL "L83, L42, L44) Copyright 2007 Western Economic Association International.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

Volume (Year): 25 (2007)
Issue (Month): 4 (October)
Pages: 616-626

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Handle: RePEc:bla:coecpo:v:25:y:2007:i:4:p:616-626

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Cited by:
  1. Che, XiaoGang & Humphreys, Brad, 2012. "Competition Between Sports Leagues: Theory and Evidence on Rival League Formation in North America," Working Papers 2012-23, University of Alberta, Department of Economics.
  2. Smith, Aaron C.T. & Stewart, Bob, 2010. "The special features of sport: A critical revisit," Sport Management Review, Elsevier, vol. 13(1), pages 1-13, February.
  3. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2011. "Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps," Working Papers 1105, International Association of Sports Economists & North American Association of Sports Economists.

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