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Are restrictions of competition by sports associations horizontal or vertical in nature?

  • Budzinski, Oliver
  • Szymanski, Stefan

In this paper, we discuss from an economic perspective two alternative views of restrictions of competition by sports associations. The horizontal approach views such restrictions as an agreement among the participants of a sports league with the sports association merely representing an organization executing the horizontal cooperation. In contrast, the vertical approach views the sports association as being a dominant upstream firm enjoying a monopoly position on the market stage for competition organizing services, an important input for the actual product - the sports game. Taking the recent financial fair play (FFP) initiative by UEFA (the Union of European Football Associations) as an example, we demonstrate that the different views lead to different assessments of restrictive effects and, thus, matter for competition policy decisions. The economic story of the potential restrictive effect of FFP on players' and player agents' income may fit more plausibly to the horizontal approach, whereas the potentially anticompetitive foreclosure and deterrence effects of FFP may be economically more soundly reasoned by taking the vertical view.

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Paper provided by Ilmenau University of Technology, Institute of Economics in its series Ilmenau Economics Discussion Papers with number 86.

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Date of creation: 2014
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Handle: RePEc:zbw:tuiedp:86
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  1. Oliver Budzinski, 2011. "The Institutional Framework for Doing Sports Business: Principles of EU Competition Policy in Sports Markets," Working Papers 1103, International Association of Sports Economists;North American Association of Sports Economists.
  2. Thomas Peeters & Stefan Szymanski, 2014. "Financial fair play in European football," Economic Policy, CEPR;CES;MSH, vol. 29(78), pages 343-390, 04.
  3. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  4. Sloane, Peter J, 1971. "The Economics of Professional Football: The Football Club as a Utility Maximiser," Scottish Journal of Political Economy, Scottish Economic Society, vol. 18(2), pages 121-46, June.
  5. Stephen F. Ross, 2003. "Competition Law as a Constraint on Monopolistic Exploitation by Sports Leagues and Clubs," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 569-584, Winter.
  6. Henning Vöpel, 2011. "Do We Really Need Financial Fair Play in European Club Football? An Economic Analysis," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 9(3), pages 54-60, October.
  7. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
  8. Egon Franck, 2014. "Financial Fair Play in European Club Football: What Is It All About?," International Journal of Sport Finance, Fitness Information Technology, vol. 9(3), pages 193-217, August.
  9. Thomas Hoehn & Stefan Szymanski, 1999. "The Americanization of European football," Economic Policy, CEPR;CES;MSH, vol. 14(28), pages 203-240, 04.
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