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Governance And Vertical Integration In Team Sports

Author

Listed:
  • 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)

Suggested Citation

  • Stefan Szymanski & Stephen F. Ross, 2007. "Governance And Vertical Integration In Team Sports," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 616-626, October.
    • Handle: RePEc:bla:coecpo:v:25:y:2007:i:4:p:616-626
    DOI: 10.1111/j.1465-7287.2007.00081.x
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    References listed on IDEAS

    as
    1. KÉSENNE, Stefan, 2005. "The organization of European football and the competitive balance within and between nations," Working Papers 2005001, University of Antwerp, Faculty of Business and Economics.
    2. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
    3. Thomas Hoehn & Stefan Szymanski, 2010. "The Americanization of European football," Palgrave Macmillan Books, in: Football Economics and Policy, chapter 3, pages 52-96, Palgrave Macmillan.
    4. Stefan Szymanski, 2010. "The Economic Design of Sporting Contests," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 1, pages 1-78, Palgrave Macmillan.
    5. Roger G. Noll, 2002. "The Economics of Promotion and Relegation in Sports Leagues," Journal of Sports Economics, , vol. 3(2), pages 169-203, May.
    6. E. Woodrow Eckard, 2001. "The Origin of the Reserve Clause," Journal of Sports Economics, , vol. 2(2), pages 113-130, May.
    7. Flynn, Michael A & Gilbert, Richard J, 2001. "The Analysis of Professional Sports Leagues as Joint Ventures," Economic Journal, Royal Economic Society, vol. 111(469), pages 27-46, February.
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    Cited by:

    1. 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.
    2. XiaoGang Che & Brad Humphreys, 2015. "Competition Between Sports Leagues: Theory and Evidence on Rival League Formation in North America," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 46(2), pages 127-143, March.
    3. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2010. "Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps," Working Papers 0122, University of Zurich, Institute for Strategy and Business Economics (ISU).
    4. Meiklejohn, Trevor & Dickson, Geoff & Ferkins, Lesley, 2016. "The formation of interorganisational cliques in New Zealand rugby," Sport Management Review, Elsevier, vol. 19(3), pages 266-278.
    5. Shilbury, David & O’Boyle, Ian & Ferkins, Lesley, 2016. "Towards a research agenda in collaborative sport governance," Sport Management Review, Elsevier, vol. 19(5), pages 479-491.

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    More about this item

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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