GOVERNANCE AND VERTICAL INTEGRATION IN TEAM SPORTS |
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| Authors: | STEFAN SZYMANSKI STEPHEN F. ROSS |
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| Affiliation: | Szymanski:;Professor of Economics, Tanaka Business School, Imperial College London, SW7 2AZ, UK. Phone (44) 20 7594 9107, Fax (44) 20 7823 7685, E-mail Ross:;Professor of Law, Dickinson School of Law, Penn State University;and Director, Penn State Institute for Sports Law, Policy and Research, University Park, PA 16801. Phone 814-865-8995, E-mail |
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| 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) |
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