Disqualification by Decree: Amateur Rules as Barriers to Entry

Document Type

Article

Journal/Book Title/Conference

Journal of Institutional and Theoretical Economics

Volume

144

Publication Date

1988

First Page

515

Last Page

523

Abstract

Collective agreements in athletics are not new. Historically, sports leagues have developed rules that limit quantities in both output and input markets, some- times to a socially desirable end, such as a sports league controlling the interdependencies among members, and sometimes to a socially undesirable end, such as the old "reserve clause" of major league baseball. The reserve clause gave owners rights over a player even after the player's contract expired, thereby impeding movement of players among teams. Because of the clause, owners were able to pay players wages that were below the players' marginal revenue products (Scully [1974]). Although the Supreme Court ruled against ex.-St. Louis Cardinal Curt Flood in a 1973 suit he brought against the reserve clause system, the case set forces in motion that ultimately brought the system to an end. In a more recent case, the Court ruled again on quantity restrictions in sports - this time on the output side. In the NCAA v. the University of Georgia and the University of Oklahoma, the high Court ruled for the two universities. In the majority opinion, the Court found the NCAA's restrictions on college football television coverage in violation of the antitrust laws

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