Governance of Professional Sports Leagues - Cooperatives versus Contracts
35 Pages Posted: 20 Feb 2009 Last revised: 2 Mar 2010
Date Written: December 2007
Historically, European team sports leagues were run by their respective national and international associations and were legally independent from the professional clubs playing in these leagues. Recently, European leagues have adopted an organizational form similar to their North American counterparts who are organized since their beginning in a cooperative-like manner. Based on a comparative institutional analysis, we explain the advantages of the cooperative form of league organization over contractual governance. With our four-stage game-theoretic model, we show that contractual governance of sports leagues leads to larger investment distortions than cooperative league organization.
Keywords: sports leagues, cooperative organization, contractual governance, hold up, bargaining
JEL Classification: L83, L14, D23
Suggested Citation: Suggested Citation