Free Agency for the Front Office: How Data Analytics and Non-Compete Agreements Threaten to Disrupt Competitive Balance in U.S. Professional Sports Leagues

58 American Business Law Journal, Forthcoming

36 Pages Posted: 12 Aug 2020

See all articles by Nathaniel Grow

Nathaniel Grow

Indiana University - Kelley School of Business - Department of Business Law

Date Written: July 12, 2020

Abstract

U.S. professional sports teams are increasingly relying on sophisticated forms of data analysis to identify potential areas of competitive advantage over their league rivals. Indeed, emerging evidence suggests that the most sophisticated teams in this area are using the insights that they derive from data analytics to establish durable and significant gains over their competition on the playing field. At the same time, sports franchises frequently utilize non-compete agreements to protect the resulting, proprietary information that their data analysis yields.

Unfortunately, recent academic research suggests that this reliance on covenants not to compete can decrease the rate of knowledge diffusion within an industry, making it more difficult for teams to catch up to early adopters of data analytics. Thus, teams’ growing reliance on data analytics — and their use of non-compete agreements to protect it — could have significant, but heretofore unrecognized, ramifications for league efforts to maintain an adequate level of competitive balance amongst their franchises. This article explores this state of affairs, as well as the implications it presents for the governance of U.S. professional sports leagues.

Keywords: non-compete, sports, data analytics, competitive balance

Suggested Citation

Grow, Nathaniel, Free Agency for the Front Office: How Data Analytics and Non-Compete Agreements Threaten to Disrupt Competitive Balance in U.S. Professional Sports Leagues (July 12, 2020). 58 American Business Law Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3649711 or http://dx.doi.org/10.2139/ssrn.3649711

Nathaniel Grow (Contact Author)

Indiana University - Kelley School of Business - Department of Business Law ( email )

Bloomington, IN 47405
United States

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