Abstract and Keywords
This chapter explores sports institutions, particularly players' unions, leagues, and the role of government. Topics covered include origins of the reserve clause, union opposition, antitrust law, breakthrough on free agency, labor-market theories, and impact of free agency. The reserve clause gave clubs a continuing option on player services, and the main arguments for and against it are given. The union's constitution sought to limit but not abolish the reserve clause. A reasonable semblance of competitive balance is necessary for a league to be successful. Rottenberg's theory holds that, under the reserve clause, trades and sale of players ensure that a player will wind up on the team for which he generates the highest marginal revenue product. The topic of the reserve clause and labor mobility is concerned with the operation of the labor market.
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