justify restrictions on the labour market such as payroll caps or the reverse-
order draft. The degree to which such restraints on workers’rights (as well as
on the application of occupational health and safety protection or the ability
to seek legal redress for grievous bodily harm) are accepted by players and
supported by public policy varies across countries. But acceptance of such
restraints is especially strong in Australia and, in contrast to the USA, where
competing leagues and players’strikes and owners’lockouts have been com-
mon, stable organizational structure and labour market tranquillity have been
the norm in Australia.
Most professional leagues engage in some form of revenue distribution, and
this is especially important when the league negotiates TV deals and then
shares the revenue among the clubs. Hence, governing bodies carry with them
authoritative power that has the capacity to seriously compromise the for-
tunes of any individual club. Sports leagues have successfully kept much of
their decision-making outside the legal system, so that disadvantaged clubs
are denied the redress that companies in other industries could seek.
The Australian sports leagues all employ forms of payroll or salary caps, and
many have player draft systems. For example, in the AFL, a player draft exists
which effectively permits the lowest-ranked clubs to havefirst pick of new
entrant players and those out of contract, with some exemptions (e.g. a
father–son connection to a club).^8 While some trade of players between
clubs is permitted outside of the draft, this is effectively relegated to a barter
system over player switches and draft pick trading. The rationale is to ensure
competitive balance, and under this system only three teams have not con-
tested the AFL Grand Final since 1997. However, there is little evidence that,
when a few teams dominate, the popularity of team sports declines; evidence
from European soccer leagues suggests otherwise.^9
Both the player draft and the salary cap are restrictions on workers’bargain-
ing rights, and Australian sporting leagues stand out in terms of forced labour
mobility. While some government allocation of labour, such as teachers, has
German soccer. In the UK, some of the largest attendances for lower-ranked soccer clubs occur
when meeting vastly superior opposition, i.e. the chance of an upset or the opportunity to see star
players draw crowds. Teams in the English Premier League generally charge higher prices for home
games against the strongest teams, indicating greater demand for such games as opposed to games
between equally matched teams.
(^8) For details of Australian draft systems see Booth (1997, 2004), Dabscheck (2004), and Cook and
Davies (2012). Reverse-order drafts may create perverse incentives, with lower-ranked teams
deliberately losing games (‘tanking’) to ensure a higher draft pick (Taylor and Trogdon 2002;
Borland et al. 2009; Klugman 2012). Mehra and Zuercher (2006) offer a sceptical view of the
competitive balance argument. 9
Although over forty teams have competed in the English Premier League since its formation in
1992, just four clubs (all from London or Manchester) have won the title in all years but one; yet
attendance and TV audiences are on the rise rather than in decline. Similarly, the Spanish Liga’s
dominance by two clubs (Real Madrid and Barcelona) and the German Bundesliga’s by one club
(Bayern Munich) have not dented their popularity.
Richard Pomfret