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Free Agency for the Front Office: How Data Analytics and Noncompete Agreements Threaten to Disrupt Competitive Balance in U.S. Professional Sports Leagues
Author(s) -
Grow Nathaniel
Publication year - 2021
Publication title -
american business law journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.248
H-Index - 23
eISSN - 1744-1714
pISSN - 0002-7766
DOI - 10.1111/ablj.12180
Subject(s) - league , analytics , agency (philosophy) , business , corporate governance , balance (ability) , competition (biology) , early adopter , public relations , marketing , economics , political science , finance , data science , sociology , computer science , social science , physics , astronomy , medicine , ecology , physical medicine and rehabilitation , biology
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 noncompete 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 noncompete agreements to protect their resulting findings—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.