Introduction

For many years economists have recognised the manager's role in the production process. In classical and neoclassical theory, individual firms and consumers are the fundamental building blocks of the market economy. The theoretical distinction between the owners, entrepreneurs and managers of firms tends to be rather blurred, because all are assumed to pursue the same objective of profit maximisation. In a highly influential contribution, Coase (1937) reinvented the theoretical role of the firm, by asking why it is that in a free market economy, certain transactions take place outside the domain of the market, within centrally planned and hierarchical organisations known as firms. Coase's answer was that for certain types of transaction, the costs of gathering information and negotiating contracts prohibit the use of market mechanisms; instead it is more efficient for such transactions to be planned and coordinated consciously. The manager is the individual within the firm who takes responsibility for this coordinating function.

In the context of team sports, whatever the outcome of the debate as to whether the league or the individual club is the relevant unit of observation (Neale, 1964; Sloane, 1971; see also Chapter 1), it is clear that the Coasian story has some merit in explaining why sports team production is organised outside the market domain. One can easily imagine that transactions costs would be prohibitive if each football player had to enter into a network of bilateral contracts with ten other players to form a team, and each team (or each set of individuals) had to contract bilaterally with the individuals in other teams to formulate a set of rules and produce a series of fixtures.