Labour market regulation and professional sport: The case of the Victorian Football League’s Coulter Law, 1930-1970

Abstract

In most professional team sports, salary caps – first used in the mid-1980s – stabilise the financial position of teams and promote balanced competitions. Teams that do not comply with labour market regulations face heavy penalties and there is a debate about whether such labour markets should operate like competitive markets in general – with wages directing players to the teams that value their contributions most. Analysis of earlier restrictions on the mobility of players and the movement of wages may raise new questions about the effects of noncompliance. The Coulter Law was a set of Victorian Football League (VFL) recruiting and payment rules that operated from 1930 to 1970. The conventional view – that most VFL clubs breached the maximum player wage rules to maximise the utility derived from winning games – is supported only by anecdotal evidence. A new data set reveals that the Coulter Law did restrict earnings in the VFL, except for a small number of elite players. Clubs allowed players to take up more lucrative jobs in other leagues and their subsequent on-field performance reflected the level of talent of replacement players.