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2010 | Buch

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Football Economics and Policy

verfasst von: Stefan Szymanski

Verlag: Palgrave Macmillan UK

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This volume deals with the competitive structure of football. It examines the relationship between sporting success and economic variables, the structure of European competitions, financial problems in football, their origins and options for reform, racial discrimination in English football, and the economic impact of the World Cup.

Inhaltsverzeichnis

Frontmatter

1. The English Football Industry: Profit, Performance and Industrial Structure

Abstract

The English (Association) Football League is a long-established industrial cartel selling a highly popular product with only imperfect substitutes. Despite that, the majority of its member clubs lose money and the industry has faced successive financial crises over the last decade. This chapter develops an empirical model of the financial performance of English League clubs using a high-quality data set of 48 clubs over the period 1974—89. The underlying model explains how rents are competed away through the maximising behaviour of club owners subject to production constraints. This model is parameterised by a system of equations which describe the behaviour of a maximising owner subject to demand and production constraints. The model is then used to examine the coordination failure which lies at the heart of the English Football League’s decline and to assess the prospects for the Premier League.

Stefan Szymanski, Ron Smith

2. The Market for Soccer Players in England after Bosman: Winners and Losers

Abstract

The Bosman judgement has changed the types of employment contracts which football clubs can write with players. This chapter analyses the effect of this on the equilibrium of the English football leagues. The English leagues are characterised by open entry and consequently intense competition in an economic as well as a sporting sense. While technology is expanding the size of the entire football market, the market for players is approximately efficient so that most of the football “rents” go to the players. If clubs already wrote contracts which were economically efficient, then Bosman would not affect the football league equilibrium. However, if some clubs are unable to write efficient contracts because of capital market constraints, then these clubs may be driven out of the market. The judgement is also likely to redistribute the rents among the players. The chapter discusses the financial impact so far using accounting data.

Stefan Szymanski

3. The Americanization of European football

Abstract

Will European football keep leagues open, or adopt the American system of closed leagues? Would this reform be to the benefit of consumers? This chapter develops a framework to analyse the consequences of the structure of competition — whether teams play in both national and international competitions or not — and the effects on performance of revenue sharing among teams within the same league. The authors argue in favour of the creation of a European Superleague and against teams playing both in the Superleague and in national leagues. They derive a number of policy conclusions and examine various regulatory issues in European football.

Thomas Hoehn, Stefan Szymanski

4. Hearts, Minds and the Restrictive Practices Court

Abstract

In footballing terms, the Office of Fair Trading (OFT) lost 5–1. Under the 1976 Restrictive Trade Practice Act (RTPA), the OFT can ask the Restrictive Practices Court to decide on whether a restrictive agreement between business organisations operates in the “public interest”. When such cases come to court, the OFT on one side presents arguments as to why an agreement in question operates against the public interest, and the companies involved (the respondents) explain why it does not. In 1996 the OFT referred to the Restrictive Practices Court three agreements entered into between the Premier League and its member clubs, British Sky Broadcasting (Sky) and the BBC. These were

(a)

Rule D.7.3 of the Premier League rule book that requires any club wishing to broadcast a match to obtain permission from the Premier League Board.

(b)

Clause 2.2 of the broadcasting contract between the Premier League and Sky that gives Sky the exclusive right to broadcast 60 matches.

(c)

Clause 2.3 of the broadcasting contract between the Premier League and the BBC that gives the BBC the exclusive right to broadcast a highlights programme (Match of the Day).

Stefan Szymanski

5. Broadcasting, Attendance and the Inefficiency of Cartels

Abstract

The English Premier League is a cartel of soccer teams that collectively sells the rights to broadcast its matches. Despite considerable demand for their product from broadcasters, the clubs agreed to sell only a small fraction of the broadcast rights (60 out of 380 matches played each season between 1992 and 2001). The clubs have explained this reluctance by claiming that increased broadcasting would reduce attendance at matches and therefore reduce cartel income. However, this chapter produces detailed econometric evidence to show that broadcasting has a negligible effect on attendance and that additional broadcast fees would be likely to exceed any plausible opportunity cost. The chapter concludes that a more likely explanation for the reluctance to market their rights is the failure of the cartel to reach agreement on compensation for individual teams.

David Forrest, Rob Simmons, Stefan Szymanski

6. A Market Test for Discrimination in the English Professional Soccer Leagues

Abstract

This chapter proposes a market test for racial discrimination in salary setting in English league soccer over the period 1978–93 using a balanced panel of 39 clubs. If there is a competitive market for the services of players, the wage bill of the club will reflect their productivity and hence the performance of the club in the league. Discrimination can be said to exist if clubs fielding an above-average proportion of black players systematically outperform clubs with a below-average proportion of black players, after one controls for the wage bill. Statistically significant evidence of discrimination in this sense is found.

Stefan Szymanski

7. The Financial Crisis in European Football: An Introduction

Abstract

Is there currently a crisis in European professional football? Surely there exists a common set of problems afflicting clubs, with negative financial implications for all. Moreover, a crisis in one large club or group of clubs threatens to damage the financial stability of other clubs. This introduction reviews the financial crises in football in several European countries, searches for common explanations of these crises, and proposes a few solutions, ranging from tighter financial regulation to the restructuring of competition, with the aim of easing the financial burden for smaller clubs in particular.

On March 12, 2004, a group of economists representing 11 of the national associations of the Union of European Football Associations (UEFA) met under the auspices of the University of Bologna at Rimini, Italy, to discuss the present financial state of football clubs in Europe. This introduction summarizes the conclusions of the group and sets the scene for the articles on specific European football leagues that follow. Our conclusions can be grouped under three distinct headings: (a) Is there currently a crisis? (b) What are the causes of the current financial problems of football clubs? and (c) What are the solutions?

Umberto Lago, Rob Simmons, Stefan Szymanski

8. English Football

Abstract

Financial distress is not an uncommon occurrence in English football. The number of clubs falling into financial difficulties has escalated, yet this coincides with an era when the revenues accrued to English football have reached unprecedented levels. This chapter examines the finances of the Premier League and the Football League and assesses the sources of financial distress experienced by many clubs. We find that as clubs in the lower divisions engage in the seasonal race for promotion to higher divisions where financial rewards are greater, excessive wage expenditure and the collapse of a major broadcaster have combined to threaten the already fragile existence of many clubs. We assess some policy proposals designed to deal with the financial precariousness of English football.

Babatunde Buraimo, Rob Simmons, Stefan Szymanski

9. Income Inequality, Competitive Balance and the Attractiveness of Team Sports: Some Evidence and a Natural Experiment from English Soccer

Abstract

This chapter examines the relationship between financial inequality, competitive balance and attendance at English professional league soccer. It shows that while financial inequality among the clubs has increased, competitive balance has remained relatively stable and match attendance appears unrelated to competitive balance. A clearer test of the relationship is suggested by comparison with FA Cup matches. Because income inequality is primarily driven by inter- rather than intradivisional inequality, the FA Cup has been a much more unbalanced competition than the divisional championships. Attendance at FA Cup matches relative to the corresponding league matches has fallen over the last 20 years.

Stefan Szymanski

10. The Champions League and the Coase Theorem

Abstract

This chapter considers the relevance of the Coase Theorem to the analysis of sports leagues. It is widely believed that there exists an ideal competitive balance between teams in a sporting contest, and that without competitive restraints to redistribute resources championships will be too unbalanced. The chapter reviews the empirical evidence on this issue to date, and then examines a model where the outcome may be either too little or too much competitive balance. Empirical evidence from English football suggests that the bias is likely to be in favour of too much competitive balance. The implications for European football in general and the Champions League in particular are then discussed.

Stefan Szymanski

11. The Economic Impact of the World Cup

Abstract

The 2002 World Cup will be the principal sporting event of the year. For the first time two nations, South Korea and Japan, will share the responsibilities of hosting the football tournament, and both plan to use the opportunity to offer foreigners a window into their world and stimulate the development of soccer domestically. The hosting of the World Cup, as with the Summer and Winter Olympics, represents a major investment in public relations both for the national associations involved and for central and local governments. It is these latter institutions that fund most of the investment associated with the event, and they look to reap substantial advantages.

Stefan Szymanski

Backmatter

Titel: Football Economics and Policy
verfasst von: Stefan Szymanski
Verlag: Palgrave Macmillan UK
Electronic ISBN: 978-0-230-27426-6
Print ISBN: 978-1-349-31259-7
DOI: https://doi.org/10.1057/9780230274266