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The Effects of Institutional Change in European Soccer

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Author Info

  • Marco A. Haan

    ()
    (University of Groningen)

  • Ruud H. Koning

    ()
    (University of Groningen)

  • Arjen van Witteloostuijn

    ()
    (University of Antwerp)

Abstract

The last decades have seen two profound changes in European soccer. First, international trade in talent has increased markedly. Second, international competitions such as the Champions League have become much more important. Using a theoretical model, we study how these changes affect competitive balance within national competitions, and quality differences between national competitions. Introducing international trade in talent leads to a flow to large countries, as the returns to talent are higher there. Wages increase in small countries, but decrease in large ones. The wage increase in small countries hurts small teams more than large ones. Therefore, competitive balance decreases. The wage decrease in large countries benefits small teams more, so competitive balance increases. The introduction of a Champions League implies the possibility to win a large amount of prize money. This is relatively more important for small teams. Hence, competitive balance increases in all countries, and talent flows from large to small countries, provided international trade is possible. Wages increase. When looking at both changes combined, we find that talent flows fromsmall to large countries. Hence, in this sense, the trade effect dominates the Champions League effect. Competitive balance increases in all but the very smallest countries.

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Bibliographic Info

Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 232 (2012)
Issue (Month): 3 (May)
Pages: 318-335

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Handle: RePEc:jns:jbstat:v:232:y:2012:i:3:p:318-335

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Keywords: Bosman ruling; Champions League; soccer;

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References

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  1. El-Hodiri, Mohamed & Quirk, James, 1971. "An Economic Model of a Professional Sports League," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1302-19, Nov.-Dec..
  2. Stefan Kesenne, 2007. "The Peculiar International Economics Of Professional Football In Europe," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 388-399, 07.
  3. Babatunde Buraimo & David Forrest & Robert Simmons, 2007. "Freedom of Entry, Market Size, and Competitive Outcome: Evidence from English Soccer," Southern Economic Journal, Southern Economic Association, vol. 74(1), pages 204-213, July.
  4. Stefan Szymanski, 2007. "The Champions League And The Coase Theorem," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 355-373, 07.
  5. Eberhard Feess & Frank Stähler, 2009. "Revenue Sharing In Professional Sports Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(2), pages 255-265, 05.
  6. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64, pages 242.
  7. Bernd Frick, 2007. "The Football Players' Labor Market: Empirical Evidence From The Major European Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 422-446, 07.
  8. Ruud Koning, 2009. "Sport and Measurement of Competition," De Economist, Springer, vol. 157(2), pages 229-249, June.
  9. Feess, Eberhard & Muehlheusser, Gerd, 2002. "Transfer Fee Regulations in European Football," IZA Discussion Papers 423, Institute for the Study of Labor (IZA).
  10. Henrik Jacobsen Kleven & Camille Landais & Emmanuel Saez, 2013. "Taxation and International Migration of Superstars: Evidence from the European Football Market," American Economic Review, American Economic Association, vol. 103(5), pages 1892-1924, August.
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Cited by:
  1. Ruud Koning, 2009. "Sport and Measurement of Competition," De Economist, Springer, vol. 157(2), pages 229-249, June.

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