Some comparative economics of the organization of sports: competition and regulation in north American vs. European professional team sports leagues
AbstractThis article contends that a new research avenue is open to comparative economics which is the economic comparison between American (closed) and European (open) professional team sports leagues. It starts with sketching the major institutional differences between the two leagues systems. Then it surveys the American modelling of competitive balance in these sports leagues that objects pro-competitive balance regulation as being non Walrasian when (American) teams are profit maximising. A next step is to cover how the Walrasian model has been adapted to European open leagues and their regulation of win maximising clubs under a hard budget constraint. Such approach has recently been outdated by models where win maximising clubs operate with a flexible supply of talent in a non cooperative game, given the globalization of the labour market for sporting talent (namely after the Bosman case). Finally, the article ploughs into a new research path advocating for a disequilibrium model where clubs would have a "soft" budget constraint rooted in their weak governance, and empirically tests a vicious circle between TV rights revenues and wages in French football that may explain the aforementioned disequilibrium.
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Bibliographic InfoArticle provided by Cattaneo University (LIUC) in its journal The European Journal of Comparative Economics.
Volume (Year): 8 (2011)
Issue (Month): 1 (June)
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sports economics; comparative economics; economic organisation; governance; sports leagues; Walrasian model; Nash equilibrium; competitive balance; regulation; soft budget constraint; TV rights; wages; profit maximising; win maximising;
Find related papers by JEL classification:
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
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