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The Economics of Promotion and Relegation in Sports Leagues: The Cases of English Football

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  • Roger Noll

    (Stanford University)

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    Abstract

    In most of the world's professional sport leagues, the worst teams in better leagues are demoted while the best teams in weaker leagues are promoted. This article examines the economics of promotion and relegation, using data from English football (soccer). The crucial findings are as follows: players earn higher wages under promotion and relegation, promotion and relegation has a net positive effect on attendance, and the effect of promotion and relegation on competitive balance is ambiguous. The unbalancing effect arises because the system places some teams in leagues in which they have no realistic chance to afford a winning team, thereby causing teams to spend less on players during their (brief) stay in a higher league than they spent while trying to be promoted from as lesser league. The article concludes with an analysis of how promotion and relegation might be implemented in North America.

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    Bibliographic Info

    Article provided by in its journal Journal of Sports Economics.

    Volume (Year): 3 (2002)
    Issue (Month): 2 (May)
    Pages: 169-203

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    Handle: RePEc:sae:jospec:v:3:y:2002:i:2:p:169-203

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    Keywords: Sports;

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    Cited by:
    1. Eckard, E. Woodrow, 2005. "Team promotion in early major league baseball and the origin of the closed sports league," Explorations in Economic History, Elsevier, Elsevier, vol. 42(1), pages 122-152, January.
    2. Marcel-Cristian Voia & Mihailo Radoman, 2013. "Youth Training Programs and their Impact on Career and Spell Duration of Professional Soccer Players," Carleton Economic Papers 13-01, Carleton University, Department of Economics.
    3. Barajas, Angel & Crolley, Liz, 2005. "A model to explain support in Spanish football," MPRA Paper 3235, University Library of Munich, Germany.
    4. Pedro Garcia-del-Barrio & Stefan Szymanski, 2009. "Goal! Profit Maximization Versus Win Maximization in Soccer," Review of Industrial Organization, Springer, Springer, vol. 34(1), pages 45-68, February.
    5. Büch, Martin-Peter & Maennig, Wolfgang & Schulke, Hans-Jürgen (ed.), 2012. "Sport und Sportgroßveranstaltungen in Europa - zwischen Zentralstaat und Regionen," Edition HWWI, Hamburg Institute of International Economics (HWWI), volume 4, number 4.
    6. Wladimir Andreff, 2006. "New Perspectives in Sports Economics: A European View," Working Papers, International Association of Sports Economists;North American Association of Sports Economists 0605, International Association of Sports Economists;North American Association of Sports Economists.
    7. Giorgo Sertsios, 2007. "¿Puede el Diseño de un Torneo Deportivo Afectar su Asistencia?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 44(129), pages 59-89.
    8. Bernd Frick & Gunnar Pietzner & Joachim Prinz, 2007. "Career Duration a Competitive Environment: The Labor Market for Soccer Players in Germany," Eastern Economic Journal, Eastern Economic Association, vol. 33(3), pages 429-442, Summer.
    9. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    10. Dietl, Helmut & Duschl, Tobias, 2012. "The organization of professional sports leagues: A comparison of European and North-American leagues from the perspective of platform organization," Edition HWWI: Chapters, in: Sport und Sportgroßveranstaltungen in Europa - zwischen Zentralstaat und Regionen, pages 111-126 Hamburg Institute of International Economics (HWWI).
    11. Helmut M. Dietl & Egon Franck & Markus Lang, 2008. "Overinvestment In Team Sports Leagues: A Contest Theory Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(3), pages 353-368, 07.
    12. Barajas, Angel, 2003. "Visión estratégica del negocio del fútbol. La opinión de los presidentes de los clubes de fútbol ingleses que cotizan en Bolsa
      [Strategic vision of football business]
      ," MPRA Paper 13597, University Library of Munich, Germany.
    13. Barajas, Angel, 2004. "Modelo de valoración de clubes de fútbol basado en los factores clave de su negocio
      [Valuation model for football clubs based on the key factors of their business]
      ," MPRA Paper 13158, University Library of Munich, Germany.
    14. Stefan Szymanski & Tommaso M. Valletti, 2005. "Promotion and Relegation in Sporting Contests," Rivista di Politica Economica, SIPI Spa, SIPI Spa, vol. 95(3), pages 3-39, May-June.
    15. Barajas, Angel & Fernández-Jardón, Carlos & Crolley, Liz, 2005. "Does sports performance influence revenues and economic results in Spanish football?," MPRA Paper 3234, University Library of Munich, Germany.
    16. Stefan Szymanski & Stephanie Leach, 2006. "Tilting the Playing Field (Why a sports league planner would choose less, not more, competitive balance): The case of English Football," Working Papers, International Association of Sports Economists;North American Association of Sports Economists 0619, International Association of Sports Economists;North American Association of Sports Economists.
    17. Luigi Buzzacchi & Stefan Szymanski & Tommaso Valletti, 2003. "Equality of Opportunity and Equality of Outcome: Open Leagues, Closed Leagues and Competitive Balance *#We thank the Editor and an anonymous referee for helpful comments," Journal of Industry, Competition and Trade, Springer, Springer, vol. 3(3), pages 167-186, September.
    18. Smith, Aaron C.T. & Stewart, Bob, 2010. "The special features of sport: A critical revisit," Sport Management Review, Elsevier, Elsevier, vol. 13(1), pages 1-13, February.
    19. Michela Pierini, 2011. "Diritti Tv E Competitive Balance Nel Calcio Professionistico Italiano," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, Centro di diritto e business dello Sport, vol. 7(2), pages 87-113, September.
    20. Wladimir Andreff, 2006. "New Perspectives in Sports Economics: The European View," IASE Conference Papers, International Association of Sports Economists 0601, International Association of Sports Economists.

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