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Why is competition in the European football market failing, and what should be done about it?

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Listed:
  • Magnus Henrekson
  • Lars Persson

Abstract

The European football (soccer) market increasingly funnels rents to superstar players and intermediaries while weakening competitive balance. We trace this dynamic to two forces: (a) technological innovation that globalised broadcasting and magnified superstar returns, and (b) legal rulings boosting player mobility and causing bidding wars. The 2024 Diarra ruling by the Court of Justice of the European Union further loosens transfer constraints, and will likely intensify talent concentration at ‘superclubs’. The result is soaring salaries and transfer fees, persistent financial fragility among non‐elite clubs, and growing predictability of match outcomes. We evaluate reform options that preserve Europe's open‐league tradition yet borrow from North American competitive‐balance tools: greater revenue sharing, hard/soft salary caps, and draft‐like mechanisms. These should be complemented by a ‘cartel tax’ to fund youth sport, and club‐governance codes plus credible financial‐sustainability rules.

Suggested Citation

  • Magnus Henrekson & Lars Persson, 2026. "Why is competition in the European football market failing, and what should be done about it?," Economic Affairs, Wiley Blackwell, vol. 46(1), pages 59-75, February.
    • Handle: RePEc:bla:ecaffa:v:46:y:2026:i:1:p:59-75
    DOI: 10.1111/ecaf.70024
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    References listed on IDEAS

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    1. Henrekson, Magnus & Lakomaa, Erik & Sanandaji, Tino, 2021. "The Interaction of Schumpeterian Institutional Entrepreneurship and Hayekian Institutional Change in Innovative Industries," Working Paper Series 1409, Research Institute of Industrial Economics.
    2. Stefan Szymanski, 2010. "The Economic Design of Sporting Contests," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 1, pages 1-78, Palgrave Macmillan.
    3. Marc Rohde & Christoph Breuer, 2016. "Europe’s Elite Football: Financial Growth, Sporting Success, Transfer Investment, and Private Majority Investors," IJFS, MDPI, vol. 4(2), pages 1-20, June.
    4. Loek Groot, 2008. "Economics, Uncertainty and European Football," Books, Edward Elgar Publishing, number 12924.
    5. Pehr‐Johan Norbäck & Martin Olsson & Lars Persson, 2021. "Talent development and labour market integration in European football," The World Economy, Wiley Blackwell, vol. 44(2), pages 367-408, February.
    6. Egon Franck & Stephan Nüesch, 2012. "Talent And/Or Popularity: What Does It Take To Be A Superstar?," Economic Inquiry, Western Economic Association International, vol. 50(1), pages 202-216, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z28 - Other Special Topics - - Sports Economics - - - Policy

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