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Some comparative economics of the organization of sports: competition and regulation in north American vs. European professional team sports leagues

Author

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  • Wladimir Andreff

Abstract

This 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 Such approach has recently been outdated by models where win maximising clubs operate with a flexible supply of talent in a non cooperative game, given the globalization of the labour market for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.

Suggested Citation

  • Wladimir Andreff, 2011. "Some comparative economics of the organization of sports: competition and regulation in north American vs. European professional team sports leagues," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(1), pages 3-27, June.
  • Handle: RePEc:liu:liucej:v:8:y:2011:i:1:p:3-27
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    File URL: http://eaces.liuc.it/18242979201101/182429792011080101.pdf
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    References listed on IDEAS

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    1. repec:hrv:faseco:33078975 is not listed on IDEAS
    2. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    3. Edward Glaeser & Simon Johnson & Andrei Shleifer, 2001. "Coase Versus the Coasians," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 853-899.
    4. Michel Aglietta & Wladimir Andreff & Bastien Drut, 2008. "Bourse et Football," Revue d'économie politique, Dalloz, vol. 118(2), pages 255-296.
    5. Edward L. Glaeser & Andrei Shleifer, 2002. "Legal Origins," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1193-1229.
    6. Andrew S. Zimbalist, 2002. "Competitive Balance in Sports Leagues: An Introduction," Journal of Sports Economics, , vol. 3(2), pages 111-121, May.
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    8. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
    9. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
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    11. Guido Ascari & Philippe Gagnepain, 2006. "Spanish Football," Journal of Sports Economics, , vol. 7(1), pages 76-89, February.
    12. Stefan Kesenne, 2000. "Revenue Sharing and Competitive Balance in Professional Team Sports," Journal of Sports Economics, , vol. 1(1), pages 56-65, February.
    13. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
    14. repec:hrv:faseco:33078568 is not listed on IDEAS
    15. Leo H. Kahane, 2006. "The Reverse-Order-of-Finish Draft in Sports," Chapters,in: Handbook on the Economics of Sport, chapter 69 Edward Elgar Publishing.
    16. Wladimir Andreff & Paul D. Staudohar, 2000. "The Evolving European Model of Professional Sports Finance," Journal of Sports Economics, , vol. 1(3), pages 257-276, August.
    17. Sloane, Peter J, 1971. "The Economics of Professional Football: The Football Club as a Utility Maximiser," Scottish Journal of Political Economy, Scottish Economic Society, vol. 18(2), pages 121-146, June.
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    Citations

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    Cited by:

    1. (ed.), 2015. "Disequilibrium Sports Economics," Books, Edward Elgar Publishing, number 15993.
    2. repec:hal:journl:halshs-00971782 is not listed on IDEAS
    3. Wladimir Andreff, 2014. "The Winner's Curse in Sports Economics," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01243890, HAL.
    4. Wladimir Andreff, 2014. "Building Blocks for a Disequilibrium Model of a European Team Sports League," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00971782, HAL.
    5. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    6. Kornai, János, 2014. "Bevezetés A puha költségvetési korlát című kötethez
      [Introduction to the author s volume entitled Soft Budget Constraint]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 845-897.
    7. repec:hal:journl:halshs-01243890 is not listed on IDEAS
    8. Egon Franck, 2014. "Financial Fair Play in European Club Football: What Is It All About?," International Journal of Sport Finance, Fitness Information Technology, vol. 9(3), pages 193-217, August.

    More about this item

    Keywords

    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;

    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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