IDEAS home Printed from https://ideas.repec.org/a/liu/liucej/v8y2011i1p3-27.html
   My bibliography  Save this article

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

Author

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 Such approach has recently been outdated by models where win maximising clubs operate with a flexible supply of talent in a non cooperative game, given the globalization of the labour market for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

    Download full text from publisher

    File URL: https://ejce.liuc.it/18242979201101/182429792011080101.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Edward L. Glaeser & Andrei Shleifer, 2001. "A Reason for Quantity Regulation," American Economic Review, American Economic Association, vol. 91(2), pages 431-435, May.
    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, President and Fellows of Harvard College, vol. 116(3), pages 853-899.
    4. Edward L. Glaeser & Andrei Shleifer, 2003. "The Rise of the Regulatory State," Journal of Economic Literature, American Economic Association, vol. 41(2), pages 401-425, June.
    5. Wladimir Andreff & Stefan Szymanski (ed.), 2006. "Handbook on the Economics of Sport," Books, Edward Elgar Publishing, number 3274.
    6. Michel Aglietta & Wladimir Andreff & Bastien Drut, 2008. "Bourse et Football," Revue d'économie politique, Dalloz, vol. 118(2), pages 255-296.
    7. Wladimir Andreff & Michel Aglietta & Bastien Drut, 2008. "Bourse et Football," Post-Print halshs-00293907, HAL.
    8. Edward L. Glaeser & Andrei Shleifer, 2002. "Legal Origins," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1193-1229.
    9. Andrew S. Zimbalist, 2002. "Competitive Balance in Sports Leagues," Journal of Sports Economics, , vol. 3(2), pages 111-121, May.
    10. Stefan Szymanski, 2010. "Income Inequality, Competitive Balance and the Attractiveness of Team Sports: Some Evidence and a Natural Experiment from English Soccer," Palgrave Macmillan Books, in: Football Economics and Policy, chapter 9, pages 182-201, Palgrave Macmillan.
    11. Bruno Dallago, 2004. "Comparative Economic Systems and the New Comparative Economics," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 1(1), pages 59-86, June.
    12. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64, pages 242-242.
    13. Wladimir Andreff, 2001. "The Correlation between Economic Underdevelopment and Sport," Post-Print halshs-00274657, HAL.
    14. Glaeser, Edward & Scheinkman, Jose & Shleifer, Andrei, 2003. "The injustice of inequality," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 199-222, January.
    15. Wladimir Andreff, 2009. "Equilibre compétitif et contrainte budgétaire dans une ligue de sport professionnel," Post-Print halshs-00394910, HAL.
    16. Wladimir Andreff, 2006. "Broadcasting rights and competition in European football," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270140, HAL.
    17. Wladimir Andreff, 2008. "Globalisation of the sports economy," Post-Print halshs-00356764, HAL.
    18. Steven Rosefielde, 2005. "Russia: An Abnormal Country," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(1), pages 3-16, June.
    19. J. Kornai & E. Maskin & G. Roland, 2004. "Understanding the Soft Budget Constraint," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 11.
    20. Wladimir Andreff & Stefan Szymanski, 2006. "Handbook on the Economics of Sport," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270122, HAL.
    21. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    22. Wladimir Andreff & Sandrine Poupaux, 2007. "The institutional dimension of the sports economy in transition countries," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270047, HAL.
    23. Guido Ascari & Philippe Gagnepain, 2006. "Spanish Football," Journal of Sports Economics, , vol. 7(1), pages 76-89, February.
    24. Wladimir Andreff & Paul Staudohar, 2000. "The Evolving European Model of Professional Sports Finance," Post-Print halshs-00274661, HAL.
    25. Stefan Szymanski & Stefan Késenne, 2010. "Competitive Balance and Gate Revenue Sharing in Team Sports," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 7, pages 229-243, Palgrave Macmillan.
    26. Wladimir Andreff & Sandrine Poupaux, 2007. "The institutional dimension of the sports economy in transition countries," Post-Print halshs-00270047, HAL.
    27. 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.
    28. Stefan Kesenne, 2000. "Revenue Sharing and Competitive Balance in Professional Team Sports," Journal of Sports Economics, , vol. 1(1), pages 56-65, February.
    29. Wladimir Andreff, 1992. "Convergence and System Change: The Convergence Hypothesis in the Light of Transition in Eastern Europe," Post-Print halshs-00275956, HAL.
    30. 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.
    31. Andrei Shleifer & Daniel Treisman, 2005. "A Normal Country: Russia After Communism," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 151-174, Winter.
    32. Wladimir Andreff, 2006. "Broadcasting rights and competition in European football," Post-Print halshs-00270140, HAL.
    33. Wladimir Andreff, 1981. "Les inégalités entre les disciplines sportives: une approche économique," Post-Print halshs-00286091, HAL.
    34. Leo H. Kahane, 2006. "The Reverse-Order-of-Finish Draft in Sports," Chapters, in: Wladimir Andreff & Stefan Szymanski (ed.), Handbook on the Economics of Sport, chapter 69, Edward Elgar Publishing.
    35. 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.
    36. Wladimir Andreff, 1992. "Convergence or Congruence between Eastern and Western Economic Systems," Post-Print halshs-00277265, HAL.
    37. 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.
    38. Wladimir Andreff, 2008. "Globalisation of the sports economy," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00356764, HAL.
    39. George Akerlof, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 599-617.
    40. Wladimir Andreff, 1996. "Economic Environment of Sport: A Comparison between Western Europe and Hungary," Post-Print halshs-00274666, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Braun, Erik & Gyimesi, András, 2021. "Van-e esélyük a feljutó csapatoknak a bennmaradásra? Az európai labdarúgó-bajnokságok összehasonlítása az első osztály előnye alapján [Do novice top teams have a chance of remaining?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 863-889.
    2. Nite, Calvin & McLeod, Christopher M. & Beldon, Zachary & Nauright, John, 2020. "Establishing a professional Rugby Union Football League in the USA: Managing institutional pluralism in sport entrepreneurship," Sport Management Review, Elsevier, vol. 23(5), pages 883-897.
    3. Egon Franck, 2016. "A comment on the newly revised “2015 version” of the UEFA Club Licensing and Financial Fair Play Regulations," Working Papers 362, University of Zurich, Department of Business Administration (IBW).
    4. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    5. Wladimir Andreff & Nicolas Scelles, 2015. "Walter C. Neale 50 Years After," Journal of Sports Economics, , vol. 16(8), pages 819-834, December.
    6. (ed.), 2015. "Disequilibrium Sports Economics," Books, Edward Elgar Publishing, number 15993.
    7. Burdekin, Richard C.K. & Franklin, Michael, 2015. "Transfer spending in the English premier league: the haves and the have nots," National Institute Economic Review, National Institute of Economic and Social Research, vol. 232, pages 4-17, May.
    8. Wladimir Andreff, 2014. "Building Blocks for a Disequilibrium Model of a European Team Sports League," Post-Print halshs-00971782, HAL.
    9. Hackinger, Julian, 2019. "Ignoring millions of Euros: Transfer fees and sunk costs in professional football," Journal of Economic Psychology, Elsevier, vol. 75(PB).
    10. Marco Runkel, 2022. "Player Mobility and Competitive Balance Regulation in Professional Sports Leagues," Journal of Sports Economics, , vol. 23(4), pages 479-500, May.
    11. Egon Franck, 2018. "European Club Football after “Five Treatments” with Financial Fair Play—Time for an Assessment," IJFS, MDPI, vol. 6(4), pages 1-19, December.
    12. 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.
    13. 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.
    14. Alice Aguiar-Noury & Pedro Garcia-del-Barrio, 2019. "Global brands in sports: identifying low-risk business opportunities," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 8(1), pages 62-83, August.
    15. 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.
    16. Wladimir Andreff, 2014. "The Winner's Curse in Sports Economics," Post-Print halshs-01243890, HAL.
    17. Andrea Rey & Francesco Santelli, 2017. "The Relationship between Financial Ratios and Sporting Performance in Italy’s Serie A," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(12), pages 1-53, November.
    18. Wladimir Andreff, 2014. "The Winner's Curse in Sports Economics," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01243890, HAL.
    19. Fabio Wagner & Holger Preuss & Thomas Könecke, 2021. "A Central Element of Europe’s Football Ecosystem: Competitive Intensity in the “Big Five”," Sustainability, MDPI, vol. 13(6), pages 1-20, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wladimir Andreff, 2011. "Some comparative economics of the organization of sports: Competition and regulation in north American vs. European professional team sports leagues," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00677436, HAL.
    2. Wladimir Andreff, 2011. "Some comparative economics of the organization of sports: Competition and regulation in north American vs. European professional team sports leagues," Post-Print halshs-00677436, HAL.
    3. Wladimir Andreff, 2009. "Équilibre compétitif et contrainte budgétaire dans une ligue de sport professionnel," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 591-633.
    4. Wladimir Andreff, 2014. "French professional football: how much different?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01244492, HAL.
    5. Andreef, Wladimir (Андрефф, Владимир), 2016. "French professional football in European context: how much different? [Французский Профессиональный Футбол В Европейском Контексте: Насколько Велики Отличия?]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 108-137, June.
    6. Meletakos, Panagiotis & Chatzicharistos, Dimitrios & Apostolidis, Nikolaos & Manasis, Vasilios & Bayios, Ioannis, 2016. "Foreign players and competitive balance in Greek basketball and handball championships," Sport Management Review, Elsevier, vol. 19(4), pages 391-401.
    7. Wladimir Andreff, 2014. "French professional football: how much different?," Post-Print halshs-01244492, HAL.
    8. Wladimir Andreff, 2006. "New Perspectives in Sports Economics: A European View," Working Papers 0605, International Association of Sports Economists;North American Association of Sports Economists.
    9. Wladimir Andreff, 2014. "French professional football: how much different?," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 18, pages 298-321, Edward Elgar Publishing.
    10. 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.
    11. Wladimir Andreff, 2010. "Why Tax International Athlete Migration? The 'Coubertobin' Tax in a Context of Financial Crisis," Post-Print halshs-00606038, HAL.
    12. Dietl Helmut M & Duschl Tobias & Lang Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, De Gruyter, vol. 13(2), pages 1-32, August.
    13. Allen R. Sanderson & John J. Siegfried, 2003. "Thinking about Competitive Balance," Journal of Sports Economics, , vol. 4(4), pages 255-279, November.
    14. Scelles, Nicolas (Сели, Николя) & Duran, Christophe (Дюра, Кристоф) & Bonnal, Liliane (Бонналь, Лилиан) & Goyeau, Daniel (Гойюс, Даниэль) & Andreff, Wladimir (Андрефф, Владимир), 2016. "Do all sporting prizes have a significant positive impact on attendance in a European national football league? Competitive intensity in the French Ligue 1 [Действительно Ли Все Спортивные Призы Ок," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 82-107, June.
    15. Wladimir Andreff, 2010. "Why Tax International Athlete Migration? The 'Coubertobin' Tax in a Context of Financial Crisis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00606038, HAL.
    16. Wladimir Andreff, 2014. "Building Blocks for a Disequilibrium Model of a European Team Sports League," Post-Print halshs-00971782, HAL.
    17. Wladimir Andreff, 2006. "New Perspectives in Sports Economics: The European View," IASE Conference Papers 0601, International Association of Sports Economists.
    18. Dorian Owen, 2014. "Measurement of competitive balance and uncertainty of outcome," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 3, pages 41-59, Edward Elgar Publishing.
    19. Markus LANG & Alexander RATHKE & Marco RUNKEL, 2010. "The Economic Consequences Of Foreigner Rules In National Sports Leagues," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 31, pages 47-64.
    20. 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.

    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;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:liu:liucej:v:8:y:2011:i:1:p:3-27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Piero Cavaleri (email available below). General contact details of provider: https://edirc.repec.org/data/liuccit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.