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Freedom of Entry, Market Size, and Competitive Outcome: Evidence from English Soccer

Author

Listed:
  • Babatunde Buraimo

    () (Lancashire Business School, University of Central Lancashire)

  • David Forrest

    () (Salford Business School, University of Salford)

  • Robert Simmons

    () (Department of Economics, The Management School, Lancaster University)

Abstract

A primary prediction of the theory of sports leagues is that teams with higher revenues will have higher league positions or winning percentages than teams with smaller revenues. Behind this prediction lies the key influence of market size, yet this has been underexplored in the empirical literature on sports leagues. This paper combines detailed census of population data with panel data on team performance for an open sports league, the English Football League, to test the hypothesis that market size matters for team performance. We find a particularly important role for population close to the team's location. The impact of local population is reduced but not eliminated when allowance is made for entry in the form of competition from neighboring clubs. We assess implications of these findings for both European and North American sports league structures.

Suggested Citation

  • Babatunde Buraimo & David Forrest & Robert Simmons, 2007. "Freedom of Entry, Market Size, and Competitive Outcome: Evidence from English Soccer," Southern Economic Journal, Southern Economic Association, vol. 74(1), pages 204-213, July.
  • Handle: RePEc:sej:ancoec:v:74:1:y:2007:p:204-213
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    References listed on IDEAS

    as
    1. Martin B. Schmidt & David J. Berri, 2001. "Competitive Balance and Attendance," Journal of Sports Economics, , vol. 2(2), pages 145-167, May.
    2. John Goddard & Peter J. Sloane, 2005. "Economics of sport," Chapters,in: Economics Uncut, chapter 12 Edward Elgar Publishing.
    3. Stefan Szymanski, 2000. "A Market Test for Discrimination in the English Professional Soccer Leagues," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 590-603, June.
    4. Forrest, David & Simmons, Robert & Feehan, Patrick, 2002. "A Spatial Cross-Sectional Analysis of the Elasticity of Demand for Soccer," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(3), pages 336-355, August.
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    Citations

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    Cited by:

    1. B Buraimo & R Simmons, 2006. "Market size and attendance in English Premier League football," Working Papers 574562, Lancaster University Management School, Economics Department.
    2. Egon Franck & Stephan Nüesch, 2007. "The Role of Patriotism in Explaining TV Audience of National Team Games - Evidence from Four International Tournaments," Working Papers 0014, University of Zurich, Center for Research in Sports Administration (CRSA).
    3. Flores, Ramón & Forrest, David & Tena, J.D., 2012. "Decision taking under pressure: Evidence on football manager dismissals in Argentina and their consequences," European Journal of Operational Research, Elsevier, vol. 222(3), pages 653-662.
    4. Lief Brandes & Egon Franck, 2007. "Who Made Who – An Empirical Analysis of Competitive Balance in European Soccer Leagues," Eastern Economic Journal, Eastern Economic Association, vol. 33(3), pages 379-403, Summer.
    5. Leif Brandes & Egon Franck & Philipp Theiler, 2013. "The group size and loyalty of football fans: a two-stage estimation procedure to compare customer potentials across teams," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(2), pages 347-369, February.
    6. repec:lan:wpaper:3983 is not listed on IDEAS
    7. Haan Marco & Koning Ruud & Witteloostuijn Arjen van, 2012. "The Effects of Institutional Change in European Soccer," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(3), pages 318-335, June.
    8. Antonio Samagaio & Eduardo Couto & Jorge Caiado, 2009. "Sporting, financial and stock market performance in English football: an empirical analysis of structural relationships," CEMAPRE Working Papers 0906, Centre for Applied Mathematics and Economics (CEMAPRE), School of Economics and Management (ISEG), Technical University of Lisbon.
    9. Terry A Robinson, 2011. "Dyed in the Wool? An Empirical Note on Fan Loyalty," Post-Print hal-00667599, HAL.
    10. Madden, Paul, 2012. "Fan welfare maximization as a club objective in a professional sports league," European Economic Review, Elsevier, vol. 56(3), pages 560-578.
    11. repec:lan:wpaper:3698 is not listed on IDEAS
    12. repec:bla:scotjp:v:64:y:2017:i:4:p:419-444 is not listed on IDEAS
    13. Stefan Szymanski, 2012. "Insolvency in English professional football: Irrational Exuberance or Negative Shocks?," Working Papers 1202, International Association of Sports Economists;North American Association of Sports Economists.

    More about this item

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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