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Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps

Author

Listed:
  • Helmut Dietl

    () (Institute for Strategy and Business Economics, University of Zurich)

  • Egon Franck

    () (Institute for Strategy and Business Economics, University of Zurich)

  • Markus Lang

    () (Institute for Strategy and Business Economics, University of Zurich)

  • Alexander Rathke

    () (Institute for Empirical Research in Economics, University of Zurich)

Abstract

This paper outlines and compares the organizational structure of major sports leagues, explores the reasoning behind their formation, and derives implications for salary caps in European football. To understand why sports leagues have developed a specific organizational structure, one must take the economic peculiarities of team sports leagues into consideration. For this purpose, we analyze the production process and illuminate its major peculiarities. For example, we present the difference between economic competition and competition on the pitch and discuss the consequences of this distinction for an attractive final product. Furthermore, we show that a hold-up problem exists between the two stages of the production process and demonstrate how these problems are overcome by the organizational structure chosen by sports leagues. We also outline the differences between the U.S. major leagues and European leagues and document recent developments in that context. Finally, based on this comparative institutional analysis, we derive implications for the introduction of salary caps into European football.

Suggested Citation

  • Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2010. "Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps," Working Papers 0122, University of Zurich, Institute for Strategy and Business Economics (ISU).
  • Handle: RePEc:iso:wpaper:0122
    as

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    References listed on IDEAS

    as
    1. Kesenne, Stefan, 2000. "The Impact of Salary Caps in Professional Team Sports," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 422-430, September.
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    Cited by:

    1. Gilles Paché, 2015. "Governance of Professional Sport Leagues: Towards a Convergence Between North America and Europe?," Post-Print hal-01436436, HAL.

    More about this item

    Keywords

    Sports leagues; organization; salary cap; hold-up problem;

    JEL classification:

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

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