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Why Is Competition in the European Football Market Failing, and What Should Be Done About It?

Author

Listed:
  • Henrekson, Magnus

    (Research Institute of Industrial Economics)

  • Persson, Lars

    (IFN - Research Institute of Industrial Economics)

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 globalized 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

  • Henrekson, Magnus & Persson, Lars, 2025. "Why Is Competition in the European Football Market Failing, and What Should Be Done About It?," IZA Discussion Papers 18354, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18354
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    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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