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

Listed author(s):
  • 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)

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.

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File URL: http://college.holycross.edu/RePEc/spe/Dietletal_OrganizationalDifferences.pdf
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Paper provided by International Association of Sports Economists & North American Association of Sports Economists in its series Working Papers with number 1105.

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Date of creation: Mar 2011
Handle: RePEc:spe:wpaper:1105
Contact details of provider: Web page: http://www.cdes.fr/index.php?id=fr69

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Web page: http://www.byuresearch.org/naasportseconomists/

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  1. Helmut Dietl & Markus Lang, 2006. "The Effect of Gate Revenue-Sharing on Social Welfare," Working Papers 0012, University of Zurich, Center for Research in Sports Administration (CRSA), revised 2007.
  2. John Vrooman, 2007. "Theory Of The Beautiful Game: The Unification Of European Football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 314-354, 07.
  3. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
  4. Helmut M. Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2012. "Salary Cap Regulation In Professional Team Sports," Contemporary Economic Policy, Western Economic Association International, vol. 30(3), pages 307-319, 07.
  5. Helmut Dietl & Egon Franck & Tariq Hasan & Markus Lang, 2006. "Governance of Professional Sports Leagues - Cooperatives versus Contracts," Working Papers 0059, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2007.
  6. Pedro Garcia-del-Barrio & Stefan Szymanski, 2006. "Goal! Profit maximization and win maximization in football leagues," Working Papers 0621, International Association of Sports Economists;North American Association of Sports Economists.
  7. Liam J. A. Lenten, 2008. "Unbalanced Schedules And The Estimation Of Competitive Balance In The Scottish Premier League," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(4), pages 488-508, 09.
  8. Helmut Dietl & Markus Lang & Stephan Werner, 2008. "Social Welfare in Sports Leagues with Profit-Maximizing and/or Win-Maximizing Clubs," Working Papers 0022, University of Zurich, Center for Research in Sports Administration (CRSA), revised Jul 2009.
  9. Stefan Szymanski & Stephen F. Ross, 2007. "Governance And Vertical Integration In Team Sports," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 616-626, October.
  10. Liam J. A. Lenten, 2009. "Unobserved Components in Competitive Balance and Match Attendances in the Australian Football League, 1945-2005: Where is all the Action Happening?," The Economic Record, The Economic Society of Australia, vol. 85(269), pages 181-196, 06.
  11. KÉSENNE, Stefan, "undated". "Revenue sharing and competitive balance in professional team sports," Working Papers 1999019, University of Antwerp, Faculty of Applied Economics.
  12. SZYMANSKI, Stefan & KÉSENNE, Stefan, 2003. "Competitive balance and gate revenue sharing in team sports," Working Papers 2003003, University of Antwerp, Faculty of Applied Economics.
  13. KÉSENNE, Stefan, "undated". "The salary cap proposal of the G-14 in European football," Working Papers 2003018, University of Antwerp, Faculty of Applied Economics.
  14. Helmut M. Dietl & Egon Franck & Markus Lang, 2008. "Overinvestment In Team Sports Leagues: A Contest Theory Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(3), pages 353-368, 07.
  15. Peter J. Sloane, 2000. "The Regulation of Professional Team Sports," IASE Conference Papers 0003, International Association of Sports Economists.
  16. Helmut Dietl & Egon Franck & Markus Lang, 2008. "Why football players may benefit from the ‘shadow of the transfer system’," European Journal of Law and Economics, Springer, vol. 26(3), pages 419-419, December.
  17. 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.
  18. Markus Lang & Alexander Rathke & Marco Runkel, 2009. "The Economic Consequences of Foreigner Rules in National Sports Leagues," Working Papers 0908, International Association of Sports Economists;North American Association of Sports Economists.
  19. Rodney Fort & James Quirk, 2010. "Optimal Competitive Balance in Single-Game Ticket Sports Leagues," Journal of Sports Economics, The North American Association of Sports Economists, vol. 11(6), pages 589-601, December.
  20. Feess, Eberhard & Muehlheusser, Gerd, 2003. "Transfer fee regulations in European football," European Economic Review, Elsevier, vol. 47(4), pages 645-668, August.
  21. Helmut Dietl & Egon Franck & Markus Lang, 2006. "Why football players may benefit from the "shadow of the transfer system"," Working Papers 0013, University of Zurich, Center for Research in Sports Administration (CRSA), revised 2007.
  22. Helmut Dietl & Markus Lang & Alexander Rathke, 2007. "The Effect of Salary Caps in Professional Team Sports on Social Welfare," Working Papers 0072, University of Zurich, Institute for Strategy and Business Economics (ISU).
  23. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64, pages 242-242.
  24. Helmut Dietl & Markus Lang & Alexander Rathke, 2009. "The Combined Effect of Salary Restrictions and Revenue Sharing in Sports Leagues," Working Papers 0102, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Jan 2010.
  25. Martin Grossmann & Helmut Dietl & Markus Lang, 2010. "Revenue Sharing and Competitive Balance in a Dynamic Contest Model," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(1), pages 17-36, February.
  26. Jeffery Borland, 2003. "Demand for Sport," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 478-502, Winter.
  27. John Goddard & Peter J. Sloane, 2005. "Economics of sport," Chapters, in: Economics Uncut, chapter 12 Edward Elgar Publishing.
  28. Daniel R. Marburger, 1997. "Gate Revenue Sharing And Luxury Taxes In Professional Sports," Contemporary Economic Policy, Western Economic Association International, vol. 15(2), pages 114-123, 04.
  29. Bernd Frick, 2007. "The Football Players' Labor Market: Empirical Evidence From The Major European Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 422-446, 07.
  30. 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.
  31. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  32. Helmut Dietl & Egon FrancK & Markus Lang & Alexander Rathke, 2008. "Welfare Effects of Salary Caps in Sports Leagues with Win-Maximizing Clubs," Working Papers 0825, International Association of Sports Economists;North American Association of Sports Economists.
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