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Promoting or restricting competition? - The 50plus1-rule in German football

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  • Budzinski, Oliver
  • Kunz-Kaltenhäuser, Philipp

Abstract

The 50plus1-rule in German football is a controversially discussed institution that regulates investment behavior of professional football teams. This paper discusses from a sports economics perspective the suspected market failures that the 50plus1-rule is expected to prevent. To examine the effects of the regulation empirically, we gathered panel data on 47 teams in the German Major League Football ("Erste Bundesliga") from the seasons 1989/90 until 2018/2019. Applying various approaches to measure financial and competitive imbalance in the league, we derive a growing trend of imbalance since the introduction of the 50plus1-rule. We employ a Difference-in-Differences approach to examine investment behavior in budgets and sporting success between afflicted competitors and those exempted from the rule. Our results do not suggest any equalizing properties of the regulation. We find anticompetitive effects and distorting properties of the regulation.

Suggested Citation

  • Budzinski, Oliver & Kunz-Kaltenhäuser, Philipp, 2020. "Promoting or restricting competition? - The 50plus1-rule in German football," Ilmenau Economics Discussion Papers 141, Ilmenau University of Technology, Institute of Economics.
    • Handle: RePEc:zbw:tuiedp:141
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    More about this item

    Keywords

    50plus1-rule; football; sports economics; financial regulation; investment; sport finance; soccer; competition economics;
    All these keywords.

    JEL classification:

    • Z23 - Other Special Topics - - Sports Economics - - - Finance
    • Z21 - Other Special Topics - - Sports Economics - - - Industry Studies
    • Z2 - Other Special Topics - - Sports Economics
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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