Pro Leagues’ Market Power Yields Different Winners in U.S., Europe

HELSINKI — A frequent topic of discussion among sports fans is how well their favorite team performs away from home. Last week, about 100 sports economists, both professors and students, gathered here for the European Sports Economics Association meetings. The conference was hosted by a Finnish university, Haaga-Helia, and is the first in-person gathering of the group since before the COVID pandemic.

The three-day event included five periods of concurrent sessions with about 45 research presentations and two keynote speeches. Nearly every participant was “playing on the road,” and the American “team” was at a minimum seven time zones from home. Nonetheless, we acquitted ourselves well, with 11 papers and one of the keynote speeches. One of our number, Brad Humphreys of West Virginia University, received the Peter Sloane Award for his contributions to the development of sports economics as a discipline in Europe.

More from Sportico.com

A major topic was the organization of team sports leagues, which was addressed in a thought-provoking way in a presentation titled, “Should Organizing Premier-Level European Football Be a Monopoly? And Who Should Run It?—An Economist’s Perspective,” by two German sports economists, Oliver Budzinski and Arne Feddersen. Leagues in Europe and the U.S. are organized differently, but market power of the leagues is an important issue. Market power, or monopoly, is just economist-speak for an ability to influence the price, quantity and quality of the competition in the best interests of the league and its member clubs rather than the interests of fans and society.

In the U.S., market power is evidenced by league control of the location and number of teams. This power means fewer games played, with higher ticket and broadcast fees, and the ability of teams to extract financial support from cities and states for new stadiums or arenas.

Market power in Europe is in evidence in a different way and at a different level of organization. The recent meteoric rise and fall of “European Super League” is an example—where some of the wealthiest clubs across Europe would compete among themselves. The attraction of a fixed league pitting the best teams across national boundaries is obvious, at least to fans from the big clubs, but not to fans of less prominent clubs from smaller cities. UEFA, the governing body that organizes cross-country competitions in soccer in Europe, said it would “remain united in our efforts to stop this cynical project … founded on the self-interest of a few clubs.” FIFA, the organizing body of all international competition in soccer, likewise weighed in against the proposal.

A super league would, at least in the short run, increase the number of games available for fans to watch. The important question is whether fans are more interested in games between two powerhouse clubs, both possibly from outside their home country, or between two weak clubs from within their country, or between two relatively obscure teams from outside their home country, as frequently happens in the early stages of the UEFA Champions League.

At present, issues such as these are in front of European Courts, as well as being studied by academics. For American sports economists, it was a great experience to get insight into these issues during this “road game.”

Dennis Coates is a professor of economics specializing in sports economics at the University of Maryland, Baltimore County (UMBC).

Click here to read the full article.