The English Football Industry: profit,performance and industrial structure

The English (Association) Football League is a long established industrial cartel selling a highly popular product with only imperfect substitutes. Despite that, the majority of its member clubs lose money and the industry has faced successive financial crises over the last decade. This paper develops an empirical model of the financial performance of English League clubs using a high quality dataset of 48 clubs over the period 1974–89. The underlying model explains how rents are competed away through the maximising behaviour of club owners subject to production constraints. This model is parameterised by a system of equations which describe the behaviour of a maximising owner subject to demand and production constraints. The model is then used to examine the coordination failure which lies at the heart of the English Football League's decline and to assess the prospects for the Premier League.     

Competitive balance and gate revenue sharing in team sports

This paper shows that under reasonable conditions, increasing gate revenue sharing among teams in a sports league will produce a more uneven contest, i.e. reduce competitive balance. This result has significant implications for antitrust authorities and legislators, who have tended to assume that revenue sharing arrangements will necessarily promote competitive balance.     

Income Inequality, Competitive Balance and the Attractiveness of Team Sports: Some Evidence and a Natural Experiment from English Soccer

This paper examines the relationship between financial inequality, competitive balance and attendance at English professional league soccer. It shows that while financial inequality among the clubs has increased, competitive balance has remained relatively stable and match attendance appears unrelated to competitive balance. A clearer test of the relationship is suggested by comparison with FA Cup matches. Because income inequality is primarily driven by inter- rather than intra-divisional inequality, the FA Cup has been a much more unbalanced competition than the divisional championships. Attendance at FA Cup matches relative to the corresponding league matches has fallen over the last twenty years.     

Cheating in Contests

Much of the interest in the study of sports from the perspectiveof an economist lies in the empirical application of contestsas efficient mechanisms for eliciting effort. Contestants respondto contest incentives, and these incentives include the incentiveto cheat. This paper discusses different forms of cheating:sabotage, doping, and match fixing. The paper discusses howthese forms of cheating arise and how they can be treated. Inparticular, we look at specific forms of cheating in soccer,baseball, and cricket. In the appendix we develop a simple modelof match fixing.     

Why is Manchester United So Successful?

Football is now a big industry worth studying in its own right: but it is also an excellent laboratory for studying success. The author argues that this is partly because, in contrast to say, American Football, there is less equalisation of resources between the clubs and English football is a highly competitive market. This article discusses one of the most successful clubs ever and argues that the reasons behind its success do not characterise football generally. It discusses how the different kinds of success in the English football industry are related to business success generally.     

Joint Ventures in Russia: The View from the Russians

This article, detailing research on Russian joint ventures with foreign partners far to the south east of the capital, focuses on Russian business people who are not playing the GKO market or trying to stash money away in Swiss bank accounts. The findings of this research suggest that some Russians may be growing as disenchanted with the experience of doing business with foreigners as some foreigners have become at doing business with Russians.     

Broadcasting,Attendance and the Inefficiency of Cartels

The English Premier League is a cartel of soccer teams that collectively sells the rights to broadcast its matches. Despite considerable demand for their product from broadcasters, the clubs agreed to sell only a small fraction of the broadcast rights (60 out of 380 matches played each season between 1992 and 2001). The clubs have explained this reluctance by claiming that increased broadcasting would reduce attendance at matches and therefore reduce cartel income. However, this paper produces detailed econometric evidence to show that broadcasting has a negligible effect on attendance and that additional broadcast fees would be likely to exceed any plausible opportunity cost. The paper concludes that a more likely explanation for the reluctance to market their rights is the failure of the cartel to reach agreement on compensation for individual teams.     

THE CHAMPIONS LEAGUE AND THE COASE THEOREM

This paper considers the relevance of the Coase Theorem to the analysis of sports leagues. It is widely believed that there exists an ideal competitive balance between teams in a sporting contest, and that without competitive restraints to redistribute resources championships will be too unbalanced. The paper reviews the empirical evidence on this issue to date, and then examines a model where the outcome may be either too little or too much competitive balance. Empirical evidence from English football suggests that the bias is likely to be in favour of too much competitive balance. The implications for European football in general and the Champions League in particular are then discussed.     

Competitive Tendering: Lessons from the Public Sector

The introduction of at first voluntary and then compulsory competitive tendering have ushered in a decade of change in the provision of public services. In this paper, the authors examine just how radical that change has been. Utilising data from local authorities the authors find that, in refuse collection at least, competitive tendering has reduced costs by forcing improvements in labour productivity. But, in comparing the relative efficiencies of the large majority of in house tender winners with the comparatively smaller set of private contractors awarded tenders, the authors conclude that scope for greater cost reductions remain.