ECONOMICS OF SPORT: EDITOR'S INTRODUCTION
| Published date | 01 July 2007 |
| Author | John Vrooman |
| Date | 01 July 2007 |
| DOI | http://doi.org/10.1111/j.1467-9485.2007.00417.x |
ECONOMICS OF SPORT
EDITOR’S INTRODUCTION
John Vrooman
What I know most surely about morality and the duty of man I owe to football.
FCamus
Sooner or later the fundamental questions of Western philosophy come down to
love or money and the same is true for the world’s game of football. Cosmic
questions of Eastern thought ultimately seek their resolution through optimum
balance, and the same is true for the economics of sport. The challenge for
economic theory is to find a dynamic balance between love and money necessary
to analytically grasp the passionate and pragmatic complexities of the beautiful
game. The games themselves require balance in that competition must be
tempered at some point, because even the greatest club is only as strong as its
weakest opponent. As a result, the peculiar economics of sport deals with a
unique dualism of symbiotic competition (Neale, 1964). This symbiosis is why
fierce Glasgow rivals Rangers and Celtic have jointly been called the Old Firm
for the last century. The world’s games are ready-made laboratories. Every
stadium is a bell jar, where the intensity of bottom-line business competition is
matched between the lines on the pitch. Objective functions come alive as owners
readily reveal their preferences for winning at-all-cost over profit maximization.
Detailed information about every player and every result is known by every
school boy and every corner bookie. Every statistic has a known face, and every
face has a known salary. Throughout the world, sports leagues have evolved
with vastly different sets of cultural rules – the range of regimes is robust.
Leagues seek balance between the yin of solidarity and the yang of meritocracy.
There is constant conflict between breakaway power of stronger individual clubs
and the tradition-bound bias of governing agencies, acting as self-appointed and
often self-serving protectors of the game.
The economics of sport is celebrating the golden anniversary of its origin in a
seminal paper by Rottenberg (1956), where he presages the Coase theorem
(1960) in a cogent argument about the impact of free agency on the baseball
players’ labor market. According to Rottenberg’s invariance proposition, free
agency would yield the same talent distribution as the reserve system in
American baseball. The difference was that free agency would weaken
monopsonistic exploitation of players trapped in the reserve system, and allow
them to be paid their marginal revenue product. The theoretical foundations of
the economics of sport are found in the elegant mathematical proofs of El
Hodiri and Quirk (1971), in public policy awareness of Noll (1974), and for
Europe, in Sloane’s (1969) early discussion of the European football market.
The modern awakening of sports economics came when Quirk and Fort (1992)
Scottish Journal of Political Economy, Vol. 54, No. 3, July 2007
r2007 The Author
Journal compilation r2007 Scottish Economic Society. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford, OX4 2DQ, UK and 350 Main St, Malden, MA, 02148, USA
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