The Economics of Professional Football Revisited
| Author | Peter J. Sloane |
| Published date | 01 February 2015 |
| Date | 01 February 2015 |
| DOI | http://doi.org/10.1111/sjpe.12063 |
THE ECONOMICS OF PROFESSIONAL
FOOTBALL REVISITED
Peter J. Sloane*
,
**
,
***
The abundance of statistics makes sport an ideal laboratory in which to test
various economic theories. It may also have lessons for other areas of eco-
nomics, such as the nature of competition. These features make it a poten-
tially fertile field of study for economists. However, when I published my
paper in the Scottish Journal in 1971 (Sloane, 1971), there was no literature
on the economics of sport in Europe apart from my own analysis of the
labour market in professional football which had appeared 2 years earlier in
the British Journal of Industrial Relations (Sloane, 1969).
Since then, not only has the literature both in relation to sport in general,
and football in particular, mushroomed, but profound changes in the sporting
environment have occurred, particularly in relation to football and especially
so in England, with the formation of the English Premier League (EPL) in
1992, the exponential growth in television income, with live games being
shown throughout the world, and a major investment in clubs by wealthy
individuals, many of them from abroad. Issues in relation to competition pol-
icy, both at national and European Union level, have emerged which were
previously ignored. Following the landmark Bosman case in 1995 the player
labour market has become increasingly international. Poli et al. (2014), for
instance, report that the percentage of expatriate players in the 31 top division
leagues of UEFA member associations has reached a new high of 36.8% and
in the EPL the figure is 60.4%. This is despite growing financial problems in
many countries. Thus, in the United Kingdom, the number of clubs going
into administration has continued at a high level despite substantial rises in
real income, so that between 1986 and 2010, when attendances in England
almost doubled, there were 59 cases of insolvency (Szymanski, 2014). Finan-
cial fair play regulations have been introduced both by UEFA and individual
leagues in an attempt to prevent clubs overspending and creating a more level
playing field from a financial perspective.
A distinction has been made in the literature between the North American
and European models of team sports. The key elements of the two systems
are summarized in Sloane (2006) as follows; while it is assumed by most pro-
tagonists in North America that clubs attempt to maximize profits, in Europe
the most common assumption is the maximization of playing success subject
to a break-even constraint. North American leagues are closed to new
entrants through the granting of exclusive territorial rights, though with
*Swansea University
**Flinders University
***IZA
Scottish Journal of Political Economy, DOI: 10.1111/sjpe.12063, Vol. 62, No. 1, February 2015
©2015 Scottish Economic Society.
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