The Effects of Institutional Change in European Soccer

Marco Haan, Ruud Koning and Witteloostuijn Arjen van ()
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Witteloostuijn Arjen van: University of Antwerp, Faculty of Applied Economics, Antwerp Centre of Evolutionary Demography, Prinsstraat 13, 2000 Antwerpen, Belgium

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2012, vol. 232, issue 3, 318-335

Abstract: The last decades have seen two profound changes in European soccer. First, international trade in talent has increased markedly. Second, international competitions such as the Champions League have become much more important. Using a theoretical model, we study how these changes affect competitive balance within national competitions, and quality differences between national competitions. Introducing international trade in talent leads to a flow to large countries, as the returns to talent are higher there. Wages increase in small countries, but decrease in large ones. The wage increase in small countries hurts small teams more than large ones. Therefore, competitive balance decreases. The wage decrease in large countries benefits small teams more, so competitive balance increases. The introduction of a Champions League implies the possibility to win a large amount of prize money. This is relatively more important for small teams. Hence, competitive balance increases in all countries, and talent flows from large to small countries, provided international trade is possible. Wages increase. When looking at both changes combined, we find that talent flows from small to large countries. Hence, in this sense, the trade effect dominates the Champions League effect. Competitive balance increases in all but the very smallest countries.

Keywords: Bosman ruling; Champions League; soccer; Bosman ruling; Champions League; soccer (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:232:y:2012:i:3:p:318-335

DOI: 10.1515/jbnst-2012-0310

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