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Freedom of Entry, Market Size, and Competitive Outcome: Evidence from English Soccer

Babatunde Buraimo (), David Forrest () and Robert Simmons ()
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David Forrest: Salford Business School, University of Salford

Southern Economic Journal, 2007, vol. 74, issue 1, 204-213

Abstract: A primary prediction of the theory of sports leagues is that teams with higher revenues will have higher league positions or winning percentages than teams with smaller revenues. Behind this prediction lies the key influence of market size, yet this has been underexplored in the empirical literature on sports leagues. This paper combines detailed census of population data with panel data on team performance for an open sports league, the English Football League, to test the hypothesis that market size matters for team performance. We find a particularly important role for population close to the team's location. The impact of local population is reduced but not eliminated when allowance is made for entry in the form of competition from neighboring clubs. We assess implications of these findings for both European and North American sports league structures.

JEL-codes: L83 (search for similar items in EconPapers)
Date: 2007
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Handle: RePEc:sej:ancoec:v:74:1:y:2007:p:204-213