Soft budget constraints and institutional logics in European football

Bernt Arne Bertheussen and Harry Arne Solberg

Chapter 2 in Professional Team Sports and the Soft Budget Constraint, 2022, pp 12-32 from Edward Elgar Publishing

Abstract: This chapter discusses how two long-lasting paradoxical financial practices in European football can be better understood combining soft budget constraints (SBC) theory and institutional theory. One practice is that clubs continue to overspend even if revenues are increasing. Another practice is that clubs rarely go bankrupt despite experiencing ongoing deficits. We argue that two, often competing, but sometimes complementary institutional logics are underpinning the soft overspending and bailout practices: a dominant sporting logic and a weaker economic logic. Consequently, the two intertwined SBC practices constitute a self-destructive financial logic of European football. The vicious circle continues because clubs and leagues operate in ways that are individual rational, but collectively irrational. Finally, we discuss reasons why clubs have been allowed to operate under SBC, and also comment on challenges that can make it difficult to establish an efficient regulation system that can harden the budget constraints (HBC) in European football.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2022
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