Why Is Competition in the European Football Market Failing, and What Should Be Done About It?

Magnus Henrekson () and Lars Persson ()
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Magnus Henrekson: Research Institute of Industrial Economics
Lars Persson: IFN - Research Institute of Industrial Economics

No 18354, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The European football (soccer) market increasingly funnels rents to superstar players and intermediaries while weakening competitive balance. We trace this dynamic to two forces: (a) technological innovation that globalized broadcasting and magnified superstar returns, and (b) legal rulings boosting player mobility and causing bidding wars. The 2024 Diarra ruling by the Court of Justice of the European Union further loosens transfer constraints and will likely intensify talent concentration at “superclubs”. The result is soaring salaries and transfer fees, persistent financial fragility among non-elite clubs, and growing predictability of match outcomes. We evaluate reform options that preserve Europe’s open-league tradition yet borrow from North American competitive-balance tools: greater revenue sharing, hard/soft salary caps, and draft-like mechanisms. These should be complemented by a “cartel tax” to fund youth sport, and club-governance codes plus credible financial-sustainability rules.

Keywords: sports industry; market integration; Diarra ruling; competitive balance; Bosman ruling; talent development (search for similar items in EconPapers)
JEL-codes: D33 D43 D63 J44 L50 L83 Z28 (search for similar items in EconPapers)
Date: 2025-12
New Economics Papers: this item is included in nep-cul
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