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Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps

Helmut Dietl, Egon Franck (), Markus Lang () and Alexander Rathke ()

No 35, Working Papers from University of Zurich, Center for Research in Sports Administration (CRSA)

Abstract: This paper outlines and compares the organizational structure of major sports leagues, explores the reasoning behind their formation, and derives implications for salary caps in European football. To understand why sports leagues have developed a specific organizational structure, one must take the economic peculiarities of team sports leagues into consideration. For this purpose, we analyze the production process and illuminate its major peculiarities. For example, we present the difference between economic competition and competition on the pitch and discuss the consequences of this distinction for an attractive final product. Furthermore, we show that a hold-up problem exists between the two stages of the production process and demonstrate how these problems are overcome by the organizational structure chosen by sports leagues. We also outline the differences between the U.S. major leagues and European leagues and document recent developments in that context. Finally, based on this comparative institutional analysis, we derive implications for the introduction of salary caps into European football.

Keywords: Sports leagues; organization; salary cap; hold-up problem (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Date: 2010-03
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http://repec.business.uzh.ch/RePEc/rsd/CRSA_WPS/35_CRSA_full.pdf (application/pdf)

Related works:
Working Paper: Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps (2011) Downloads
Working Paper: Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps (2010) Downloads
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