Competition among national football leagues. Does it exist ? Should we regulate ?

Yvon Rocaboy

Economics Working Paper Archive (University of Rennes & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS

Abstract: It is often supposed that the stakeholders of a national football league draw more satisfaction from their sport if the league is balanced. This is the so-called Competitive balance hypothesis. If there exists an international competition like the European champions league, this hypothesis can be challenged however. The utility of national leagues’ stakeholders could be higher, the higher the probability of winning of their representative club at the international level. If it is correct, a league’s governing body intending to maximise the quality of the national league by making use of redistributive schemes would face a tradeoff between national competitive balance and international performance of the national representative club. We propose a simple microeconomic framework to model this tradeoff. If there exists a non-cooperative game among the national league governing bodies, whether it is a Nash or a Stackelberg one, this game would result in inefficient redistributive policies. We find "soft" empirical evidences suggesting that such a competition occurs among the big 5 football leagues in Europe. This result supports the idea of the creation of an international regulatory body. We derive the conditions under which the international regulatory body should ensure that the leagues’ governing bodies implement redistributive schemes guaranteeing the respect of the national competitive balance. We also emphasize the risk of experiencing a drop in the quality of leagues if one of them becomes too big relatively to the others, what we call the tragedy of the wealthy.

Keywords: Sports economics; National football leagues; International football league; Interleague competition; Competitive balance; Regulation of sports; European football champions league (search for similar items in EconPapers)
JEL-codes: D3 J3 L5 L83 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-com and nep-spo
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Related works:
Journal Article: Competition Among National Football Leagues. Does It Exist? Should We Regulate? (2017)
Working Paper: Competition Among National Football Leagues. Does It Exist? Should We Regulate? (2017)
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