nep-spo New Economics Papers
on Sports and Economics
Issue of 2020‒07‒13
four papers chosen by
Humberto Barreto
DePauw University

  1. Promoting or restricting competition? - The 50plus1-rule in German football By Budzinski, Oliver; Kunz-Kaltenhäuser, Philipp
  2. Are French Football Fans Sensitive to Outcome Uncertainty By Luc Arrondel; Richard Duhautois
  3. Professional Rugby on the Celtic Fringe By Vincent (Vincent Peter) Hogan; Patrick Massey
  4. Who benefits from transfers? By Samuel Hoey; Thomas Peeters; Francesco Principe

  1. By: Budzinski, Oliver; Kunz-Kaltenhäuser, Philipp
    Abstract: The 50plus1-rule in German football is a controversially discussed institution that regulates investment behavior of professional football teams. This paper discusses from a sports economics perspective the suspected market failures that the 50plus1-rule is expected to prevent. To examine the effects of the regulation empirically, we gathered panel data on 47 teams in the German Major League Football ("Erste Bundesliga") from the seasons 1989/90 until 2018/2019. Applying various approaches to measure financial and competitive imbalance in the league, we derive a growing trend of imbalance since the introduction of the 50plus1-rule. We employ a Difference-in-Differences approach to examine investment behavior in budgets and sporting success between afflicted competitors and those exempted from the rule. Our results do not suggest any equalizing properties of the regulation. We find anticompetitive effects and distorting properties of the regulation.
    Keywords: 50plus1-rule,football,sports economics,financial regulation,investment,sport finance,soccer,competition economics
    JEL: Z23 Z21 Z2 J83 L11 L50
    Date: 2020
  2. By: Luc Arrondel (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Richard Duhautois (CEET - Centre d'études de l'emploi et du travail - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé, LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM])
    Abstract: The idea that competitive balance increases the utility of fans, and therefore their spending and the revenue of professional clubs, lies at the heart of sports economics in general and the economics of football in particular. This notion of competitive balance is often invoked to explain the decisions of professional leagues to change the rules of competitions or the distribution of TV rights. However, the empirical literature shows that the relationship between competitive balance and fan demand is far from obvious. In this paper, we examine the idea of competitive balance as perceived by football fans. In the case of Ligue 1, it is mainly explained by medium-and long-term uncertainty, while in the case of the Champions League it is more a matter of long-term suspense. But uncertainty over the outcome is far from being the only factor explaining the demand for football since around 30% of fans report that they would always be willing to attend or watch games even in the hypothetical case that there is no suspense left. JEL Classification: D12, L83
    Keywords: uncertainty of outcome hypothesis,competitive balance,demand for football
    Date: 2020–04–17
  3. By: Vincent (Vincent Peter) Hogan; Patrick Massey
    Abstract: The design of sports leagues has significant financial implications for the organisers and member teams and for the relative success or failure of the individual clubs. Using the Pro 14 rugby league as an example we show how the structure of the league has influenced the success of the league overall and that of individual teams. We use variation in rules across time and space to identify their effects. We show how match attendance has been boosted by measures such as reducing the number of Sunday matches and the introduction of play-offs. We also show that the Pro14 have increased broadcast revenue largely through geographic expansion into larger broadcast markets. Furthermore, this has occurred without an adverse effect on match attendance.
    Keywords: Sports finance; Productivity
    JEL: Z23 D24
    Date: 2020–01
  4. By: Samuel Hoey (Erasmus School of Economics); Thomas Peeters (Erasmus School of Economics); Francesco Principe (Erasmus School of Economics)
    Abstract: One major argument to legitimize the transfer system in European club football is that transfer fees paid by hiring clubs result in a redistribution of revenues from large market to small market clubs, which may lead to more intense on-field competition. We investigate this claim using a unique dataset of digitalized financial accounts for a representative sample of clubs across eight national football associations. Overall, the transfer system leads to a very modest reduction in revenue inequality. Small market clubs rarely earn substantial amounts of money from the transfer market. The main financial beneficiaries are clubs around the middle of the market size distribution. A select group of large market clubs makes significant transfer losses, but this does not undo these clubs’ initial financial advantage.
    Keywords: labor contracts, transfer system, European football, antitrust, revenue redistribution
    JEL: L41 J41 K12 L83
    Date: 2020–06–20

This nep-spo issue is ©2020 by Humberto Barreto. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.