Dominance and Distress in European Football

Since the pioneering work of Rottenberg (1956) economists have argued that a successful sports competition requires a degree of uncertainty of outcome and competitive balance among the contestants. Since the time of Rottenberg the experience of European football seems to have rejected this hypothesis.

Football is the world’s most popular professional sport by some margin. Today the revenue generated by European football is roughly equal to the combined revenue of the NFL, MLB, NBA, NHL, US college football and US college basketball. Attendance at European football matches is roughly equal to the total attendance at all major league sports in the US, while on TV European football, unlike most American sports, commands a global audience.

Yet football has been characterized since its beginning by dominance. Dominance is a concept used in European competition law, and is assessed using measures such as market share, the ease of entry for competitors, control of the production chain and the extent of countervailing buyer power. A group of football clubs, including Real Madrid, Barcelona, Bayern Munich, Manchester United, Manchester City, PSG, Juventus and maybe a dozen others jointly meet this standard of dominance. This dominance dramatically curtails uncertainty of outcome. In most European leagues, large or small, a very small number of clubs persistently win the national championship.

Alongside side this dominance there is financial distress for the vast majority of clubs – clubs live on the edge of insolvency and legal insolvency events are frequent.

These facts require us to re-examine the way in which the market for professional sports operates and the conditions necessary for a successful sporting competition.