The effects of institutional change in European soccer

M.A. Haan, R.H. Koning, A. van Witteloostuijn

Research output: Contribution to journalArticleScientificpeer-review

Abstract

The last decades have seen two profound changes in European soccer. First, international trade in talent has increased markedly. Second, international competitions such as the Champions League have become much more important. Using a theoretical model, we study how these changes affect competitive balance within national competitions, and quality differences between national competitions. Introducing international trade in talent leads to a flow to large countries, as the returns to talent are higher there. Wages increase in small countries, but decrease in large ones. The wage increase in small countries hurts small teams more than large ones. Therefore, competitive balance decreases. The wage decrease in large countries benefits small teams more, so competitive balance increases. The introduction of a Champions League implies the possibility to win a large amount of prize money. This is relatively more important for small teams. Hence, competitive balance increases in all countries, and talent flows from large to small countries, provided international trade is possible. Wages increase. When looking at both changes combined, we find that talent flows from small to large countries. Hence, in this sense, the trade effect dominates the Champions League effect. Competitive balance increases in all but the very smallest countries.
Original languageEnglish
Pages (from-to)318-335
JournalJournal of Economics and Statistics
Volume232
Issue number3
Publication statusPublished - 2012

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soccer
institutional change
wage increase
world trade
Second International
First International
international competition
wage
money
Soccer
Institutional change
Competitive balance
Wages
Small countries
Champions
International trade

Cite this

Haan, M. A., Koning, R. H., & van Witteloostuijn, A. (2012). The effects of institutional change in European soccer. Journal of Economics and Statistics, 232(3), 318-335.
Haan, M.A. ; Koning, R.H. ; van Witteloostuijn, A. / The effects of institutional change in European soccer. In: Journal of Economics and Statistics. 2012 ; Vol. 232, No. 3. pp. 318-335.
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Haan, MA, Koning, RH & van Witteloostuijn, A 2012, 'The effects of institutional change in European soccer', Journal of Economics and Statistics, vol. 232, no. 3, pp. 318-335.

The effects of institutional change in European soccer. / Haan, M.A.; Koning, R.H.; van Witteloostuijn, A.

In: Journal of Economics and Statistics, Vol. 232, No. 3, 2012, p. 318-335.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - The effects of institutional change in European soccer

AU - Haan, M.A.

AU - Koning, R.H.

AU - van Witteloostuijn, A.

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AB - The last decades have seen two profound changes in European soccer. First, international trade in talent has increased markedly. Second, international competitions such as the Champions League have become much more important. Using a theoretical model, we study how these changes affect competitive balance within national competitions, and quality differences between national competitions. Introducing international trade in talent leads to a flow to large countries, as the returns to talent are higher there. Wages increase in small countries, but decrease in large ones. The wage increase in small countries hurts small teams more than large ones. Therefore, competitive balance decreases. The wage decrease in large countries benefits small teams more, so competitive balance increases. The introduction of a Champions League implies the possibility to win a large amount of prize money. This is relatively more important for small teams. Hence, competitive balance increases in all countries, and talent flows from large to small countries, provided international trade is possible. Wages increase. When looking at both changes combined, we find that talent flows from small to large countries. Hence, in this sense, the trade effect dominates the Champions League effect. Competitive balance increases in all but the very smallest countries.

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JF - Journal of Economics and Statistics

SN - 0021-4027

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Haan MA, Koning RH, van Witteloostuijn A. The effects of institutional change in European soccer. Journal of Economics and Statistics. 2012;232(3):318-335.