Competitive Imbalance and Budget Constraints
- New Horizons in the Economics of Sport series
Chapter 6: Soft budget constraints in European and US leagues: similarities and differences
In contemporary economic literature on professional team sports the European and the North American contexts are commonly contrasted. A typical textbook comparison argues that open European professional team sport leagues (pro leagues) consist of win (or utility) maximizing teams (Késenne, 1996, 2006; Sandy et al., 2004), while closed American ‘major’ leagues involve franchises that are essentially profit maximizers (Noll, 1974; Cairns et al., 1986; Fort, 2000; Szymanski and Hall, 2003; Késenne, 2006; Szymanski and Zimbalist, 2006). However, others stress the similarities between the two models in relation to sports organizations and team objectives (Fort, 2000). The adaption of new strategies and aims on both sides of the Atlantic has led scholars to question the archetypical categorizations. On the one hand, it appears that European football has been ‘Americanized’ (Hoehn and Szymanski, 1999; Nauright and Ramfjord, 2010) with an increasing focus on revenue streams and profit. On the other hand, an increasing awareness of the existence of ‘glory seeking’ (that is, ‘win maximizing’) ‘sportsmen’ owners in American leagues has evolved as well (Vrooman, 2000).
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