Chapter 1: Club objectives
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A standard assumption in the theory of the firm is that business enterprises attempt to maximise their profits, though it is recognised that in some cases firms may pursue alternative strategies such as sales revenue maximisation or growth maximisation. But are any of these appropriate assumptions for team sports in general or the football industry in particular? Economists in North America have tended to answer in the affirmative on the grounds that there is no strong evidence, for the major team sports there (namely, baseball, American rules football, basketball and ice hockey) that long-run rates of return have been below the market average. In Europe, in contrast, sports economists have in most cases assumed that non-profit-maximising behaviour is the norm as in most team sports there have been long-run losses, with clubs subsidised through the generosity of their owners or donations from supporter clubs. This is a matter of some significance. As Kesenne (2006a) has pointed out, different objectives can lead to different outcomes with respect to issues such as the distribution of players across clubs, the average size of player salaries, total league revenue, optimal ticket prices and the impact of different regulations such as those relating to the sharing of revenues and salary caps. As Franck (2010) observes, compared to firms in other industries, professional football clubs seem to operate in a weak economic environment or at least one that does not generate large profits for most clubs.

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Edited by John Goddard and Peter Sloane
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