Real Madrid and Sports Econ 101

So what do professional sports teams sell? Rivalry of course, and to have rivalry you have to have a rival. Real Madrid have broken the bank (how did they manage to find one not already broken?) this week buying Kaka, Ronaldo and according to today’s news story Villa , blowing a total of around €200 million, but who is all this talent going to play against? OK, two games against Barcelona will be spectacular, but the other 18 teams in the Spanish League are minnows. Champions League, you say? Six group stage games will probably only include one serious opponent, then they have six more games before the Final (God forbid they should get unlucky and lose, but at least one of these opponents will also be a minnow. So, all that money for at most nine games that count. This is why the most interesting outcome of this week’s excitement is that President Perez is now talking about reviving plans for a proper European Superleague that would give them enough games to play. This idea, whose pedigree goes back to the 1980s, was dead in the water a year ago because of the dominance of the Premier League. But now that big stars are being lured away, the EPL clubs have a motive to come to the table.

I think there is an inexorable logic to this: the biggest stars in soccer play for Real, Barcelona, AC Milan, Juventus, Inter, Bayern Munich, Man Utd, Chelsea, Liverpool and Arsenal. This makes for 90 top flight games a season (home and away), but because they are spread across four leagues and only occasionally meet in the Champions League in a typical season they play less than 30 games among themselves. A proper Superleague would generate huge interest and unlock a great deal of value for owners. But hey, I could be wrong; after all, I’ve always thought the same thing about the Conference system in American college football…

Photo of author

Author: Stefan Szymanski

Published on:

Published in: