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Soccer Incentives

Recent travels kept me away from the SportsEconomist for the past couple of weeks. Fortunately, I was lucky of enough to have access to Fox Soccer Channel over the weekend of May 15 for the final day of the English Premier League. Whether one cares about soccer or not, the incentives embedded in the EPL (and other soccer leagues around the world) provide an interesting contrast to those offered in American sport.

One of the biggest differences is at the bottom of the league. In American sports, teams play out the season in front of empty stadiums in games that mean very little to fans. The relegation system in soccer creates an entirely different atmosphere. During the course of the May 15 games (all started at the same time), all four EPL teams vying for the last spot above the relegation zone held the upper hand at one time. Norwich came into the day holding the spot. Southhampton grabbed it for a time in the first half. During the second half of the games, Crystal Palace and West Brom traded the spot back and forth as their scores changed. These games contained interest, tension, and drama equivalent to any "game 7" playoff in American sport. The celebration scene at West Brom looked like world championship. The weekly EPL Review Show spent the first thirty minutes summarizing this battle at the bottom! Beyond the relegation battle, competition for European Cup football places as well as 500,000 pounds for each finishing spot made most of the games meaningful and exciting. There are many more marginal incentives than in American sports.

The relegation system likely creates some internal redistribution issues. I suspect that the system enhances the "size of the pie" to the point of swamping the division of the pie problems it may create. Teams are always playing for something, which translates into high fan interest and revenues for the league. In From the Ballfield to the Boardroom, I discuss the recurring problem in American sport of owners and pundits observing them fixating too much on the division of the pie while ignoring the effects of building a bigger pie. As noted in an earlier post, for all of the attention devoted to the NFL's revenue sharing and salary cap, their real success has been through the boom in the interest in their product over the last thirty years.