The kids are alright

It’s easy to think that baseball and cricket and football and soccer have nothing in common, but two stories from the past two days illustrate the basic idea that sports leagues conform to the rules of supply and demand in much the same way as pork bellies and crude oil.

I have posted several comments on this blog about the threatened tightening of regulation of European soccer by the governing bodies (led by UEFA) with the support of the European Commission. UEFA proposals include restrictive nationality regulations for players and a salary cap. These rules are likely to hurt the bigger clubs, that buy all of the top players and pay huge salaries (out of their huge revenues). Not surprisingly, this threat has finally pushed the clubs into wheeling out their nuclear weapons, in the form of a breakaway Superleague. As with previous such threats it probably won’t happen, but the threat should enough to water down the UEFA proposals.

The second story comes from India, where Zee TV is proposing to run a club league made up of six teams using a mix of Indian stars, international stars and up-and-coming Indian players. The players would probably face some kind of sanction from the cricket authorities in their own countries, since the tournament would not be authorised, but similar attempts to restrain players participating in an Australian rebel cricket competition in the 1970s failed in the courts. It may be that the tournament will never materialise, but it will be a useful bargaining chip for Zee TV when negotiating rights and possibly for the underpaid players (see my blog on cricket from last week).

What unites these two stories is the fact that these threats to start new leagues are only credible in the face of unsatisfied demand. Demand is unsatisfied because governing bodies insist on retaining traditional formats even when consumers have moved on. The reason that consumers move on is simply fashion- I never wanted the things my parents wanted, and my children don’t want the same things that I did. I can tell you, woe betide the administrator who fails to give my kids what they want.

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Author: Stefan Szymanski

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