Friday, August 17, 2007

'Fair' Competition OR Economics in Sports, Part One

Recently two English publications have been spending some time investigating the matters of money and sport and how competition on the field is contrasted against competition at the coffers. The first, When Saturday Comes, is a fanzine that's grown into a magazine, with a concentration on paying attention to the smaller clubs in Britain instead of turning into all-Premier-League-all-the-time, as many English publications have. The second is The Economist, a British journal that has a basis in economics, although articles cover a wide range of subjects, with an emphasis on a free-market philosophy.

Both publications have noted that it is odd that America, which tends to a free-market approach, has highly socialist and collectivist sports leagues (the most obvious being the NFL), while in England, which traditionally tends toward socialism, the EPL definitely leans towards a free-market approach (although not nearly as much as in other European soccer leagues, as we will get into later). Both of these approaches are reflected in the competitive nature of the the leagues.

The modern NFL, where the salary cap and shared revenues ensure that no one team or group of teams maintains a permanent advantage over the others, is defined by parity, with no team dominating the league (in theory) and where any team can have a reasonable expectation of success in the short- to medium-term without having something miraculous occurring.

In direct contrast, the EPL is dominated by a group of 4 clubs, and even that may be generous considering that Liverpool has gone an extended period of time without winning the league. These clubs maintain their dominance because financial rewards, both in terms of prize money and more importantly, in the form of television contracts and merchandising, mean that the rich are those who have the greatest earning potential and joining the ranks of the rich is possible only through a massive cash investment, approximate to a deus ex machina.

Of course, both publications have reached conclusions that their preferred way of thinking is obviously the correct one, with WSC looking wistfully at the number of different NFL champions over the last 10 years while The Economist asserts that the Premiership is as popular as it is precisely because a small handful of teams, free of administrative controls, can go forward with creating super-teams.

Both of these arguments have their own pitfalls. The Economist claims that the NBA has "lost its shine" since Michael Jordan's dominating Bulls teams left the landscape, which has more to do with the nature of stardom and the state of the game in terms of strategy and rules in the late 90s than it does with the lack of a truly dominant team, especially considering the success of the Shaq/Kobe Lakers (not to mention that the NBA's periods of high success, including during Jordan's dominance, were post-salary cap); while WSC believes that fan interest in the EPL is, to a certain extent, driven by dreaming by Tottenham/Newcastle fans as well as the fleeting interest of fans whose teams have been promoted, which seems to be a bit too eager to downplay the impact of the uber-successful teams and their large amount of fans, both ticket-buying and otherwise.

The most galling aspect of this is, that for myself, my initial inclinations are to agree with WSC -- open financial competition has seemed to kill off competition on the field, with all domestic prizes inevitably falling to one of the big teams, while as a 49ers fan, I know that a couple years of shrewd maneuvering could bring the team back to the Super Bowl relatively easily, regardless of tepid performances in previous years. And that being said, it is the EPL that is far more fascinating to me as a fan, to the point where I posted on this blog an article last year decrying the parity of the NFL, where the rules intended to spread the wealth have created a league of mediocrity, where excellence is confined to the front office and the best teams are those that merely fail to lose. My viewing habits also support this, as I watched more EPL games over the opening weekend than the total number of NFL games I watched during the previous season (which also serves to highlight that I have more options for watching games from a league not even in my country than I do with NFL games, courtesy of the league monopoly with DirectTV).

If asked to choose between the systems, it becomes clear that the situation is not that simple. There are pros and cons to each methodology. Although any NFL team can become a contender, they have lost their sense of personality. With millions behind them, the great managers of Europe can build teams that fit their philosophy, allowing teams to retain a visible and notable style of play that extends to the teams outside of the elite.

It seems that an increasing response, at least among vocal sports fans, is "neither". While both systems have their strengths and weaknesses, neither of them is particularly forgiving to the fan. Both the EPL and the NFL have become dominated by the rich fan, the tourist or the corporate interest, the prototypical beer-swilling working-class fans of the earlier years of the sport having been priced-out by ticket and concession prices (especially in terms of taking kids to games), creating an atmosphere decried both by ESPN-haters in the US and by football lovers in the UK, including Roy Keane's famous dismissal of the new "prawn-sandwich brigade" fans attending Manchester United matches.

One area that crucially is different between the two countries is how the creation of new teams is treated. When Manchester United was bought by the Glazers, Americans who also own the Tampa Bay Buccaneers, a group of Manchester United fans got together in protest, which eventually turned into fan groups pooling money and starting a new team, Football Club United of Mancester, or FCUM for short. They've already made it to the Premier League, even if it's the Unibond Northern Premier League, Division One North, a full 7 levels of football below Manchester United.

Compare this to the NFL, which has no lower divisions and if one wanted to start a new team, say in Los Angeles, you would need approval of the League's commissioner as well as the Board of Directors, as well as a metric fuckton of money, as well as a possible stadium location, etc. As a communalist system, the NFL works on stringently controlling all aspects of the sport, especially the economic ones, making it extremely difficult for newcomers to break into the game.

The fact that both the Manchester United supporters who left to support FCUM, as well as the Wimbledon supporters who started AFC Wimbledon after the original Wimbledon FC was moved to Milton Keynes, is a strong argument for the viability of the more entrepreneurial sporting system in the UK, even if the financial maneuverings at the top of that system are regarded as the catalyst for these groups of supporters having to"take back" their teams.

At the same time, the system as set up in England creates a situation where, like other businesses, a club can fail to the point of disappearing. Leeds United have always been one of the larger clubs and in 2001 they were one of the pretenders to the throne, even appearing in the Champion's League semi-finals. Today, they've been relegated to the third division of English football, complete with a 15 point deduction to start the season thanks to shaky financial dealings which at one point threatened the club with liquidation. Smaller clubs are continually having to deal with what's called "asset stripping" as owners take over the club with the main intention of leveraging the club's property as real estate, often leaving clubs with nowhere to play.

I'm left wondering if there isn't a sweet spot in the middle ground, possibly along the lines of the NBA's soft cap and luxury tax, some way to allow the big clubs to spend money if they want while allowing smaller clubs to maintain a certain level of competitive edge, creating leagues with discernible styles for their different teams and some financial oversight on teams that might otherwise be run into the ground. There's no way to bring back the past; however, that doesn't mean that future disasters are in any way inevitable.

Comments on "'Fair' Competition OR Economics in Sports, Part One"


post a comment