IF THE PRICE IS RIGHT

Printed in the Southern League South and West League match v Bridgewater Town Saturday 20th October 2007. We lost again 2-0 in front of 207.

A book written by two economists about baseball and what they annoyingly call “soccer” wouldn’t usually be at the top of my ‘to read’ list. But with Americans queing up to buy Premiership clubs, this book is a timely read.

The owner of an American football team now controls Manchester United, while other Americans own Aston Villa and Liverpool. Then there’s a certain Rupert Murdoch, whose Fox Network holds the main national TV contract with Major League Baseball, while his regional sports networks cover 25 of the 30 Major league baseball teams. Until early 2004 he owned the Dodgers – which he admitted to buying in order to gain control over the regional sports network market in Southern California. Murdoch controls SKY and Aky Italia and he tried to get his grubby mits on Man United before Glazier was successful. Of course he would like nothing better than a European Superleague.

As the authors point out “Rather than abandon the design of sports leagues to the Murdochs and Glazers of the world, we think that a public airing of issues that arise from a cross-cultural interpretation of sports leagues might be part of a wider debate on the reform of baseball and soccer.”

While at times the number crunching and the baseball bits are of little interest to me, the book is more than this. The history chapter in particular is excellent.

What you also find out that in the US sports leagues are closed, meaning there is no relegation and promotion. Team owners carefully control the number of franchises and their locations, and generally each team is granted a monopoly over a certain area. Teams also get substantial public subsidies when building new grounds.

“Every US league adopts some or all of a litany of measures that supposedly promote competitive balance but in practice control costs. A number of measures have the effect of restraining economic competition. They include: restraints on players moving club, squad limits, rigid salary caps or 'luxury taxes' on teams that opt to break pay ceilings, rules controlling the drafting of college players, revenue sharing, collective selling of TV rights, joint merchandising deals and more. American sports leagues are essentially cartels that create profit by limiting competition for players, cutting costs, and restricting incentives to build a winning team, preventing an 'arms race' for talent.”

But while baseball makes a profit for the owners the same cannot be said of European football. Worse, relegation can bring financial ruin. This scramble to avoid relegation brings extra cost, as more players are bought; higher wages are paid – which of course all eats into owner’s profits. In the US, losing teams need not invest in talent because there is no penalty for failure which means that nearly everyone makes money.

As the authors point out “It is likely that American owners in the Premier League would want to see some of these measures adopted here, but to do that they would have to dispense with promotion and relegation. This would both destroy the incentive for losers to spend, and create an incentive for the rich clubs to share. The main obstacle to abolishing promotion and relegation is political: the European Commission has declared that it is a fundamental characteristic of the 'European model' of sport, while the European parliament has declared that we do not want to adopt the 'American model'. Confusingly, the commission is now working on a white paper that promises to promote cost control and revenue sharing in the interests of competitive balance while maintaining promotion and relegation, even though the latter undermines the former. The commission seems set on burying its head in the sand by granting a broad exemption from competition law to the governing bodies and hoping that will make the Americans go away.”

However, the big European clubs are already flexing their muscles at any attempts to 'tax the rich' and talk of a European superleague is never far away. A superleague that football owners and media moguls alike will be rubbing their hands with glee.

· National Pastime: How Americans Play Baseball and the Rest of the World Plays Soccer by Stefan Szymanski and Andrew Zimbalist (Brookings 2006)
http://www.brookings.edu/press/books/nationalpastime.htm