In its rulings on Bosman, Diarra, and the European Super League, the Court of Justice of the European Union has overlooked competition in consumer markets, to the detriment of football fans and small clubs. The European Commission has also been weak in enforcing competition law in football consumer markets. To rectify this, the Commission should apply competition law more rigorously. In the long run, a European Sports Act could further enhance consumer market competition, while also improving the sports ecosystem more broadly.
In 1995, the Bosman ruling put an end to transfer fees for out-of-contract players. This year, the Court of Justice of the EU (CJEU) is dealing with the Diarra case, which concerns players still under contract. The Advocate General has already given the Opinion, which suggests that the upcoming CJEU's ruling will further weaken the transfer system. I argue that both rulings focus too much on the labour market and the freedom of movement of workers and neglect the fact that the football transfer system enhances competition in consumer markets at the benefit of smaller clubs and the football fans.
Over the years competitive balance has decreased in many football competitions in Europe. This means that the number of clubs with a realistic chance of winning important prizes has declined. Consequently, there is less choice for the many consumers who want to watch, or become fan of, a club from their own country that can win important prices. Put differently, in many national consumer markets competition has decreased. Unfortunately, the legal profession has paid insufficient attention to the effect of decreasing competitive balance on competition in consumer markets. This is also relevant for the Bosman ruling. The ruling prohibited transfer fees for out-of-contract players. This has led to a decrease in competitive balance. Therefore, the ruling has decreased the competition in national consumer markets. However, in making the ruling the European Court of Justice fully neglected the possibility of such a decrease. While it did apply the hard law concerning the free movement of workers, and it did take account of the specific features of the sport and the need for competitive balance more specifically (even though this was not decisive in the end), it neglected hard competition law as regards the competition in consumer markets. If it had not done so the ruling might have been different, and better for the football fans.
In 1995, the Bosman ruling put an end to transfer fees for out-of-contract players. This year, the Court of Justice of the EU (CJEU) is dealing with the Diarra case, which concerns players still under contract. The Advocate General has already given the Opinion, which suggests that the upcoming CJEU's ruling will further weaken the transfer system. I argue that both rulings focus too much on the labour market and the freedom of movement of workers and neglect the fact that the football transfer system enhances competition in consumer markets at the benefit of smaller clubs and the football fans.
According to the European Superleague Company ruling of 21 December 2023, the UEFA rules for the approval of football competitions are inadequate. In search of better rules, this paper proposes three criteria for the approval of competitions: they should (1) improve welfare; (2) reflect the preferences of the consumers (football fans); and (3) be compatible with competition law. All Super Leagues proposed before 2022 would not have met criteria 1 and 3 in any case, as they would have reduced welfare and would have reduced the competition in consumer markets in a way incompatible with competition law. The same holds (or is likely to hold) for the reforms of the Champions League that UEFA has made since 1998 in reaction to threats of big clubs to start a Super League. However, if UEFA improves its own competitions in line with the criteria above, it should be able to outcompete the organizers of alternative competitions.
Research question In European men's club football, competitive balance is decreasing. Review articles have concluded that the empirical studies do not provide a unanimous answer to the question whether this decrease leads to lower utility for the fans. This paper investigates whether the conclusion of the reviews is (still) correct.Research methods Qualitative analysis is applied to get a better interpretation of the results of the empirical studies.Results and findings There are three types of uncertainty of outcome: short-term, seasonal, and long-term, with possible different dimensions within one type. A possible interpretation of the literature is the following: a decrease in one or two types of uncertainty of outcome, or a certain dimension, can lead to serious reductions in welfare, while the conclusion may be different for other types or dimensions. Several studies suggest that a decrease in (a certain type of) competitive balance has no effect on welfare, or just a small effect, if the competitive balance remains above some minimum level whereas once the competitive balance is below this level, further decreases in it result in serious welfare reductions. Taking these and other points into account, the review concludes that it is highly plausible that the present level of competitive balance is below the welfare-maximising level in most competitions at least, and any further decrease in it will seriously reduce welfare.Implications Policies that improve competitive balance will plausibly also improve welfare.Research contribution Compared to other review studies, this paper pays more attention to the reasons why different empirical studies get different results, which enables a less ambiguous conclusion.
Research question: The paper investigates the way in which the large football clubs are increasing their dominance, and whether this is compatible with EU competition law. Research methods: Various insights from the economic and legal literature have been combined to give a new interpretation of EU competition law. Results and findings: The number of clubs with a realistic chance of winning important prizes has declined in many national markets. As a result, the economic competition has diminished and prices have increased to the detriment of welfare. This development has been reinforced by the joint actions of the top European clubs, such as threatening to start a Super League. Consequently, UEFA has implemented policies that have been particularly helpful for the top clubs. But, the clubs' actions are incompatible with EU competition law, as is the actual creation of a European Super League. Implications: If the EU were to enforce the law, the power of the big clubs would be reduced, and UEFA's policies could be based more on the old democratic principles, again. This would lead to more sporting successes for small clubs and to lower prices for the fans.
Research question: Which combination of league system and competitive balance in European men's club football maximises welfare, and which policies can improve the combination? Research methods: Qualitative analysis is applied that uses the sport economics literature and other sources. An encompassing number of factors, insights and empirical results are considered to analyse systematically the options to reform European professional football. Results and findings: In the present league system, competitive balance is decreasing which reduces welfare. In a system with a Super League, competitive balance can be higher. The last system also has other advantages, as well as disadvantages, in relation to issues such as the quality of play, the role of star players, chances to lift important trophies, regional and national sentiments and rivalries, and sporting meritocracy. After discussing these issues, it is concluded that a Super League system may improve future welfare. If, however, the present system regains a higher level of competitive balance, it may well generate a higher welfare level than a Super League. Two measures for improving competitive balance are a more equal distribution of broadcasting revenues and a progressive luxury tax. Practical implications: At present, the measures above may seem to be infeasible. However, this can change if the competition authorities accept our interpretation of EU competition law and act accordingly. More generally, the government should become better aware of its potential to improve welfare in the football sector. Research contribution: The paper provides a systematic analysis of the welfare effects of different options to reform Europe's professional men football. Because of its broad approach it sheds new light on pressing issues and it provides insights for policymaking.
The last year has seen mounting speculation that some of Europe’s top football clubs are preparing to establish their own European Super League. Tsjalle van der Burg argues that given a European Super League would violate European competition law, the European Commission should step in and forbid it. This would empower European football’s governing body, UEFA, to reform football for the benefit of supporters.
The public health measures taken to combat the corona virus are having a direct negative effect on a number of industries. To help avoid bankruptcies and rescue aid from the government, it is useful to shift part of the direct costs of the public health measures from the companies that sell the final goods to the suppliers of their inputs. This could be realized by emergency laws to strongly reduce certain input prices, such as pub rents, football player wages, and airplane lease prices.
A number of authors have proposed that firms can internalize externalities through their shareholders. This paper investigates this proposition, focusing on public bads. Theoretically it is, indeed, possible that shareholders decide that the firm reduces its public bads at the cost of profits, thereby increasing Pareto-efficiency. One of the factors which help determine the size of the reduction is the number of shareholders with a (very) small stake in the firm. The greater this number, the greater the reduction will tend to be. It is shown that the reduction in public bads can be reversed by takeovers, but under special conditions only while takeover defences may also be used. Unfortunately, there are a number of factors which significantly limit the internalization of external effects in practice. The paper also discusses a change in the legal share-voting system whereby the direct owners of the shares (i.e., the shareholders) no longer possess, in their capacity of direct owners, the legal right to vote at the General Meetings of firm owners. Instead, these rights become the property of the beneficial owners of the shares (i.e., the people who ultimately provided the money to buy the shares), but on the condition that they delegate their voting rights to a proxy voting institution. This institutional innovation may significantly increase the internalization of external effects among other things because many beneficial owners have a tiny stake in the firm.
This paper discusses a new system of firm governance. In the system, the responsibility for voting the shares of a firm ("voice'') is given to the people who ultimately provided the money, who, however, have to delegate it to proxy voting institutions. The system helps overcome collective action problems and conflicts of interest within firms, and it reduces the private benefits of control. The disadvantages for firm governance may be relatively modest. However, since the new system of voice is a conceptual innovation, the analysis of its effects is rather tentative. Further research and experimentations are required for firmer conclusions.
