Economics of European Soccer

A really nice article by Stefan Szymanski Professor of Sport Management at the University of Michigan.

He explains how this origins of European Soccer club culture came about and how it has changed over the years from an economics lens. There is a bit of everything in the article – history, competition, regulation, deregulation, labor markets, labor mobility etc etc.

The soccer World Cup in Brazil will be the biggest sporting event of 2014, likely dominating the news and lives of fans for many months. For some of the players, this will also be the defining moment of their careers.

Attention will focus on established soccer stars such as Argentina’s Lionel Messi and Portugal’s Cristiano Ronaldo and whether they can do as well for their countries as for their clubs (Barcelona and Real Madrid, respectively).

The World Cup will also create several new millionaire players—players currently working for small clubs in places like Costa Rica, Croatia, Greece, or Japan will earn lucrative contracts with mega clubs such as Bayern Munich and Manchester United on the back of star performances in Brazil. Almost every player’s ambition will be to play at the highest level in Europe.

Thanks to fundamental changes in the regulatory regime and other factors, international mobility in Europe’s soccer labor market has increased markedly in the past two decades. Today, the size of the expatriate labor force in European soccer (at more than one-third of the total) far exceeds that in the wider European labor market, where foreigners comprise only 7 percent of the labor force (Besson, Poli, and Ravenel, 2008; European Commission, 2012). This internationalization is a key factor in Europe’s soccer success.

Nice stuff to read..

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