The Future of Football

Tyler Cowen is a really bright guy. But he's just wrong when he writes:

The combination of hierarchical leagues and not-for-profit clubs, which has characterized soccer for the twentieth century, is poorly suited to the age of modern commercial sport.  Its days probably are numbered.

1. Football is a sport drowning in money. While it's true that Chelsea (top three headlines as of this minute at the webpage: "Terry worth £50m, says Mourinho," "Everton to bid £4m for Forssell," & "Chelsea confirms Scott Parker is up for sale as Everton prepare a £6m bid") is a hobby for Russian billionaire Roman Abramovich, today's big story is Malcolm Glazer's for-profit takeover of Manchester United. Football is the essence of "modern commercial sport."

2. Hierarchical leagues create many more profit opportunities (titles). Think of all the fans that followed Arsenal to its FA Cup victory, Chelsea to its Premiership title, and Liverpool to last night's Champions League win. Would collapsing all of football down to the World Cup be wise?

3. Hierarchical leagues make football much more interesting. Witness how Swansea fans paid attention to every last match as they attempted to secure one of the top three spots in League Two in order to move up to League One. Not to mention the intensity brought by the threat of relegation to those that languish at the bottom of the table. When has Triple-A baseball ever been so interesting?

Football's days are far from numbered.

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Football is the essence of

Football is the essence of “modern commercial sport.”

Yes and no, Football exists in a strange bizarro world where ordinary market incentives are extremely distorted leading to many undesirable outcomes. Your headlines allude to one of the most egregious of these distortions - the transfer system, or property rights over players. This is a kind of self-perpetuating scam whereby clubs collude in the system because they already have players "on their books". But, apart from any qualms one might have about "owning" any individual, the big problem I see with this system is that it removes the incentive to moderate salaries for the entire tier below the star players. Many clubs which are losing money or barely breaking even pay massive salaries to players who don't "earn" the club anything like enough money to justify those salaries.

If you are buying an asset, you can bundle that "asset's" salary into your valuation of that asset and hope that his "value" goes up by the time you sell him. If, by contrast, you don't have to buy him, the salary you offer him would have to reflect what you reasonably believe he is able to earn for the club.

My guess is that under a liberalised system players would command salaries equivalent to executives who earned their companies an equivalent amount of money.