How does the North American- and the European model differ in Structure, Entry, Territories & Objectives?
How is the Structure different?
NA: Bottom-up approach. Independent (from any rule body) team owners came together and created a league. In the NBA it’s about the owners and their assembly
EU: National sports associations created leagues which slowly started to become more professional. DFB is not an association of team owners. Bundesliga is integrated into a whole system of leagues.
European layer on top -> UEFA
Higher than UEFA -> FIFA
3 reasons why European clubs maximize wins
Why are is the European model about Win-maximization rather than Profit-maximization?
Verein is a non profit organization. It should maximize the utility of members which is sport success
Teams in open leagues don’t earn profit if they play badly and get relegated
Where does the market value from the teams in the European model come from?
Doesn’t stem from their internal profit, but rather from their hug potential to generate global exposure and spillovers
What are the two perspectives on the institutions and institutional differences?
Market power perspective
Focuses on the set of institutional devices by which the team owners succeed to curb competition to the detriment of their transaction partners in all relevant markets
(Team ownders collude and create a championship and broadcasting rights)
Efficiency perspective
Sees the insitutional setup of a league as the result of attempts to reduce the “costs of running the system”
-> For many years, sports economics has been dominated by the market power perspective
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