Competitive balance and revenue sharing in European football. Some novel insights

Abstract or Introduction

This thesis will provide the reader with a good understanding of the economic forces in the modern sports industry with a focus on European Football. The reader will be introduced to the most common measures of Competitive Balance and the existing literature on the topic. Equipped with this knowledge, the paper takes the reader on a recap of the European top leagues history with a focus on the Competitive Balance beginning in 1980. The final chapter then provides an econometric deep dive into the data for the Bundesliga.

The commercialization of European football strongly accelerated in the early 1990s and brought tremendous revenue increases to the industry. Rapidly, broadcasting revenues became the clubs’ main source of income. Some professional football leagues jointly sell their teams broadcasting rights as bundles and share the incomes with a certain degree of solidarity among them. This study tries to find evidence for the positive impact of such revenue sharing agreements on the competitive balance in Europe’s strongest football leagues. Therefore, a newly developed measure is applied, which contains combined information about leagues absolute level of competitive balance as well as relative changes in standings over time. The results of the study mainly speak in favor of an enhancement of solidarity among teams, because of its positive impact on competitive balance and thus on a leagues attractiveness to customers.