DEEP SUMMARY - Money and Soccer_ A Soccernomics Guide_ Wh - Stefan Szymanski

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Here is a summary of the book's "Also by Stefan Szymanski" section:

Stefan Szymanski has authored or co-authored several books on the economics of sports, especially soccer. His books include Soccernomics, which examines why certain countries excel at soccer, and National Pastime, a comparison of baseball and soccer. He has also written about the business strategy of soccer in Winners and Losers, the economics of modern sports in Playbooks and Checkbooks, and soccer finance and policy in Football Economics and Policy. Szymanski has additionally co-authored books on sports consumers and Italian soccer business. His academic interests cover the comparative economics of sports.

Here are a few key points about Real Madrid's dominance and the contrast with HB in the Faroe Islands:

  • Real Madrid is one of the most successful and valuable soccer clubs in the world, having won a record 10 European Cup/Champions League titles and generating over $600 million in annual revenue.

  • Its dominance is built on long-term success in the Spanish La Liga, which it has won a record 32 times, far ahead of rivals like Barcelona.

  • This contrasts sharply with HB in the Faroe Islands, which has won 22 league titles in a smaller and less lucrative league.

  • While Real Madrid is worth billions and attracts the world's top players, HB operates on a much smaller scale financially in a very localized context.

  • The comparison highlights how success and dominance look different in large, rich leagues versus smaller football countries. Real Madrid sits atop the soccer world while HB is a dominant force on the remote Faroe Islands.

In summary, Real Madrid's global pre-eminence contrasts with HB's localized dominance to highlight the very different scales and economics of elite soccer today. Despite the differences, both leverage long-term success to cement their positions.

Here is a summary of the key points:

  • HB Tórshavn is the dominant soccer club in the Faroe Islands, a country of around 50,000 people. HB is based in the capital Tórshavn, the largest town with around 18,000 people.

  • HB was founded in 1904 and has won the Faroese league 22 times, well ahead of any other club. Only 9 clubs have won the league in the past 50 years, illustrating HB's dominance.

  • Similar patterns of dominance by 1-2 clubs are seen in many small European leagues, like Luxembourg where Jeunesse Esch has won 20 of the last 50 titles.

  • Despite their small sizes, these leagues have a structure of promotion/relegation like bigger leagues. But a few clubs still dominate over long periods.

  • Dominance is common across European leagues regardless of size. On average the dominant club in 20 leagues won 1/3 of titles in the past 50 years.

  • The promotion/relegation system and equal competition should lead to around 40 different champions over 50 years. Yet the average is only 10, showing persistent dominance.

  • The Champions League also shows dominance by a few countries like England and Spain. This pan-European competition resembles domestic leagues.

  • Dominance is not new - comparing the last 25 years to previous 25 years shows a very similar pattern of persistent dominance by a few clubs/countries.

    Here is a summary of the key points about Real Madrid:

  • Founded in 1902, but fortunes rose under Franco's dictatorship from 1939-1975. Benefited from favorable political environment, though Franco did not directly fund or manage the club.

  • President Santiago Bernabéu built a large new stadium in 1940s, hired great players, and focused on proving Real Madrid was the best club in Europe. Won 5 straight European Cups from 1956-1960.

  • Dominance faded in 1970s with political changes in Spain post-Franco. But revived in late 1990s/early 2000s under President Florentino Pérez with "Galácticos" strategy - signing superstar players like Zidane, Figo, Ronaldo to regain elite status.

  • Marketed itself as heir to royalty and won 2002 Champions League final with Zidane's iconic goal. Marie Antoinette-like aura around the club. Dominance rooted in favorable political treatment and shrewd management capitalizing on Real's royal image, not direct political financing.

    Here is a summary of the key points:

  • Unlike other major European leagues, Real Madrid does not share its lucrative TV rights revenue with smaller clubs, leaving them struggling financially while Real thrives.

  • Real can afford to spend lavishly on star players and has high ticket prices, averaging €90 per fan per game. Other Spanish clubs average only 20,000 fans per game compared to Real's 70-80,000.

  • Real sees itself as royalty, above sharing its wealth. Other Spanish clubs are like peasants unable to keep up with Real's extravagant spending.

  • This situation is unique in Europe. In the Premier League, Bundesliga, and Serie A, TV rights are shared more evenly so smaller clubs can remain competitive.

  • Real Madrid's financial dominance reinforces its sporting dominance, as it is the only Spanish club that can consistently afford the best players. This entrenches its position as Spain's leading club.

  • The inequality between Real and other Spanish clubs is damaging the competitiveness and appeal of La Liga overall.

    Here is a summary of the key points about investment in the passage:

  • By the late 1990s, Manchester United had become the most valuable soccer club and sports franchise worldwide, worth more than teams like the New York Yankees and Dallas Cowboys.

  • Globalization and the Premier League's international popularity led to huge financial success for Manchester United as the most glamorous club.

  • American investors became interested in owning Premier League clubs. The Glazer family took over Manchester United in 2005 in a controversial leveraged buyout that saddled the club with debt.

  • Despite fan protests, Manchester United continued winning titles under the Glazers. Revenue has risen dramatically and the club's value is now around $3 billion.

  • The Glazers have benefited from broadcast revenue growth and recognized Manchester United's global symbolism and popularity. They commercialized the club but did not drastically change operations.

  • In Germany, Bayern Munich has long dominated the Bundesliga due to luck and consistently good decisions. The 50+1 ownership rule prevents takeovers and disruption to Bayern's dominance.

  • Dominant teams like Manchester United and Bayern Munich still face local competition despite their financial power and on-field success.

    Here is a summary of the key points:

  • Dominance in markets can occur even when competition is feasible, as seen in the beverage industry where Coca-Cola and Pepsi dominate despite low barriers to entry.

  • According to economist John Sutton, advertising creates dominance in "advertising-intensive" industries. Firms compete on advertising for consumer recognition, which requires large sunk costs. This leads to a few dominant firms and a competitive fringe of small firms.

  • In soccer, dominance occurs through competition for players rather than advertising. Big clubs spend heavily on top players and achieve global followings. Many small clubs survive due to intense local loyalty, forming a competitive fringe.

  • Unlike most businesses, distressed soccer clubs almost always survive through various means like liquidation and reformation, or acquisition by another club. This pattern of dominance and survival happens across all market sizes.

  • Spanish and Italian clubs have accumulated billions in debt, with little reform success. Clubs continue to overspend and accumulate debt, propped up by government bailouts and leniency.

    Here is a summary of the key points:

  • Spanish clubs built up large debts until 2003 when a new insolvency law, the Ley Concursal, allowed them to renegotiate debts rather than shut down. Between 2003-2011, 22 clubs used this law to restructure debts.

  • In 2012 the Spanish government intervened to force clubs to pay tax and social security debts. It's not yet clear if this will succeed.

  • Insolvency has long been an issue for English clubs, especially lower division ones. Since WWII over 70 clubs have undergone insolvency while in the top 4 divisions.

  • High profile cases include Newton Heath (later Manchester United), Arsenal, Aston Villa, and Wolverhampton Wanderers, though most reappeared after resolving finances.

  • Insolvency also happens in Germany but is less publicized. Since 1993, 86 lower division German clubs have entered insolvency.

  • UEFA data shows high rates of negative equity and auditors raising "going concern" issues, signs of financial distress. This is especially true of smaller clubs.

  • Dominance and distress are inherent features of soccer's structure and part of its popularity, but create pressures for regulation.

    Here is a summary of the key points about players and performance in professional soccer:

  • Choosing the starting lineup each week involves complex decision-making for managers. In a 38-game season, a manager may make over 400 choices for the starting 11 and over 600 including substitutes. Even at smaller clubs with fewer players, managers still average 5+ changes per game.

  • Player performance varies wildly from game to game. According to Bundesliga player ratings, the performance of a given player may range from excellent to poor by a factor of 2:1 or more across games in a season.

  • Due to team dynamics, individual performance fluctuations compound each other. As a result, a team's best and worst performances during a season may differ by a factor of 20x or more.

  • The uncertainty in player performance from game to game makes managing a team complex. It is similar to fantasy soccer, where one assembles a squad under a budget constraint despite unpredictable individual performance. If players could be freely traded each week like in fantasy, their values would fluctuate rapidly.

    Here is a summary:

The amounts teams spend on players correlates with their success, but expensive players often have poor games. This leads some to think player valuations are unreliable for predicting team performance. However, bookmakers' odds are the best indicator we have of game outcomes. Bookies balance their books to profit regardless of results. Research shows it's hard to consistently beat bookies' odds.

Comparing bookies' odds to a simple model based only on wage spending shows a high correlation. Wage spending doesn't perfectly predict individual games, but over many games the team that spends more is much more likely to win. This demonstrates the law of large numbers - as you repeat a game of chance, the frequency of outcomes converges with their probabilities.

The teams that spend the most on wages usually win championships. The correlation between spending and performance suggests causation, though this is hard to prove definitively in social science. Player market conditions imply spending enables teams to acquire better talent and thus perform better. The data and theory both point to wage spending causing better performance.

Here is a summary of the key points:

  • The law of large numbers explains why league competitions with many games per season tend to produce outcomes that closely correlate with the amount clubs spend on players. The more games played, the less randomness in outcomes.

  • Club managers are like fund managers picking stocks - some may get lucky in a given year but over time most perform in line with the market average. This is because player abilities are generally known, so wages reflect performance.

  • As the player market has become more global, talent compression means smaller differences in ability produce bigger wage differences. Salary dispersion has increased over time.

  • Clubs' league position closely tracks their player wage spending relative to other clubs, based on extensive data for English clubs 1958-2014. Figures illustrate this correlation.

  • Some randomness occurs in individual games or seasons, but over multiple seasons club performance reliably correlates with wage spending. Law of large numbers reduces randomness over many games.

  • Conclusion: League outcomes are predictable based on wage spending because many games played means individual game randomness washes out. Club managers have limited ability to change performance vs market averages, like fund managers.

    Here is a summary of the key points about the three eras in English soccer from 1958-2013:


  • Period when English soccer started to go into economic decline
  • Wage spending explains 62% of variation in league position (R2 = 0.62)


  • Period of crisis, with darkest days in mid-1980s
  • Wage spending explains 74% of variation in league position (R2 = 0.74)


  • Premier League era, started in 1992
  • Wage spending explains 77% of variation in league position (R2 = 0.77)


  • Wages and league position go in lockstep over entire period
  • Variation in wages explains 50-80% of variation in league position
  • Other factors like management and luck have smaller effects
  • Long term, spending dominates performance - high spending leads to higher position

    Here is a summary of the key points:

  • There is a strong correlation between a club's wage spending and its performance/success over the long run. Teams that spend more on wages tend to achieve greater success.

  • However, this correlation is not perfect. In the short term, performance can be quite unpredictable despite wage spending differences between clubs.

  • Three times before 1968 and then again in 1970 and 1975, the eventual league winner had lower relative wage spending than the typical league winner.

  • No Premier League winner has ever ranked lower than fourth in terms of wage spending.

  • Chelsea and Manchester City have demonstrated through massive spending that being the team with the highest wages strongly correlates with winning championships, though it does not guarantee it.

  • The relationship between wage spending and success is akin to the risk-reward relationship in investing, where higher returns are available for higher risk. Clubs can choose how much to spend based on the level of success they want to achieve.

    Here is a summary of the key points:

  • There is a strong negative correlation (-0.75) between league rank and stadium capacity in English soccer - lower ranked teams tend to have smaller stadiums.

  • However, this does not imply causation - simply building a bigger stadium does not guarantee success. Success requires attracting top talent by spending money on wages and transfer fees.

  • There is a positive correlation (+0.75) between a club's wage spending and its stadium capacity. Again, this relationship is not causal.

  • To be successful, a club needs both a high-quality squad and a large stadium to generate revenue from fans. This depends on location and local market conditions.

  • Successful clubs tend to be located in large cities, which provide a bigger pool of potential fans. Most fans come from within 10 miles of the stadium.

  • In smaller countries, successful teams often come from the largest cities. In bigger countries, most league titles go to clubs in the largest metropolitan areas.

  • City size and team success do not correlate perfectly due to historical soccer cultures and numbers of teams per city. But being in a large city with limited local competition makes success more likely.

    Here is a summary:

The historic pattern that successful soccer clubs come from larger cities still holds true today, despite changes brought by TV revenue and sponsorship money. Building a new stadium is extremely expensive, costing around $2,400 per seat. For a 20,000 seat stadium, construction costs would be $48 million. To finance this through debt over 40 years would require annual repayments of around $2.8 million. For a typical second division club with $32 million in revenue, this would consume 10% of revenue - a significant burden.

Moreover, the risks of relegation make stadium finance extremely precarious. Relegated clubs see revenues cut dramatically, making debt repayments near impossible. Though in theory stadiums could be sold off for alternate uses like housing, in practice this rarely happens due to politics and the cultural status of soccer stadiums. Thus for lenders, soccer stadiums may be worthless collateral if the club cannot repay its debts. The system of promotion and relegation, along with political constraints, make stadium building a huge financial risk for clubs.

Here is a summary of the key points about stadium investment:

  • Soccer fans generally don't value their local stadiums highly enough to pay to prevent redevelopment, even though soccer clubs depend on having a stadium.

  • Governments have historically been the main source of stadium investment, both in soccer and other sports like baseball and American football. Taxpayer money has subsidized around $30 billion in stadium construction in the U.S. in recent decades.

  • U.S. universities are another major source of stadium investment, as they use football stadiums to drive alumni donations.

  • In Europe, around two-thirds of top division soccer stadiums are municipally owned. This guarantees clubs a home stadium even if they face financial trouble.

  • Most soccer stadiums globally are old, often 50+ years, as there has been chronic underinvestment. This has led to multiple disasters from crumbling infrastructure.

  • After disasters like Hillsborough in 1989, government intervention has improved safety standards. But the incentive is still to underinvest in stadiums and prioritize spending on players instead.

    Here is a summary of the key points:

  • Governments have invested public money in stadiums to host major events like the World Cup, claiming economic benefits. But economists dispute this and the public is increasingly skeptical.

  • UEFA is now spreading hosting across Europe to share the burden rather than having one nation host. Most stadiums won't need major upgrades.

  • The Hillsborough disaster led to legislation mandating all-seater stadiums in Britain, reducing capacity. But clubs invested heavily in the 1990s in new stadiums, mostly privately funded.

  • With austerity, public willingness to fund stadiums is declining. So clubs are tying stadium investments to ancillary property developments like hotels and shopping to make them profitable.

  • Obtaining planning permission for such developments is difficult in densely populated cities. Linking them to a popular stadium has become a way to gain approval.

    Here are the key points summarizing the revenue growth in English league soccer over the past 56 years:

  • Average annual revenue for top division clubs has grown from £127,000 in 1958 to £126 million in 2013, an increase of about 1,000 times. Adjusting for inflation, revenue has grown at 7.3% per year, meaning a nearly 50-fold real increase.

  • Revenues in the second and third tiers have grown at 4.6% per year after inflation, a nearly 12-fold real increase.

  • Fourth tier revenue has grown at 2.6% per year after inflation, about a 4-fold real increase.

  • Growth has outpaced broader UK income growth of 2.2% per year over this period.

  • Revenue growth has not closely tracked the wider economy, growing rapidly even in some recession years like 2008-09.

  • Key factors driving revenue growth include the start of new broadcasting contracts, performance of the England national team, and other events like England hosting and winning the 1966 World Cup.

    Here is a summary of the key points:

  • Soccer club revenues appear to grow steadily over time on average, but individual clubs see much greater variability due to promotion and relegation between divisions.

  • The composition of teams in each division changes from year to year as teams get promoted and relegated.

  • Manchester United has remained a top division club since 1958, while Bolton has moved between divisions, reflected in their revenue trajectories.

  • The financial gap between the top division and lower divisions has grown enormously since the 1960s.

  • Inequality within divisions grew before 1992 due to ticket price differentiation and attendance variation, then leveled off after the Premier League began.

  • There is a very strong correlation between team performance (league position) and revenue generation. League position alone explains over 60% of revenue variation among clubs over time.

  • Promotion and relegation between divisions over time leads to significant mobility in league positions for clubs, but league position remains closely tied to revenues across this mobility.

    Here is a summary of the key points:

  • There is a clear relationship between on-field success and revenues in soccer. Better performance leads to higher revenues from sources like ticket sales, merchandise, sponsorship, and TV rights.

  • This creates a self-reinforcing cycle - higher revenues allow clubs to invest more in talent and facilities, leading to more success and even higher revenues. Dominant clubs raise the bar for rivals.

  • Historically, the main revenue source was matchday ticket sales. But now broadcast rights are much more important, accounting for over 75% of revenue in major leagues.

  • Attendance trends can be divided into three eras: the Golden Age of stability (1960s-70s), the Dark Ages of decline (1980s), and the Renaissance of growth (since 1990).

  • Factors impacting attendance include recessions, stadium facilities, national team successes, and hooliganism. Hooliganism deterred fans in the 1980s but has since declined.

  • The growing revenue gaps between clubs have made it very difficult for smaller clubs to compete at the highest level.

    Here is a summary of the key points:

  • There is an argument that land ownership in England has become concentrated among the wealthy, moving away from ordinary people.

  • However, there is clear evidence that English soccer stadiums have become much safer places to watch the game since the 1980s.

  • Attendance at matches has risen steadily despite increasing ticket prices that have made attending matches unaffordable for many low-income fans.

  • The average age and income of match-going fans has increased as a result of the "gentrification" of English soccer.

  • Ticket prices in England are high compared to Germany, but the gap is not as large as sometimes claimed.

  • Ticket prices in both countries have increased far faster than inflation and average incomes since the 1990s.

  • The growth of commercial revenue sources like corporate boxes has driven clubs to raise ticket prices to maximize matchday revenue.

  • Season tickets account for 50-65% of capacity in major leagues. Clubs sell them to get revenue upfront and ensure fans attend all matches.

So while the argument about land ownership may be debatable, the data clearly shows that top-level English soccer has become more expensive and exclusive, even as stadiums have become safer places to watch matches.

Here is a summary of the key points:

  • Attendance at Premier League and Bundesliga games has increased substantially since the 1990s. This is largely due to investment in stadium renovations and expansions.

  • Both leagues typically sell out most games, so increasing revenue depends on building bigger stadiums or raising ticket prices.

  • The 2008 financial crisis slowed stadium investment in England. Liverpool provides an example - its owners had planned a new 76,000 seat stadium but could not get financing after the crisis.

  • With limited capacity, English clubs raised prices rapidly in the 2000s. Prices have fallen recently due to the recession lowering demand.

  • German clubs invested heavily in stadiums for the 2006 World Cup. This increased capacity and enabled rising attendance. Prices have also increased but not as quickly as in England.

  • Broadcasting rights have become the biggest revenue source for major European leagues, now generating over $2 billion per year for the Premier League.

  • Pay TV technology drove huge growth in broadcast rights values since the 1990s. Soccer was key content to attract subscriptions.

  • Despite fears it would deter live attendance, television exposure has boosted match attendance. Broadcasting has transformed clubs into major commercial enterprises.

    Here is a summary:

Television broadcasting drove subscriptions and popularity of soccer. Broadcasters invested in better production and heavily advertised soccer. Bars liked soccer as it sold more beer. Coca-Cola set out to be ubiquitous like soccer is today. TV promotion increased live attendance rather than substituting for it.

Clubs debated how to share the growing TV revenues. Bigger clubs pushed for negotiated deals to prevent broadcasters playing them off against each other. Smaller clubs wanted more equal sharing like in American leagues. Most leagues compromised with partial revenue sharing favoring bigger clubs.

Domestic TV deals promoted equality but Champions League revenues increased inequality, heavily favoring the same big clubs year after year. The two effects canceled out in most countries except Spain where Barcelona and Real Madrid negotiated individual deals, further extending their financial advantage.

Inequality, measured by revenue ratios and Gini coefficients, greatly increased in Spain but remained more stable in England. Yet Spanish soccer remains hugely popular despite its inequality. The Spanish league is far more unequal in revenues than Spanish society.

Here is a summary of the key points:

  • The Champions League's broadcast money distribution has increased inequality between big and small countries. It gives more places to clubs from bigger countries and more revenue to clubs from the biggest broadcast markets like England, Germany, Italy and Spain.

  • This allows the big clubs from these countries to dominate, as they get more money from winning which funds further success. 90% of Champions League winners and runners-up in the last 20 years have come from these 4 nations.

  • Club revenues mainly come from broadcasting, gate receipts, sponsorship and merchandising. These are linked to on-field success - winning teams get more fans, sponsorship and merchandise sales.

  • Inequality between big and small leagues is increasing as sponsorship and merchandise have greater potential for growth in major leagues.

  • Bundesliga clubs get a higher percentage of revenue from sponsorship compared to Premier League clubs. This may be because German TV has less pay channels so sponsors get more exposure.

  • Manchester United has led in developing global sponsorship deals across many countries, leveraging their worldwide exposure and fanbase. This commercial revenue funds continued sporting success.

  • Overall, the Champions League money distribution and growth of commercial revenue sources like sponsorship have increased inequality between major soccer nations and smaller ones. The rich get richer.

    Here is a summary of the key points about debt from the passage:

  • Debt is not necessarily a bad thing if it is sustainable and manageable within a club's cash flow. It can facilitate growth.

  • Debt has become a "dirty word" in football, but perceptions are often shaped by negative headlines rather than the nuances.

  • There are different definitions of "football debt" - it can refer broadly to all liabilities or more narrowly to debt financing.

  • Spending on players and stadiums comes before revenue, so debt is often used to bridge the timing gap between outlays and receipts.

  • Throughout history, debt has been used to finance growth through trade, investment, and industrialization. Risky ventures require outside financing.

  • In a competitive market, revenues and costs are in equilibrium. Debt allows clubs to compete for players and revenue despite timing differences between spending and earnings.

  • Much of the Premier League's growth has been financed through outside investment rather than debt, e.g. from media companies, new owners, public listing.

  • The success of the Premier League has been in attracting capital from outside to facilitate growth and competition for top talent.

    Here is a summary of the key points:

  • Debt financing involves borrowing money that must be repaid with interest. It allows businesses to acquire equipment, materials, and labor without having the full funds upfront. The debt is paid back out of revenues generated by the business.

  • Limited liability corporations revolutionized business by separating company debt from owner liability. If the company goes bankrupt, owners' personal assets are protected.

  • English football clubs were early adopters of the limited liability corporation structure after it was introduced in the UK in 1855. This allowed them to borrow money to build stadiums without the club leaders being personally liable for the debt.

  • By 1923 almost all professional English football clubs had become limited companies. This provided liability protection and facilitated their access to debt financing for growth.

  • Debt is less risky for lenders when lent to large stable corporations like Sony or Ford. Smaller businesses represent greater default risk but limited liability protects owners somewhat.

  • Overall, the limited liability corporation and access to debt financing fundamentally transformed business growth capabilities. Football clubs were early beneficiaries of these innovations.

    Here is a summary of the key points regarding safe investments and financing for soccer clubs:

  • Large, stable companies can sell bonds to investors who are essentially lending money in exchange for regular interest payments. If the company defaults, assets can be seized and sold off to repay debts.

  • Most smaller businesses instead borrow from banks over time and provide assets like buildings or equipment as collateral in case of default. Banks prefer assets they can readily sell off.

  • Player transfers and stadiums are risky assets for banks to lend against when financing soccer clubs. Players can't be seized and sold, and stadiums have limited alternate uses if the team fails.

  • Securitization was a novel form of lending where future revenues were bundled into tradable bonds, but this backfired when club revenues dropped after relegation.

  • Bank lending to clubs is usually limited to small overdraft facilities rather than large sums. Revenue streams like broadcasting rights can sometimes be borrowed against.

  • Overall, banks are wary of lending to soccer clubs due to unpredictable revenues and lack of seizable assets, so clubs have trouble raising money through traditional corporate finance channels.

    Here are the key points:

  • Premier League club debts totaled £2.5 billion in 2012/13, but less than 40% was owed to banks. The biggest bank debts were at Manchester United, Arsenal, and Aston Villa.

  • Championship clubs owed around £1 billion, of which 60% was owed to banks.

  • Across the top two divisions, almost £2 billion was owed to club owners as "soft loans" rather than banks.

  • Roman Abramovich bought Chelsea in 2003 and invested over $1.5 billion by 2009, which was treated partly as debt and equity. In 2009 he converted debt to equity, perhaps to appease UEFA's Financial Fair Play rules.

  • The Glazers bought Manchester United in 2005 with $800 million in debt. Fans protested the high interest costs and ticket hikes. But revenue doubled and debt was refinanced, making the club sustainable. By 2013 the Glazers' investment was worth estimated $2.1 billion.

  • Liabilities include commercial debt but also obligations like wages and transfer fees. Long-term liabilities are less risky than short-term. The share that is long-term has increased recently.

    Here is a summary of the key points:

  • Many soccer clubs have large liabilities such as unpaid taxes and social charges. These appear as debts on their balance sheets.

  • Clubs charge sales tax (VAT) on tickets which must later be paid to the government. There can be a significant time lag before clubs have to pay the taxes they collect. This essentially provides the clubs an interest-free loan from the government.

  • UEFA analysis found that unpaid tax liabilities were especially high in certain countries like France and Spain, amounting to a large percentage of club revenues.

  • The tax debts of Spanish clubs in particular have reached crisis levels, requiring government bailouts multiple times. Many clubs other than Barcelona and Real Madrid may never be able to repay their tax debts.

  • Not all club liabilities should be treated as debt. For example, season ticket revenue is a liability but not a risky debt. The key in assessing debt is the likelihood it can be repaid.

  • Debt calculations should take into account cash balances and assets that can easily be turned into cash to determine net debt. Club accounts can provide an unrealistic snapshot depending on time of year.

    Here is a summary of the key points:

  • European top division soccer clubs had assets worth €20 billion in 2008, more than enough to cover their liabilities. However, debt remains a problem for several reasons:

1) Club revenues can fluctuate wildly due to promotion/relegation, making debt repayment difficult.

2) Assets like stadiums are not easily sold to raise cash and repay debt.

3) Debt is not evenly distributed - 35% of clubs had liabilities greater than assets in 2008 and were at risk of not paying debts.

  • The case of Leeds United illustrates how risky high debt loads and inflated player valuations can be. Leeds gambled on winning trophies and borrowed heavily to buy stars. When success didn't materialize, they had to sell players at a loss. Revenues shrank, debt mounted, and the club entered administration.

  • The example shows the risks of overly ambitious business plans, unrealistic player valuations, and excessive debt. Forced selling of players brings low fees, revenues fall, and a vicious cycle develops.

    Here is a summary:

Soccer clubs are closely tied to the identity of cities and regions. Teams like Barcelona represent the Catalan people and their aspirations for independence from Spain. Athletic Bilbao only recruits Basque players, reflecting the strong Basque identity. Clubs can represent broader identities too - Bayern Munich is tied to Bavarian identity.

This local tie gives soccer clubs an emotional connection that goes beyond mere entertainment. Fans have an intense loyalty to their clubs. However, the legal ownership structure of clubs has changed over time. Originally many clubs had dispersed shareholders, giving fans a sense of ownership. Now most big clubs are owned by one or a few individuals. Winning is the main goal for owners, not making money. The pleasure of owning a winning club is greatest when control is concentrated rather than shared across many small shareholders.

Here is a summary of the key points:

  • There is debate about whether soccer club owners aim to maximize profits or maximize wins. Evidence suggests most prioritize winning over profits.

  • Many clubs run operational losses as they spend heavily on wages trying to achieve success on the field. Losses are common in soccer, though sustained losses can threaten club solvency.

  • Owners often act more like fans who want to see their club win than businesspeople looking to make money. Some owners have long-term connections as fans, while others acquire clubs as trophies despite no prior affiliation.

  • The involvement of wealthy owners willing to bankroll success has existed for decades, though it has become more prominent recently with billionaire owners like Roman Abramovich at Chelsea.

  • Overall, the evidence suggests that for most soccer club owners, the priority is winning matches and titles over making profits. Financial losses are accepted as long as success is achieved.

    Here is a summary of the key points:

  • Henry Norris was a successful London property developer who bought a controlling stake in Arsenal in 1910. He oversaw the club's move to Highbury and its rise to prominence.

  • In 1929, Norris was banned by the FA from involvement in football after a libel case revealed he had pumped £15,000 of his own money into Arsenal to help them achieve success.

  • Adjusted for inflation, Norris' £15,000 investment would be worth about £1 million today - far less than today's billionaire owners spend. But wages were lower then so it cost less to buy success.

  • Norris brought Herbert Chapman to Arsenal as the first celebrity manager. He also bankrolled the record transfer fee for Charlie Buchan, paving the way for Arsenal's subsequent dominance.

  • Norris deserves credit as one of the early examples of a benefactor-style club owner, like today's Abramovich and Sheikh Mansour.

  • Club ownership has become a way for billionaires to display status on a global scale, through the prestige and trophies that come with a successful club.

  • The competition to have the top club has generated huge investment in soccer, benefitting players, clubs, facilities etc. But there are a limited number of trophies to go around.

  • Concentrated individual or family ownership has been a long-standing trend in sports teams, especially as owners seek the "amenity value" and status from owning a top club.

    Here is a summary of the key points:

  • In the 1990s, English soccer clubs began raising capital by selling shares on the stock exchange. Between 1995-1997, 16 clubs raised around $240 million this way.

  • For club owners, it allowed them to take some money out while also raising funds for investments like new stadiums.

  • However, most clubs struggled to generate profits and pay dividends to shareholders. Manchester United was an exception in being profitable.

  • As share prices fell, professional investors lost interest. By 2012, all English clubs had de-listed and returned to private ownership.

  • Stock exchange listings have not been common for European soccer clubs overall - only around 2-3% of clubs. Lack of profitability makes clubs unattractive to investors.

  • Wealthy individuals have been more willing to invest their private fortunes into clubs to try and make them successful.

  • In the 1990s, media companies like Sky also acquired stakes in clubs, seeing soccer as important content. But most broadcasters have since retreated from club ownership.

  • Germany and Spain have been more conservative than England and Italy when it comes to commercial changes like ownership structures. Their clubs have largely remained membership associations rather than limited companies.

    Here is a summary of the key points about Bern”—West Germany’s unexpected 1954 World Cup victory and the development of German soccer:

  • Club soccer in Germany initially had limited interest and no national league until 1963 when the Bundesliga was formed. Professionalism was also not officially recognized until then.

  • A few clubs were company-owned like Bayer Leverkusen (Bayer) and VfL Wolfsburg (Volkswagen) but most were member associations (Verein).

  • The Bundesliga did not go through bankruptcy like Spain. But the success of the English Premier League led German clubs to consider reform and adopt a corporate structure in the late 1990s.

  • The Bundesliga clubs created the Deutsche Fussball Liga (DFL) to control the top divisions instead of the national federation.

  • In 1998, the DFB adopted the 50+1 rule - clubs can become commercial entities but 50%+1 of voting shares must remain with the member association.

  • Many admire the German model as giving fans/members a voice while still being commercially successful. Fan activism rose in England in the 1990s over commercialization.

  • Northampton Town fans formed the first Supporter Trust in 1992, later inspiring trusts at other English clubs. The UK government funded Supporters Direct in 2000 to enhance fan roles.

    Here is a summary of the key points:

  • Most of Swansea's creditors when it went into administration in 2002 were small local businesses that had provided services to the club. After negotiations, the debt was reduced to $800,000.

  • Swansea was able to rebuild thanks to a group of shrewd local businessmen who were fans of the club and willing to invest money. The supporters trust was also given a 20% stake.

  • The new owners put around $800,000 of their own money in initially and more later to help clear debts.

  • The local government finally financed and built a new stadium for Swansea after years of delay.

  • A series of excellent managers were chosen who got results and moved the club up the leagues.

  • Fan engagement increased dramatically even when the club was in lower leagues.

  • Promotion to the Premier League in 2011 transformed Swansea's finances, increasing revenue massively.

So in summary, it took investment from new owners, support from fans, good management choices, local government support, and ultimately reaching the Premier League to turn around the club's fortunes. The supporters trust model played an important role in engaging fans and stabilizing the club.

Here is a summary of the key points:

  • Winning and making money do not seem to go together in soccer. Clubs spend up to their limit in pursuit of success. Many now rely on wealthy owners to bankroll success by buying talented players.

  • There are limits on strategy imposed by competition. What matters is spending more than rivals, not absolute spending. Over twenty years, average wages in the Premier League rose from £5.3m to £89.4m.

  • The 'wage curve' shows the relationship between wage spending and league position. Spending 4x average wins the league, 2.5x gets second, 2x gets third. Average spending gets seventh.

  • The 'revenue curve' shows higher positions earn more revenue. At the top, wage spending is higher than revenue - clubs like Chelsea and Man City have spent more than they earn.

  • For most clubs, 60-70% of revenue is spent on wages. Bottom teams spend as much as mid-table teams, forcing them to spend heavily just to avoid relegation.

  • The gap between clubs has grown - between 1960-80 most champions spent less than 66% above average. Since 1992, gap is wider - Man Utd spent 183% of average in 2013. Concentrated ownership is funding more spending despite growing revenues.

    Here is a summary of the key points:

  • There is a large and growing gap between the revenues of the top clubs and the rest in the English Premier League. The top clubs spend far more on wages than the league average.

  • This gap was much smaller in the 1960s and 1970s when the league had policies like a maximum wage that restricted spending. Winning was less tied to wage spending back then.

  • Nowadays clubs struggle to make a profit at any level. To move up requires spending more on players, often funded by owners rather than revenues. Luck also plays a big role.

  • The role of the soccer manager has grown over time. They are responsible for coaching, tactics, player recruitment, contracts, staffing, and more.

  • Good managers introduce innovations that improve performance, like better fitness. But successes are often copied, so sustainable innovations are key. Managers are important but success is still largely driven by chance.

    Here is a summary of the key points:

  • Most studies find little evidence that asset managers can consistently deliver above-average investment performance through skill rather than luck. This suggests skill is limited in picking winning stocks.

  • A study of English soccer managers since 1974 found about 20% had a statistically significant positive impact on their team's performance, while only 1.5% had a negative impact. This suggests some managers have real skill, but most do not.

  • Simple rules like avoiding buying players based on short-term performance can help avoid common judgment errors. But any effective tactics will likely be copied widely if proven to work.

  • There is disagreement over whether managers can make a strategic difference through design versus mainly avoiding mistakes. Some books suggest heuristics to try, like focusing on improving the worst player.

  • The tenure of soccer managers has declined dramatically across Europe, now averaging around 1-1.5 years in top divisions and less than a season in lower tiers. This allows little time to implement strategic changes.


  • Managers typically don't get very long in their jobs before being fired. The average tenure for a Premier League manager is only 1.23 years.

  • This tenure is getting shorter over time. Back in the 1960s, managers would often stay in their jobs for many years.

  • The reason tenure is getting shorter is likely due to changes in the player market. With more money in the game, managers have an easier time buying talented players rather than developing them over time. This makes managerial skill less important.

  • Firing the manager often leads to a short-term boost in performance, but this may just be due to randomness rather than improved skill. Over the long-term, changing managers frequently does not seem to improve results.

  • So manager tenure is decreasing, even though it may not help performance. Managers are now seen more as expendable assets rather than long-term builders of teams.

    Here is a summary of the key points:

  • The concept of the "paradox of skill" was advanced by Stephen Jay Gould to explain the lack of .400 hitters in baseball since 1941, despite more players achieving that previously. As the talent pool expands, the difference between the best and worst players shrinks, making outliers less likely.

  • Measuring manager performance is difficult because results are largely determined by player wages. However, some managers like Paul Sturrock consistently overperform expectations based on wages through tactics, analytics, decision-making, and other skills.

  • Sir Alex Ferguson is an outlier who achieved unmatched success at Manchester United over many years, benefiting from factors like longevity that most modern managers don't get.

  • Clubs have limited ability to relocate for profit like US franchises. Location is inherited.

  • Most clubs don't have real brand value beyond their on-field performance. Manchester United is a rare exception with long-term profitability. Dominant clubs in dominant leagues like Real Madrid and Bayern Munich may also have true brand value.

    Here is a summary of the key points:

  • Insolvency and financial distress are common in soccer clubs due to the competitive nature of the sport. Big clubs invest heavily to stay dominant, while smaller clubs overextend themselves trying to compete.

  • Insolvency refers to when a club cannot pay its debts and obligations. This usually arises from financial distress over an extended period.

  • Historically, bankruptcy laws were harsh, but they evolved to recognize business risks. Now insolvency for companies is treated through liquidation of assets to pay creditors.

  • Directors have a duty to declare insolvency once repayment of debts becomes impossible. But judgment calls mean this often happens late, to the detriment of creditors.

  • The dominance of big clubs with strong brands makes it hard for smaller clubs to profit from their identity. Most have negligible brand value, unlike mega clubs like Manchester United.

  • When clubs like Rangers FC go insolvent, their brand value and assets are often worth very little, showing most lack real brand power.

  • The endless competition for players and success in soccer drives clubs to overspend, leading many into insolvency when performance and revenues lag expectations.

    Here is a summary of the key points:

  • Insolvency of soccer clubs is a matter for the courts, not soccer authorities, though authorities can sanction financially precarious clubs.

  • Until the 1970s, insolvency almost always led to liquidation. Legal reforms since then, such as Chapter 11 in the US, have swung power toward debtors, making it easier for companies to survive insolvency.

  • In soccer, the common view is that clubs become insolvent by overspending on players. But analysis of insolvent English clubs shows this is not the typical story.

  • The clubs that go insolvent tend to be mid-table teams in the lower divisions. Their performance declines in the years before insolvency, resulting in falling revenues.

  • As revenues fall, the clubs' wage-to-revenue ratios rise dramatically, exceeding 90% at the point of insolvency.

  • The true cause is usually a vicious cycle of declining on-field performance, which reduces revenues, which then reduces player investment, further worsening performance.

    Here are the key points from the summary:

  • The money going toward player wages leaves little left over to cover other business expenses, making insolvency more likely. Clubs tried to adjust budgets to account for lower revenues, but wage commitments were difficult to reduce quickly enough.

  • Data shows insolvency is often the result of a series of negative "shocks" or bad luck, where club performance falls short of what wage spending would predict. This causes revenues to fall, making it harder to cover expenses.

  • Bad management can also play a role, as can declining local populations and alternative sports. A history of previous insolvency also seems to be a factor.

  • Insolvency almost always happens when clubs are declining, not when trying to spend beyond their means to reach a higher level. The data shows clubs entering insolvency had typically spent the prior decade in the same division or higher.

So in summary, insolvency appears to frequently result from short-term bad luck in performance, combined with structural factors like poor management, declining markets, and past financial issues. Clubs tend to already be declining when insolvency hits.

Here are the key points summarizing the years of entering first insolvency for English soccer clubs:

  • The study looked at 48 English soccer clubs that underwent insolvency proceedings between 1982 and 2010.

  • Over half (27 clubs) entered insolvency for the first time in the 2000s.

  • 9 clubs entered insolvency in the 1990s.

  • 12 clubs entered insolvency in the 1980s.

  • The data shows an increasing trend of clubs entering insolvency, with over half doing so in the 2000s compared to only 12 in the 1980s.

  • The study links this trend to growing financial pressures in English soccer over time, such as higher player wages. Clubs took on more financial risk, leading more of them to eventually undergo insolvency.

    Here are the key points from the summarize:

  • Club directors often take excessive risks in pursuit of glory and success, but it is difficult to define "excessive." Many fans want directors to take risks.

  • Failing to take risks can also lead to disaster for competitive clubs. Well-run teams can still fade into obscurity if they don't take chances.

  • Financial failure has consequences for directors, like losing jobs and reputation, but limited liability protects the club itself.

  • Moral hazard could be reduced if failure had harsher consequences for the clubs themselves, like liquidation, but clubs rarely permanently disappear.

  • Insolvency laws have shifted power from creditors to debtors, making administration easier and encouraging overspending since the 1980s.

  • Soccer clubs, like banks, often turn to governments for bailouts when insolvent ("too big to fail"). This state aid is restricted under EU law.

  • Many argue there are too many professional English clubs, but other countries are expanding clubs at the national level. Financial difficulties make clubs seem "too many."

  • U.S. major league franchises are typically worth much more than European clubs, though the most valuable are Real Madrid, Barcelona and Manchester United.

    Here is a summary:

  • Forbes values the 92 American major league teams (MLB, NBA, NFL) at $81 billion collectively, while valuing the top European soccer clubs at only $32 billion.

  • This valuation gap exists despite European soccer generating about two-thirds as much revenue as American sports leagues. Each dollar of revenue generates $4 of franchise value for American teams but only $2.5 for European clubs.

  • The higher multiple for American franchises reflects greater certainty that revenues will grow due to lack of promotion/relegation. Most European soccer clubs face significant risk of declining revenues if relegated.

  • Dominant American franchises ensure revenue stability and hence receive higher valuation multiples. In contrast, only a handful of dominant European clubs receive comparably high multiples.

  • The promotion/relegation system means few European clubs can guarantee stable revenues into the future. This revenue uncertainty translates into lower valuation multiples for most clubs.

In summary, the American franchise model creates conditions for reliable growth that leads to higher valuation multiples, while Europe's promotion/relegation introduces risk that depresses club valuations.

Here is a summary of the key points:

  • Total sports attendance in American professional and college leagues is around 272 million, compared to 160 million in European soccer leagues. This shows the popularity of both the closed American league system and the open European system.

  • The closed American system, pioneered in baseball's National League in 1876, provides financial security for teams as there is no promotion or relegation. The open European system creates instability but allows ambition for clubs to rise to the top league.

  • The circumstances at the time led to the different systems being adopted in America versus Europe. Promotion and relegation would have been unthinkable for baseball in the 1870s.

  • The closed system encourages cooperation between teams as businesses, almost like a cartel that limits competition. There is less desperation to avoid the severe consequences of poor performance.

  • The closed system gives power to the league authorities. Teams have autonomy - e.g. for player release to international duty.

  • Economists see American sports leagues as textbook examples of cartels that aim to increase profitability by restricting competition. But there are challenges in maintaining cartels.

    Here is a summary of the key points:

  • Cartels face three main problems that make it difficult for them to maintain high prices: cheaters who secretly cut prices, difficulty writing legally binding agreements to punish cheaters, and anti-trust laws that make cartels illegal.

  • In ancient Athens, grain merchants were prosecuted for trying to control market prices. The Sherman Act of 1890 in the U.S. made conspiracies to restrain trade illegal. This became the model for anti-trust laws globally.

  • Participating in cartels can lead to large fines and executives going to prison. Most economists believe explicit collusion is rarer than people think.

  • In U.S. sports leagues, teams make agreements like the draft system and territorial rights that reduce competition for players and fans. Salary caps also limit competition for talent. These agreements raise questions about maintaining competitive balance.

  • The structure of U.S. college football has similarities to European soccer, including debates over how to ensure the best teams play each other and financial viability of smaller teams.

    Here is a summary of the key points:

  • American professional sports leagues like the NFL, NBA, and MLB operate as cartels that impose economic restraints like salary caps and revenue sharing to limit competition between teams. This ensures profits are evenly distributed.

  • These restraints are justified through the "competitive balance" defense - arguing that economic cooperation is needed for teams to be able to compete in a balanced sporting competition.

  • Economic research has been inconclusive on whether fans truly demand a balanced competition. Dominant teams like the Yankees also enhance interest.

  • Nonetheless, the competitive balance defense has allowed American leagues to justify limits on economic competition that increase profits and distribute them evenly.

  • This contrasts with European soccer leagues which operate on freer market principles with less redistribution, leading to greater inequality between teams.

  • The American model looks paradoxically more "socialist" in redistributing resources, while European leagues are more "capitalist" in letting the strongest teams prosper.

  • MLS adopts the American model but struggles to compete for talent in the global soccer market due to lower revenues, presenting a challenge to becoming a top league.

    Here is a summary of the key points:

  • Major League Soccer (MLS) in the U.S. has built a niche audience among Hispanics and in certain regions, but struggles to become a mainstream national sport compared to the NFL, NBA, MLB.

  • MLS's structure as a single-entity league with centralized control over player contracts makes it more like a minor league than a competitive top-tier league.

  • MLS's business model focuses on controlling costs rather than maximizing competition, which limits its growth potential.

  • Unless MLS changes its closed business model to introduce more competition, through promotion and relegation for example, it may remain a minor league compared to top soccer leagues around the world.

  • MLS faces inherent challenges in establishing itself in the competitive U.S. sports market dominated by the major professional sports leagues. Soccer may always remain a minor sport in the U.S. unless MLS transforms its business model.

    Here is a summary of the key points:

  • UEFA introduced Financial Fair Play (FFP) regulations in 2009 to address problems like excessive commercialization, rising costs, and financial insolvency among European football clubs.

  • FFP rules require clubs to balance their football-related income and expenditures over a 3-year period in order to obtain a license to play in UEFA competitions. Clubs cannot have overdue payables.

  • The stated objectives of FFP are to improve club finances, protect creditors, introduce financial discipline, encourage clubs to operate within their own revenues, promote responsible spending, and protect the long-term sustainability of European football.

  • Many view the rules as focused on financial efficiency rather than fairness. FFP could reduce player wages and transfer spending, which some see as evidence of "too much soccer" and overinvestment caused by a competitive rat race between clubs.

  • FFP exempts smaller clubs and limits the number of clubs affected. Critics argue the 2014 sanctions were limited, but UEFA may have started small to ensure compliance. The longer-term impacts on efficiency and fairness are still unclear.

    Here is a summary of the key points:

  • Financial Fair Play (FFP) restricts clubs' spending to be in line with their revenues. This is likely to benefit clubs from richer countries like England, Germany, and Spain, who have bigger markets and can generate more revenue.

  • Historically, Italian and Spanish clubs dominated European competitions, but recently English clubs have become more competitive due to their lucrative broadcast rights deals and ticket prices.

  • FFP prevents owners from injecting their own money into clubs to buy top players and win championships. Some see this as preventing "sugar daddies" from buying success.

  • The overdue payables rule requires clubs to pay creditors on time. This is fair and in line with standard business practices.

  • The break-even rule limits owners' investment even if they have the resources. This restricts clubs' ability to buy top players.

  • It's debatable whether FFP promotes efficiency or fairness. Sponsor investment has helped the game grow globally. Limiting investment could see talent instead go to developing leagues.

  • Evidence suggests European soccer is in robust health - revenues are growing, new investors keep appearing, and few clubs collapse. Arguably no market failure that requires regulation.

    Here is a summary of the key points:

  • There is no evidence that the soccer system as a whole is in danger of collapse. Financial problems at some clubs are not new and the system has continued to thrive.

  • European soccer developed first which gave it a head start, but regulations that reduce efficiency could undermine this advantage. No dominant position is impregnable.

  • Financial Fair Play (FFP) regulations primarily target "sugar daddy" club owners, not efficiency. The fairness argument is questionable - it seems to favor established elite clubs.

  • FFP draws arbitrary lines on what counts as legitimate investment, similar to anti-doping rules. Defining "own revenues" is problematic.

  • FFP ossifies the existing inequality in revenues between clubs. It reduces hopes of smaller clubs gaining investment to compete with elite clubs.

  • The break-even rule likely restricts competition for players and investment. A legal complaint argues it violates EU laws against anti-competitive agreements. UEFA will claim the rules enhance competition.

    Here is a summary of the key points:

  • Article 101 of the Treaty on the Functioning of the European Union prohibits agreements that restrict competition.

  • UEFA's Financial Fair Play (FFP) regulations may violate this by restricting spending by clubs.

  • The regulations aim to improve financial stability, but may go further than necessary to achieve this.

  • The break-even rule in particular seems hard to justify as "indispensable" to financial stability.

  • Alternative regulations could achieve the same goals in a less anti-competitive way.

  • The rules may reduce competition in the player market and ossify the dominance of the biggest clubs.

  • However, courts are reluctant to interfere in the running of private organizations like UEFA.

  • So while flawed, the regulations may not actually be found illegal. The outcome rests on interpretation of exemptions in Article 101.

  • The rules claim to promote "fair play" but are more about restricting competition, often in arbitrary ways.

  • Nonetheless UEFA may still win in court by arguing the rules eliminate "rat races" and soft budget constraints.

So in summary, while the regulations are economically questionable and seem to restrict competition unduly, UEFA may still succeed in defending their legality. But the rhetoric around "fair play" seems highly dubious.

Here is a summary of the key points made in the chapter:

  • Soccer is a game of financial inequality, with a few dominant clubs at the top and many smaller clubs facing financial distress.

  • However, the system of promotion and relegation gives hope to smaller clubs that they may one day reach the top.

  • Dominant clubs often threaten to break away into a "super league" but so far this has not happened, as it would likely ruin domestic leagues.

  • UEFA's Financial Fair Play rules aim to alleviate financial problems but may just entrench dominance of big clubs.

  • Some argue for government regulation but the author thinks this is inappropriate for the entertainment business.

  • The author values capitalist competition as it imposes discipline on owners, though some reforms like penalties for unpaid debts could help.

  • The author supports greater fan involvement through supporter trusts and more dialogue between clubs and fans.

  • The biggest issue is restructuring competitions so top clubs play each other more often internationally. Some traditions may need to change.

  • Promotion and relegation should be preserved as it gives hope to small clubs and communities. Equality is impossible with so many teams, but the system gives everyone some hope.

    Here is a summary of the key points made in the passages:

  • UEFA is the governing body of European soccer and oversees leagues and associations on the continent. It aims to maintain rules and regulations at all levels.

  • Leagues in soccer have less autonomy compared to major US sports leagues due to the affiliation with national associations.

  • There are substantial differences between player transfers in soccer versus trades in US sports in terms of compensation and contracts.

  • Players' values and salaries are closely linked to their on-field performance statistics.

  • Building new stadiums does not reliably increase club revenue or attendance in the long run, except for the very biggest clubs.

  • Most smaller clubs struggle to fill large new stadiums and take on unsustainable debt as a result.

  • Stadium disasters like Hillsborough have led to safer venue requirements and reduced capacities.

  • Public funding of stadiums provides questionable economic benefits to cities according to research.

    Here is a summary of the key points from the excerpts on revenue and debt in professional football:


  • The Premier League has become more equal in revenues due to changes in the TV rights distribution formula over the past decade. More weight is now given to equal sharing of international broadcast revenues.

  • Relegation from the Premier League leads to an average 13% drop in matchday attendance. Loyalty of fans to their club is not absolute.

  • Ticket prices have increased much faster than the rate of inflation, but this reflects the increasing commercialization of the game. Other spectator sports have seen similar trends.

  • Champions League distributions are very unequal, with the top teams taking the lion's share of revenue. This inequality is greater than in domestic leagues.


  • Debt is endemic in football, with over half of top division clubs in Europe losing money in the late 2000s. Debt is used to finance player transfers and wages.

  • Debt became excessive in the 1990s/2000s due to easy availability of credit and lax regulation. It was facilitated through securitization of future broadcast revenues and other creative financial arrangements.

  • UEFA introduced financial fair play regulations around 2010 to control clubs' losses and debt. Rules generally limit acceptable losses to €5 million over three years.

  • Debt remains a structural feature of football economics. It arises from the imbalance between regular operating costs and the irregularity of transfer spending needed to maintain competitiveness.

    Here is a summary of the key points from the passage:

  • UEFA introduced financial regulations called Financial Fair Play (FFP) in 2009 to improve the financial health of European soccer clubs.

  • FFP limits the losses clubs can make to 5 million euros over 3 years. Clubs that exceed this are subject to sanctions.

  • Supporters of FFP argue it will improve club finances and competitive balance. Critics argue it entrenches existing hierarchies.

  • Economic research suggests FFP may reduce losses but will likely not improve competitive balance or financial stability.

  • FFP may discourage investment and innovation in European soccer. Regulations often favor incumbents.

  • The regulations have legal issues regarding restraint of trade and proportionality. Their effects require ongoing empirical study.

    Thank you for sharing these insights on dominance in European soccer leagues, including the history, economics, and controversies surrounding it. Some key takeaways seem to be:

  • Dominance is concentrated in a handful of teams/leagues, with the English Premier League being the most dominant currently.

  • Factors enabling dominance include commercialization, capital investment, city size, and fan loyalty/identity.

  • Dominance can contribute to competitive imbalance and financial instability for smaller clubs.

  • Regulation like FFP aims to curb excessive spending by dominant clubs but raises controversies around fairness and competition law.

  • Promotion/relegation helps maintain hope for smaller clubs, though cross-league mergers or closed systems could threaten this.

  • Ultimately dominance reflects deeper economic disparities and tensions between ideals of parity, open competition, and financial success. There's no simple resolution but context helps illuminate the debate.

Please let me know if I've accurately summarized some of the key themes and issues around dominance in European football.

Here is a summary of the key points about English Premier League spending and insolvency:

  • English Premier League clubs have high wage spending, with total wage spending reaching £1.6 billion in 2011/12 (Figure 47).

  • High wage spending is correlated with higher league position and revenue, but some clubs spend unsustainably high wages relative to revenue.

  • Insolvency is common among English clubs, with 46 insolvency events from 1992-2011.

  • Insolvency is linked to factors like high wage spending, poor performance, relegation, and lower revenues.

  • Repeated insolvency is an issue, with some clubs entering insolvency multiple times.

In summary, high wage spending in pursuit of success has led many English Premier League clubs to insolvency when revenues fail to match ambitious spending. Despite repeated insolvencies, clubs continue to spend at unsustainable levels.

Here is a summary of the key points:

  • Reserve clause in baseball allowed teams to retain player rights indefinitely, restricting player salaries and mobility until free agency began in the 1970s.

  • Major leagues like MLB, NBA, NFL, and NHL have enjoyed strong attendance, revenues, and television rights thanks to promotion/relegation-free structure.

  • MLS adopted primarily closed league structure and salary caps to emulate successful U.S. leagues. Revenues and salaries still lag behind European soccer.

  • Broadcasting revenues increased sharply in 1990s for European soccer leagues, especially English Premier League.

  • Soccer clubs became limited liability corporations and trading on stock exchanges expanded in 1990s. Increased financial speculation.

  • Wage spending by biggest clubs has far outpaced revenues, fueled by rich owners, debt financing, and Champions League payouts.

  • Growing revenue inequality between top clubs and rest of league in European soccer. Dominance of super clubs like Real Madrid.

  • Poor financial regulation allowed overspending on wages, transfers, and stadiums. Many clubs faced insolvency and decreased competitiveness.

  • UEFA Financial Fair Play rules enacted in 2011 to control costs and encourage break-even budgets. Controversial for entrenching elite clubs.

  • Promotion/relegation vital for competitive balance in European soccer but threatened by growing inequality between clubs.

    Zara Anishanslin Editorial assistant: Eileen DeGregorio Design: Fiona Scherl Publicity manager: Ariel Ratner

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Contents
  6. Introduction
  7. 1: The Curious Case of Blackburn Rovers
  8. 2: Does Money Buy Success?
  9. 3: Gut Instincts and Data
  10. 4: There's a Stat for That
  11. 5: Being George Best
  12. 6: Pay as You Play
  13. 7: Pay Gaps and Power Players
  14. 8: Running Up Debt
  15. 9: Staying Alive
  16. 10: Spinning the Web
  17. 11: Over the Rainbow
  18. 12: Are You Not Entertained?
  19. 13: Home Field Advantage?
  20. 14: Building the Brand
  21. 15: Open Markets
  22. 16: The Level Playing Field
  23. Acknowledgments
  24. Index
  25. About the Author
  26. About the Nation Institute


  1. Begin Reading
  2. Table of Contents

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