Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps

17 Pages Posted: 3 Dec 2019

See all articles by Helmut M. Dietl

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW)

Egon P. Franck

University of Zurich - Department of Business Administration (IBW)

Markus Lang

University of Lausanne - Faculty of Social and Political Sciences

Alexander Rathke

University of Zurich

Date Written: March 11, 2011

Abstract

This paper outlines and compares the organizational structure of major sports leagues, explores the reasoning behind their formation, and derives implications for salary caps in European football. To understand why sports leagues have developed a specific organizational structure, one must take the economic peculiarities of team sports leagues into consideration. For this purpose, we analyze the production process and illuminate its major peculiarities. For example, we present the difference between economic competition and competition on the pitch and discuss the consequences of this distinction for an attractive final product. Furthermore, we show that a hold-up problem exists between the two stages of the production process and demonstrate how these problems are overcome by the organizational structure chosen by sports leagues. We also outline the differences between the U.S. major leagues and European leagues and document recent developments in that context. Finally, based on this comparative institutional analysis, we derive implications for the introduction of salary caps into European football.

Keywords: sports, regulation, salary caps

Suggested Citation

Dietl, Helmut M. and Franck, Egon P. and Lang, Markus and Rathke, Alexander, Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps (March 11, 2011). Available at SSRN: https://ssrn.com/abstract=3489168 or http://dx.doi.org/10.2139/ssrn.3489168

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW) ( email )

Hottingerstrasse 10
Plattenstrasse 14
Zurich, 8032
Switzerland

Egon P. Franck

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich 8032
Switzerland
+41 1 634 28 45 (Phone)

Markus Lang (Contact Author)

University of Lausanne - Faculty of Social and Political Sciences

Quartier UNIL-Centre
Synathlon
Lausanne, 1015
Switzerland

Alexander Rathke

University of Zurich ( email )

Zuerich, 8006
Switzerland

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