Talent Concentration and Competitive Imbalance in European Soccer

Abstract

While most of the available literature on competitive balance analyzes its impact on ticket sales and TV audiences, little empirical research is available that analyzes the observable variation in competitive balance across leagues and over time. This paper studies the concentration of player talent and end-of-season league points to empirically examine whether leagues with a more homogenous distribution of player talent produce a more balanced competition than leagues with a less homogenous distribution. The longitudinal data we use to estimate our empirical model comes from professional soccer leagues in twelve Western European countries over the period 2005/06 thru 2019/20, yielding a total of 4942 club-season observations. Our empirical analysis confirms that the level of talent concentration in a league has a statistically significant and positive impact on the points concentration in this league, suggesting that the stronger the concentration of talent in a league, the lower is the league’s competitive balance. However, we also find that the positive correlation between talent and points concentration does not vary a lot across the European leagues nor over time. Our results suggest that repeated participation in the UEFA Champions League with its considerable monetary returns by (more or less) the same subset of teams does not increase competitive imbalance in the respective national league. Thus, with relatively few additional regulatory interventions, the promotion and relegation system in the open European soccer leagues seems to be quite effective in ensuring a balanced league.

Keywords: Competitive balance in professional team sport, talent concentration, European football competitions, player market values

JEL Classification: J30, L83, Z22