Sunday, November 29, 2020

Teaching sport economics in times of COVID-19

This term I am not teaching my usual undergraduate course on soccer and economics in the Study Abroad program at my University (not enough US students in Barcelona now), but I am teaching my usual four two-hour lectures in the joint Master of Sports Management between my University and the Cruyff Institute.

I gave my first lecture last Thursday, where I presented the basics of game theory and the taxonomy of goods as classified along the two dimensions of rivalry-nonrivalry and excludability-nonexcludability. We'll apply these concepts to understand why institutions are needed in organized sports, and what is their role.

What may be of special interest this time is to reflect about the impact of COVID-19 in some institutional aspects of the sport. I will ask my students to confirm (or otherwise) with recent data the preliminary results that show that, as expected, the home-field advantage has diminished, in soccer and other sports. More generally, one would expect that, to some extent, the sports industry, especially in soccer, has become less populist, as the fans have less short-run pressure on club decisions. For example, has managerial turnover decreased, as expected?

More importantly, the financial problems because of the reduced revenues, have put pressure to increase the number of games between top teams. One form that this could take, in soccer, is the creation of a closed European Superleague. This can take a variety of forms, and probably there will be some sort of arrangement with the incumbent institutions, as it happened with the introduction of the current format of the Champions League in the 1990s. This time, the interest of US investing institutions injects even more credibility to the attempts to secede of some of the top clubs, including FC Barcelona and R. Madrid. There was an article about this in the Financial Timesthis this week-end.

The horizon of a very lucrative European superleague (or enhanced Champions League) would facilitate a mutualized exit from the current crisis (as suggested by the economist Stefan Szymanski), and it would correct a clear inefficiency: more top games are feasible and there is willingness to pay for them. But there will be redistributive implications that will have to be addressed (by compensating the losers), and important cultural implications in the form of reduced importance of national championships, and increased importance of European competitions. It will be the soccer way to a federal Europe.

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