Monday, December 25, 2023

UEFA vs the European Super League: regulation, competition and ownership

The recent decision of the European Court of Justice (ECJ) denying UEFA the right to stop the European Super League (ESL) illustrates the dilemmas facing the football (soccer) industry.

FIFA (the global non-profit governing body) and UEFA (its European affiliate), both headquartered in Switzerland, are part of an international monopoly that acts as the gatekeeper of a global club good: the right to play football at the “official” (both professional and amateur) level. We are talking about the most successful and unified global sport. And it is successful, among other reasons, because it is unified.

That is why the ECJ decision does not guarantee the success of the ESL. Without the English (also, the French and German) clubs, it will just not happen. To some extent, the English Premier Legue is already the true ESL. Internationally, the unification of football’s rules and calendar brings value to the fans and stakeholders. It is true that one could think of making numerous improvements, but the challenge is to make them without eliminating the unified character of the current setting.

However, the ECJ has concluded that FIFA and UEFA (both regulators and promoters of competitions) abuse their dominant position. How to solve the problem of abuse of dominant position? Traditionally, market power has been addressed through three mechanisms: competition policy (antitrust), monopoly regulation or public ownership. One can discard the latter in this field (not necessarily in others), because of the diversity of club ownership models and the involvement of federations and other traditions of self-organization. Also, given our fragmented institutions at the global level, there wouldn’t be a way to organize a system of public ownership of planetary scale. That does not mean that the issue of ownership (club-states, tycoons, sportswashing, the German model, member-owned clubs…) should not be the object of (interesting) debate.

The ECJ seems to advocate for a pro-competition model, where agents other than the federations can organize events and tournaments without their permission. In its decision, the principle is clear, but not the way to implement it (it is not the job of the ECJ). Economist Stefan Szymanski’s book “Playbooks and Checkbooks” has a chapter on the history of antitrust in sport, showing a dynamic field and many open questions, among them the treatment of Sports leagues as joint ventures that make possible a better product for consumers. One could extend the argument to global arrangements.

A look at basketball shows the problems of a non-unified approach. The basketball Euroleague shows that the model is possible, but the lack of a global calendar also shows that the final product could be much better if it were globally unified in a hyerarchy similar to football.

Not all monopolies are bad -if they can be regulated. The problem of a global monopoly such as FIFA is that there is no federal global regulator, but a patchwork of decisions by several jurisdictions. When large democratic jurisdictions have been involved in one way or another (the FBI 2015 investigation, the Bosman Ruling), the changes have been significant. But there is no day to day regulation.

In Europe, the Champions League or the ESL conquering the week-ends is still a taboo, but would no doubt be a move in the direction of efficiency if the losers (modest teams in national leagues) were somehow compensated.

The current structure, although it is very successful, is still inefficient (there is money on the table, because there are too many boring games), and has other important social problems attached to it, such as corruption, sportswashing or unfairness. My preference is for making progress towards a global regulation keeping the unified character of football, but it will be a second best and it doesn’t surprise me that others try other approaches.

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