Third party money injections of benefactors (sugar daddies) function as a bailout mechanism for otherwise insolvent football clubs. The successful implementation of the new UEFA "financial fair play" regulations will abrogate this bailout mechanism. We develop a theoretical model of a...

The UEFA Champions League is an annual Pan-European football competition that takes place parallel to the domestic league competitions. The participation in the Champions League secures the teams large payments, which have steadily increased over the last decade. This paper develops a general...

This paper provides a game-theoretic model of a professional sports league and analyzes the effect of luxury taxes on competitive balance, club profits and social welfare. We show that a luxury tax increases aggregate salary payments in the league as well as produces a more balanced league....

This paper provides a contest model of a professional team sports league and analyzes the impact of a restriction on foreign players. It shows that a league with binding restrictions on foreign talent for all clubs is more balanced than a league without binding restrictions on foreign talent....

Many major sports leagues are characterized by a combination of cross-subsidization mechanisms like revenue-sharing arrangements and payroll restrictions. Up to now, the effects of these policy tools have only been analyzed separately. This article provides a theoretical model of a team sports...

In this paper, we provide an analysis of the principal economic issues in the professional team sports industry. We characterize the major peculiarities of this industry and give an overview of the most important league policy measures that are implemented to provide cross subsidies among teams....

This paper analyzes the effects of a percentage-of-revenue salary cap in a team sports league with win-maximizing clubs and flexible talent supply. It shows that a percentage-of-revenue cap produces a more balanced league and decreases aggregate salary payments. Taking into account the...

Abstract: In the recent years, many clubs in the biggest European soccer leagues have run into debts. The sports economic literature provides several explanation for this development, e.g., the league structure (open versus closed league), club constitutions, ruinous rat races between clubs....

This paper applies contest theory to provide an integrated framework of a team sports league and analyses the competitive interaction between clubs. We show that dissipation of the league revenue arises from `overinvestment' in playing talent as a direct consequence of the ruinous competitive...

The release of players from a club to the national team often leads to a conflict concerning the duration of the players' stay with the national team. Based on a theoretical bargaining model, we examine whether intervention in this conflict by a governing body is desirable. We show that...