Impact on Competitive Balance from Allowing Foreign Players in a Sports League: Evidence from European Soccer

Different theoretical frameworks have yielded different predictions concerning the impact on competitive balance of widening the pool of players from which clubs in a sports league are permitted to recruit. We identify that one reason for differences is that models may represent clubs as hiring from the pool of talent either simultaneously or in a leader‐follower fashion (such that strong clubs have first pick of players). With the latter assumption, we suggest that there is an effect, the sign depending on how many extra talented players are admitted to the pool. Whether balance is modified favourably or unfavourably when, for example, foreign players are introduced is therefore an empirical matter. In our statistical analysis, we test for effects from the liberalisation of football player labour markets associated with the Bosman Ruling. We show that, across seventeen European football leagues, results derived from indicators based on tables of aggregated seasonal performance (for example, concentration ratios) point to an improvement in within‐season (but not cross‐season) competitive balance following Bosman.