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The English Football Industry: Profit, Performance and Industrial Structure

In: Football Economics and Policy

Author

Listed:
  • Stefan Szymanski

    (Imperial College Management School)

  • Ron Smith

    (London University)

Abstract

The English (Association) Football League is a long-established industrial cartel selling a highly popular product with only imperfect substitutes. Despite that, the majority of its member clubs lose money and the industry has faced successive financial crises over the last decade. This chapter develops an empirical model of the financial performance of English League clubs using a high-quality data set of 48 clubs over the period 1974—89. The underlying model explains how rents are competed away through the maximising behaviour of club owners subject to production constraints. This model is parameterised by a system of equations which describe the behaviour of a maximising owner subject to demand and production constraints. The model is then used to examine the coordination failure which lies at the heart of the English Football League’s decline and to assess the prospects for the Premier League.

Suggested Citation

  • Stefan Szymanski & Ron Smith, 2010. "The English Football Industry: Profit, Performance and Industrial Structure," Palgrave Macmillan Books, in: Football Economics and Policy, chapter 1, pages 1-26, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-27426-6_1
    DOI: 10.1057/9780230274266_1
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    References listed on IDEAS

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    4. John Goddard & Peter J. Sloane, 2005. "Economics of sport," Chapters, in: Simon W. Bowmaker (ed.), Economics Uncut, chapter 12, Edward Elgar Publishing.
    5. Ron Smith & Stefan Szymanski, 1995. "Executive Pay and Performance: The Empirical Importance of the Participation Constraint," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 2(3), pages 485-495.
    6. Klein, Roger W & Brown, Stephen J, 1984. "Model Selection When There Is "Minimal" Prior Information," Econometrica, Econometric Society, vol. 52(5), pages 1291-1312, September.
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