Revenue sharing in European football leagues: a theoretical analysis

Hansen, BO; Tvede, M

doi:10.1007/978-3-319-32543-9_12

Revenue sharing in European football leagues: a theoretical analysis

Lookup NU author(s): Professor Mich Tvede

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Abstract

In the present paper a general model of competition between clubs in sports leagues with flexible supply of inputs is studied. There are externalities between clubs because it takes more than one club to produce games and tournaments. It is assumed that the externalities take the form of complementarities. Firstly, it is shown that revenue sharing leads to lower overall quality of sports leagues. Secondly, it is shown that the optimal quality for the league is lower (higher) than the quality in a league without revenue sharing in case of negative (positive) externalities between clubs. Thirdly an example is used to illustrate the findings.