Will American sport business models work in European football?

The level of league governance in terms of how it influences the business models of individual teams is a pervading element of many American sports leagues. The influx of competitive balance shines through in for instance the NFL and the NBA. The nature of league control of competition maintain an ‘uncertainty’ of the outcome of the games, which increases the level of excitement with reference to what team will end up winning the national title in the end of the season.

European football has been characterized by other levels of governance than what is applied by the American leagues. In recent years, UEFA has brought attention to the application of Financial Fair Play (FFP), which is thought to prevent European football clubs from ‘overspending’ and hence consecutive financial losses and huge debt burdens. However, European football clubs still possess a large degree of freedom within the framework of FFP to act (including the club’s transfer activities) according to financial strength. Market conditions in the European football industry are still highly impacted by the biggest football brands recruiting the best players and thus seeing a relatively high probability of competing for the national championship and for a spot in international competitions, e.g. the UEFA Champions League. Competitive balance and revenue sharing level the playing field and balance the probability for winning titles in the American model.

Research made by various economists pointed to the fact that the European model with its irregularities concerning governance of the game did not allow for strong evidence that a move to the American model would be beneficial for European clubs (Gratton, 2000). Over the past decades, European football has experienced strong commercialization rates. For sure, there are aspects from the American model that European football can utilize as inspiration. For example, the NFL has been an extremely strong marketing vehicle at the league level whereas European football puts more emphasis on the individual clubs to come up with strategies to secure brand equity and profitable revenue streams. Especially, smaller European clubs may benefit from a centralization of some commercial activities and over the years European football has also experienced greater parallels with the American model.  Though, readers should be aware of the fact that the argument against applying an American model as ‘the model to follow’ in European football stems from leading European clubs boosting the interest for the game of football in their respective countries. In that regard, keep in mind how Real Madrid’s Galacticos team increased exposure of and interest in the Spanish La Liga, how Chelsea’s European success last year affected the sales of the club’s shirts, or how FC Barcelona’s tiki taka style has set new standards for the aesthetic perfection of a football team and led to boosted global reach. All these examples of increased interest for the game of football have also brought revenue potential to these clubs and its surroundings.

There are certainly pros and cons affiliated with the American and the European models but in this contemporary sports reality, it makes sense to underline that each model is constructed by cultural productions and re-productions spanning over long time periods. Sport businesses must be dynamic and adaptable entities but to change the DNA of a football league system in Europe where ongoing promotions and relegations are part of life seems brutal for those clubs in lower leagues, which may have aspirations of being promoted to the best league or traditions based on performances in the best league. It would be unfair to these clubs to implement a ‘closed-league system’ as seen in the American model. It would break up some of the patterns, which portray fan identification in parts of European football.  Another American element, which does not fit well with the traditions linked to European football clubs, is the movement of clubs from one city to another, repeatedly due to a city’s (and its taxpayers) economic support or lack of it regarding the club’s facilities. It would be unlike to imagine a situation where Manchester United was moved to another city.

Gratton, C. (2000). “The peculiar economics of english football”. In J. Garland, D. Malcolm & M. Rowe (Eds.), The future of football: Challenges for the twenty-first century. London: Frank Cass Publishers.