Nr. 10/2004

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Management, competition and efficiency in professional sports


Michael Drewes


1. Introduction

While sports clubs in professional American leagues such as Major League Baseball (MLB), the National Basketball Association (NBA), the National Football League (NFL) or the National Hockey League (NHL) are traditionally in the hands of owners with concrete property rights, European sports clubs were originally associations with more or less social tasks. Ownership and the right to retain profits were diluted. This is

especially true in Spain and Germany, where most of them still are without an explicit will to make and retain profits.1 But commercialisation is going ahead in European sports as well. English, Danish, Dutch and Italian clubs are changing their legal form from private associations into profit-oriented stock corporations, and their German counterparts are currently following suit. In many cases this provides an advantage in financial terms resulting in a better sportive basis. As a result, most of the clubs might feel forced to follow suit and go public. When clubs in Europe act more and more like profit-maximizing corporations, other problems could follow. For example, profitmaximizing clubs could demand market conditions which provide them with simpler and safer planning with reference to long-term investments, especially human capital investments in players. One of these demands could be the limitation or abolition of the relegation rule, which endangers club investments in case of relegation.


* Autors note: For valuable remarks and help in translation my special thanks goes to Janet and William Duke as

well as Robert Schreiber from Ernst & Young.


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