North American Soccer Club Essay

An Economic Comparing North American Sports Leagues with European Sports Leagues

For some Americans supporting a team or a club is a relaxing Sunday afternoon activity, for some this social event is a good excuse to be loud and let of some steam but for most Europeans supporting a team is a way of life. These people would do anything for your team to be successful. They would gladly go to every away and home game, buy all of their merchandise and get as many people as they can involved. This affects the amount of revenues clubs earn and their profitability. Many would argue that this is because of the cultural difference between Europe and America but in reality this is a result of an economic phenomena that is caused by the way the respective

North American leagues, on the other hand, are organized as closed platforms with exclusive property rights and high entry barriers for major leagues. This difference explains why European clubs outperform their North American counterparts in terms of revenue generation and value creation, and why North American clubs are much more profitable than most European clubs. The list below provides us with important numbers to get a better understanding of how European soccer clubs match up with American sports teams. As seen the top 6 clubs are all European, this is because European clubs “create wealth”.

Rank Team Revenue 2007/08

1 Real Madrid € 366m

2 Manchester United € 325m

3 FC Barcelona € 309m

4 Bayern Munich €

NHL top: Toronto Maple Leafs € 102m

However, Even if Europeans clubs seam to have more revenues American sports teams o average are much more profitable these different symptoms have developed because of the way their respective platforms have been establish.

What is a “platform”? According to European economist Tobias Duschl, who has written many works in the field, defines a platform as the following; “as any infrastructure that enables two or more market sides to interact with each other. Network effects usually characterize the interactions that are enabled through platforms.

Network effects are key in how all of this will relate back to sports. However before we connect those dots it is worth note to talk about the two kinds of network effects.

The first one is the same side effect. This is the idea that when one of the two sides of a platform grow it increases the sides overall attractiveness for others to join. A good example for this would be any social media platform. As more people become member to a particular social community more people have a social incentive to join because all the things they care about are already on the