Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

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. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Saturday, June 04, 2005

Szymanski and Zimbalist Analyze the Economics of Soccer

Phil Miller quotes the essence of their analysis at Market Power. It hinges on promotion and relegation: teams that are really good in their league move up to a better league, while teams that lose a lot of games are relegated to a lower league. One interesting result is that games are very meaningful among teams about to be promoted or relegated to a different league.

Imagine trying that in Major League Baseball: the two teams with the worst records at each level get demoted one level [e.g. from MLB to AAA or from AA to A] while the two teams with the best records get promoted.

Over time the divisions would have to morph, and scheduling could be a nightmare. But I'm sure the system could be tweaked so that it could be applied in North America. I'm not saying it should, just that it could. After all, if the present system generates more value, in terms of willingness to pay, maybe it is better. Here's part of the quote from S&Z:

Emulating the U.S. model and uniting Europe's top clubs -- Man U, Chelsea, Arsenal, Real Madrid, Barcelona, AC Milan, Inter, Juventus, Bayern Munich-- into a single, closed league would be a surefire way to make more money. Not only would it add to the value of broadcast rights, it would create a system for controlling costs and raising revenue. But it wouldn't be the traditional English way.

Update: At The Sports Economist, Phil Miller also has a very illuminating review of the latest book by Szymanski and Zimbalist,
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