EU competition law, football and national markets

ABSTRACT

Research question

The paper investigates the way in which the large football clubs are increasing their dominance, and whether this is compatible with EU competition law.

Research methods

Various insights from the economic and legal literature have been combined to give a new interpretation of EU competition law.

Results and findings

The number of clubs with a realistic chance of winning important prizes has declined in many national markets. As a result, the economic competition has diminished and prices have increased to the detriment of welfare. This development has been reinforced by the joint actions of the top European clubs, such as threatening to start a Super League. Consequently, UEFA has implemented policies that have been particularly helpful for the top clubs. But, the clubs’ actions are incompatible with EU competition law, as is the actual creation of a European Super League.

Implications

If the EU were to enforce the law, the power of the big clubs would be reduced, and UEFA's policies could be based more on the old democratic principles, again. This would lead to more sporting successes for small clubs and to lower prices for the fans.

KEYWORDS:

• Soccer
• EU competition law
• market power
• European Super League

1. Introduction

The last 60 years have seen an increase in the differences in the playing strengths of football clubs in Europe. Currently, the number of clubs that have a realistic chance of winning the highest European title within 10 years is lower than in the past. Moreover, many countries have fewer clubs with a realistic chance of winning the domestic title. A large number of scholars have described or explained this development (see Section 2).

When it comes to the effects of this development, many studies have focused on what is one of the central features of football: the uncertainty of the outcome of matches and seasonal competitions. To keep football interesting, it is crucial that there is “uncertainty of outcome”, to a certain extent at least. But, the increasing differences in playing strengths between clubs have led to decreases in uncertainty of outcome. The effects of such decreases on the pleasure of football fans, and therefore on welfare, have been investigated by many economists (e.g. Dobson & Goddard, 2011; Nalbantis et al., 2017; Simmons, 2006). Legal scholars have also studied the subject. They consider the need for competitive balance on the playing fields to be one of the specific characteristics of sport, and argue that such specific characteristics justify a “sporting exception” in European law (e.g. Parrish & Miettinen, 2008; Van den Bogaert & Vermeersch, 2006; Van Rompuy, 2015).

This paper also pays attention to the effects of the reduction in the number of clubs which can win important prizes. Yet, unlike other papers, it will not discuss the effects of this reduction on uncertainty of outcome. Instead, it takes a new route by focusing on the effects of the reduction in the number of clubs which can win important prizes on economic competition within national markets and, in relation to that, on prices, consumption and welfare. After discussing these effects, it will turn to the question of whether the European law implies that the EU should help the small clubs in order to improve competition within the national markets. Here, the arguments will be based on hard competition law. This is a marked difference with the arguments for a sporting exception, which, given the existing European Treaties, are based on “soft law” (Serby, 2016; Vermeersch, 2007).

The paper only deals with European professional club football and, from now on, “football” means European professional and semi-professional club football. Football fans are defined as all the people who get pleasure from the game. Football fans are also called consumers. The paper focuses initially on the markets for the end products of the football industry, which offer consumers TV broadcasts of football matches, stadium tickets and other products. Later in the paper, attention will be paid to the markets where competition organisers (such as football associations) offer their services to clubs.

It is assumed that the external effects of football clubs (such as the effects on the environment or the community) are zero. Consequently, the welfare generated by the football sector is equal to the difference between the total pleasure of the fans and the total (opportunity) costs of the sector (this follows from standard economic theory; see Mankiw & Taylor, 2006).

The aim of the paper is to answer some legal questions, and this will be done in the final part. Before that, a fair bit of economic groundwork is needed. Thus, Sections 2 and 3 provide an economic analysis. Section 2 analyses how competition has developed within the national markets for the end products of the football industry over the years, and it investigates the effects of this development on prices, consumption and welfare. Section 3 discusses the possible future emergence of a European top league for a limited number of clubs only, and the effects of such a “European Super League” on economic competition and welfare. Section 4 deals with the policies of the European Union of Football Associations, UEFA, and with the joint actions taken by the big European clubs to influence UEFA. Section 5 presents the legal argument. It deals with two questions. First, are the joint actions of the big clubs in line with the competition law? Second, will the possible emergence of a Super League be in line with this law? Section 6 concludes the paper.

2. Economic competition within the markets for the end products

2.1. The relevant market

To analyse economic competition, one first needs to know the “relevant market”. By definition, a relevant market comprises all products that are regarded as interchangeable or substitutable by the consumer. The following holds when a firm increases its own price significantly: If the price increase causes a substantial number of the firm's customers to switch to one or more other firms, it means those other firms operate in the same relevant market. Those firms that do not get substantially more customers are not operating in the same relevant market (Belleflamme & Peitz, 2015; European Commission, 1997).

Most consumers prefer to watch matches with at least one club from their own country. Substantial increases in the prices of stadium tickets or TV broadcasts of the clubs in a certain country will not lead to domestic consumers switching substantially to foreign clubs. This implies that the relevant market does not stretch beyond the borders of the country. Regarding TV broadcasts, it is widely accepted that the relevant market is the national market (Bourg & Gouguet, 2010; Jeanrenaud & Késenne, 2006; Parrish & Miettinen, 2008).

With respect to stadium tickets, the relevant market may be smaller than the national market due to travelling distances. No research has been done on this issue, and this paper will not fill the gap, but the following can be said: If a relevant market is smaller than a country, all the clubs operating in this market will have a larger market share than they would have had if the relevant market were the national market. These larger market shares imply that there is less competition. Considering this, it will be assumed that the relevant market is the national market for stadium visitors too. This assumption will, in any case, not make the problem of reduced competition, which is at the heart of the paper, larger than it actually is.

Besides watching football of domestic clubs, many consumers also like to watch (some) foreign football. Here, the relevant market could be comprised of all the European clubs; whether a Dutchman watches English or Spanish clubs may strongly depend on the price. The market for non-domestic football clubs is still (much) smaller in terms of turnover than the national markets for domestic football clubs taken together.¹

The analysis below will focus on the (national) markets for domestic football clubs. Only focusing on these markets will facilitate the hard legal conclusion of this paper. Whether the conclusions can be reinforced by also taking the market for non-domestic clubs into account is a question for later research. Finally, it should be noted that small countries like Luxembourg and Cyprus are neglected in this paper.

2.2. Demand and supply in the national markets

Now that it is clear which markets are going to be analysed, it is time for a first, elementary description of these markets. On the demand side of every national market, there are hundreds of thousands of football fans at the least. Obviously, these consumers do not all have the same preferences. Many like to have a special bond with one particular club. A fan's favourite club is often a club from their own city, or their own region if they do not live in a city with a reasonable club. At the same time, most fans like to support a club that can win important prizes (Dobson & Goddard, 2011; Koenigstorfer et al., 2010; Simmons, 2006).

On the supply side, there are many different clubs in every country. Each club has its own characteristics. This implies we are dealing with “imperfect competition”.

A further description of the supply side can be enhanced with some definitions. A top national club is a club that has a realistic chance of winning the national title at least once in the 10 years after the date of observation, while not being a top European club. A top European club is one that has a realistic chance of winning the (highest) European title in the same period of time. A top club is a club that is either a top national club or a top European club. Top clubs will also be referred to as suppliers of top football.

Over the last 60 years, the differences in the clubs’ playing strengths have increased. In relation to this, the number of top European clubs has diminished, as has the number of top national clubs in most countries. The main explanation for this development is that the financial differences between the clubs have increased, while the financial strength of a club determines its playing strength to a large extent (For these issues see: Andreff & Raballand, 2011; Bloching & Pawlowski, 2013; Dobson & Goddard, 2011; Groot, 2008; Ramchandani et al., 2018; Rohde & Breuer, 2016; Scelles et al., 2020). There are, of course, many deeper reasons for this development, but a full explanation is outside the scope of this paper. To give some perspective, and to demonstrate that an important part of this development cannot be contested in any court case, it can be said that one of the deeper instigators of the increasing differences is the rise of television (Bourg & Gouguet, 2010; Groot, 2008).

Given the description of the demand side, it will be clear that the attractiveness of clubs that cease to be top clubs decreases for many consumers. Therefore, the remaining top clubs get more fans and a larger market share of their national market. Their new fans are often young, as older football fans tend to remain loyal to their old club. In relation to this, the reduction in the number of top clubs is a relatively slow process which takes many years.

This section has given no more than an elementary basis for the upcoming analysis. The most obvious conclusion is that the football markets are characterised by imperfect competition. The next section will discuss what the economic theory has to say about these types of markets.

The meaning of some other terms will be given here. When we speak of big clubs, large clubs and small clubs, the adjectives do not refer to the chances of winning prizes, but to the revenues of the clubs. The adjectives will not be defined in any precise way. Roughly speaking, big clubs are clubs that have sufficient revenues to be a top European club, as defined above.² A large club is either a big club or a club that is, in terms of revenues, somewhat smaller than a big club. Small means neither big nor large. Note that the Danish champions are a top club by definition, but are certainly not a big club.

2.3. The theory of market competition

The theory of markets with imperfect competition provides a number of insights that may be useful for football too. The explanation of the theory can start with the concept of market power. Essentially, a firm has market power if it has the ability to raise its price without seeing all its customers switching to its competitors. The larger the market power of a firm, the more it can raise its price without seeing many of its customers moving away. All markets with imperfect competition enable the firms to have at least some market power.

An important conclusion of the theory is this: The market power of the suppliers will be larger when the number of suppliers in the (relevant) market is lower, the product differentiation is higher, and the market share of the main suppliers is larger.

The theory is based on the idea that firms aim to maximise profits. This implies they will use their market power to raise prices up to the level where profits are maximised. In relation to this, the following holds: The larger the market power of the suppliers, the higher their prices. Higher prices, in turn, lead to lower consumption levels. Lower consumption implies lower welfare, because the value of the marginal product is higher than the marginal costs.

Finally, higher prices and profits may, or may not, lead to more innovation and to products with more value for consumers in the long run. As far as this point is concerned, it may, or may not, improve welfare if the number of competitors is not too large, so that prices can be higher. A full discussion of the theory can be found in the book by Belleflamme and Peitz (2015).

2.4. Application of the theory to the football sector

Can this general theory be applied to the football sector? This question will be discussed step by step, paying due attention to the exact meaning of the concepts.

2.4.1.Market power

This section discusses the concepts of the general theory which may help explain market power. The first one is the number of suppliers within the relevant market. As discussed earlier, the relevant market is the national market. The Netherlands has always had at least 36 professional football clubs (over the last 60 years). So there has never been too much market power as a result of the number of suppliers being too small. The same conclusion applies to other countries in Europe.

The second concept is product differentiation. Product differentiation in football concerns many factors, including the location, the style and the history of the clubs. It also concerns the playing strengths of their teams. As discussed earlier, the differences in the playing strengths of football clubs have become more pronounced since 1960, and the number of top clubs has been reduced. Thus, a few clubs have distinguished themselves more clearly from the rest. In this sense, there is more product differentiation now.

An example may clarify this. Consider a young boy living in present-day Rotterdam. He wishes to become a fan of a top club in his city. If he had lived 60 years ago, he could have made a choice between two top clubs: Feyenoord and Sparta. But the last time Sparta was Dutch champion was in 1959. Feyenoord, on the other hand, is the only club in Rotterdam that currently sells tickets for top football. So, presently, the product offered by Feyenoord differs much more from the product offered by Sparta, compared to 60 years ago.

The third concept is the market share of the main suppliers. As discussed earlier, the number of top clubs has been reduced, and the remaining top clubs have obtained a larger market share of their national market.

So, both the product differentiation and the market share of the main suppliers have increased in the football markets. According to the general theory, such changes will lead to an increase in the market power of the main suppliers. As far as I can see, there can be no reason why this last conclusion is not applicable to the football sector too.

Here too, the boy from Rotterdam example could be used to elucidate this. As noted above, product differentiation has increased in Rotterdam; Feyenoord is currently the only local club that can win the Dutch title. Therefore, if a boy from Rotterdam wishes to become a fan of a top club in his city, he can no longer turn to another club if Feyenoord raises its price. By definition, this means the club has more market power than 60 years ago.

2.4.2. Prices

One of the conclusions of the general theory is that increases in market power lead to higher prices. This is based on the assumption that firms aim to maximise profits. But the aim of many football clubs is to maximise sporting success (Garcia-del-Barrio & Szymanski, 2009; Rohde & Breuer, 2017). Can this lead to a different conclusion?

The answer is no. Sporting success strongly depends on the budget for players. Therefore, clubs that strive for sporting success are forced to strive for high revenues too. In relation to this, the pricing rule of clubs aiming for sporting success is, according to a theoretical analysis, the same as the one for clubs seeking profits, with the price depending on the club's demand curve and thus on its market power (Késenne & Pauwels, 2006). Hence, the theory predicts that all football clubs will charge higher prices if they get more market power.³

Have the prices been rising in reality, as the combination of the theory and some of the empirical facts given above suggests? In 1999, the average real price of a ticket for a match in the highest English league was 8.3 times higher than in 1960 (Dobson & Goddard, 2011). Such a precise conclusion is not possible for the period after 1999, but it may be noted that the Football Supporters Federation has been campaigning against high ticket prices in recent years. In Madrid, the real price of the average stadium ticket of Atlético Madrid in 2016 was three times higher than in 1966 (Pérez-Gonzales et al., 2018). A final observation: prices to watch football on pay TV have risen sharply between 2004 and 2016 (Smith et al., 2016).

Note, however, that this is not strong empirical evidence for a positive relationship between market power and prices, as no attention has been paid to the different possible reasons for the observed price increases. Indeed, this paper is focused on showing that the general theory of market competition, on which the competition law is based, can be applied to the football sector too. It is not focused on providing new statistical evidence for this theory, although a little evidence may be mentioned here and there. The underlying idea is this: if it can be shown that the general, standard economic theory is applicable to the football sector, the input for the legal analysis is as strong as this theory.

2.4.3. Consumption and welfare

The general theory says that higher prices lead to lower consumption levels. Disregarding, until further notice, the case of football stadiums that are always sold out, it is quite obvious that higher prices reduce consumption in the football sector too.⁴

The theory also says that lower consumption implies lower welfare in markets with imperfect competition. The reason is that prices, and so the value of the products for the buyers, are above the marginal costs in these markets. Given the definition of welfare, such a difference logically implies that lower consumption leads to lower welfare (Mankiw & Taylor, 2006). Since there are many examples of prices being above the marginal costs in the football sector,⁵ lower consumption implies lower welfare in this sector too.

A small complication is that the capacities of football stadiums are limited. In relation to this, some stadiums are (sometimes or nearly always) sold out, also after price increases. This means that higher prices do not reduce consumption, and the standard theory does not apply.

The capacity limits do imply the following: The reduction in the number of top clubs discussed above means that the total capacity of all the stadiums of the top clubs is lower. Since the remaining top clubs attract many new fans, more fans will be refused a ticket to watch their favourites (if demand is not reduced through high prices to begin with). This means a reduction in welfare. So, the mechanism is different here, but the conclusion that welfare is reduced remains the same.

2.4.4. Higher prices and the value of the product

A final conclusion of the general theory is that, in the long run, higher prices and profits caused by market power may, or may not, lead to more innovation and to products with more value for consumers. This raises the following question: Have the observed increases in market power in the football sector, and the related increases in prices and revenues, led to a more valuable product? If so, these higher prices may not be a problem after all.

Now, the higher prices, and the resulting higher revenues, have enabled clubs to innovate in the field of training methods, to improve training facilities, and to pay the players higher salaries. Nevertheless, this has not led to more attractive matches. Messi is brilliant, and the defenders facing him are in much better physical condition than the defenders of the past but there is no proof at all that Messi and his opponents entertain the audience more than Pelé and the defenders of his time. Speaking more generally, the product of the football clubs is presently not (really) more attractive than in 1960, in so far this concerns the activities on the playing fields (Borghans & Groot, 1998; Van der Burg, 2014).

This conclusion is certainly not 100 or even 95% reliable; the satisfaction of the fans of 1960 cannot be compared with those of the present fans on the basis of reliable statistics. However, the conclusion of the previous paragraph is good enough for policymakers or judges who have to make decisions.⁶

Thus, the higher prices caused by the market power have not led to a more attractive product. At the same time, they have had a negative effect on welfare, as they have caused consumption levels to be lower. All in all, the conclusion that the higher prices harm welfare remains valid.

2.5. Conclusions

In the football sector, many of the relevant markets are national markets, and this paper focuses on them. It has been shown that the general theory of markets with imperfect competition can be applied to the football sector, with a few modifications at some points.

On combining the theory with a number of factual observations, the analysis has yielded a number of conclusions which can be useful for the remainder of the paper. They are: Over the last 60 years, the differences in the playing strengths of the football clubs have increased, the number of suppliers of top football has decreased, and the remaining top clubs have obtained a larger market share. Such developments have given these clubs more market power. In other words, competition within the national markets has been reduced. This has had an upward effect on prices, and a downward effect on consumption.⁷ In addition, the stadium capacity for top football has become lower, which also reduces consumption. The final result is a lowering in welfare.

3. A European Super League

According to many observers, the increasing differences in playing strength between the clubs, and the related decreases in the uncertainty of outcome, make football less interesting for the fans. The question has been posed whether this problem of decreasing uncertainty of outcome can be reduced by a change in the league system. More specifically, attention has been paid to the idea of a Super League, which means European Super League in this paper (This section is based on: Franck, 2018; Hoehn & Szymanski, 1999; Késenne, 2007; Solberg & Gratton, 2004; Van der Burg, 2014; Vrooman, 2007).

The Super League would consist of 16–64 clubs, including all the big European clubs. The participants would no longer play in national leagues or in UEFA's European cup competitions. Taken by itself, the passing away of the old national leagues, with all the country's clubs and thus many regional sentiments, will have a negative effect on the pleasure of the fans and therefore on welfare.

The Super League could, for instance, consist of 32 clubs with 6 participants from England and 26 participants from other countries. Let us first assume that there is no promotion and relegation to and from the Super League, which means a closed Super League.

Hence, in England, no more than six domestic clubs will produce top European football forever. The market share and the market power of these clubs regarding the English market will become very high, and their prices will rise further. The stadium capacity for top European football will be reduced to around only 400,000 seats.

Most other counties will have less than six clubs in this Super League. Some countries will only have one Super League club. This club will then have a monopoly on top European football in its own country, as far as club football is concerned. In the long run, it may be comparable to the monopoly of the national football association on the football of a national team.

Let us turn to an alternative scenario. An open Super League would enable clubs playing in national leagues to gain promotion to the Super League. So, in theory, these clubs would still have a chance to win the European title one day. But, in practice, many of these clubs would play alternatively in the Super League and in their national league, at best. They may then never be able to really compete with the big European clubs financially, because the national league is much less profitable. Thus, the number of clubs playing in the Super League (almost) every year, and having a serious chance of winning the European title one day, would still remain limited. Indeed, having an open Super League would increase the market share and the market power of a small number of big European clubs over their national market, causing higher prices.

A conclusion is that the business model of both an open and a closed Super League will, to a large extent, be based on the increase in the market share and the market power of the participants in their national markets. In relation to this, any Super League will lead to higher prices and therefore to lower consumption, which reduces welfare.

However, the Super League would have a big advantage in the eyes of many observers: uncertainty of outcome will be high, especially if the number of participants is 32 or less. After all, the number of “small” participants will be low to begin with, while it will be relatively easy for the big clubs to help these few “small” clubs becoming stronger. Therefore, a Super League may well increase welfare on balance (Hoehn & Szymanski, 1999).

Hoehn and Szymanksi's analysis is based on the assumption that uncertainty of outcome will be low under the present system. What would happen, though, if measures are taken that strongly increase uncertainty of outcome in the present system again? In that case, a low uncertainty of outcome can no longer be a disadvantage for the present system. Hence, the previous analysis seems to suggest that the present system generates more welfare than a Super League system. Van der Burg (2014) and Franck (2018) argue that this will be the case indeed.

To summarise: the emergence of a European Super League one day, be it a closed one or an open one, would further increase the market share and the market power of the big clubs. In other words, competition would be reduced. This would lead to higher prices and lower welfare. The passing away of the old, popular national leagues, with all the country's clubs, will also reduce welfare. Conversely, according to a number of observers, a Super League can solve the problem of reduced uncertainty of outcome, and will, because of that, (probably) increase welfare on balance. However, these observations are only right if it is impossible to increase the uncertainty of outcome under the present system. The question remains whether this is certainly impossible.

4. The UEFA policies and the joint actions of the big clubs

The Union of European Football Associations, UEFA, consists of national associations, with each one being formed by the country's professional clubs. Decision-making within the associations is, in principle, based on “one member, one vote”. The majority of the voting rights in the national associations and UEFA is in the hands of, respectively, small clubs and associations from small countries, and therefore in the hands of officials that would like to have more balance on the playing fields.

In relation to this, UEFA and the national associations have, in the more distant past, taken quite a number of measures which have decreased the differences in playing strength between the clubs and increased the number of clubs that can win important prizes (as compared to a situation without these measures). As discussed in Section 2, such developments mean that the large clubs get a smaller market share in the long run, and less market power. In other words, economic competition increases. So, although this will not have been the main concern of the clubs, the democratic nature of the football associations not only promotes the competition on the playing fields, but also the competition within the markets. This means it will lead to lower prices and higher welfare.

The present UEFA chairman, Ceferin, also wants more competitive balance on the playing fields. He has proposed a number of measures, such as salary caps and a limitation on squad sizes, while inviting discussion about other measures (Chaplin, 2017; McInnes, 2018; Press Association, 2017). It suffices to say here that good measures are indeed available for promoting the balance in all the leagues and competitions (Groot, 2008; Schubert & Lopez Frias, 2019; Van der Burg, 2014; Van der Burg & Prinz, 2005).

Unfortunately, there is a lot of opposition from the big European clubs. These clubs have been threatening since 1998 to leave UEFA and start a European Super League if UEFA reduces their chances of sporting success. Consequently, UEFA has actually done little to improve uncertainty of outcome. Even worse, the repeated threats by the big European clubs about leaving UEFA, and their other joint actions, have caused UEFA to take measures that strengthen these clubs (Franck, 2018; Parrish & Miettinen, 2008; Pijetlovic, 2015). This has reduced the competition within the national markets, causing higher prices and lower welfare.⁸

To summarise: the repeated threats of the big clubs to start a Super League, and their other joint actions, have harmed the democratic nature of UEFA and the principle of “one member, one vote”. In relation to this, UEFA is no longer of much help to the small clubs. This development reduces the competitive balance on the playing fields, and it also reduces the economic competition within the markets. This brings us to the question as to what the EU, and its competition law, can do.

5. Legal analysis

One of the objectives of the EU competition law is to help realise a situation whereby consumers get products which are as good and cheap as possible, so as to improve welfare. The previous sections have shown that competition in the national football markets has decreased and that this has increased prices and reduced welfare. The question now is whether parts of this development, and especially the two parts which are (at least partly) related to the European Super League, are incompatible with the EU competition law.

5.1. The threat of a European Super League and the other lobbying efforts by big clubs

It has been established that professional football clubs are undertakings that have to comply with the EU competition law (Parrish & Miettinen, 2008). Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements between undertakings and concerted practices whose objectives are, or which have a positive effect on, the restriction or distortion of competition within the internal market. Article 102 prohibits any abuse by one or more undertakings of a dominant position within the internal market.⁹

Section 4 has argued that the repeated threats by the big clubs to start a European Super League, and their other joint actions, have disturbed UEFA's democratic way of decision-making. In relation to this, they have caused UEFA to take measures that help the big clubs, to the detriment of the small ones. As a result, the competition within the national markets of the member states has been reduced. Such a reduction is a reduction in the competition within the internal market (European Commission, 1997). It follows that the joint actions of the big clubs are incompatible with article 101(1).

In addition, these joint actions harm the small clubs, and their fans. This could be seen as an abuse of power by the big clubs, which is incompatible with article 102. A similar conclusion was drawn by Van den Brink (2000) and Pijetlovic (2015).

Pijetlovic (2015), however, notes that if this induces the EU to take action, it may frustrate the big clubs, and cause them to really start a Super League. This brings us to the crucial question: Is the actual foundation of a Super League compatible with the EU competition law?

5.2. The establishment of a European Super League

From an EU competition law perspective, the foundation of a new sporting competition is not objectionable in itself. Objections can only arise in relation to the specific nature of the newly established structure (Parrish & Miettinen, 2008).

Van den Brink (2000), Parrish and Miettinen (2008) and Pijetlovic (2015) indicate that a closed Super League, that is a league without relegation and promotion, is (possibly) incompatible with articles 101 and 102. For instance, Parrish and Miettinen argue that a closed league could reflect an abuse of a dominant market position, as it forecloses the market to aspiring entrants.

These are valuable arguments. At the same time, they seem to be based on the idea that the relevant market is the European market. But, as shown in Section 2, many of the relevant markets in football are national markets. This leads to another line of argument.

As discussed in Section 3, both a closed and an open Super League decrease economic competition within the national markets. This means that any agreement between the big clubs to start a Super League of whatever kind is incompatible with article 101(1). So, every (European) Super League should be prohibited.

Of course, it has to be admitted that UEFA presently holds a monopoly on organising European club competitions. So, the question of whether the organiser of a Super League does not have the right to break this monopoly, is justified. This is an interesting question, but it does not lead to a convincing argument for a Super League.

American team sports have, historically, had many situations with rival leagues whereby each league pretended to or tried to have the best teams in the USA (and Canada in some cases). Ultimately, the league winner was called the champion of the USA. However, such situations never lasted long; they always ended in one league attracting all the important teams, or in a merger. The reason is that sports fans always prefer a situation with one league, and one winner which can really be seen as the best team of the country or the continent (Quirk & Fort, 1992). Pijetlovic (2015, p. 246) noted: “It is a peculiarity of professional sports production that championships must possess a monopoly status to achieve consistent ranking and increase their value for consumers”. So, we can expect that, even though there will be competition between the new organiser of a Super League and UEFA in the short run, a monopoly for a competition with all the top European clubs will eventually emerge again. So, the important question is: Which monopoly is best, UEFA or the organiser of a Super League?

In my view, a UEFA monopoly is the best, at least in the situation where the EU puts an end to the joint actions of big clubs trying to influence the UEFA decisions. As discussed in the previous subsection, the EU is legally obliged to do this. This implies the UEFA, small clubs or (associations from) small countries can force the EU to carry out this obligation. Once these organisations see they can do this (possibly after reading this paper), there is a strong chance they will actually do it. We can expect, therefore, that the EU will do what it is legally obliged to do. As a result, UEFA will become more democratic, again. As explained in Section 4, more democracy will lead to measures that support the small clubs, and this will promote competition within the national markets.

Improved democracy will also lead to more uncertainty of outcome under the present league system. This means that a Super League would no longer have the advantage of increasing uncertainty of outcome compared to the present system. In that case, a Super League would result in less pleasure for the fans and in lower welfare, as discussed in Section 3.

The organiser of a Super League would only be able to win the competition against UEFA by promising the big clubs higher revenues than the revenues they get under the present system. Given that, as has just been argued, the Super League results in less pleasure for the fans, the big clubs will only be able to earn higher revenues with a Super League if they get a larger market share and more market power in the national markets. Indeed, as discussed in Section 3, the business model of a Super League will be strongly based on increases in market share and market power. However, this is exactly the reason why it is at odds with the competition law.

In short, a European Super League will never emerge if the EU does what it is supposed to do: put an end to the joint actions of the big clubs, and so promote democracy. This will increase the small clubs’ chances of sporting success and will, in turn, improve the economic competition within the national markets (in the long run). All in all, a strict application of the European law will increase welfare.

6. Conclusions

The threats of the big European football clubs to leave UEFA and start a European Super League, and their other joint actions, have undermined UEFA's democracy, and the principle of “one member, one vote” which gave the small clubs more power in the past. As a result, UEFA has recently taken measures that help the big clubs particularly, thus contributing to the trend of diminishing economic competition within the national markets. Because of this, the joint actions are incompatible with the EU competition law. The possible establishment of a Super League would also be at odds with the competition law.

Acknowledgment

The author would like to thank Stefaan van den Bogaert, Victoria Daskalova, Aloys Prinz, Jadzia Siemienski, Ramses Wessel and Celeste Wilderom for useful suggestions.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The total revenue of all the European football clubs was 25.5 billion euros in 2016/17. The revenues from the national leagues amounted to 23.1 billion euros, while the revenues from the international competitions amounted to 2.4 billion “only” (Deloitte, 2018). In the national leagues, most revenues come from domestic sources. This also holds for the Premier League. This league is far ahead of the other national leagues in earning money from selling TV rights abroad whereby it earnt 1.57 billion euros per season over the three seasons from 2016 to 2019 (Solberg et al., 2018). Still, this “only” equals to 29% of the Premier League's total revenues for those seasons (see also Deloitte, 2018). Therefore, the largest portion of the revenues came from England itself. Domestic earnings are also dominant in all the other national leagues (they earn much less from selling TV rights abroad than the Premier League). It can be concluded that football clubs earn most of their money within their own national market. In other words, the market for non-domestic football clubs is (much) smaller than the national markets for domestic football clubs taken together.

2 This is a rough approximation because the chances of winning prizes also depend on factors other than revenues to a certain extent. For instance, Everton has slightly higher revenues than AC Milan. But AC Milan is a club from Italy and, in relation to that, it qualifies more easily for the Champions League. This means it has more chances of winning the European title.

3 A possible counterargument to the argument up to this point is that many consumers are loyal fans of one club, and will never switch to another club because of the price. Hence, price competition does not work on them. Does not this mean that every club has maximum market power over its fans anyway, so that the increasing differences in playing strength cannot lead to changes in market power? No it does not. Before a person is a loyal fan of a specific club, they have to first become a fan. This often happens during childhood. Visiting the stadium, watching the club on TV, or receiving a club shirt as a birthday present could help. Here, the price of the items can play a role, also because the process could involve price-conscious parents. Thus, if a club charges low prices in a certain year, this can lead to an influx in new young club fans who will continue to be paying fans for seventy years. A low price in one year then leads to a stream of new revenues over the next seventy years. Price competition is very profitable in such cases. This more or less counterbalances the fact that people who are already a club fan will not switch clubs (easily) because of the price. On balance, price competition may be reasonably profitable for clubs competing for club fans. It can also be profitable with respect to more neutral consumers. Hence, price competition will play a role in the football sector. In this context, the increasing differences in playing strength will lead to increases in market power, to less price competition, and to higher prices.

4 The negative relationship between price and quantity demanded is so common that economists call it the Law of Demand (Mankiw & Taylor, 2006). So, we can expect the relation to hold for football too. A few studies have empirically tested the prediction that higher prices reduce the number of stadium visitors and have all confirmed it (Dobson & Goddard, 2011).

5 For instance, the marginal costs of TV broadcasts are zero, while many people pay for Pay TV (or pay a price in terms of watching more commercials than they would prefer to watch). The marginal cost of a stadium seat is close to zero (as cleaners do not need much time for cleaning one additional seat), while most ticket prices are well above 10 euros.

6 The fact that there is no hard proof for a conclusion does not mean it cannot be part of a scientific paper. Otherwise, science could not be a basis for policy advice, as it would neglect important aspects of reality.

7 Regarding the application of the theory to broadcasts of football matches, a possible counterargument is that the TV rights of the clubs in a league are often sold by the league organiser, meaning that the clubs have formed a cartel. When the cartel sells all its rights to one single TV channel, this channel gets a monopoly in the market for broadcasting the league's games. In that case, the market power in both markets is maximum. So, a decrease in the number of top clubs cannot lead to higher prices. This argument is only partly true. Sometimes, the competition authorities request the cartel to sell its broadcasting rights in packages to different channels. One channel will then get different clubs than the other channel(s). The larger the number of top clubs, the more the competing packages that can be created in principle – leading to more competition, causing lower prices. This means, conversely, that the observed decline in the number of top clubs can lead to higher prices, also in the case of a cartel selling the broadcasting rights.

8 Conn (2019) and Knipping (2019) reported (rumours of) new plans to reshape the Champions League in such a way that it will bring larger benefits to the big clubs while including elements of a Super League.

9 To be precise, article 101(1) prohibits “all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market”. Article 102 reads:

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

It is obvious that trade between the Member States is affected by the increasing strength of the big European clubs, which attract viewers and buy players from all the Member States.