Article Summary: the Economics of Professional Football: the Football Club as a Utility Maximiser
Analysed Article: The Economics of Professional Football: The Football Club as a Utility Maximiser
Peter J. Sloane’s investigation of the economics of the English Football League and is member clubs was one of the first sports economic papers to move away from the American assumption of profit maximisation being the ultimate objective.
Sloane appears to have been intrigued by the fact that a majority of 92 stable league clubs operated a loss, and only remained solvent through non-footballing income sources. Some clubs made heavy long run losses without which could not be consistent with a sole objective of profit maximisation. Sloane similarly highlighted that the substandard comparable financial returns delivered through investing in football clubs as opposed to alternate investment vehicles was in contradiction with this sole objective. Sloane ultimately contended that a range of other motivations could possibly explain the action of the football clubs. It is worth highlighting that Sloane’s article does cover a very wide range of discussions. Sloane considers external competition for attendance from other sports and from other leisure pursuits. Sloane discusses how the cross-subsidisation of clubs, despite a potential misallocation of resources, clearly demonstrates mutual interdependence. Despite this he also considers the appropriateness of Neale’s idea of viewing a league as the firm (or cartel). With reference to alternate priorities to profit maximisation, Sloane also considers the application of Rottenberg’s views on labour market regulations. Ultimately, the main point delivered from these other considerations was that there are certain features which distinguish the operation of football clubs from the normal business model. From this, it is in the consideration of alternate maximisation objectives that Sloane’s article has most contributed to the development of Sports Economics. Sloane discusses Security Maximisation serving clubs’
Peter J. Sloane’s investigation of the economics of the English Football League and is member clubs was one of the first sports economic papers to move away from the American assumption of profit maximisation being the ultimate objective.
Sloane appears to have been intrigued by the fact that a majority of 92 stable league clubs operated a loss, and only remained solvent through non-footballing income sources. Some clubs made heavy long run losses without which could not be consistent with a sole objective of profit maximisation. Sloane similarly highlighted that the substandard comparable financial returns delivered through investing in football clubs as opposed to alternate investment vehicles was in contradiction with this sole objective. Sloane ultimately contended that a range of other motivations could possibly explain the action of the football clubs. It is worth highlighting that Sloane’s article does cover a very wide range of discussions. Sloane considers external competition for attendance from other sports and from other leisure pursuits. Sloane discusses how the cross-subsidisation of clubs, despite a potential misallocation of resources, clearly demonstrates mutual interdependence. Despite this he also considers the appropriateness of Neale’s idea of viewing a league as the firm (or cartel). With reference to alternate priorities to profit maximisation, Sloane also considers the application of Rottenberg’s views on labour market regulations. Ultimately, the main point delivered from these other considerations was that there are certain features which distinguish the operation of football clubs from the normal business model. From this, it is in the consideration of alternate maximisation objectives that Sloane’s article has most contributed to the development of Sports Economics. Sloane discusses Security Maximisation serving clubs’