Globalization and Soccer

One of the interesting debates going on in the sports economics literature is whether or not there is a fixed supply of talent available for teams in a league in the short run (i.e. is it vertical).  While this may not be interesting to the average sports fan, it is an important issue to sports economists and to sports policy makers.  By assuming that the supply of talent is fixed, a gate revenue sharing agreement will not alter competitive balance (see Fort and Quirk (1995)).  On the other hand, assuming that the supply is not fixed, a gate revenue sharing agreement can cause competitive balance to worsen (see Szymanksi (2004)).

Assuming a fixed supply of talent seems reasonable for some sports but not for others.  For instance, the  supply of NFL talent would seem reasonably fixed because there are no other American football leauges currently in existence that display NFL-level play.  Thus one can safely assume that all available NFL talent is willing and able to play in the NFL.  One can make a similar argument about Major League Baseball, although players can and do go to play for the Japanese League.  But the migration of players between the two leagues that takes place is one-sided.  the best Japanese players come over to America to play but those that go from MLB to Japan tend to be second-tier players.

But as I understand it, you can't say this about the world's top soccer leagues.  The English Premier League, the Bundesliga, Serie A, and other leagues all provide viable options for players, and recent policy changes in soccer governing rules have made the labor market truly golbal.  Dani Rodrik explains that globalizatrion has made the labor market even more competitive (via Bill Polley).