Sports And “Socialism”

Why American sports require a different model than European sports.

(To get the blog up and running, here’s one I’ve had saved away for a while.)

America is a capitalist nation, at its core.  Few will dispute that, regardless of what direction we may be headed these days.  Likewise, Europe is more socialist.  So how come their sports leagues appear to be exactly the opposite?  American sports leagues seem to strive for parity, while European leagues are dominated by the big-spending teams and there is little effort to prevent this.  Why is this so?

The truth is that American sports leagues are very much capitalistic, but the “competition” from a business perspective is much different here than in Europe.  The primary differences in operation between American and European sports leagues boil down to two main factors:  geography and other sporting options.

Let’s take an example to illustrate the differences:  we’ll compare Major League Baseball’s Colorado Rockies to EPL’s Wigan Athletic, just to pick two teams.

First, let’s consider the Rockies.  Their primary competition in MLB is the Arizona Diamondbacks, Los Angeles Dodgers, San Diego Padres and San Francisco Giants, which are the other four teams in their division.  To a lesser extent, they compete with the rest of the National League, and to an even lesser extent, the American League.

While these other teams are their on-the-field competition, are they competing with them from a business perspective?  The answer is no.  If a person lives anywhere near Denver and has Rockies season tickets, it is highly unlikely that said person is suddenly going to decide to become a Diamondbacks season ticket holder instead, seeing as Phoenix is 600 miles away as the crow flies, and even more if you try to drive it.  An American baseball fan is more likely to stick with his hometown team, because that’s the only team he’s going to be able to see without taking a long trip, except in certain areas of the country.  Colorado is a somewhat extreme example in this case, but except for Chicago, New York, the Bay Area and Los Angeles, MLB teams are pretty well isolated from each other, and this is the case for most other American sports as well.

This doesn’t mean that the Rockies don’t face competition from a business perspective; it’s that the competition is external.  From a business perspective, the Rockies compete for leisure dollars with the Broncos, Avalanche and Nuggets, and to a lesser extent, any college teams in the area.  If the Rockies go into a prolonged run of irrelevance in their division over a series of seasons, fans are more likely to spend their sports dollars on other teams in the area that perform better.

Let’s compare this situation to that of Wigan.  How far away is the closest competitor to Wigan?  It’s a whopping 15 miles in driving distance to get to Everton or Liverpool from there.  (Thanks to Sports Map World for the handy chart.)  While Wigan and the others compete on the pitch, they are also very competitive from a business perspective as well due to their proximity.  Also, unlike the U.S., there are no major sports leagues that offer a serious level of competition to the EPL externally.  Other European leagues are very similar, as most European countries are about the size of various American states.  This is one of the key distinguishing features between American and European sports leagues:  European football teams compete with each other on the field and from a business perspective, while American teams’ primary business competitors are teams from other leagues.

With that in mind, let’s go up a level to the leagues themselves and examine that situation.

The four major sports leagues (NFL, MLB, NBA and NHL) are all competing with each other (and other sports like golf and NASCAR, among others) for leisure dollars, television exposure, ad revenue and whatever other revenue streams come about.  With a land as expansive as the United States, all of these sports are competing with each other in major markets.  Football and baseball are popular pretty much all over the country, except for Los Angeles, which currently has no NFL team.  The NBA definitely rules the roost in Los Angeles, as well as some smaller markets that have no other sports like Oklahoma City, Utah and Portland.  Hockey is more popular in the northern part of the country than it is in the warmer climates.

Regional tastes aside, there is no question that the biggest determining factor for many American fans as to what teams they will support is how good they are.  My hometown of Minneapolis/St. Paul is a good example of these factors.  The Vikings traditionally do very well, but in the lean years, you’ll find TV blackouts here and there.  The Twins in the mid-to-late 90’s were well and truly awful, and you couldn’t pay people to watch them, but their resurgence in the 2000’s led to a new stadium and solid crowds even in this down year.  The Wolves were a hot ticket during the Garnett years, but have mostly played in an echo chamber since then, and are only now starting to pick back up.  The Wild, meanwhile, have consistently done well in attendance and fan-interest regardless of their standing because Minnesota is very much a natural home for hockey.

The Wolves’ problems are as much (if not more) due to complete mismanagement as opposed to league imbalance – although there is little question the NBA has that problem – so looking at the late-90’s Twins is a better example of the real point.  There is no question that when the Twins are good, fan interest spikes, but things actually got so bad for the Twins in the late 90’s that the league actually considered giving up on the market entirely and contracting them.  It wouldn’t have been good for baseball, as you don’t want to have a market like Minneapolis (as well as northern Iowa and the Dakotas) to just drop off the baseball sphere-of-interest entirely, but it almost happened.  If it had, the fans would have turned more of their attention toward the other sports options.

If an American sports league wants to be able to keep all markets interested, this is what leads to some of the more “socialist” aspects of sport governance.  The league as a whole loses profitability if it completely loses a market, so it attempts to level the playing field to some degree so as to not completely lose fan bases.  This is why the worst teams get the top draft picks in each league except the NBA and NHL, though both leagues still favor the worst teams in that area.  This is why there are concepts like revenue sharing, salary caps and other rules regarding player movement:  the league as a whole has a strong interest in seeing all of its teams be healthy.  So while internally, the sport runs on a more socialist model, it does this in order to increase its market share against other sports, which is obviously more capitalist in nature.  Recall from above that the individual teams are not competing with each other from a business perspective.  The leagues, on the other hand, are definitely in competition with each other business-wise.

Compare this again to the EPL.  What would happen if Wigan Athletic stopped being any good?  Well, at first, they would be relegated.  Let’s say things got so bad for Wigan that they went completely bankrupt and disappeared.  How would it affect EPL as far as market coverage and overall profitability?

The answer is basically none.  Sure, there would be a few bitter fans who might stop giving their patronage to the sport, but with two other teams within 15 miles, most fans would probably find their way there.  For those that hate Everton and Liverpool, there are still plenty of teams within reasonable driving distance that they could go see and who would be easy to watch on TV.  On top of that, there really isn’t another major sport that competes with soccer in Britain.

Putting it all together, the health of individual teams in the EPL is simply not that big of a deal to the league itself.  It doesn’t have to worry about external competition taking fans away, and if a team stops being good, there are plenty more options for fans.  That’s why in the EPL, teams are basically left to fend for themselves, because having some teams be also-rans every year doesn’t hurt the league as a whole.  They don’t need parity to keep the sport at its maximum profitability like their American counterparts do.

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