Rasmus K. Storm

Soft budget constraints in professional football

Abstract Professional football in Europe is characterized by persistent deficits and growing debts among the majority of the top league clubs. Despite these problems, the clubs have an abnormally high survival rate. This paper focuses on this apparent paradox and poses the question: Why do only very few European professional football clubs go out of business even though they operate chronically on the edge of financial collapse? The paper argues that the paradox can be explained by the fact that professional football clubs operate within soft budget constraints in a way which is similar to the role of large companies in socialist economies – a phenomenon which was first identified by the Hungarian Economist János Kornai.

Hosting major sports events: the challenge of taming white elephants

While the literature on the economic impacts of major sports events has grown considerably over the years, the question of utilisation of venues built for these events after the party is over has received little attention. This article fills some of the gaps in the literature. By means of a Stadium Utilisation Index, it measures the post-event utilisation of venues that were constructed of significantly refurbished to host major sports events in the period from 1996 to 2010. It reveals some of the challenges facing the utilisation of the venues once ‘the circus has left town’. The regressions identify that private owned stadiums have a higher rate of utilisation than publicly built venues. The stadiums with the highest capacity tend to have higher utilisation. Last, but not least in terms of importance, stadiums in nations with a high degree of corruption had the lowest utilisation.

In a peak fitness condition? The Danish elite sports model in an international perspective: managerial efficiency and best practice in achieving international sporting success

Purpose: According to international findings, nations today face diminishing returns on investment when it comes to elite sports. As the power struggles to win medals in international tournaments have intensified in the last couple of years, and the financial investments have increased, the market has adapted by raising the price of a medal. As a direct consequence, managerial efficiency can be a non-financial tool for nations to enhance the chances of success. Taking the Danish case as a point of departure, the article addresses the Danish elite sports model with the question: to what extent is it suited for future challenges? Methodology: The article is based on a research evaluation of Team Danmark conducted by the authors and provides a literature review on factors leading to international sporting success, combined with an analysis of the development of the international sporting arms race. Findings: The analysis finds the Danish elite sports organisation, Team Danmark, well prepared and fit for future challenges. Still, certain areas are in need of improvement in order to strengthen the managerial efficiency.

Can a small nation be competitive in the global sporting arms race? The case of Denmark

In 2014, the Danish elite sport organisation, Team Danmark (TD), celebrated its 30th anniversary. TD was founded by the government in response to the country’s decline in international standings. This study examines how Denmark’s international performance has developed in the global sporting arms race since then. It analyses how a small nation can improve its international competitiveness despite stagnating funding and growing international competition. The paper argues that the establishment of TD in 1984 is a key factor behind Denmark’s success in elite sport. Measured in absolute terms, by a market share approach, and adjusted for differences in population, wealth, religion and relevant political factors, it is evident that Denmark is performing well and appears to be competitive. Denmark is now the leading nation in Scandinavia and is doing better than almost all other smaller countries in the Summer Olympic disciplines. By examining the development of Danish elite sport policies, the paper shows how the establishment of TD has created an elite sport structure that has helped Denmark to bounce back from its previous decline.

From Standard to Directive: A Case Study on the Peculiar Policy Processes of Danish Stadium Funding

ABSTRACT In 2003, the Danish Football Association introduced a new club licensing system for its first-tier clubs. Among the criteria for the system was a requirement for clubs to play at a stadium with a minimum capacity of 10,000 spectators. This paper aims to understand how the Danish Football Association and the Danish league clubs have succeeded in their efforts to make their licensing criteria a public concern by standardizing them at a municipal level. It presents a case study examining how the policy process surrounding the decision of building a new stadium in the Danish village Hobro changed – in a peculiar way – what in institutional theory is understood as a (voluntary) standard into a directive for Mariagerfjord Municipality. The case is illustrative of policy processes regarding stadium funding in other parts of Denmark and most likely in other Scandinavian countries.

Soft budget constraints in European and US leagues: similarities and differences

Kornai’s soft budget constraint (SBC) approach provides a useful framework, which is highly relevant for understanding the economics of European professional sports leagues. However, it has not hitherto been used in a comparative analysis of the European and North American sports leagues. This chapter offers a novel perspective on professional sports leagues that transcends the traditional profit versus win (utility) maximizing distinction by applying the SBC approach. Europe’s win (utility) maximizing teams usually face softness by surviving resounding and/or frequent losses, whereas the budget constraints for North American franchises appear ‘hard’. But are the American pro franchises in fact facing hard budget constraints and the survival characteristics of hardness? This chapter gives a brief interpretation of the European context by using the framework of the SBC approach, while further seeking to adjust and apply it to the American context. It points out that even though the American pro leagues are profitable compared to the European ones, many of the European characteristics are in fact at play in the US, revealing an existence of softness in both league types. In order to better understand the similarities as well as the well-known differences across these two traditionally opposed contexts, a new matrix of team sports economics based on the SBC ideas is developed, supplementing existing research and giving new insights into the peculiar economics of professional team sports.

The Anatomy of the Sports Scandal: An Outline for a Theoretical Contextualization

Sports scandals are often discussed in the media and research literature without any deeper reflection on their specificities or development. As the economic and political significance of sport seem to grow in correlation with the development of globalization and new social media, the call for a sociological understanding of the downsides of sport becomes imperative. By deploying a communication-theory framework supplemented with insights from discourse theory, this article aims to develop a theoretical model of the sports scandal. It presents a 5-step model encompassing initial steps of transgression, followed by a publicly observed dislocation destabilizing the social order, which subsequently results in moral communication, environmental pressure for appropriate action, and, finally, an institutional solution.

European Club Capitalism and FIFA Redistribution Models: An Analysis of Development Patterns in Globalized Football

Abstract Globalization has had different implications for professional club football in Europe and the global football landscape governed by FIFA. In club football, Europe is at the top of the financial ladder with club revenues having increased significantly over the last decades. For teams in the ‘Big Five’ leagues, a new inflow of media rights revenues from markets outside Europe has strengthened their position. This pattern contrasts the redistribution of revenues generated by FIFA to football nations on continents other than Europe. The expansion of teams in the FIFA World Cup has also developed in a direction that favours non-European football nations. This paper analyzes the reasons behind the different revenue distribution models that have evolved in club football and the broader football landscape governed by FIFA. In club football, the market forces have worked in favour of those having the best product quality, whereas FIFA’s model has favoured weaker continents.

Isomorphic Forces and Professional Soccer Standardizations: Instruments of Governance for Municipal Investments?

ABSTRACT This article aims to explain why Danish municipalities usually choose to comply with stadium requirements from the Danish Soccer Association (DBU) even though, in most cases, they do not have the supporter base that could fill the renovated or new stadiums to their capacities. Using institutional theory as a theoretical framework, the article shows that coercive forms of isomorphism are part of the homogenization process leading to the municipalities’ compliance. It also suggests that mimetic forms of isomorphism are present in the sense that municipalities believe that if they comply with these requirements they will strengthen the conditions of their local clubs. In turn, they have encouraged other municipalities to follow suit. In sum, the analysis shows that the central form of governance through standardizations together with isomorphic forces have contributed to a uniformity among the municipalities.

The complex challenge of spectator demand: attendance drivers in the Danish men’s handball league

ABSTRACT Research question: A growing number of studies of professional team sports have tried to understand the drivers behind match-day attendance. However, no research has ever been conducted in relation to team handball. As existing literature mainly focuses on European football and US Major League sports, club managers from smaller sports lack the evidence that could assist them in developing strategies to increase attendance. This study is a step toward filling this gap. Research methods: Using robust panel data regression models deployed on data from Danish men’s team handball league matches in the seasons from 2011/12 to 2015/16, the study identifies the main determinants of spectator demand. Results and findings: The findings are largely consistent with existing research, but also reveal new insights that seem to be specific to handball. These include (1) negative effects on spectator demand due to simultaneous live television coverage of other league matches; (2) no obvious preferences for weekend matches and (3) weather-related factors, whereby rain has a positive effect and snow a negative effect, while variations in temperature have no effect. Implications: To maximize spectator attendance, we suggest that league managers and club representatives take the problem of simultaneous broadcasts from other league matches into consideration when planning the schedule in the future. Further, we argue that games should be placed in the time slots with highest spectator demand while recognizing that this can be club-specific. Finally, we recommend that clubs increase their efforts in promoting games involving strong away teams.