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Which sport is the best business?

Tonhe 2023 National Basketball Association Finals (NBA) and the UEFA Champions League are both history-making events, just in very different ways. The June 12 basketball game crowned a small-city team that had never won a title, the Denver Nuggets. They beat an unlikely challenger in the Miami Heat, the last seeded team in the quarterfinals. If Miami wins, it will be a first for such a low-level team. at the same time, UEFA In the UEFA Champions League final held on June 10, the giants Manchester City from the United Kingdom defeated the mainstay of European football, Italy’s Inter Milan.

Football leagues in Europe and the UK generally allow teams to spend as much as they want on players, as long as they don’t lose too much money. More successful teams tend to make more money and thus have more cash to splurge on star players — which in turn translates to greater success on the field, and so on.A week before the Champions League victory, Manchester City clinched the English crown FA Cup, defeated another deep-pocketed team Manchester United.Manchester United and Manchester City have won 20 of the last 31 Premier League titles; the Champions League (or its predecessor, the European Cup) has been won by Real Madrid, and air conditioner Milan, Inter’s bitter rivals, 21 of 68.

Meanwhile, across the Atlantic, the most lucrative game in sports, the National Football League (NFL, involving the non-football variety) has a hard salary cap, leading to more equality between teams. The top two teams have won just 12 of the 56 Super Bowl games, the final round of the annual tournament.Penalties for Violations NBAThe current $124 million salary cap was raised again in 2011 and this year in revenue-sharing agreements negotiated by the players union and owners. “The new agreement is basically trying to stop the superteams,” Brian Windhorst said. ESPN, a television network. It seems to be working. economistAnalysis NBA The numbers show that more teams have indeed made the playoffs in recent history.In the five years to 2023, 29 NBAThirty teams have advanced to the league’s knockout stage at least once (with the exception of the Charlotte Hornets). This hasn’t happened since the five years before 2008, which itself was an exceptionally competitive period.

Thus, American sports socialism seems more competitive than European winner-take-all approaches. But will a more competitive league lead to better business? The evidence here is mixed. On the one hand, the unpredictability can be intriguing – why watch when you know who’s going to win? The possibility of underdog success may help small teams develop loyal fan bases. On the other hand, people like winners.Mr Windhorst pointed to seasons dominated by big-name teams like the Boston Celtics as some of the NBAmost profitable years. In 2022, when the Celtics take on another star team, the Golden State Warriors in San Francisco, in the Finals, the league hits a record $10 billion in revenue.

Another structural difference between American and European sports is more easily linked to their earning potential. Unlike European soccer, where teams can be promoted or relegated from different league levels, American sports tend to be “closed” — there’s no way for new teams to make it to the top tier. “Europeans see this as the basis for organizing team sports,” explains Stefan Szymanski of the University of Michigan in Ann Arbor. Counting all levels, there are more than 1,000 clubs across Europe hoping to compete in the Champions League.this NBA30 years old or NFL32 makes the market more concentrated. Focus brings wealth. (This explains why the threat of elite teams leaving the league looms over European football.)

last year NFLAt $19 billion in revenue, it’s almost three times that of the Premier League, which probably has more fans around the world than all U.S. sports combined (see chart). As a result, the American teams involved in the bonanza received higher valuations.Average value over the past ten years NFL and NBA The teams have grown by 300% and over 600%, respectively, while the booming US stock market has grown by 170%. After all, the willingness to sacrifice profits for participation makes European sports look European.

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