The Premier League's generosity in giving larger hand-outs to its relegated clubs may not quite be all it seems. Mike Holden explains

Three years ago, three American economists emulated the non-fiction phenomenon Freakonomics with a book documenting their mathematical studies into sports data. Among other things, The Wages of Wins looked at the “competitive balance” of leagues across a variety of sports using a formula known as the Noll-Scully measurement, leading them to conclude that basketball will always have a competitive balance problem due to the relative lack of tall people.

In the US, competitive balance is seen as the Holy Grail in sports where the concept of promotion and relegation doesn’t exist, to such an extent that teams with the worst records and lowest budgets will be handed certain advantages when it comes to acquiring new players. Needless to say, the NFL, NBA and MLB have all been party to this kind of research when considering various regulation changes, so it’s difficult to imagine that the multi-billion pound Premier League is oblivious to its existence.

Of course it’s no secret that the Premier League has a problem with competitiveness given that the same four clubs routinely contest the top four positions, while at least one promoted teams heads straight back down. But it’s important to make the distinction between competitiveness and competitive balance. The latter primarily concerns itself with the distribution of points across the league with no real regard for where those points go. According to economists, a positive correlation can be shown between competitive balance and the monetary value of a league in terms of how many people are willing to pay at the gate and for television rights.

This means that Man Utd can win the league every year and people will keep paying to watch as long as they perceive there is a struggle and some element of doubt to it. This distinction echoes all the way down the division, so balance between teams in mid-table is every bit as important.

The idea for a Champions League play-off system was made public in February, only to be cast as a non-starter by the necessary minority of member clubs. The following month brought proposals for an increase in the parachute payments from next year. Relegated clubs would receive £48 million over four years, an increase of more than £8m over the first two seasons with an additional bounty of £16m thereafter – more than double overall.

While Football League clubs don’t wish to appear ungrateful for whatever handouts come their way in these trying times, they are sensing a wolf in sheep’s clothing. The Noll-Scully measurement for competitive balance delivers some quite revealing conclusions when applied to the major European football leagues. The Championship has topped the table for competitive balance against the Premier League and its equivalents in Spain, Italy, Germany, France, Holland and Portugal in each of the past two seasons. Indeed, the graph shows how the Premier League has declined in the competitive balance stakes over the past dozen seasons while the Championship has been almost continually on the increase.

Obviously, this all stems from the lure that the Premier League offers to Championship clubs and the fact that many of them still have something to play for later into the season with four play-off places up for grabs. Unwittingly, the Premier League has created a competitive utopia in the division below and it certainly makes for a wonderful spectacle – at least in terms of drama, if not always quality. This is the kind of spectacle that the Premier League would love to own – or at the very least shift up a division – but such a notion remains fanciful while the elite clubs still have so much say.

Indeed, these are exciting times for the Championship, especially in light of its increasing exposure through the BBC’s excellent coverage, comparing well to the tawdry non-stories regurgitated by the celebrity-driven Premier League. Obviously the Premier League shouldn’t worry about the Championship posing a threat to its global superiority, but its growing popularity on the domestic front is threatening to encroach and that staggering level of competitive balance is the biggest nuisance of all.

More to the point, it’s the one thing the Premier League can do something about. So while the general consensus is that the Premier League is trying to strengthen its own product with these new parachute proposals by reducing the circulation of its own membership, that is to overlook its primary focus of destroying the competitive balance in the Championship. When little brother starts getting big ideas, it’s only natural that the bigger sibling will use his clout to bring him down a peg or two.

From WSC 279 May 2010

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