For years, economists have wondered why America doesn’t share Europe’s socialist approach to government. But maybe it’s worth flipping the question: Why don’t European sports share U.S.-style socialism? Why do European soccer leagues punish the downtrodden, while American sports are so soft on losers?
In their famous 2001 paper, “Why Doesn’t The U.S. Have A European-Style Welfare State?” the economists Alberto Alesina, Edward Glaeser, and Bruce Sacerdote pointed out that public policies are an echo of national history. For example, in the U.S., the legacy of the 19th century’s “open frontier” made Americans skeptical of government intrusion, while the absence of an influential socialist party after World War II made it difficult for leftist policies to take root.
By analogy, perhaps, one could look to history to see the origin of Europe’s surprisingly free-market approach to sports. The rules of today’s English Premier League can be traced to the late 19th century, when English soccer was in a period of rapid growth, with hundreds of English and Welsh clubs forming in several decades. Owners, players, and fans all recognized that the helter-skelter scheduling made it harder for people to plan their lives around soccer. In 1888, 12 teams banded together to form England’s first Football League. This provided a modicum of structure to the beautiful game, such as set schedules and guaranteed home games. In its original rules, the worst teams in the league had to apply for “reelection” to remain. Otherwise, one of England’s hundreds of other soccer teams could take their place. As the League grew in size and number of divisions, reelection evolved into a system of promotion and relegation—a model that has taken hold in soccer leagues in Europe and around the world.
Promotions and relegations were a tailored solution to a specific problem in English soccer: the problem of chaotic abundance. There are thousands of soccer clubs in England and Wales. Without any churn among the most elite divisions, like the Premier League, hundreds of teams would be denied the chance to ever improve their lot. The divisions would ossify, and fans, denied all hope of moving into higher levels of competition, could lose interest or revolt.
Today’s American sports leagues don’t have the same problem of abundance. For example, there are only 32 teams in the NFL and 30 teams in Major League Baseball. There is no 33rd football team that can compete with the Tennessee Titans for a spot in the league. If a baseball team is bad for an extended period of time, they might lose fans or move to a new city (which is a form of relegation), but nobody talks seriously about sending the Minnesota Twins to AAA.
In fact, there have been several periods in U.S. history when multiple leagues existed within the same sport. There used to be an American Football League and a National Football League, but they merged in 1970, in part to prevent each from outbidding the other for the most talented players. There used to be a Basketball Association of America and National Basketball League, but they merged in the 1940s. As a result, for decades, there has been one dominant monopolistic organization (or a cartel) for each of America’s most popular sports: football, basketball, baseball, and hockey.