The Old Firm: give them a profitable dose of competition in England

Article by John Blundell in The Scotsman

Money and sport have always gone together but Scottish sport is handicapped by the small pool to which it is confined. We can see this most clearly in the economics of Scottish football.

Economists are fascinated by the laboratory of human action called sport. Studying sport gives us plenty of long run data on behaviour, sets of rules to test against outcomes and all kinds of other juicy goodies. We salivate. A key pioneer of this rapidly emerging sub-discipline is the Professor Peter Sloane, formerly of the University of Aberdeen.

The results can be very revealing and useful. As an example, the economics of crime as applied to US college basketball showed that a 50% increase in law enforcement (i.e. an extra umpire) led to a 33% drop in crime (i.e. fouls). And I cannot find a single sports economist who supports public funding of stadia for professional teams. There is apparently no such thing as the economic multiplier in such cases. In other words public money spent on sports stadia does not ripple through the economy creating lots of new permanent jobs. That is nothing but hocus-pocused thinking or voodoo economics.

These thoughts came to mind as I read "Scottish Football - It's a Funny Old Business" by the accountant Stephen Morrow of the University of Stirling in the brand new special issue of the Journal of Sports Economics which focuses on football or soccer as it is called in my home as my American kids follow the NFL. And yes the Journal of Sports Economics does exist - I promise I did not make that up. I have written for it myself on the property rights in lost golf balls. Finders keepers ?

Indeed Scottish football is a very very very funny old business. Debt is greater than annual turnover; profits are rarer than hen's teeth; a quarter of the industry is routinely in administration; two thirds of the firms (teams) are over 100 years old yet few have ever gone out of business. The Scottish leagues were basically designed to fit the late Victorian railway timetable - hence Berwick Rangers play out of England.

Oh, and since 1891 either Celtic or Rangers has won 90 out of 108 league titles. This is the absolutely crucial point because sports economists have repeatedly shown that long time dominance by a small group of teams of any sports league is dangerous to its long term economic health. The argument is simple: fans don't like walkovers. On