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 any given day both sides have to have a realistic chance of winning or fan interest eventually wanes. Hearts recent good run has been a tonic - but an exception.

Another problem with any league in which one or two great clubs dominate is that the lack of weekly tough competition does not make the strong stronger but indeed might be said to weaken them. Who would want an easy ride into European level competition if the almost inevitable result is early exit? Battle hardened warriors tested week in and week out are what I would want at, or rather in, my side.

Reading Stephen Morrow's analysis leads one inexorably to conclude that the heart of the problem is the dominance of the Old Firm duo of Rangers and Celtic.

Either the Scottish Premier League needs a big revamp possibly using the kinds of techniques employed in the wealthy US sports leagues to level the playing field. Also all of the 30 teams not in the Premier division could become feeder teams to the elite ..... and owned by them. As Morrow alludes, 42 teams for a country of 5 million people is absurd and it is no wonder a Scottish team holds the record for lowest ever turnout in professional football. I recall 27 but maybe it was 28.

Or a way must be found to move Scotland's top teams to join those of Wales in the English leagues, hopefully top ones! The English would benefit; the Old Firm would benefit; and the rest of Scottish football would benefit.

The English league was after all created by that Scottish draper William McGregor from Maco, Perthshire who brought together Accrington, Aston Villa, Blackburn Rovers, Bolton Wanderer, Burnley, Derby County, Everton, Notts County, Preston North End, Stoke, West Bromwich Albion and Wolverhampton Wanderers in 1888.

It is interesting to note that McGregor's motivation in collecting the best teams together in that first league was to combat low attendances at one sided matches. He must be the patron saint of sports economists and is clearly a descendant of Adam Smith.

Today one later member of McGregor's league, the Salford City based team called Manchester United, is worth $1.20 billion which is $250 million more than the mighty Washington Redskins who also do not play in their eponymous city in America's NFL. Clearly McGregor did something right although in any league I ran you would have to be named after the place in which you play.

Given the size of Sven's promised payoff for peccadilloes and malapropisms, the football authorities can easily afford to hire Messrs. Blundell and Morrow to sort out this Funny Old Business.

Would it be better if Celtic and Rangers were playing in an adapted UK Premier League. It would be better business. It would be better sport.

John Blundell is Director General of the Institute of Economic Affairs.