The Premier League is an oligopolist erecting effective barriers to market entry. What is anyone going to do about it?
As the Guardian notes this morning, this is the current state of the UK's football premier league:
There is, I promise, good economic reason for noting this.
The bottom three clubs in the league will be relegated at the end of the season, which is now just three games away. And it so happens that all three of those clubs now facing the likelihood of relegation were promoted from the second-tier league, the Championship, just one year ago. After a single season in the top flight of English football, they will very likely be returning whence they came.
The economic point that I am making is a very simple one. As is apparent to anyone who follows football, the English Premier League acts like an oligopoly. In other words, the well-established clubs within it make sure that it is organised to their advantage. They do, as a result, collect vastly more revenue than anyone else in the football. Their players are remunerated at extraordinary levels that would be exceptionally difficult to justify without this oligopoly power. In economic parlance, they earn rents on top of any reasonable level of reward they should enjoy. And, as is all too commonly the case when oligopoly exists, there are massive barriers to entry into this market, as the likely relegation of all three clubs that were promoted into it last year makes abundantly clear.
The current UK government has suggested that the UK needs a football regulator. I agree. One of the things that it needs to do is to control the abuse of market principles by the most powerful football clubs in the country. I am not anticipating that any such thing will happen. The idea that fair competition might prevail is, I think, very unlikely to win the support of those who might lose out as a result.