Analyses Article: The Economics of Professional Football: The Football Club as a Utility Maximizes Peter J. Slovene’s investigation of the economics of the English Football League and is member clubs was one of the first sports economic papers to move away from the American assumption of profit mastication being the ultimate objective. Sloane appears to have been intrigued by the fact that a majority of 92 stable league clubs operated a loss, and only remained solvent through non-football income sources. Some clubs made heavy long run losses without which could not be consistent with a ole objective of profit mastication.
Sloane similarly highlighted that the substandard comparable financial returns delivered through investing in football clubs as opposed to alternate investment vehicles was in contradiction with this sole objective. Sloane ultimately contended that a range of other motivations could possibly explain the action of the football clubs. It is worth highlighting that Slovene’s article does cover a very wide range of discussions. Sloane considers external competition for attendance from other sports and from other leisure pursuits.
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Sloane discusses how the cross-substation of labs, despite a potential misapplication of resources, clearly demonstrates mutual interdependence. Despite this he also considers the appropriateness of Male’s idea of viewing a league as the firm (or cartel). With reference to alternate priorities to profit mastication, Sloane also considers the application of Rottenness views on labor market regulations. Ultimately, the main point delivered from these other considerations was that there are certain features which distinguish the operation of football clubs from the normal business model.
From this, it is in the consideration f alternate mastication objectives that Slovene’s article has most contributed to the development of Sports Economics. Sloane discusses Security Mastication serving clubs’ objective of long run survival as well as the objective of Sales Mastication. The most influential consideration though was that of Utility Mastication which seemed to best reflect the many and differing club behaviors. Sloane does acknowledge that utility mastication can be consistent with almost any type of behavior, but does highlight those factors considered most important to utility generation in the football intent.
Sloane produced the following utility model that football clubs would seek to operate to maximize. s. T. TIER>CIO+T Slovene’s model contends that utility will be generated through a combination or playing success (P), average attendance (A), the health of the league (X) and the requirement of sufficient retained profits (TIER-CIO-T). Playing success seems the most logical, however, this clearly stated utility objective goes some way to contradict Rottenness view that a club would prefer a team to lower quality it it delivered larger profits.
The average attendance component considers how the creation off partisan atmosphere in itself is desired by clubs. The health of the league considers how it is more ideal to win a closely contested league with uncertainty or result than to win easily. The sufficient level of retrained profits, either positive or negative, highlights the need to maintain the viability of the club. Any multiple factor economic utility function considers the tradeoffs between these factors.
While some factors would be strongly positively correlated, Sloane does highlight that even within a club hat while playing success would be an objective of all club participants, divergent interests and conflicts may come about due to financial constraints. The clearest example would be a manager and supporters of the club being much more concerned with successful team performance than financial stability as compared with the club directors. Slovene’s formula shown would be incredibly difficult to practically model and so the optimal solution to divergent opinions is not discussed. They key point is that such disagreements do exist.