Promoting or Restricting Competition? – The 50plus1-Rule in German Football

Ilmenau Economics Discussion Papers, Vol. 26, No. 141, June 2020

45 Pages Posted: 2 Jul 2020

See all articles by Oliver Budzinski

Oliver Budzinski

Ilmenau University of Technology

Philipp Kunz-Kaltenhäuser

Ilmenau University of Technology

Date Written: June 10, 2020

Abstract

The 50plus1-rule in German football is a controversially discussed institution that regulates investment behavior of professional football teams. This paper discusses from a sports economics perspective the suspected market failures that the 50plus1-rule is expected to prevent. To examine the effects of the regulation empirically, we gathered panel data on 47 teams in the German Major League Football (“Erste Bundesliga”) from the seasons 1989/90 until 2018/2019. Applying various approaches to measure financial and competitive imbalance in the league, we derive a growing trend of imbalance since the introduction of the 50plus1-rule. We employ a Difference-in-Differences approach to examine investment behavior in budgets and sporting success between afflicted competitors and those exempted from the rule. Our results do not suggest any equalizing properties of the regulation. We find anti-competitive effects and distorting properties of the regulation.

Keywords: 50+1-rule, football, sports economics, financial regulation, investment, sport finance, soccer, competition economics

JEL Classification: Z23, Z21, Z2, J83, L11, L50

Suggested Citation

Budzinski, Oliver and Kunz-Kaltenhäuser, Philipp, Promoting or Restricting Competition? – The 50plus1-Rule in German Football (June 10, 2020). Ilmenau Economics Discussion Papers, Vol. 26, No. 141, June 2020, Available at SSRN: https://ssrn.com/abstract=3623779 or http://dx.doi.org/10.2139/ssrn.3623779

Oliver Budzinski

Ilmenau University of Technology ( email )

Ilmenau, D-98684
Germany

HOME PAGE: http://www.tu-ilmenau.de/wth

Philipp Kunz-Kaltenhäuser (Contact Author)

Ilmenau University of Technology ( email )

Ilmenau, D-98684
Germany

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