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The Rich Get Richer in European Football

Spain’s La Liga is one of the highest profile top-flight leagues in European football (the sport Americans call soccer), composed of 20 club teams and involving millions of dollars. Increasingly, La Liga has become two-team affair, with the domination of Real Madrid C.F. and F.C. Barcelona virtually guaranteeing that one of the two will win the league. Already composing the lion’s share of titlists in the history of La Liga, they have completely shut out any other team from the top spot in the last 7 seasons, with this season already looking to be much the same. The gap between the top two and the rest of the clubs in the league has grown in recent years in a demonstration of the rich-get-richer phenomenon.

One hotly debated issue is TV broadcasting rights, specifically how deals are negotiated and who gets the revenue. The present system in Spain lets each club negotiates their own individual deals with media companies for rights to broadcast their matches, both domestically and internationally. The result is that Barcelona and Real Madrid each have deals worth around €140 million, far outstripping the profits of any other team in La Liga (the third-placed team Valencia earns a ⅓ of that amount, and is in serious financial trouble). From the media companies’ point of view, it makes perfect sense to copy previous behavior and put the most money into Barcelona and Real Madrid, who are the most popular, successful teams. The agony of the other 18 clubs in La Liga is that these deals help create a feedback cycle that leaves them further and further behind, no matter how hard they try or how well they play.

Barcelona and Real Madrid are two of the most successful teams not just in Spain but in all of Europe, so they make the most money as well get the most media coverage. This helps to expand their fan base, driving up revenue from other sectors, and making their brand more popular and valuable. In turn this means Barcelona and Real Madrid can afford to buy some of the best players in the world–often from other La Liga clubs who can’t afford not to sell–so understandably, they are able to field the best squads, turning out 6-1 wins unnaturally often.

So the most popular get even more popular, though one interesting complication in La Liga is the danger the top two will completely crowd out the rest of their competition. Being the best is one thing; not having anyone to play against competitively is another. There are warning signs that Real Madrid and Barcelona could get too rich, killing the value of their own league and ultimately hurting themselves. Although it seems economically counter-intuitive at first, Barca and Real are amenable to reining in the rich-get-richer phenomenon to some degree through collective TV rights deals that would share revenue with all La Liga clubs. Though it would reduce their market share percentage of TV revenue, a collective system such as the one used in the English Premier League could raise the overall revenue from La Liga broadcasting deals and potentially earn more money for each team in the league–including Barcelona and Real Madrid.
http://www.goal.com/en-gb/news/3277/la-liga/2011/09/10/2658800/the-revolution-will-not-be-televised-how-disparity-in-tv
http://sportsillustrated.cnn.com/2011/writers/georgina_turner/10/17/pl.tv.rights/index.html

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