Key Points:
1. In both the US and Europe, the most popular sport directly contradicts each region’s broadly-accepted economic models.
2. The U.S.’s favorite league, the NFL, follows many principles of economic socialism.
3. In an interesting reversal, Europe’s most-watched soccer leagues are run in an unashamedly capitalist manner.
Estimated reading time: 7-14 minutes
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In both the United States and Europe, two types of football enjoy an almost undisputed status as cultural cornerstones. As you’re well aware, these two sports share few similarities, with the European version even referred to by a different name stateside, soccer. And for the rest of this piece, that’s what I’ll be calling it in order to save everyone’s brain cells.
As a side note, despite the haughty superiority of those in the UK who look down on anyone who refers to their beloved game as “soccer,” that term actually originated in Britain. Continuing the theme of differences between the two sports, they sit at distinct spots on what I call the Skill/Athleticism Continuum, but that’s not our focus today.
Instead, we’re going to explore the ways in which football and soccer represent a somewhat odd inversion of European and American economic policies. Though we’d expect the opposite, the NFL has far more in common with economic socialism than European soccer, which serves as an example of almost comically cutthroat capitalism.
Real quick, what does socialism actually mean, again?
While U.S. politicians frequently and often incorrectly use this term in response to policies with which they disagree, let’s define it. From Wikipedia:
Socialism is a political philosophy and movement encompassing a range of economic and social systems, which are characterized by social ownership of the means of production.
In this piece, we’re more concerned with the economic systems, particularly those that function according to different economic laws and dynamics than those of capitalism. To that end, there are two basic types of economic socialism, “market” and “non-market.” Wikipedia further explains, “A non-market socialist system seeks to eliminate the perceived inefficiencies, irrationalities, unpredictability, and crises that socialists traditionally associate with capital accumulation and the profit system in capitalism.” Market socialism operates differently, but still allows for the regulation of everything from prices to profit redistribution.
Stereotypically, socialism is not popular in the United States. A 2022 report from the Pew Research Center reveals that six in ten Americans view socialism negatively, with three of those six saying they view it “very negatively.”
Let me paint you a picture…
Imagine this. As the confetti dropped on Sunday night’s Kansas City Chiefs’ 38-35 victory over the Philadelphia Eagles, NFL commissioner Roger Goodell steps on stage and says, “To reward the sustained excellence of the Chiefs franchise, we have decided to award them the first pick in the 2023 NFL draft! They will also receive 25% of the league’s total revenue from next year’s TV rights deal, and we are increasing their salary cap to allow them to continue to attract the talent their success deserves.
NFL fans would riot in the streets.
Now imagine this had happened in 2019, after the Tom Brady-led New England Patriots made it to their fourth Super Bowl in five seasons, winning three. A nonzero chance exists that angry fans would have tried to burn NFL headquarters to the ground.
The point is, despite Americans’ strong preference for capitalism over socialism, to most fans of the NFL, the hypothetical scenario I described above would have felt deeply, profoundly unfair. Were this to actually happen, I imagine even fans of the teams favored would have felt slightly uneasy about receiving such an embarrassment of riches.
And yet…this is EXACTLY how European soccer works
For those unfamiliar, European soccer prides itself on royalty, not parity. There are 40 professional leagues representing 34 countries and over 1,000 clubs, yet only around a dozen have any real chance of major success.
Between five different countries, roughly 100 teams compete at the very top of the European game. Over the past 30 years, the top leagues in England, Spain, and Italy have each enjoyed a spell as the continent’s dominant force. Currently, England’s Premier League is the richest and most powerful, with Spain’s La Liga a somewhat distant second. Italy’s Serie A and Germany’s Bundesliga battle it out for third and fourth place, and France’s Ligue 1 rounds out the top five. Beyond that, the quality and economic firepower of other nations’ leagues don’t compare.
However, even within each of these leagues, one or two teams typically dominate. As a benchmark, remember the aforementioned New England Patriots? They’re considered an NFL “dynasty” for having won six championships in twenty seasons.
Germany’s best team, Bayern Munich, has won their league 15 out of the last 20 years, including the previous ten in a row. In France, the best and richest team, Paris St. Germain, has finished first in eight of the past eleven seasons, and second the other three times. For the Italian league, we’re only a couple years removed from the top club, Juventus, winning nine seasons in a row. Plus, either Juventus or one of the two Milan clubs have won every title all the way back to the 2001-02 season.
In Spain, since the 1984-85 season, either Barcelona or Real Madrid have won 32 of the last 38 league titles. Finally, in England, after my favorite team, Arsenal, enjoyed an historic undefeated season in 2003-04, the clubs Chelsea, Manchester United, and Manchester City have been champions 16 of 18 times.
That’s not all…
European soccer’s version of the Super Bowl is called the Champions’ League, and the final is the culmination of a 10-month tournament gradually whittled down to 32 of the best teams throughout the continent. A team’s placement in their domestic league determines whether they can participate in the following season’s Champions’ League, and no country is allotted more than five qualifying spots. Many only receive one. So, the standard of play is incredibly high. It’s also a knockout tournament, which means the potential for upsets and Cinderella stories is theoretically higher.
And yet…of the “royalty” teams we highlighted above, a mere seven of them have combined to win the Champions’ League in 19 of the last 20 seasons. In the NFL, this would be unacceptable.
So…how can dominance like this be allowed to happen?
Well, this is where the market socialism vs. unfettered capitalism dynamic starts to matter.
In the NFL, revenue from TV deals is shared equally among all 32 teams. It doesn’t matter if a team was the best or the worst; their cut is the same. This is not the case in Europe. Not even close. Relative to other soccer leagues, The Premier League is seen as a bastion of fairness and equitability when it comes to television rights agreements. But, in the 2020/21 season, the team that finished in first place made over $65 million dollars more in TV money than the team that placed last.
Next, the NFL has a salary cap that applies equally to all teams. This is a foreign concept in European soccer. Only one of the “Big Five” leagues, Spain’s La Liga, has wage restrictions of any kind. And even then, the cap is based on total revenue from the previous season, so the bigger, richer teams have higher salary caps. This dramatically skews the playing field…obviously. And in the Premier League, the position a team finishes in the league table and the amount of money it spends on player wages are highly correlated. Go figure.
To continue, the NFL is a closed system, where a poor season is rewarded with a high draft pick the following year. This is done to promote parity and unpredictability. There are also safeguards to prevent franchises from going bankrupt, and even a team with losing season after losing season is allowed to stay in the NFL. In the broader labor market, these practices would probably be called “handouts.” Isn’t capitalism about letting the “bad” companies fail and the cream rise to the top, unhindered by pesky government regulations?
I’m being a little bit facetious here, but European soccer couldn’t be more different. There is no draft system, and player trades are rare. Clubs develop young players through their own academies, and the biggest and richest clubs tend to have the better ones. Further, when a young player on a less powerful team starts to excel, his contract will inevitably be bought out by one of the wealthier teams. London’s Chelsea Football Club has spent over $650 million dollars doing this in the past nine months alone!
Since they’re constantly losing their best players, it becomes incredibly difficult for “middle class” teams to challenge the soccer aristocracy, unless they’re suddenly bought by oil-rich nations with unlimited finances. What’s more, smaller clubs go bankrupt with embarrassing regularity, and in each league, the bottom two or three teams drop to the equivalent of AAA baseball. They must fight their way back up the following season, and some never make it back. Knowing this, it’s hardly surprising that only a few teams are capable of winning.
Results on the Pitch vs. the Gridiron
Contrast the “closed shop” of European soccer success to the NFL. In the past 20 seasons, 13 different franchises have won the Super Bowl. Further, in the 90-year history of the league, only one team, the Green Bay Packers, has won the championship three seasons in a row, and this includes one season before the Super Bowl was officially created. It remains rare for a team to win back-to-back Super Bowls. It’s only happened eight times in nearly 60 seasons, and not since 2005. That’s part of why the Patriots of the 2000’s were such outliers. It was unprecedented in modern NFL history for a team to win more than two championships per decade.
To the higher-ups in the league, this is a good thing. NFL fans often remark on the parity of the league being one of its strengths, and they seem to have little to no problem with regulations regarding wealth distribution, financial and performance safety nets that can encourage giving up on a poor season, and even an incredibly strong players’ union. And yet, these “socialist” policies remain incredibly unpopular when it comes to the American workforce at large.
In Europe, where worker protections, paid holidays, and affordable medical treatment are the norm, fans eat up the idea that power and success can be concentrated in the hands of roughly a dozen teams. In fact, in 2021, twelve of these “royalty” teams attempted to break away and form their own European Super League, which would have been an NFL-style closed shop. The proposal was for these teams to only play each other, make tons of money regardless of performance, and have no fear of dropping into a lower league or missing out on the Champions League.
There literally was rioting in the streets. Games had to be postponed due to fan protests, and the “powers that be” backed out of forming the Super League after less than 48 hours.
So, what conclusion can we draw from all of this?
Basically, systems aren’t as intractable as we’re led to believe.
Broadly, I imagine many people think the U.S. would never adopt any of the market socialism policies common in Europe. Vice versa with Europe and American capitalism. And yet, in their favored sports leagues, fans not only accept but even love the policies of the opposite system.
Heck, NFL teams even have something called a “franchise tag,” where a team can essentially force one of its best players to stay under contract for an extra year. Granted, tagged players are incredibly well-compensated, but still. The notion of enforced sacrificing of individualism for the good of the collective organization would feel foreign in almost every other area of U.S. economic policy.
But in Europe, when a player wants to leave for another club, despite being under contract, they typically get their way. They often accomplish this by refusing to play for the team that currently pays their wages. And fans eat this stuff up!
Like with my article about sports and the Skill/Athleticism Continuum, my goal here is merely pointing out concepts that I find interesting rather than trying to make a judgment about which way of operating is “better.” But, I simply wouldn’t be so sure that either the U.S. or Europe are as married to their current economic models as we might think. Market socialism is unpopular in the States…unless it involves helmets and “Hail Marys.”
So, maybe some clever American politician will come along and start trying to frame left-leaning economic policies as, “exactly how the NFL does it,” in an attempt to gain wider support. Would it work? I have no idea. But I do know that in both the U.S. and Europe, our favorite sports leagues prove we’re at least open to something different.
Before you go, I’d love to hear from you. Do you prefer the European Soccer or NFL model of competition? Are dominant superteams or unpredictable parity more exciting? Do you think the economic practices in these leagues will ever influence actual economic policy? Reply to this email and let me know!
