Abstract
This paper will look at the business side of football, how clubs generate income, how income is distributed between competing clubs, and how this distribution affects the utility for the fans, who are the end consumers in football. I will start with a general description of football before I look at how the business of football is run. I show how previous academic work has discussed the incentives of the clubs (the primary decision making agents), and that there is a consensus towards clubs maximizing their wins. I then show what type of market regulation exists in football to try to optimize the allocation of talent between clubs in the same competition. I will then take a look at the Norwegian Tippeligaen in particular, and look at which regulations are used here, and to what extent. The theory section gives a formal presentation of the incentives for clubs, and show that these are not compatible with social preferences. The model used, assumes that winning is a function of the quantity of talent hired, and that clubs in a free market will have a distribution of talent that is suboptimal. Regulations therefore have the potentially important role of optimizing the allocation of talent between clubs. Using available data from the Norwegian Tippeligaen in the period 2008-2015, I show that even with existing redistribution, the allocation of talent is not optimal. Specifically, more popular clubs have more talent than ideal, and the league as a whole could benefit from a more equal distribution. I also show that there is a trend towards less competitive balance. This, however, does not affect the efficiency of the league, due to a falling demand for competitive balance by the fans. The raw data requires manipulations and refinement to fit the analysis. Also, the questions raised do not rely heavily on statistical methods. Therefore, analysis in done using Excel, as it offers considerable freedom in preparing and using the data. Following the analysis, it is shown that certain aspects of the data do not seem to correspond very well with the predictions of the model, indicating that the model may be poorly specified. In particular, competitions are in general more even than what the model predicts, and the free market allocation is more uneven than the model would predict. I will look at possible improvements to the model, in order to better reflect reality. In the final section of this thesis I suggest possible improvements to the redistribution process in Tippeligaen, in order to improve social welfare