A fan of Chelsea FC condemned a fan of Liverpool FC for spending only $66 million during the recent transfer window. A fan of Chelsea FC proudly proclaims that they have spent $630 million in the first two transfer windows. Although football fans might be delighted by the signings of new players, many experts and CEO of other football clubs are alarmed by the immense spending by Chelsea FC.

The U.S. and Europe sports leagues have disparate systems and economic models. For instance, the U.S. soccer league does not have a relegation and transfer fee system, As the system of transfer fee does not exist in the U.S. sports league, it eliminates the need for the U.S. sports team to make an aggressive investment. Instead, it allows the U.S. sports team to become self-sufficient and successful with revenue earned from broadcast fees and ticket sales. Prospects and young players join a team through a draft system. Furthermore, the absence of a relegation system reduces the pressure on the U.S. sports team to make progress within a year.

The Europe football league experiences extreme competition within the league due to relegation. Since the European football league has had relegation from its past, the competition and standing of football clubs have become immensely important. Therefore, European football clubs spend high transfer fees to purchase top players as they are allowed to purchase a player who is on a contract with another team by paying a transfer fee to another club; new players can join a new team every transfer window. However, in recent years, the number of transfer fees that football clubs pay has significantly increased due to the high demand for players caused by the extreme competition but also the financial loss that the European football league had during the pandemic when spectators were not allowed and the league temporarily suspended. Despite the extremely high transfer fee, clubs like Chelsea FC, Manchester City, Newcastle FC, and Paris Saint-Germain F.C. which is owned by a billionaire, are spending millions of dollars to win the league. For instance, as mentioned above, Chelsea FC alone spent $630 million in the first two transfer windows and signed Argentina midfielder Enzo Fernandez for $131.4 million which was a British record fee. However, Chelsea FC stands in 10th place in the premier league.

For other teams to compete against clubs owned by billionaires such as Mohammed bin Salman Al Saud or Mansour bin Zayed Al Nahyan who are willing to invest millions of dollars, they are also pressured to spend significant amounts of money to compete against them. Therefore, the extreme emphasis on competition in European sports leagues creates a structure of sports leagues where the standing of teams will solely depend on the investment and jeopardizes the establishment of a stable and self-sufficient economic model.

Nevertheless, in April 2021, twelve ‘Founding clubs’ (AC Milan, Arsenal, Atletico Madrid, Chelsea, Barcelona, Inter Milan, Juventus, Liverpool, Manchester City, Manchester United, Real Madrid, and Tottenham Hotspur) launched the European Super League which was a league composed of top clubs from different countries within Europe. The establishment of the Super league was an attempt to Americanize the European football system. Unlike the UEFA Champions League which determines the competitor through the standing of the domestic league, the European Super League had fifteen permanent top clubs permanently qualified. The closed system would allow top clubs to generate and dominate profit instead of spending significant amounts of money to compete for qualification to the UEFA Champions League.

However, within 48 hours of its announcement, the European Super League collapsed with strong opposition from fans of the domestic league, UEFA, and the British government. As competition has been a tradition within the European sports league, there was strong opposition against the European Super League which allowed only top clubs to dominate the profit and discarded the unqualified clubs. The strong opposition that the Super League faced in Europe reveals how the element of competition within different clubs are highly emphasized in Europe than in the U.S..

The open system of the European football league has allowed the league to become more popular and competitive. However, the extreme emphasis on competition and standings has created teams to compete through the investment and spending of players. To compete against each other, the clubs are spending significant amounts of money despite the severe inflation after the Covid-19 pandemic. Perhaps, the standing and championship of a football club are now purchased rather than earned.

$5.52 billion marks the entire payroll of the National Football League; $3.83 billion marks the entire payroll of Major League Baseball. $1.97 billion marks the entire payroll of the EPL. The highest-paid MLB player is Max Scherzer, with a 2023 salary of $43.3 million. The essence is, sports are becoming one of the industries with the most valuable transactions.

Professional sports have become a means of entertainment since their popularity surged during the 1920s in the United States. Across the Atlantic Ocean, in Europe, the popularization of modern professional sports dates back to the eighteenth century. As interest in sports in the United States and in Europe grew, companies and sponsors have utilized the athletic market to shape their business models. The different policies in varying sports leagues caused the formation of varying business models.

The notion of relegation is a major factor that creates different structures in sports leagues. Relegation is the transfer of teams between different leveled leagues based on a team’s performance. Professional baseball in the United States is divided into different leagues based on performance level: the rookie league, low single-A, high single-A, double-A, triple-A, and the Big Leagues. The teams in the Big Leagues are each categorized as individual organizations. Per se, the New York Yankees is an organization. Minor League teams are affiliated with a Big League team, ergo the lower-tier teams are under the ownership of the Big League teams. This eliminates the need for relegations, as underperforming players would be demoted to the Minor Leagues.

In European leagues, such as the EPL, three out of twenty teams are relegated to a second-tier league, and three teams from the second-tier league are promoted to the Premier League–a first-division league. Hence, for teams to avoid such relegation in this structure, it has become inevitable to spend excessive European Euros or English Pounds. The team with the highest payroll in the EPL is Manchester United F.C., with a total payroll of $255 million.

When comparing the two teams with the highest payrolls in the MLB and the EPL, the New York Mets’ payroll–$335 million–outnumbers that of Manchester United’s–$255 million, as aforementioned. It clearly seems logical to assume that European leagues would invest more in sports, especially under the direct pressures of relegations.

One distinguishing factor in the business models of sports teams in the U.S. is yielding the naming rights to corporations to extend their revenues by a substantial amount: the higher the revenue, the more funds that may be allocated to investments. For instance, the Rams and Chargers of the NFL received $625 million dollars in exchange for yielding SoFi the naming rights of their stadium for a 20-year span; this is the largest stadium naming rights deal.

As it is the human instinct to seek entertainment, sports provide enjoyment in a way no other media does. The professional sports industry is growing at a steady pace, and it is thus important to answer ignorant questions such as, “Why are athletes and teams so overvalued?”

In 2021, April 18th, the European Super League (ESL) was proposed to be a new football league featuring some of the biggest and most successful clubs in Europe, such as Real Madrid, Barcelona, and Juventus. Those teams in the ESL would compete against each other in a closed league separate from traditional domestic leagues. This idea of matching some of the biggest world-class clubs on a weekly basis was expected to generate significant amounts of revenue through broadcasting rights, sponsorship deals, and ticket sales, but it was met with opposition from politicians and football governing bodies.

One of the strongest reasons for the opposition to the European Super League was the negative impact it would have had on national leagues, like the English Premier League (EPL), the Serie A, and the La Liga. Many politicians and governing bodies felt that the ESL would take away the importance of national leagues, and would eventually make the national leagues lose their supporters and fans.

This would have a negative impact on local communities, as many of the smaller clubs would experience a financial crisis from the lack of supporters and revenue. One of the strongest voices against the ESL, U.K. Prime Minister Boris Johnson stated, "The plans for a European Super League would be very damaging for football and we support football authorities in taking action. They will strike at the heart of the domestic game, and will concern fans across the country."

The potential damages that the European Super League could do to the national leagues are especially concerning for politicians like Boris Johnson because many of them strongly consider local economic growth in order to keep their position and be re-elected. The politicians and the government intervene with the economic activities to prevent economic failures and maintain the economic growth. However, the establishment of the super league would cause a great impact on the local economic growth and probably lead to an economic failure, damaging all the politicians’ prestige. So that is why for the politicians, the European Super League is a big threat to their positions.