Third blog post and counting in response to one simple question!
But as the title suggests, this will be the last one, I promise. Mostly.
But this last one, it is my favorite of the three, Here we go:
Have you heard of the European Super League?
The European Super League (ESL), officially The Super League, was a proposed seasonal club football competition that initially would have been contested by twenty European football clubs, twelve of them being the competition’s founding members. It was organised by the European Super League Company, S.L., a commercial enterprise created to rival the UEFA Champions League, Europe’s premier club football tournament organised by UEFA.https://en.wikipedia.org/wiki/European_Super_League
The announcement of the European Super League in April 2021 received wide opposition from fans, players, managers, politicians, and other clubs in England, which with six teams was the most represented country in the project. It also received opposition from UEFA, FIFA, and some national governments. Much of the criticism against the ESL was due to concerns about elitism and the lack of competitiveness within the competition, as it would have consisted of only high-ranking teams from a few European countries
There were many reasons to oppose the ESL, and I should at the outset make my own opinion clear – I abhor the idea. But the main reason to oppose it? The structure, or the format of the competition:
Inspired by European basketball’s EuroLeague, the proposed competition was to feature twenty clubs who would take part in matches against each other; fifteen of these would be permanent members, dubbed “founding clubs”, who would govern the competition’s operation, while five places would be given to clubs through a qualifying mechanism focused on the teams who performed best in their country’s most recent domestic season. Each year, the competition would see the teams split into two groups of ten, playing home-and-away in a double round-robin format for 18 group matches per team, with fixtures set to take place midweek to avoid disrupting the clubs’ involvement in their domestic leagues. At the end of these group matches, the top three of each group would qualify for the quarter-finals, while the teams finishing fourth and fifth from each group would compete in two-legged play-offs to decide the last two quarter-finalists. The remainder of the competition would take place in a four-week span at the end of the season, with the quarter-finals and semi-finals featuring two-legged ties, while the final would be contested as a single fixture at a neutral venue.Each season of the competition would feature 197 matches (180 in the group stage and 17 in the knockout stage)https://en.wikipedia.org/wiki/European_Super_League (emphasis added)
A while ago, Tyler Cowen spoke with Luigi Zingales for a Conversations with Tyler episode. A truly wonderful episode, full of enjoyable insight, but this in particular really stuck with me:
I don’t understand why in the United States the only thing that is really noncompetitive is sports. In Europe, the only thing that is really competitive is sports. In Italy, soccer you are the first division, second division, you are promoted or demoted, according to performance. You don’t buy your way into the NFL or the Major League, et cetera.https://conversationswithtyler.com/episodes/luigi-zingales/
Here, you buy the franchise, and once you’re in, no matter how incompetent you are, you stay there, which is completely un‑American.
The next three words in the transcript are, and I quote “laughter and applause”, but this is no laughing matter. Luigi Zingales is completely right, and is speaking about a ridiculously powerful idea: skin in the game.
The reason every single football fan I know, without exception, was completely set against the ESL is because it took away skin in the game. The top fifteen clubs would never be demoted from the league.
There was no fear of failure, and without fear of failure – without skin in the game – you can’t make the jump.
You really should read the whole post on Medium (and then the entire book, and both at least twice, preferably once more, just to be sure), but think about what Nassim Nicholas Taleb is saying in that quote. Inequality, he says elsewhere in the post, is a zero-sum game. In countries such as the US, he says, the act of wealth creation is also an act of destruction (he means it in a Schumpeterian sense).
And that’s what Zingales is getting at when he says that sports in America is, well, un-American. The leagues there have no skin in the game, because no matter how incompetent you are, you never get demoted from the league. There is no creative destruction in American sports leagues.
And that was the problem with the ESL. There would have been no skin in the game, and that doesn’t sit well with us. The best team in the leagues as they are structured today begins with a clean slate next year, and while the probability that it will be demoted the next year is very low, it isn’t zero. Every team in, say, the English Premier League has skin in the game in this sense. And it really and truly matters.
And so my final answer to Navin’s question isn’t really my own, it is a quote from Taleb:
Inequality itself isn’t bad. Inequality in a rigged game, where there is no skin in the game? In that case, it is really and truly bad to be rich.
Please, do read Skin in the Game.