Evaluating Rent Dissipation in the Spanish Football Industry

This paper proposes to evaluate empirically the consequences of the rent-seeking behavior of football clubs on their costs. The empirical work entails estimating a football wage, result, and demand system with data on clubs competing in the first and second Spanish leagues over the 1996-2003 seasons. The estimation sheds light on wage distortions above a theoretical frontier that differ from 45% to 52% over the period considered. This provides an interesting illustration of the financial difficulties faced recently by many European football clubs.