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Despite the economic growth of professional football in Europe, clubs continue to receive substantial public subsidies, raising questions of legitimacy. While the relationship between public authorities and professional football has been studied from various disciplinary perspectives, an integrated theoretical framework remains absent. This conceptual study therefore adopts a political economy approach to systematize and integrate theories from sport economics and microeconomics, considering the political environment, aiming to setup a more coherent analytical model. For empirical and policy illustration, we draw specifically on the German Bundesliga, which exemplifies a balanced governance model combining corporate autonomy, democratic control by membership-based clubs, and public support. We advance two key propositions: First, the institutional relationship between clubs and local authorities can be conceptualized as a (local) bilateral monopoly with asymmetric market and bargaining power favoring the clubs. While local authorities hold a jurisdictional monopoly by law and through league restrictions on relocations, clubs may exert (economic) power due to effective barriers to entry for competing teams. Second, although market failures, externalities, and public-good characteristics can justify public support, subsidies may also serve political aims related to merit goods and distributional objectives. Public funding can thus either enhance overall welfare or sustain a monopoly operating at a loss. In conclusion, we argue for a strategic repositioning of the state as an active investor rather than a reactive financier. This approach may mitigate risks of government failure and prevent loss of control to investors with external - possibly geopolitical - interests.
Baumeister et al. (Mon,) studied this question.