Understanding Soft Budget Constraint in Western-European and Central-Eastern-European professional football

Abstract

The paper presents the implementations of János Kornai’s theory about Soft Budget Constraint (SBC) through the example of the special and popular topic of professional football. It shows the theory of Soft Budget and its application in professional sport. It illustrates the market and bureaucratic co-ordinating mechanisms and explains the specialities of the state and the market model of professional football through the transition of Central and Eastern European countries. The aim of the paper is to highlight the main differences of the operation of Western and Eastern European football and to present the application of the SBC theory in the two region. The research summarizes the main specialities of professional sport and football, the markets of professional football, the double objective and possible strategies of sport companies and return on investment in players. Professional football’s specialities in the post-socialist countries and current business results of CEE football were examined. With the method of data collection and processing, main market results were investigated. The paper identify successful Central-Eastern-European championships and clubs which operate with business model. This identification helps to evaluate the efficiency of Hungarian football in the regional environment and it helps to understand why SBC causes inefficiency.