US vs UK sport: comparing the structure, scale, and commercial landscape

As the world convenes to watch the football World Cup this summer, attention will, in part, turn to one of the host nations, the United States. The distinct sporting landscape in the US, where domestic games such as American football, basketball and baseball far exceed football – or ‘soccer’ – and most other sports in popularity, will be brought into sharp focus.

This article looks at the key legal and commercial differences between US and UK sports, and explores how the UK is beginning to adopt some US-style commercial structures.

Key takeaways

• Model: closed franchises in the US offer more commercial potential than open leagues with promotion/relegation in the UK.
• Money: central administration guarantees higher and more stable income for US clubs; UK clubs negotiate individually, placing smaller teams in weaker positions.
• Control: US leagues can change rules for their own purposes; UK sports, as they are more international, are more limited by worldwide governing bodies.
• Influence: US expansion into the UK sports sector creates a clash of ethos – competition vs commerciality.

Ownership and league structure differences

All major sports in the US are organised as unincorporated associations. The four major leagues – the NFL (National Football League), NBA (National Basketball Association), NHL (National Hockey League) and MLB (Major League Baseball) – own every team, and therefore every player on those teams. The NFL for example has 32 franchises, each owned by private entities or individuals. These teams operate under the umbrella of the NFL and are part of that trade association.

Conversely, the major sports in the UK tend to operate in open league systems where promotions and relegations mean that performance determines a club’s position in the wider system, unlike the closed franchise model seen in the US. The Premier League, the UK’s largest sporting organisation, reflects this approach – it operates as a private company in which each of the 20 competing clubs holds an equal one‑twentieth share.

Commercial changes in the UK

Promotion and relegation are widely valued for the excitement and competitiveness they create, but sports with less financial strength than football operate under different pressures.

Cricket provides a useful illustration of how traditional structures are beginning to adapt under commercial pressure. The domestic game has historically been organised along county lines, with fixed teams competing in formats such as the County Championship, leaving little scope for new entrants or structural change. However, recent developments such as the introduction of The Hundred, a franchise-based competition, reflects a move towards a more commercially driven, centrally controlled model similar to that seen in the United States.

Rugby union has recently gone through landmark changes too, rebranding into PREM Rugby and Champ Rugby, with the premiership agreeing in principle to move from a traditional promotion and relegation format into a criteria-based, closed franchise system.

Do ownership structures impact value?

Ownership structures aside, the primary difference between US and UK sport is population size, with more domestic interest in sport in the US by a factor of millions. The most recent Super Bowl was watched by an estimated 125 million people, compared to 973,000 for the final of PREM Rugby. The final day of the UK’s Premier League is admittedly spread over a number of games, but also pales in comparison.

As a result, the NFL has a combined TV deal of $111 billion. By contrast, the Premier League is £6.7 billion. All other sports in the UK do not come close: Formula 1 is £1 billion, the English Football League (divisions 2-4) is £935 million, and PREM Rugby is £200 million.

While the scale of US sport dwarfs that of the UK, its organisational structure also plays a part. Under the franchise system, US sports teams can act together on deals which affect the league as a whole, and individually on their own branding in their own states. Revenue is thus divided between the teams on a national basis, and on an individual local level. Big ticket income streams, such as TV rights deals or advertising partnerships, are divided amongst the teams evenly.

This results in guaranteed income for every team. For example, merchandising is done through the NFL Trust, which orchestrates its own deals with sportswear brands – the current provider being Nike. The rationale behind that decision was that every team can earn more collectively than they could separately, and this became the usual approach to commercial agreements as the leagues grew.

A notable exception to this is the Dallas Cowboys, who did not sign up to the trust. Several lawsuits and countersuits later, owner Jerry Jones maintained its right to keep its own share of its merchandising sales, as ‘America’s Team’, despite a lack of championship success in recent decades.

For most other teams and leagues, these collective agreements form the foundation of how sport operates commercially in the US.

By contrast, every club across all UK sports (excluding The Hundred) negotiates their own sponsorship deals and finds their own kit provider. For example, in PREM Rugby, two of Northampton Saints’ key sponsors have historically been Church’s and Travis Perkins, a local footwear brand and builders merchant within a stone’s throw of the ground. It is a significantly weaker bargaining position, and commands a lower price compared to the collectivised approach in the US.

The prize of success

It is perhaps ironic that it is in the fiercely competitive, capitalist culture of the US that this model of collectivisation and guaranteed league position exists. While it has its commercial advantages, the absence of any relegation has an impact on the sporting competition. In the UK, the Championship playoff final is known as the ‘richest game in football’, because the prize of Premier League promotion carries with it £200 million in additional revenue. The financial shock of dropping out of the Premier League can however be significantly damaging. By contrast, there is less jeopardy attached to end of season games in the US.

The US alternative is a draft system, which rewards underachieving teams with the rights to contract the best young prospects in the sport. Nevertheless, it is not without its flaws; teams out of the running for championship success often ‘tank’, losing games on purpose to increase their draft stock. This has led to such uncompetitive in-season games that the product (and critically, attendance) has suffered so much as to warrant the NBA to change its draft rules.

In the absence of the punishment of relegation, alongside guaranteed income, it is difficult to encourage effort from organisations when the desire to win only goes so far. Commercial strength could be seen as coming at the expense of genuine sporting competition.

Differences in rules and laws

In football, the rules and regulations are set by FIFA, and whilst different leagues can make small decisions (like using VAR or not), they must work within the wider structure of the FA, FIFA, and UEFA on domestic, international and European levels. Leagues govern themselves on a commercial level, but cannot change the foundations of the sport and how it is played.

By contrast, leagues like the NFL and MLB have league operated committees who decide on their rules, giving them more control. In basketball, although the International Basketball Federation (FIBA) governs the sport globally, the NBA regulations provide for sufficient variation in the rules to dramatically change how the games are delivered in the US, adapting the product to the market. For example, rules that make scoring easier and encourage attacking play help make games more exciting and appealing to fans and sponsors. The NBA also introduced quarters instead of halves, creating more breaks for advertising.  Because NBA teams share ownership power and have equal voting rights, they can directly influence changes to the sport in ways that benefit their business interests.

We have seen sports in the UK experiment with similar ideas – the rugby union Six Nations on ITV introduced adverts alongside coverage at inactive moments of the game, which fans largely criticised. However, unions and teams do not have the capacity to alter the format of the sport itself in the UK, while American sports can in the absence of international regulatory oversight.

Transatlantic sporting futures?

American investment into UK sports has been widely publicised; Ryan Reynolds’ acquisition of Wrexham FC is a poignant example. Americans now own 11 of the 20 Premier League clubs, including four of the ‘Big Six’.

This interest is driven largely by the Premier League’s growth, but also perhaps the appeal of its open competition and the uncertainty created by promotion and relegation. The feature which is most alien to a sporting context defined by guaranteed income and league position is precisely what many US investors clearly are beginning to find so commercially intriguing.

From a sporting standpoint, the jeopardy attached to winning and losing defines competition. For a US audience, unfamiliar with the drama of relegation and promotion, a club such as Wrexham climbing the football mountain is an appealing story. It is clearly one which is also eminently marketable as the Disney+ documentary demonstrated.

But there is a balance which must be struck. The ill-fated European Super League showed how difficult this is. Its proponents clearly misjudged where the equilibrium lies. Nevertheless, it suggests that there may still be a middle ground which can provide the benefits of both.

Perhaps the highly commercialised, yet intrinsically competitive World Cup will show where this balance currently stands.

This article was co-written by Ted Hicks, trainee solicitor.