In Europe, soccer superclubs such as Real Madrid and Manchester United have created a virtuous circle of success. Vast revenues from sources such as broadcast fees (Exhibit 1) permit them to acquire top players who make winning more likely. Winning teams, in turn, enjoy higher revenues.

Top European clubs have, on average, budgets that are 20 times larger than the budget of a typical Swiss soccer club. The top clubs also have much bigger stadiums and, on average, seven times more spectators (Exhibit 2). As for the value of television rights, the gap between big and small countries is a factor of 20—and it is growing every year (Exhibit 3). How then do clubs in smaller markets such as Belgium, Portugal, Sweden, and Switzerland set in motion the virtuous circles of the superclubs?

The Swiss Premier League comprises 12 clubs, which have a total budget of about $50 million; the biggest club’s budget is $13 million, that of the smallest $1.6 million. A Swiss soccer club typically has four revenue streams: ticketing, merchandising and licensing, television rights, and sponsorship. The main costs are player salaries, the organization of games (including catering, security, and ticketing), out-of-town travel, and marketing. Transfers...