The relationship between psychological pressure and performance outcomes has been studied across a variety of sporting contexts. As an extension and complement to recent empirical studies, we construct a formal model of soccer penalty shoot-outs to determine the links between psychological pressure and first-mover advantage (FMA). Our approach indicates that even seemingly simple competitive interactions may include a rich, complex set of effects. We demonstrate that psychological pressure leads to FMA in shoot-outs; however, we show that this relationship can vary depending on a variety of different factors, such as the nature of the pressure, the magnitude of the pressure, and the specific rules governing the shoot-out. Overall, our work clarifies and extends knowledge of the operation of FMA and of how psychological pressure impacts performance outcomes in competitive interactions.
We study the impact of managers on the success of professional soccer teams using data from the German Bundesliga, where we are exploiting the high turnover rate of managers between teams to disentangle the managers’ contributions. Teams employing a manager from the top of the ability distribution gain on average considerably more points than those employing a manager from the bottom. Moreover, estimated abilities have significant predictive power for future performance. Managers also affect teams’ playing style. Finally, teams whose manager has been a former professional player perform worse on average compared to managers without a professional player career.
Using data from the 2011-2012 season of the Premier League, we study empirically and theoretically the impact of soccer suspension rules on the behavior of players and referees. For players facing a potential one-game suspension, being one versus two yellow cards away from the suspension limit results in an approximate 12% reduction in fouling, while for those facing a potential two-game suspension, the reduction is approximately 23%. The probability such players receive a yellow card is also reduced. In addition, we find some evidence of slight referee bias for the home team in the dispensing of penalty cards, but not in the calling of fouls. Finally, we develop a theoretical framework for investigating the effects of suspension rules on the number of fouls committed. Within this framework, we investigate how policy instruments such as referees’ propensity to give out yellow cards or their consistency in giving them out affect the impact of suspension rules.
Despite the increasing internationalization of marketing activities by professional sporting clubs, previous research exploring the role of game outcome uncertainty (GOU) in spectator demand has been exclusively conducted within national contexts. As a consequence, very little is known about the preferences of international television (TV) spectators watching games from abroad. Hence, this study analyzes all 571 English Premier League (EPL) games broadcast in Germany between the seasons 2011-2012 and 2015-2016 in order to explore whether TV demand for transnational football games is affected by GOU. In line with the prominent uncertainty of outcome hypothesis, the results of this analysis reveal a significant and positive relation between German EPL demand and GOU. This result, however, is not consistent for male and female spectators.
This article examines insolvency (payment failure) in the top three divisions of French soccer. Between 1970 and 2014, we observed 79 cases of insolvency arising from participation in the top two or three (since 1993) divisions. We find that demand (attendance) shocks can account for insolvency to a significant degree. We also find that insolvency can be explained by club status and ownership structure, with professional status and the association structure being more likely to lead to insolvency. We also examine the postinsolvency performance of soccer clubs and find that the adverse consequences of insolvency are long lasting.
Labor-related work stoppages in professional sports have the potential to alienate fans—but whether they generate sustained reductions in demand remains an open question. Existing evidence generally indicates work stoppages may negatively impact attendance but only for a short period of time. Focusing on the 1994, 2004, and 2012 lockouts in the National Hockey League, this article finds evidence consistent with sustained decreases in attendance following the 1994-1995 lockout and revenue following the 2004-2005 and 2012-2013 lockouts. Back-of-the-envelope estimates suggest work stoppages may still be optimal even if there is a sustained negative impact on fan demand.
This article applies a panel data model with observed common factors to Major League Baseball (MLB) data from 1904 to 2012 to analyze attendance. In particular, it aims to identify common factors. The empirical results suggest that MLB fan preferences were simple in the early years (1904-1957) with respect to common factors and then became multifaceted in later years (1958-2012), because the number of significant common factors increased from four to seven. Time trends and per capita gross domestic product were significant over the whole sample period, but outcome uncertainties and offensive performance, such as slugging performance, became newly significant common factors influencing attendance in later years. This indicates that fans consider not only their home team’s characteristics but also the characteristics of the away teams; then, in the modern era, it became critical for the league to implement elaborate business measures to promote competitive balance and slugging performance.
Nontraditional scheduling in the National Football League (NFL) has created variation in the rest/preparation time among opponents. Using data from the 2011 to 2015 NFL seasons, regression analysis examines the impact of differential rest and preparation periods among teams on the probability of the home team winning and on the number of points scored in a particular contest. Results show that the probability of winning a game for the home team and the total number of points scored in a game are impacted by different rest combinations between opponents. These impacts are sensitive to the familiarity among opponents and the travel patterns of the visiting team.
Collegiate football may provide advertising for universities, attracting larger pools of applicants and leading to more academically qualified student bodies. Football may also build school spirit, reducing attrition and improving long-run graduation rates. This analysis uses data from 2001 to 2004 for available National Collegiate Athletic Association Division-1 institutions to examine the advertising and effectiveness effects of football. Using both general linear model and linear-in-means model estimation procedures, we find strong advertising and effectiveness effects for football in the full sample. Among schools fielding a football team, the impact of Football Bowl Subdivision and winning percentage is muddy; however, the advertising effect of bowl appearances is strong.
Prior to the 2012-2013 season, National Football League franchises had the option to significantly adjust their TV blackout policies for the first time since 1973. Using data from team policy choices and local TV blackouts during the 2007-2008 to 2014-2015 seasons, we examine whether the policy change was effective in reducing the probability of blackouts or affected attendance. Controlling for team fixed effects, we find no evidence that policy-adopting teams experienced significantly fewer blackouts or a change in attendance following the policy implementation. Our analysis sheds light on the economic factors that are correlated with local TV blackouts and game attendance.
We investigate to what extent crowd support contributes to the home advantage in soccer, disentangling this effect from other mechanisms such as players’ familiarity with the stadium and travel fatigue. To evaluate the relevance of crowd support in determining home advantage, we analyze same-stadium derbies (matches among teams that share the same stadium), in which teams enjoy different levels of support from the crowd—the home team has many more supporters mainly because of season ticket holders—while teams do not differ in terms of travel fatigue or familiarity with the stadium. Our estimation results suggest the existence of a sizable crowd support’s effect on the home advantage generated through the encouragement of players’ performance. Furthermore, we find consistent evidence that the support of the crowd tends to bias referee’s decisions (in terms of penalties, red cards, and yellow cards) in favor of the home team.
In contrast to the popular policy claim that sport might serve as vehicle to meet the Millennium Development Goals, empirical evidence based on large-scale survey data is largely missing. We use panel data based on a cohort of children and employ propensity score matching to identify the effects of sports participation on child development in Peru. Our findings suggest that participation in a sports group has positive impacts on subjective health and a measure of social capital. However, and in contrast to developed countries, we find no statistically significant effects on well-being and human capital formation.
The aim of this study is to identify variables that influence the stadium attendance in Portugal, and how these variables may affect decision management. Deriving a demand curve for stadium attendance in the Portuguese First Division Football League for 898 matches of five seasons (2010/2011-2014/2015), the results highlight five main explicative variables: cost, habit persistence, expected quality, team performance, and outcome uncertainty. With regard to outcome uncertainty, we employ the framework proposed by Humphreys and Zhou and we conclude for the importance of alternative factors affecting consumer choice like loss aversion and home win preference.
This article provides evidence for mixed strategy play in a natural setting, using data from penalty kicking in professional German soccer. A penalty kick is a two-person constant-sum game. We distinguish two strategies for both players, namely, choosing left or right and verify empirically that the two main requirements for the existence of a Nash equilibrium in mixed strategies are met: (1) the expected payoffs are equal across strategies and (2) we cannot reject the hypothesis that players choose their actions randomly.
We assemble and analyze a novel data set that provides evidence on the quality of decision-making by on-field umpires and teams in the sport of cricket. The decision review system, introduced in November 2009, gives teams a limited right to challenge an on-field umpire’s decision. Of the 1,201 on-field umpire decisions that were challenged in test matches by nine playing teams between 2009 and 2014, 310 (25.81%) were reversed by a 3rd umpire. Controlling for several match and team characteristics, logistic regressions show that (1) leg before wicket (LBW) and caught decisions that are ruled "out" by the on-field umpire are more likely to be reversed than decisions that are ruled "not out"; (2) for both LBW and caught decisions, home and away teams are equally likely to win a 3rd umpire reversal.
We develop evidence of bettors with sentiment bias in the betting market on National Basketball Association (NBA) games. We use measures of team popularity (arena capacity utilization and team all-star votes received) as proxies for the presence of biased bettors. Analysis of point spreads and bet outcomes for more than 32,000 NBA games played in 1981-2012 shows that bookmakers increase prices on games involving popular home teams, an outcome consistent with sentiment bias. These changes in prices do not translate into higher returns for bettors, suggesting that bookmakers shade point spreads to increase profits.
Numerous sports stadiums in Australia have been renovated or built from scratch in the past two decades, funded in whole or part by public subsidies. This note focuses on one particular group that benefits from subsidies—those spectators who attend live sporting events. A portion of the benefits from subsidies provided by government are captured as increased consumer surplus by sporting fans. Thus, the income and wealth position of these fans are of interest to those deciding whether to subsidize a facility. On the other side of the equation, the taxes which fund sporting facilities are to a large degree state and local levies, which are mostly regressive, taking a larger portion of the income of lower and middle income than of higher income taxpayers because savings are usually exempt from the relevant taxes. Using data from the Household Expenditure Survey (1988-1989, 2009-2010), we analyze various financial status characteristics of those who pay to attend sporting events in Australia. We find that those who buy tickets to sporting events have higher annual incomes and greater wealth than Australians who do not purchase tickets to sporting events. Hence, while media and policy makers may view such funding as subsidizing "working man’s recreation," our results suggest that funding of sporting arenas should be assessed through the lens of correcting market failures rather than equity considerations.
This article is concerned with how contract extensions create incentives that affect the characteristics of compensation of Major League Baseball players. We begin with a description of a number of attributes of the negotiation process. Using a sample of contract extensions, we summarize a number of characteristics of this phenomenon. For example, we show how both sides are made better off as a result of these negotiations and that most extensions take place during the last year of the existing contract. Furthermore, for those players with less than 6 years of service, the new contract typically extends beyond the player’s arbitration-eligible years.
Prior to the 2012-2013 season, National Football League franchises had the option to significantly adjust their TV blackout policies for the first time since 1973. Using data from team policy choices and local TV blackouts during the 2007-2008 to 2014-2015 seasons, we examine whether the policy change was effective in reducing the probability of blackouts or affected attendance. Controlling for team-fixed effects, we find no evidence that policy-adopting teams experienced significantly fewer blackouts or a change in attendance following the policy implementation. Our analysis sheds light on the economic factors that are correlated with local TV blackouts and game attendance.
Between 1994 and 2013, Black head coaches of Division I National Collegiate Athletic Association basketball programs were more likely to be terminated than their White counterparts, adjusting for performance and characteristics of the coach. Controlling for employment at a historically Black college or university, which accounts for approximately a quarter of the Black coaches in our sample, overturns this result. The findings highlight the importance of understanding institutional environments when assessing discrimination in labor market outcomes.
Using 2010–2013 television ratings data for 33 Professional Golfers’ Association Tour events, this article analyzes determinants of audience size. Only one of six measures of uncertainty of outcome based on the leader’s margin or the number of golfers within five strokes of the leader is found to be positively correlated with ratings. Instead, ratings are strongly related to certain tournaments, particularly The Masters and the U.S. Open, and to the presence of Tiger Woods and Phil Mickelson. Ratings are found to increase by about 50% if Woods is in contention.
We examine the processes by which star power (SP) develops and the impact of SP on both consumer demand and team performance using data from Major League Baseball. First, we examine the dynamics of stardom using data based on player salaries, performance, and award recognition. We find that SP explains additional variance in salaries beyond performance measures. Also, we examine the impact of SP on consumer demand and team success. We find that a team’s stock of SP positively influences consumer demand, even after controlling for various factors ranging from team success to ticket prices.
We estimate Canadians’ willingness to pay (WTP) for medals won by Team Canada in the 2010 Winter Olympic Games using data from contingent valuation method (CVM) surveys of nationally representative samples conducted before and after the Games. The results permit an assessment of Own the Podium, a government program designed to increase Canada’s medal count. International prestige and national pride are important determinants of WTP. The results are sensitive to cost and scope, respondents’ beliefs about the effectiveness of the program, as measured by expected medal count. WTP estimates suggest that Own the Podium generated benefits above its cost to a degree unique in the growing literature of sport CVM studies.
We analyze the relation between stock returns and results in national league matches for 13 clubs of six European countries. We assume that the stock prices should only respond to the unexpected component of match results, and we use betting odds to separate the expected component of results from the unexpected one. We consider both the unweighted results and the results weighted by a new measure of match importance that we propose. When this measure is used, a significant relation between the results and stock performance is found for most teams.
We estimate the effect of proximity to two sports facilities in Columbus, OH, on residential property values. Results from a spatial hedonic model indicate that the presence of sports facilities in Columbus have a significant, positive, and distance-decaying effect on surrounding residential housing values, supporting the idea that professional sports facilities generate intangible benefits in the local economy. Ordinary least square (OLS) overestimates the hedonic model parameters compared with maximum likelihood and spatial two-stage least squares, suggesting that spatial autocorrelation plays an important role in this setting.
This study analyzes 400 broadcasts of Fédération Internationale de l’Automobile (FIA) Formula One (F1) World Championship Grands Prix between 1993 and 2014 in order to explore the question of whether race outcome uncertainty affects the TV demand for F1 racing in Germany. The results reveal that demand is shaped by race outcome uncertainty as proxied by performance differences between those drivers with the best performances during the qualifying as well as additional factors primarily related to Grand Prix circuit and scheduling. From a TV demand perspective, FIA, therefore, is well advised to keep the competition among F1 teams balanced.
In the past decade, television (TV) broadcasters have been investing a huge amount of money for the Belgian Pro League broadcasting rights. These companies pursue an audience rating maximization, which depends heavily on the schedule of the league matches. At the same time, clubs try to maximize their home attendance and find themselves affected by the schedule as well. Our article aims to capture the Belgian soccer fans’ preferences with respect to scheduling options, both for watching matches on TV and in the stadium. We carried out a discrete choice experiment using an online survey questionnaire distributed on a national scale. The choice sets are based on three match characteristics: month, kickoff time, and quality of the opponent. The first part of this survey concerns TV broadcasting aspects. The second part includes questions about stadium attendance. The choice data are first analyzed with a conditional logit model which assumes homogenous preferences. Then a mixed logit model is fit to model the heterogeneity among the fans. The estimates are used to calculate the expected utility of watching a Belgian Pro League match for every possible setting, either on TV or in the stadium. These predictions are validated in terms of the real audience rating and home attendance data. Our results can be used to improve the scheduling process of the Belgian Pro League in order to persuade more fans to watch the matches on TV or in a stadium.
Laboratory experiments have established the existence of cognitive biases, but their explanatory power in real-world economic settings has been difficult to quantify. We evaluate the extent to which a cognitive bias, confirmatory bias, affects the opinions of experts in a real-world environment. In the Associated Press Top 25 College Football Poll, expert pollsters are tasked with assessing team quality, and their beliefs are treated week to week with game results that serve as signals about an individual team’s quality. We exploit the variation provided by actual game results relative to market expectations to develop a novel regression-discontinuity approach to identify confirmatory bias. We construct a data set that matches more than 20 years of individual game characteristics to poll results and betting market information and show that teams that slightly exceed and barely miss market expectations are exchangeable. The likelihood of winning the game, the average number of points scored by teams and their opponents, and even the average week of the season are no different between teams that slightly exceed and barely miss market expectations. Pollsters, however, significantly upgrade their beliefs about a team’s quality when a team slightly exceeds market expectations. The effects are sizable—one fifth of the standard deviation in poll points in a given week can be attributed to confirmatory bias, which is equivalent to nearly half of the voters in the poll ranking a team one slot higher when they slightly exceed market expectations. This type of updating suggests that even when informed agents make repeated decisions, they may act in a manner consistent with confirmatory bias.
This article tests the impact of match outcome uncertainty on stadium attendance and television audiences of English Premier League football. The method accounts for different measures of outcome uncertainty, an issue identified as a potential source of discord between existing evidence. Results show that more certain matches are preferred by spectators at the stadium yet more uncertain matches are preferred on TV spectators. Thus, a change in revenue sharing polices aimed at promoting a more uncertain match may affect both TV and stadium demand in opposing directions.
In this article, we examine the value of high school basketball prospects, and results indicate that each five-star (four-star) recruit generates US$625,000 (US$178,000) in marginal revenue for his university. Additionally, university academic donations are strongly related to basketball performance and five-star recruits bring in an additional US$5,800,000 in funding on average as a result of their contribution to team success. Calculations indicate that if five-star players were to be fairly compensated, their earnings would be approximately US$613,000. Four-star prospects would be paid roughly US$166,000, three-star recruits US$91,000, and two- and one-star players US$50,000.
This article provides a novel answer to the question of why elite college football programs schedule so-called "cream puff" games against vastly inferior out-of-conference opponents. Using data on college football games from 2002 to 2010, I find that a team’s chances of winning are 5.3–15.6% greater in the game following their victory over a cream puff. In my preferred estimation, this "cream puff effect" is roughly half as large as the estimated home field advantage. I also show that the U.S. Today/Sagarin rating system, which I use to control for team abilities, penalizes teams for playing vastly inferior opponents. I devise two empirical strategies that deal with this potential problem and show that the cream puff effect is not simply an artifact of the rating system. These results contribute to the literature on dynamic contests by showing that not only does the timing of one’s efforts within a contest matter but so does the schedule of one’s opponents.
We theoretically and experimentally analyze recent changes in the posting system used by Japan’s Nippon Professional Baseball (NPB) organization and the U.S. Major League Baseball (MLB) organization to transfer the rights of NPB players from NPB teams to MLB teams. Under the old system—a sequential, first-price sealed-bid auction among MLB teams for player negotiation exclusivity rights—the NPB team enjoyed considerable surplus from lucrative posting fees. We predict that the revised system—an English auction with an entry fee—will transfer most of the NPB’s middleman benefits (posting fees) to the players through higher salaries. Additionally, we analyze a third, proposed but not adopted, mechanism—a weighted-average sealed-bid auction. Our experimental results confirm our theoretical predictions. Furthermore, under the new system, efficiency is greatest, MLB teams spend less on Japanese players, and the players’ salaries increase significantly.
This study examines data from the 2001 to 2009 National Football League (NFL) seasons to determine whether Black quarterbacks face discrimination. When controlling for injury, age, experience, performance, team investment, backup quality, and bye weeks, Black quarterbacks are found to be 1.98–2.46 times more likely to be benched. Marginal evidence is also found that Black quarterbacks face less discrimination in areas with a larger percentage of Black residents. Additionally, it has been observed that when White quarterbacks are benched, the team improves by more than when Black quarterbacks are benched. This provides evidence that there is a cost to this discrimination.
Since 2011, the National Association for Stock Car Auto Racing (NASCAR) has forced drivers to pick one of three national series for which they would be eligible to compete for a season championship. Prior to this "Pick-A-Series" rule, many drivers in the premier Sprint Cup Series competed regularly in the Nationwide Series, which is a developmental division for less experienced drivers. I examined whether the removal of moonlighting Sprint Cup drivers from championship contention encouraged less aggressive driving among those who competed exclusively in the Nationwide Series. There was weak evidence that the Pick-A-Series rule reduced accident proneness among Nationwide drivers relative to Sprint Cup drivers.
Michael Lewis’ Moneyball ... describes how the Oakland Athletics exploited an imperfection in the way player productivity was being evaluated pre-2003. On-base percentage appeared to be more important in determining team success compared to more popular statistics. We test the hypothesis that in a competitive market, other teams will increase the weight given on-base percentage in the reward structure for their players. Our results show that in the post-Moneyball (MB) era, the return to on-base percentage has indeed increased for free agents, the group whose salaries we expect to be most affected by the MB philosophy.
American households’ willingness to pay (WTP) for soccer player development is measured using the contingent valuation method. Data are drawn from two national surveys administered before and after the 2014 World Cup event. Individuals are asked whether they perceive that additional funding for player development will improve the chances of the national team’s performance at the 2018 World Cup and whether they are willing to pay an annual household tax to fund the program. A bivariate probit model accounts for correlation between the two decisions. WTP estimates indicate that the intangible benefits of player development are roughly twice the cost.
This article analyzes how changes made to the revenue sharing agreement in the 2007 Major League Baseball collective bargaining agreement influenced the salaries of position players and pitchers. The tax rates associated with revenue sharing decreased following ratification of the 2007 agreement. Theoretically, these changes should increase players’ marginal revenue product and, therefore, salaries. Results indicate that position players experienced an increase in salary following the 2007 agreement. Pitchers’ salaries also increased, but by a smaller amount. The effect of the 2007 agreement was different throughout the salary distribution for position players, but uniform throughout the distribution for pitchers.
Conventional wisdom in sports is that consistency is praiseworthy and that competitors should seek momentum. A small standard deviation is the simplest measure of consistency, and a positive autocorrelation is the simplest measure of momentum. With these statistical definitions, we find that consistency is predictable for Sprint Cup drivers, but momentum is not. Simulating seasons, we find consistency reduces the variability in season-ending performances and momentum increases them. Since drivers are ordinarily seeking unlikely occurrences, consistency is harmful and momentum is beneficial. Thus, consistency is obtainable but not desirable, and momentum is desirable but not obtainable in National Association for Stock Car Auto Racing.
Choking under pressure represents a phenomenon in which individuals faced with a high-pressure situation do not perform as well as would be expected were they performing under normal conditions. In this article, I identify determinants that predict a basketball player’s susceptibility to choking under pressure. Identification of these determinants adds to our understanding of players’ psychology at pivotal points in the game. My analysis draws on play-by-play data from ESPN.com that feature over 2 million free-throw attempts in women’s and men’s college and professional basketball games from the 2002-2013 seasons. Using regression analysis, I explore the impact of both gender and level of professionalism on performance in high-pressure situations. I find that in the final 30 seconds of a tight game, Women’s National Basketball Association and National Basketball Association players are 5.81 and 3.11 percentage points, respectively, less likely to make a free throw, while female and male college players are 2.25 and 2.09 percentage points, respectively, less likely to make a free throw, though statistical significance cannot be established among National Collegiate Athletic Association women. The discrepancy in choking between college and professional players is pronounced when comparing male college players who do and do not make it to the professional level; the free-throw performance of those destined to go pro falls 6 percentage points more in high-pressure situations. Finally, I find that women and men do not differ significantly in their propensity to choke.
Betting exchanges allow punters to bet on a horse to lose a race. This, many argue, has opened up the sport to a new form of corruption, where races will be deliberately lost in order to profit from betting. We examine whether anecdotal evidence of the fixing of horses to lose—of which there are many examples—is indicative of wider corruption. Following a "forensic economics" approach, we build an asymmetric information model of exchange betting and take it to betting data on 9,560 races run in 2013/2014. We find no evidence of the widespread corruption of horse racing by the betting exchanges.
Spectator effects represent a central concept in (behavioral) sports economics. A thorough understanding of the phenomenon promises to further our understanding as to the nature of performance production under pressure. In traditional home advantage studies, it is difficult to isolate the net crowd effect upon relative team performance. In a typical sports setting, multiple factors change at once for a visiting team. Experimental evidence suggests that supportive crowds may hinder task performance. In that it serves as home stadium to two National Basketball Association teams, the Staples Center in Los Angeles offers a rare natural experiment through which to isolate the crowd effect upon competitive output. Each team possesses equivalent familiarity with built environment, and teams face similarly sparse travel demands prior to games between one another. However, the team designated as "home team" in a contest enjoys a largely sympathetic crowd due primarily to season ticket sales. Moreover, crowd effects are sizable in motivating a home team win, raising the likelihood of such an event by between an estimated 21 and 22.8 percentage points. The point estimate implies that essentially the entire home advantage between the two teams is attributable to the crowd effect.
This article analyzes the efficiency of coaches in the Top Spanish Basketball League and what determines this efficiency. To accomplish this, a stochastic production function is estimated. Among others, the inefficiency determinants considered are whether the coach is an ex-professional player and whether he is from Spain. The results demonstrate that foreign coaches are more efficient. To build upon these results, a new approach to estimate the efficiency of coaches, in which efficiency is obtained by comparing their performance with expectations attained from betting odds, is proposed. The results were principally reinforced.
This article analyzes the impact of policy changes, with a specific focus on the Bosman ruling, on the competitive nature of new entrants to the English Premier League. Relevant labor economics literature motivates the prediction that post-Bosman entrants will be more productive and consequently have a higher probability of earning/retaining a first-team spot in top European leagues. To test these predictions, proprietary data were collected on all players who entered the English Premier League in 4-year windows around the Bosman ruling. Regression discontinuity design displays evident discontinuity in player productivity parameters around the ruling, and the ability to decompose the treatment effect among subgroups of players identifies an incentive effect of increased competition for foreign players. Strong and robust empirical support for the motivating predictions is also established through the application of survival analysis indicating that post-Bosman entrants are dominant in terms of career duration to their pre-Bosman counterparts. Robustness of the results is established by controlling for relegated players through the application of stratified duration models and by testing for endogeneity bias for the productivity parameters employed.
This article shows that under certain circumstances, an increase in doping sanctions can decrease the number of participants in the competition. The model, which is based on a work of Haugen, is formulated as a two-stage game in which agents first decide whether to participate in a competition and second whether to use an illicit but effective drug when competing. If initially low sanctions are increased but do not prevent a certain overall level of doping, then the payoff for all athletes is reduced, which, in turn, reduces their willingness to participate in the competition.
This article highlights an aspect of mega-events that has been neglected: the changing composition of tourist arrivals during and after the event. The change happens because, in the FIFA World Cup, a quota of countries participate from each continent and this opens up new tourism markets. We show that the 2010 FIFA World Cup in South Africa had a smaller growth effect on South Africa’s traditional tourism markets but attracted a large increase from nontraditional ones. However, the size of the effect, we find, is partly due to randomness: It depends on match results in the qualification phase of the tournament. We use a new long-run data set of tourism flows to South Africa and a gravity model for tourism flows and run counterfactual examples of play-off matches during the qualification phase to estimate how much more South Africa could have benefited had larger or richer countries qualified. We conclude that the random results of a few play-off games significantly affect the extent to which the World Cup benefits the host country’s economy.
This is a response to Madden’s comment on our original article: It’s Not Over ‘til the Fat Lady Sings: Game-Theoretic Analyses of Sports Leagues.
To search for eras in a sports league, we utilize time-series tests with structural breaks in Major League Baseball performance. Using data from 1871-2010, the mean and standard deviation of four different performance measures are examined. Throughout, rather than assume that a break point is known a priori, we identify breaks endogenously from the data. Perhaps most notable among our findings, we identify a deterministic trend in mean slugging percentage with breaks in 1921 and 1992. Interestingly, these years closely coincide with the early years of the free-swinging (Babe Ruth) era and the modern steroid era, respectively.
We examine the relationship between beer being sold at college football stadiums and both attendance and football revenue for 29 mid-major universities over the 2005-2012 period. Using both ordinary least squares and instrumental variable estimation, no evidence that beer availability increases attendance or football revenue is found.
This article examines the growing diversity of participation and achievement in the Olympics. A wide set of socioeconomic variables are correlated with medaling, particularly with respect to the Summer Games and women’s events. Host advantage is particularly acute in judged contests such as gymnastics. However, there is evidence that the influence of correlates, such as country size, per capita income, and membership in the communist bloc is declining over time as competition becomes increasingly diverse. These effects are less evident in the Winter Games, events in which significant capital investments are required, and judged contests.
The central hypothesis of this study is that relationships develop systematically between referees and teams and affect referees’ decisions. Referees’ travel distance to respective stadiums and count of matches refereed for respective teams are used to measure long-term relationships. We find some evidence that the count of referee–team interactions affects disciplinary cautions in lower divisions of the English Football League. This is less evident in higher divisions where, however, distances between referees’ hometowns and stadiums appear to play a role. The influence of distance further increases with the extent of referees’ experience with the respective teams.
This article aims to evaluate the sports performance of teams that have participated in the Union of European Football Associations (UEFA) Champions League (UCL) during the last 10 seasons (2004-2005 to 2013-2014). Technical efficiency is estimated using well-known data envelopment analysis (DEA) approaches and a bootstrapped DEA model. To solve the problem of measuring sporting results as output in knockout competitions, we propose the use of the coefficients applied by the UEFA from UCL revenue distribution. The results obtained show first that there is a high level of inefficiency in UCL over the period studied: Only 10% of the teams seem to be efficient. Also, the teams have many problems in maintaining their efficiency during the seasons. Second, the champion is always efficient. Third, we identify two sources of inefficiency: waste of sports resources and the selection of sporting tactics. Finally, from a methodological perspective, the output measure proposed seems to be suitable to represent reliably the sports results achieved by clubs in this qualifying competition type. Furthermore, our results are robust when applying alternative estimation methods. Regarding the results, some management implications are discussed and suggestions are made to boost the efficiency in inefficient clubs.
Research has found that, controlling for team quality, National Basketball Association visiting teams win more often when playing to the east of their home time zones and less often when playing to the west. We reaffirm this finding for 1991-2002. We find that only these seasons’ day games, and not their far more frequent night games, featured a significant relationship between time zone and visiting team win probability. We hypothesize that some of these day-game effects were biological in origin. The 2002-2013 seasons featured no significant relationship between time zones and visiting team win probability for either day or night games.
There is little evidence in support of the main economic rationale for regulating athletic doping that doping reduces fan interest. The introduction of random testing for performance-enhancing drugs (PEDs) by Major League Baseball (MLB) offers unique data to investigate the issue. The announcement of a PED violation (a) initially reduces home-game attendance by 8%, (b) has no impact on home-game attendance after 15 days, and (c) has a small negative impact on the game attendance for other MLB teams. This is the first systematic evidence that doping decreases consumer demand for sporting events.
In labor economics, the theory of assortative matching focuses on the mutual selection of workers and firms. Empirical studies using Abowd, Kramarz, and Margolis’ methodology (an estimation of a two-way fixed effects (FE) model) do not provide clear evidence of the existence of assortative matching between workers and firms, that is, there is no clear evidence that good employees work in good firms. In fact, negative or very small correlations are found in the literature using this approach. Andrews, Gill, Shank, and Upward suggest that positive assortative matching has not been observed in the empirical literature because of a limited mobility bias. This article uses Italian soccer championship data to test positive assortative matching. Because job turnover is significantly high in professional soccer, we use numerous movers to detect sorting. Our results indicate that estimating a standard Mincerian wage equation with numerous movers enables us to find a positive correlation between players’ and firms’ FE, meaning that good players tend to move to good teams. This suggests that superstar effects are at work as the unobserved component of the player FE is far more correlated with the wage than the observed component.
The economics literature related to the uncertainty of outcome hypothesis reopens the discussion of whether the fans’ perceptions of competitive balance (CB) are in line with Rottenberg’s and Neale’s theory. This article contributes to the literature by analyzing the effect of fans’ perceptions of suspensefulness on their willingness-to-pay for a single-game ticket and evaluating monetarily the (un)importance of CB. Results suggest that fans’ notions of competitiveness influence their spending behavior, rising as perceived balance rises, at least up to high levels of competitiveness.
How important is recruiting to a football program’s success? While prior research has attempted to answer this question, we utilize an extensive panel set covering 13 years of games along with a two-stage least squares approach to investigate the effects of recruiting on team success. This article also includes new control variables to account for omitted variable bias that prior work may have missed. We also split our sample to investigate whether recruiting displays heterogeneous effects across schools. Additionally, we find evidence that the benefits of recruiting are driven by team-specific effects, indicating that team success may be more heavily derived from the ability of teams to harness and improve their recruits than their ability to utilize each athlete’s raw abilities. This leads to important revelations regarding future research into both the value of recruits and what drives a football team’s success.
The research presented here aims to fill the existing gap in empirical research on demand for individual sports. A unique data set on audiences for live broadcast tennis matches from Germany, as Europe’s biggest and most competitive TV market, is analyzed. The results indicate that canonical approaches of empirical sport economics can be fruitfully applied to individual sports. Consumers prefer prestigious competitions, relevant matches, highly ranked, and German players. The findings suggest that the German tennis industry needs to provide national tennis stars in order to revitalize the interest of major networks and audiences.
Driskill and Vrooman have recently provided an interesting argument for a Cournot-based approach to modeling duopsony sports leagues with perfectly inelastic talent supply (the usual assumption for major North American sports league), quite different from the suggestion made by this author (and others) that specifications where talent expenditures are strategic variables (rather than Cournot talent levels) are most appropriate for the context. This comment offers some clarifications and comparisons of the merits of the alternative approaches; they continue to point toward the talent expenditure approach as the most fruitful for the leagues under investigation and probably more generally.
The uncertainty-of-outcome hypothesis (UOH) posits that sports fans value competitive contests, implying that competitive imbalance within a league will motivate stronger teams to leave. Testable hypotheses can be formulated utilizing the many college football conference realignments over the last century. The results support the UOH. For example, schools leaving an existing conference to form a new major conference, or join a preexisting one, were on average stronger than their former associates in the years before their departure. Also, the number of seed conference championships won by departing schools generally exceeded their "fair share" under an equal-likelihood assumption.
The National Football League (NFL) draft is used to examine the presence of the sunk-cost fallacy in teams’ playing time decisions. In the NFL, salary cap value represents a significant sunk cost to teams. We use the structure of the NFL draft to conduct a fuzzy regression discontinuity design. Optimal bandwidth local linear results suggest a 10% increase in salary cap value yields an additional 2.7 games started, for players selected near the cutoff between the first two rounds. Despite being no more productive, the first round selections receive a compensation premium, which leads to them starting significantly more games.
This research examines whether the college football betting line and over/under accurately assimilate travel effects on visiting teams, including time zones traversed; direction and distance traveled; and temperature, elevation, and aridity changes. We investigate the market’s accuracy at predicting winners, point differentials, and points scored and examine its market efficiency, that is, whether travel affects the chance the home team covers the spread or the chance that an "over" bet wins. The betting market is found to be an inaccurate and inefficient processor of travel effects, most consistently for late-season games involving an underdog with a 1-hr time deficit versus its opponent.
In 2007, Major League Soccer (MLS) changed its salary rules to allow teams to pay over the salary cap to sign high-priced talent. The first Designated Player was David Beckham. This study presents estimates of the influence of marquee players on MLS attendance using data from 2007 to 2012. The results indicate that few of the marquee signings drove higher attendance. Furthermore, these attendance effects tend to diminish over time. Specifically, only Beckham, Blanco, and Márquez generated excess fans in the games they played, with the largest effect in their first year. The results also give evidence of a superstar externality.
The presence of asymmetry in the relation between attendances and competitive balance in the Australian Football League is tested, over the period 1945-2010. The results from the well-specified structural time-series model validate the uncertainty of outcome hypothesis, and the null of no asymmetry is rejected easily in the structural innovations of the series, although it is not rejected in the levels. The latter finding substantiates the reversibility (without net loss of demand) of league revenue-sharing and labor market policies that influence demand in professional sports leagues.
We formalize a discrete-choice model of program selection from the view of college football recruits. With a conditional logit model, we correctly predict the recruit’s preferred college for 65% of the 19,815 individuals, besting a purely random guess method (21%). We focus on the role football will play in postcollegiate careers of high-rated, mid-rated, and low-rated prospects in choosing a school. High-rated and mid-rated recruits value historical on-the-field success, historical head coach success, stadium capacity, media exposure, facilities, and coaching expenditures. Academic considerations and more recent on-the-field success, however, are more dominant factors for low-rated recruits.
Corporate title sponsorship of college football bowl games has proliferated over the past two decades, yet little analysis has been made concerning the returns to these investments. This article examines the impact that title sponsorships have had on the stock value of the corporate sponsors. Using event study analysis, we find that there was no significant change, on average, in the stock prices following the sponsorship announcements. However, a cross-sectional analysis of changes in firm stock prices relative to corporate and bowl characteristics reveals that markets view sponsorships by large and high-tech firms negatively and major bowls positively.
A great deal of recent research has employed instrumental variables to estimate the effect of participation in athletics on academic or labor market outcomes, finding evidence of small positive effects from participation. This research proposes several theories of how participation affects success but cannot distinguish between them. I ask a fundamentally different question, whether an athlete performs better or worse, academically, during the season in which they participate in sports, focusing on the time allocation theory of participation. Time spent on sports may substitute from time on academics or negative leisure activities, causing academic performance to improve or decline in-season, respectively. This paper finds a small negative and significant in-season effect on academic performance for varsity athletes and a small positive and significant in-season effect on academic performance for junior varsity (JV) athletes. Decreases in in-season grade point average (GPA) for varsity athletes occur through a decline in performance in English and history courses, while increases in in-season GPA for JV athletes operate through an improvement in math and science courses. Results are robust to controlling for various measures of course ease across semesters. The relatively small in-season effects suggest that estimates of the effects of participation in the rest of the literature operate primarily through mechanisms other than time allocation.
In Moneyball, the assumption was made that the baseball labor market undervalues specific player skills. This study investigates whether this is also the case for player effort in professional soccer which had no significant effect on players’ market values in previous research. Specifically, it examines the effect of effort on team performance in soccer using team-game day data from three seasons (N = 1,514) of the German Bundesliga. Two effort measures are applied: (1) total distance run and (2) number of intensive runs (>20 km/hr) per player and per match. The results of probit models show that both effort measures have a significant positive effect on whether the observed team won the observed match in separate estimations. In the full model, only the effect of running distance remains positive, while intensive runs become negative. Given the insignificant effect of effort on players’ market values in previous research, we suggest that there may be a Moneyball phenomenon in soccer in the sense that the soccer labor market undervalues running distance. The findings imply that decision makers in professional soccer should consult player statistics to a greater extent.
This brief article estimates the effects of a rule change from the early days of professional basketball. The Mikan rule was intended to curb the offensive potency of tall players whose primary contribution to team output consisted of points scored close to the basket. The Mikan rule limited players’ ability to stand close to the basket, and hence made it more difficult for these players to score. However, the rule change did not account for strategic offsetting behavior—that defensive players’ optimal allocation of resources would change in response to the rule. I engage the literature on strategic offsetting behavior and estimate a two-way fixed effects model that strongly suggests the Mikan rule did not have its intended effect due to strategic offsetting behavior.
Judo is a combat sport with seven different weight categories. In this article, we examined data from 1,902 men’s and 1,400 women’s fights at the eight most prestigious judo tournaments during the period 2010-2013. Using a single fight as the unit of observation, we found that the probability for the favorite to win against the underdog in the men’s half-lightweight category is significantly lower than in most other categories. Moreover, in fights in which only European and/or Asian judokas participate, we found that the men’s half-lightweight category is significantly more balanced than all other men’s categories. For women, there is no consistent evidence that any one weight category is more balanced than any of the others. Our results indicate that in choosing the members of a national team, it is to some extent reasonable for national coaches to select a lower ranked judoka in the men’s half-lightweight category over a higher ranked judoka in several other weight categories. We also found that the home advantage increases the probability of winning a single fight for both genders. This result implies that it might be worthwhile for national judo associations to bid to host international tournaments in order to improve the world rankings of their domestic judokas.
This article presents evidence of the impact of overconfidence bias in asset prices drawn from a study based on data from tennis betting exchanges. A series of betting strategies in tournaments with a clear-cut favorite are shown to yield significant economic returns. The impact of overconfidence bias on betting odds increases with trading volume, media coverage, and levels of disagreement between overconfident and cumulative prospect theory bettors. Just as in traditional financial markets, arbitrage limits are shown to be a necessary condition for the impact of behavioral biases on prices.
This article looks at the role an owner’s attitude toward risk plays in his salary bids for free agents in Major League Baseball. We show that risk-averse owners will pay a premium for consistency on the field. Our empirical results are consistent with the hypothesis that a free agent’s contract terms are negatively related to the degree of variability in his performance. To the extent that our results carry over to all players, this suggests a heretofore unrecognized factor affecting the market for talent in professional sports.
This article investigates the effects of National Football League (NFL) games on crime. Using a panel data set that includes daily crime incidences in eight large cities with NFL teams, we examine how various measurements of criminal activities change on game day compared with nongame days. Our findings from both ordinary least squares and negative binomial regressions indicate that NFL home games are associated with a 2.6% increase in total crimes, while financially motivated crimes such as larceny and motor vehicle theft increase by 4.1% and 6.7%, respectively, on game days. However, we observe that play-off games are associated with a decrease in financially motivated crimes. The effects of game time (afternoon vs. evening) and upset wins and losses on crime are also considered.
Customers who boycott an organization after some scandal may actually exacerbate the fraud problem they would like to prevent. This conclusion is derived from a game-theoretic model that introduces a third player into the standard inspection game. Focusing on the example of doping in professional sports, we observe that doping is prevalent in equilibrium because customers undermine an organizer’s incentives to inspect the athletes. Establishing transparency about doping tests is necessary but not sufficient to overcome this dilemma. Our analysis has practical implications for the design of anti-doping policies as well as for other situations of fraudulent activities.
This article uses data for Italian Serie A to estimate a production function for the league and the relative efficiency of the clubs playing in it. It utilizes a panel data set comprising season aggregated match statistics for 36 Serie A clubs that played over 10 seasons from 2000 to 2010. The seasons affected by the Calciopoli corruption scandal are incorporated with specific indicators in the statistical model. The results highlight the importance of attacking play in Serie A, the role played by historic success or lack of it and, more tentatively, the potential gains and also costs from fraudulent behavior.
This study considers the game-related performance of two listed soccer clubs in Italy which share the same stadium: Roma and Lazio. We introduce the performance of the archrival in the analysis. The high level of rivalry in sports should lead to a feeling of pleasure at the suffering of another group (known in German as Schadenfreude) and we assume to see the satisfaction of investor fans with the defeat of the archrival. Likewise, the win of the archrival can have a negative impact on the mood of investors. This study shows that, when club supporters experience the negative performance of their team, the results of their archrival can affect their investment decisions. It is therefore proven that, at least in this respect, the investors (also widely represented by club supporters) are driven by the sentiments conveyed by rivalry which, considered to be a source of emotion, may be relevant to the market.
Quirk and Fort’s gold plating hypothesis stipulates that subsidies are partly capitalized into stadia’ opulence. If the gold plating hypothesis is true, it would indicate that subsidies contribute to their own existence, as owners and major league executives argue subsidies are necessary to meet leagues’ increasing facility design standards. This study tests the gold plating hypothesis using a pooled cross section of stadia from the five major leagues. The findings confirm that subsidies increase stadia’ opulence. As evaluated at leagues’ mean stadia acreage, the marginal opulence of an additional US$1 million construction subsidy ranges from US$188,490 to US$501,420 depending on the league.
Sporting event attendance is determined by ex ante expectations about the quality of the game, but because changing television channels costs nothing, sporting event viewership is influenced by actual game progression. This implies that demand determinants for televised baseball may change as games progress. This study examined the dynamic relationship between demand for televised baseball games and the uncertainty of outcome hypothesis (UOH). In particular, we analyzed inning-varying coefficients in a television rating regression equation. According to our empirical study, there are large dynamics in TV viewership demand for sports events and the marginal effects of factors on viewership changes significantly as innings progress. The estimation results can be summarized as (1) the UOH was shown to be significant not only statistically but also economically; (2) although ex ante variables were more effective in earlier innings and ex post variables were more effective in later innings, we found that ex ante expectations of outcome uncertainty remain significantly influential in later innings; and (3) after the matchup, the ex ante game quality is the second most significant factor among the examined effects on ratings.
We investigate the impact of individual performance and competitive pressure on the duration of ski jumpers’ careers. We find that the degree of competition in the respective national associations has a statistically significant impact on individual career duration: Poorly performing athletes have a higher survival probability if they cannot be replaced (i.e., if the jumpers with whom they compete for the limited number of slots in their national team perform even worse). Moreover, "superstars"—(former) World Champions—can expect significantly longer careers as their nominations seem to be justified by their past success rather than by their current performance.
Firms rely heavily on their investments in human capital to achieve profits. This research takes advantage of detailed information on worker performance and confidential information on firm revenue and operating costs to investigate the relationship between talent migration and firm profitability in major league sports, one of the few industries in which detailed information about the past performance of each individual worker (athlete) is known to all potential employers. I use confidential microdata from the 2007 Economic Censuses, and from the 2007 and 2008 Service Annual Surveys to investigate the link between individual worker performance and team profitability, controlling for many other aspects of the sports business, specifically taking account of the mobility of athletic "stars" and "superstars" from one team to another. The investigations in this article provide limited support for the hypothesis that hiring talented individuals (stars) will increase a firm’s profit. However, there is no convincing support for the incremental benefit of hiring superstars. The peculiar characteristics of major league sports suggest that these results are probably not generalizable.
This study estimates the relationship between production and salary structure in Major League Soccer (MLS), the highest level of professional soccer (association football) in North America. Soccer production, measured as league points per game, is modeled as a function of a team’s total wage bill, the distribution of the team’s wage bill, and goals per game. Both the Gini coefficient and the coefficient of variation are utilized to measure salary inequality. The results indicate that production in MLS is negatively responsive to increases in the salary inequality; the estimation model with the best fit uses the coefficient of variation to measure dispersion. Furthermore, MLS teams appear to be constrained in their choices of salary inequality by the salary cap and other regulations.
We examine the impact of regulation on the doping decisions of athletes in a Tullock contest. The regulatory measures we consider are greater monitoring by sports authorities and a lowering of the prize in the contest. When legal efforts and illegal drugs are substitutes, an increase in anti-doping regulation may, counterintuitively, increase the levels of doping activity by athletes. Anti-doping regulation can also have the undesirable consequence of decreasing legal efforts; in our model, this always occurs when legal efforts and illegal drugs are complements, and under certain circumstances when they are substitutes.
Rank-based groupings are uninformative signals of quality when the exact rank is known; therefore, they should be ignored in decision making. However, evidence is presented that rank-based groupings are used to determine the compensation of rookie players in the National Football League (NFL). The NFL draft, which largely determines rookie compensation, provides two signals of player quality, selection number, and round. However, the rounds are simply groupings based on selection number; thus, the rounds should not affect subsequent decisions. Sharp regression discontinuity design (RDD) estimates of discontinuities in rookie compensation at the round cutoffs are shown to be very large and robust. The first to second round discontinuity is –US$240,000 to –US$250,000, or 36% of the average salary of the first selection in the second round. The second to third round discontinuity is –US$60,000 to –US$70,000, or 17% of the average salary of the first selection in the third round. The results show rookie compensation, which comprises a large share of career earnings, is subject to heuristic thinking.
Major League Baseball franchises expend an abundance of resources on scouting in preparation for the June Amateur Draft. In addition to the classic "tools" assessed, another factor considered is age: Younger players may get selected over older players of equal ability because of anticipated development. Additionally, Little League rules in effect until 2006 operated on an August 1–July 31 year meaning that, in their youth, players born on August 1 were the eldest in their cohort. We define a relative age to be how old a player was (in days) when the youngest player in their cohort was born. For example, a player born on July 31 would have a relative age of 1 day, whereas a player born on August 1 would have a relative age of 365 days. We examine the performance of high school (HS) players selected in the June Draft from 1987 to 2011. We find that more relatively old players are selected in the Draft. Conversely, both age and relative age have a significant negative relationship with the odds of reaching the major leagues. Given that a draftee reaches the majors, however, there is no difference based on age or relative age, as measured by games played, wins above replacement, and on-base plus slugging percentage. Had the draft market operated efficiently, neither relative age nor age on draft day would have captured additional variation in performance after controlling for draft position and other factors. We conclude that teams have undervalued both young and relatively young HS players.
The National Collegiate Athletic Association (NCAA) governs athletics at colleges and universities in the United States. Economists commonly view the NCAA as a cartel. We empirically reexamine evidence from the 1984 Supreme Court decision on football telecasts and find support for cartel behavior and evidence that this model does not fully explain. Our analysis indicates that the NCAA central organization may have behaved opportunistically by overregulating relative to what would maximize cartel net benefits. We provide a theoretical rationale and show that our empirical estimates are consistent with this behavior that occurs within the cartel framework.
This article expands on previous research regarding the relative efficiency of National Collegiate Athletic Association III Athletic Departments. In our analysis, we employ Frontier Analysis to develop an efficiency score for each program over the time frame of 2007-2008 to 2011-2012. We find that private schools dominate the rankings of the most efficient athletic departments. In addition, it is clear that some inputs are more valuable than others. In reviewing the yearly cross-sectional results, it is evident that for the average institution, increasing the number of female students participating in sports will yield the greatest expected increases in Director’s Cup points.
We construct a data set of all 429 tied at the half regular season National Football League (NFL) games between 1994 and 2012. We then examine whether or not the path taken to reach the tie (e.g., rushing yards, turnovers, etc.) has any ability to predict the eventual winner. Our main finding is that only the point spread is significantly predictive, although there is weak evidence to suggest that allowing more sacks reduces the chances of winning. Surprisingly, we find that the team receiving the first possession of the second half does not enjoy a statistically significant advantage. Teams should thus simply try to maximize their first half lead without expecting that first half strategies such as "establishing the run" will pay dividends in the second half.
We empirically investigate whether tournaments between heterogeneous contestants are less intense. To test our hypotheses, we use professional sports data from the TOYOTA Handball-Bundesliga, the major handball league in Germany. Based on sports betting odds, we estimate the differences in winning probabilities of the competing teams and find evidence for a negative impact of the matchup’s heterogeneity on the intensity of the game. The decrease is significant not only at the beginning but also toward the end of the game. Further analysis shows that the overall intensity decrease is almost entirely driven by the reaction of the ex ante favorite team.
Since 2004, Forbes has proposed a list of the most valuable soccer clubs. One year later, Transfermarkt began to estimate European soccer players’ value. This article estimate the determinants of firm values in European soccer over the period 2005-2013 incorporating player valuations, clubs’ operating income, and new ownership, three variables not included previously. The results of this study demonstrate that these variables are significant factors in club valuations. More generally, club assets including stadium age, club ownership type, supporter numbers and income, and past sports performances all have a significant impact.
Previous studies have examined the effect of recruiting classes on team performance in college football and found a positive correlation between recruiting classes and success on the field. The relationship between recruit quality and team performance may be overstated, however, if the effect is driven by heterogeneity between teams. In this article, we analyze the effect of recruit quality on team performance controlling for school fixed effects. We collected data from recruiting services to obtain the number of individual recruits by ex ante star rating for every Football Bowl Division (FBS) school for the years 2002-2012. We also record team performance in the regular season and postseason during the same time period. We find that controlling for between-school heterogeneity lowers the estimated effect of recruit quality on wins by more than 25%, but the remaining effect is still statistically and economically significant. Furthermore, we find that within-school variation in recruit quality is an important determinant of the probability of an appearance in the most lucrative bowl games. Our within-school estimates imply that a 5-star recruit is worth more than US$150,000 in expected Bowl Championship Series bowl proceeds to an individual school.
Football hooliganism, defined as episodes of crowd trouble inside and outside football stadiums on match days, is commonly perceived to have adverse effects on the sport. We are especially interested in the effects of football-related fan violence on a club’s potential for generating revenues. In this article, we measure hooliganism by arrests for football-related offenses. We analyze two distinct periods in the history of hooliganism in the English Football League: an early period, during which hooliganism was a fundamental social problem (seasons from 1984-1985 to 1994-1995), and a more recent period, in which hooliganism has been less prevalent (2001-2002 to 2009-2010). In the early period, we find evidence of an adverse effect of arrests on football club revenues for English League clubs. This effect disappears in the more recent period, showing that hooliganism, while still present but at lower levels, no longer has adverse effects on club finances. Our results support a hypothesis that recent "gentrification" has reduced hooliganism and thereby has had a positive influence on revenue generation.
Given the vast number of observations in a transparent environment, the interaction between players and referees in the National Basketball Association (NBA) provides a real-world laboratory that allows for observation and testing of implicit height-based biases (the so-called "Napoleon Complex"). Controlling for a plethora of referee-specific characteristics and including 4,463 regular season games from 2008 to 2012, we find that (i) more personal fouls are called when a relatively shorter three-person officiating crew is working and (ii) no more or fewer fouls are called when games involve relatively taller players. Such biases are probably not large enough to impact game outcomes but could affect gambling markets. Our findings support the conclusion that relatively shorter NBA referees officiate basketball games differently than their taller peers. The analysis spotlights an oft-suggested but rarely studied bias in a workplace where employees are heavily scrutinized and monitored.
Although Major League Baseball has a long history, most studies of attendance have focused on recent years because important explanatory data, such as ticket prices, are often missing for earlier periods. This study fills gaps in the data by analyzing individual team attendance records between 1904 and 2012. If important missing variables are determined using common factors that can influence between-team attendance, the attendance function can be estimated by a panel factor model. Our results indicate that the determinants of fans’ attendance decisions have changed over time. In earlier years (1904-1957), the home team’s win record was the only significant team characteristic influencing attendance. However, in recent years (1958-2012), outcome uncertainty, size, and quality of the stadium, and playing styles have also influenced fan attendance.
There have been major disputes about the appropriate game-theoretic analyses of sports leagues. The basic sports-league model assumes a two-team league where each team is seen as a monopolist in its product market and a passive price taker in a duopsony talent market. For simplicity, these models assume talent supply is either perfectly inelastic or perfectly elastic. It has been argued that perfectly inelastic supply is ill suited for duopsony analysis. This article solves the problem of multiple equilibria by proposing a selection criterion that finds a unique equilibrium in a duopsony limit game as talent supply approaches perfect inelasticity.
This article uses daily border-crossing data within the Niagara region of Ontario and New York to evaluate the Canadian market for a U.S.-based National Hockey League (NHL) team, the Buffalo Sabres. We conservatively estimate that 15% of attendees at Buffalo Sabres home games travel from Canada. This effect is heterogeneous with respect to the opponent country of origin, with higher levels of game day border crossing associated with a Canadian visiting team. We also find fan substitution effects between Buffalo and the Toronto Maple Leafs with respect to both the price of attendance and the quality of each team. Implications extend to NHL expansion near international borders and compensation to incumbent teams both within and across the national border near where an expansion or relocated team is placed.
A couple of weeks before the 2012 Super Bowl, Andrew Lehren of The New York Times advised fans wanting tickets to be "patient," because prices in secondary ticket markets tend to fall "precipitously" as the time to kickoff nears. Using data compiled from SeatGeek.com on more than 46,000 ticket postings in the two weeks prior to the 2013 Super Bowl and more than 18,000 ticket postings prior to the 2012 NCAA Final Four, we find that average prices decreased in the last few days prior to these events, reaching their lowest levels on the mornings before kickoff and first tipoff. This evidence seems to support Lehren’s recommendation that savvy fans should wait until the last minute to buy their tickets. But, we also show that savvy fans can often find similar or better bargains much earlier in the week by searching the available inventory. The greater variation in posted prices earlier in the week implies that fans can often find better bargains by searching than by being patient, especially for super-premium seats. We discuss how changes in technology have made it easier to search for bargains, while also insuring against being left ticketless if fans decide to patiently wait until the day of the game. Both strategies—patiently waiting until close to game time versus searching early and often—can produce bargains, although we suspect that changes in technology have increased the relative rewards to searching.
This article examines line-call challenges by male and female professional tennis players in major tournaments around the world. In terms of utilization rates, we find that the genders behave similarly. Nevertheless, we do detect some intriguing gender differences in these challenges. First, male players’ challenges are more likely to be provoked by those of their opponents. More importantly, at tiebreaks, females are more likely to reverse an umpire’s unfavorable call, while males make relatively more unsuccessful challenges. Furthermore, we find that men are a lot more likely to make "embarrassing" line-call challenges at tiebreaks and offenses (i.e., when the shot lands at the opponent’s side of the tennis court) than women. These significant gender differences suggest that women particularly diverge from men at crucial junctures of the match such as tiebreaks. Differences in factors such as risk aversion, overconfidence, pride, shame, and strategic signalling behavior might help us to explain these gender-difference findings in line call challenges.
In this article, we investigate changes over time in the organization of the relationship between Major League Baseball and minor league baseball teams. We develop a model in which a minor league team serves two functions: talent development and local entertainment. The model predicts different modes of organizing the relationship between majors and minors based on the value of these parameters. We then develop a discursive history. Consistent with the model’s predictions, we find that when the value of minor league baseball’s training function was low but the value of its entertainment function was high, major and minor league franchises operated independently, engaging in arms’-length transactions. However, as the training function became more important and the local entertainment function less important, formal agreements ceded control of minor league functions to major league franchises. Finally, as the value of local entertainment rose once again in the late 20th century, the two roles were split, with control of local functions accruing to local ownership and training functions to major league teams. This analysis helps shed light on factors that influence the boundaries of the firm.
We test the hypothesis that women’s empowerment correlates with women’s international athletic success. Greater gender equality (measured using the Gender Inequality Index) is associated with higher participation and medal counts in the Summer Olympic Games from 1996 through 2012. This relationship persists even after controlling for previously identified nation-level predictors of Olympic success and across alternative measures of success (such as shares of the total, percentage within each country, and medals per athlete). These results provide direct evidence for the long-standing claim that girls’ and women’s international athletic achievement is linked to women’s empowerment.
We examine whether the three-point rule—the increase in rewards for a win from two to three points that the Fédération Internationale de Football Association (FIFA) adopted in 1995—makes Bundesliga games become more exciting. Using regression discontinuity design as the empirical strategy, we do not find evidence that the three-point rule makes games more decisive, increases the number of goals, or decreases goal differences. We only find some evidence that the three-point rule increases the second-half goals of losing first-half teams. Overall, our results suggest that, in the case of Bundesliga games, the three-point rule does not work as FIFA intended.
The relative standard deviation measure of league parity is persistently higher for the National Basketball Association (NBA) than for the other three major sports leagues in North America. This anomaly spans the last three decades and is not explained by differences in demographic and market characteristics. With a much greater number of scoring attempts in each game, basketball reduces the influence of random outcomes in the number of points scored per game and also season winning percentage. Our simulations demonstrate that lesser parity in the NBA is inherent in the rules of the game so that interleague comparisons must be interpreted carefully.
We correct the results by Wu et al. Although Wu et al. proposed an integer-valued data envelopment analysis (DEA) model, which is based on Charnes-Cooper-Rhodes (CCR) model, the displayed results are based on an integer-valued DEA model, which is based on Banker-Charnes-Cooper (BCC) model. Therefore, we introduce the true models and corresponding results.
The tension between focusing on collegiate athletic or academic performance has persisted for decades. A recent study finds that recruited athletes in college athletic programs underperform academically, earning lower grades than predicted. It postulates that increased representativeness and integration efforts will enhance the academic value of college athletes’ experience. The U.S. Air Force Academy system presents a natural experiment of whether such efforts can affect student-athlete academic performance. In this setting, we find that student-athletes perform comparably to nonathletes after controlling for predicted academic performance.
This article investigates the relationship between the star effect and match attendance in the National Basketball Association for the 2010-2011 and 2011-2012 seasons. We include five different definitions of star players, measures of short-run league-level competitive balance, and game uncertainty for two rivals in a Tobit regression model. The evidence shows that the appearance of stars increases home and road game attendance. A positive star externality on game attendance is found.
National Basketball Association (NBA) teams have drafted international players regularly since 1996. Did NBA teams value international prospects accurately relative to U.S. players? Regressions of NBA performance reveal that international players drafted through 2001 tended to outperform expectations adjusted for draft positions. Teams subsequently drafted more international players, but first-round picks tended to underperform, implying that teams overreacted in adjusting their valuations of international prospects. Teams have not moved smoothly toward optimal evaluation of international players relative to U.S.-trained players.
This article takes a novel approach to the study of discrimination in sports by looking at minutes played by strikers in the Union of European Football Associations Champions League over 1991-2011. We compare differences in minutes played between five ethnic groups: White Europeans, Black Europeans, Africans, White Latin Americans, and Black Latin Americans. We find evidence that White Latin Americans enjoy significantly less game time than White Europeans, while the opposite is true for Black Latin Americans. However, the inclusion of player fixed effects reveals that, after controlling for player ability, there is no evidence of discrimination in this competition.
Gender differences in tennis have sparked a great deal of heated debate. Using data from the 24 top men’s and 23 top women’s singles tournaments in 2010, we find a gender difference in the competitiveness (tightness) with regard to the final score of tennis sets. However, when using two physical variables (height and body mass index) that have not been investigated in this context before and controlling for the physical characteristics of the players, this gender difference completely disappears. Moreover, this result remains robust in propensity score analysis. To narrow this disparity between the number of games in men’s and women’s sets, it might be worthwhile for tennis authorities to consider making some changes in court conditions on a gender basis.
Ten years ago, some golf analysts believed that "drive for show and putt for dough" may no longer be true on the Professional Golfers’ Association Tour. Scholars analyzed data from 1991 to 2002 and found that the old adage was still true since putting remained the number one skill determining earnings. We updated their models with data from 2006 to 2013 and found that driving replaced putting as the number one skill determining earnings starting in 2011. The most likely reasons for this return to skill are the lengthening of the courses and the shortening of the rough.
Assessing the intensity of college football rivalries is an annual exercise of sports columnists. Fan polling, average ticket price, and even the bad behaviors of athletes have been used to quantify and rank rivalries. For economists, market prices of tickets have an appealing behavioral interpretation as they represent fans’ marginal willingness to substitute game attendance for other sources of utility. We have collected secondary market data on 278,117 individual ticket sales at different points in the season for 171 home games played by Southeastern Conference (SEC) member football teams over a 2-year period. Our rich data set allows us to control for the quality of the seats and the effects of on-field successes or failures during the season. Since we use data from 2 successive years, we are also able to normalize the level effect on prices of certain stadiums. We construct a willingness-to-pay measure of fan interest in various matchups and use this to compare the intensity of different rivalries for SEC schools.
This article analyzes the long-term effects of Union of European Football Associations (UEFA) Financial Fair Play on competitive balance using a multiperiod adaption of a professional team sports model. This study accounts for the empirical fact that a club’s market size is positively affected by historic success. An increasingly successful club can attract more and more supporters and thus yield higher revenues that lead to even more success and an ever-growing market size. It is argued that this development will result in an utmost uneven contest if so-called sugar daddies are prevented from overspending by Financial Fair Play and thus cannot longer outweigh a club’s smaller market size.
This study investigates many commonly purported beliefs by fans and media concerning a team’s likelihood of advancing in the National Football League's (NFL) postseason, including the impact of a team’s previous playoff experience on its future postseason performance. Using data covering the 1966-2012 NFL postseasons, four empirical models are estimated to examine the factors that influence various outcomes associated with a team’s postseason performance. Overall, there is little evidence to suggest that a team’s previous playoff experience has a significant impact on its future postseason performance.
This article uses bookmaker betting volume data to test the influence of bettor sentiment on bookmaker pricing in the over/under 2.5 goals betting market. In an average match, more than 80% of the volume wagered is concentrated on the over bet as cheering for a high score is more attractive than betting against it. We do not find that this volume imbalance is associated with systematic biases in bettor returns. High price transparency seems to prevent bookmakers from systematically distorting their odds in order to exploit bettor sentiment.
The purpose of the current study is to investigate how consistency of professional soccer players’ performance affects salaries in the German Bundesliga. Using game-level data for five consecutive seasons (n = 34,413 player–match day observations), we find empirical evidence for a salary premium to players showing volatility in performance. Applying ordinary least squares, fixed-effects as well as quantile regression analyses, this effect remains robust.
European Cup football has experienced a major change in format with the introduction of the Champions League (CL) in 1992 and a major change in admission rules with direct qualification for multiple teams from the highest ranked leagues in 1999. We show that, in line with popular press reports and other studies, qualification in lower rounds has become more predictable in the CL. At the same time, however, outcomes at later stages have become less predictable. We provide evidence and an explanation.
This article addresses the issue of peer effects on a swimmer’s performance. The National Database of Student Athletes in Taiwan from 2008 to 2010 is employed. The results show that a swimmer performs better when his or her competitors are faster. The evidence shows that peer effects are positive. As to the relative quality of swimmers in a competition, dispersed-quality competitors make a swimmer faster. The evidence also shows that older and taller boys swim faster. The regressions of the Heckman selection model support these conclusions.
We consider managerial decision making by examining the impact of decisions taken by cricket captains on Twenty20 International (T20I) match outcomes. In particular, we examine whether pressure from external commentators is associated with suboptimal decision making by captains. Using data from over 300 T20I matches, we find little evidence that either winning the toss or choosing to bat first improves the likelihood of winning. Despite this, we find that captains in T20I cricket are significantly more likely to choose to bat rather than bowl after winning the toss, a finding that is consistent with social pressure constraining captains’ decision making.
Probabilities from bookmaker odds are often used in measures of short-run outcome uncertainty. We analyzed the most commonly used methods for deriving probability forecasts from odds and found that basic normalization (BN) produces biased probabilities. Furthermore, differences between probabilities produced with BN, regression models, or Shin probabilities are large enough to lead to contradictory conclusions when used to measure outcome uncertainty. We also provide evidence against the reported bias of bookmakers favoring better supported teams and show how past evidence of such a bias is possibly only due to a misinterpretation of the results.
Under cricket’s decision review system (DRS) a player may request a review of dismissal decisions taken by on-field umpires. Reviews of leg before wicket decisions, the focus of this article, occur through a ball-tracking technology popularly called "Hawk-Eye." If Hawk-Eye makes mistakes, in the face of such errors, the overall error rate can be decomposed into a "technology error rate" and a "human error rate." Consequently, improved decision can be achieved through better technology or better umpires. We argue that, given the costs of DRS, the same gains could be obtained, at lower cost, by investing in umpires rather than technology.
We investigate potential racial bias by Major League Baseball umpires. We do so in the context of the subjective decision as to whether a pitch is called a strike or a ball, using data from the 1989-2010 seasons. We find limited, and sometimes contradictory, evidence that umpires unduly favor or unjustly discriminate against players based on their race. Potential mitigating variables such as attendance, terminal pitch, the absolute score differential, and the presence of monitoring systems do not consistently interact with umpire/pitcher and umpire/hitter racial combinations. Most evidence that would first appear to support racially connected behaviors by umpires appears to vanish in three-way interaction models. Overall, our findings fall well short of convincing evidence for racial bias.
In the top Czech ice hockey competition "Extraliga," 14 geographically close teams compete during a regular season in a pure round-robin tournament. However, the eventual champion is determined in the additional playoff stage and the regular season just decides which teams qualify for the playoffs and how these teams are seeded. This article uses a Monte Carlo simulation to show that although the additional playoff stage heavily favors higher-seeded teams and consists of a lot of games, it lowers the average probability of the strongest team becoming a champion from 48 to 39% and thus increases seasonal uncertainty.
The release of players from a club to the national team often leads to a conflict concerning the duration of the players’ stay with the national team. Based on a theoretical bargaining model, we examine whether intervention in this conflict by a governing body is desirable. We show that bargaining between the club and the national federation yields a socially inefficient outcome if financial compensation is either prohibited or limited. If, however, the national federation is allowed to pay unlimited financial compensation to the club, it is not necessary to intervene in the negotiations because the bargaining outcome will be socially optimal.
We analyze the links between soccer match results, betting odds, and stock returns of all listed European soccer teams. Using an event-study approach, we measure positive (negative) abnormal returns following wins (ties and losses). Additionally, we analyze the role, which we find to be nonsignificant, of betting odds in shaping market reactions to unexpected results. We propose an alternative econometric approach, using seemingly unrelated regressions models, to take into account the problem of overlapping events. Abnormal returns following unexpected results are then found to be statistically significant and to magnify the positive (negative) effects of wins (losses).
Using 2008-2009 data, we identify winning input combinations for the game of cricket in two different formats: 50-over one-day internationals and 20-over games from Twenty20 internationals and the Indian Premier League. We find that attacking batting and bowling are the best determinants of the winning probability in both formats in an international setting despite their 30-over difference. Interestingly, attacking batting and defensive bowling are the optimal input combinations in the league version of the 20-over format. Finally, we speculate about their implications for the future of cricket, especially for the popularity of formats, choices of players, and player development.
Winfree and Fort (WF) recently suggested an approach to modeling basic two-team sports leagues, which requires Nash equilibrium solutions to games where investments in (not levels of) talent are the strategic variables. I comment (a) it is crucial that talent investments are the strategic variables, reworking arguments from my earlier article; (b) with nuanced but important differences from Stefan Szymanski’s conclusions regarding WF, Walrasian fixed supply conjecture solutions and the invariance principle are unlikely to emerge from this approach but Contest-Nash solutions can; (d) the long-running debate alluded to in the title of this article may have run its course.
We use a data set of Football Bowl Subdivision (Division-IA) universities to investigate the hypothesis that higher coach pay leads to improved team performance. Our analysis finds that pay and team performance are positively correlated and that, when schools change coaches, higher pay is associated with improved performance. The evidence suggests that additional rating points are increasingly valuable, perhaps over US$1 million for top teams. Our descriptive analysis reveals the median 2011 head coach pay of US$1.2 million, significant increases over our 2006-2011 study period, and large disparities among schools and conferences. We conclude that administrators perceive highly ranked football teams have significant value.
This article tests for salary discrimination based on player ethnicities in the National Hockey League across various geographical locations with a market model that analyzes every game played during the 2010-2011 season. Using both the relative share of game-team players on the starting roster and time on ice as inputs, results suggest that, relative to English Canadian players, French Canadian and American players playing on Canadian teams suffer from wage discrimination. Potential confounding factors that can influence the inferences, as well as the limitations, of the market model approach are discussed.
We investigate the role of fatigue in soccer (football). Although this issue is important for the "productivity" of players and the optimal organization of national and international championships, empirical evidence is lacking. We use data on all the matches played by national teams in all the tournaments of the Soccer World Cup (from 1930 to 2010) and the European Football Championship (from 1960 to 2012). We relate team performance (in terms of points gained and goals scored and conceded) to the respective days of rests that teams have had after their previous match, controlling for several measures of teams’ abilities. Using different estimators we show that, under the current structure of major international tournaments, there are no relevant effects of enjoying different days of rest on team performance. However, we find that before 1990s days of rest had a positive impact on performance, presumably because athletic preparation of players was less effective. Furthermore, we show that the advantage of additional rest is quite relevant, when rest time of one of the opposing teams is three days or less.
This article develops a model of managerial efficiency for National Collegiate Athletic Association’s top division college football coaches. The derived efficiency measures are then linked to the hiring and firing process. The work concludes with an evaluation of the effect of head coach succession on team performance. This study evaluates coaching efficiency in terms of both use of talent and recruiting talent. The constructed efficiency rankings are used to evaluate hiring and firing decisions and determine the degree that each type of efficiency plays in these decisions. Last, the efficiency of the market is assessed by evaluating whether universities are making a good choice and are able on average to improve performance when replacing an underperforming coach. The empirical results indicate that both constructs of efficiency matter. Coaches who exhibit high level of both types of efficiencies regularly move up to the most lucrative jobs. Replacement of poor performing coach is most often a wise decision.
This study utilizes Nielsen ratings to estimate the factors that influence viewership for Bowl Championship Series telecasts. Our modeling demonstrates increased start-of-game ratings for contests of higher absolute quality, but not of anticipated higher relative quality. Little support is generated for the notion of consumer preference for scoring. However, the relationship between outcome uncertainty and television ratings is dynamic as consumers initially prefer more certain games, but ratings increase systematically throughout a contest when the outcome of that contest becomes more uncertain. Preferences also exist for games in which actual outcomes match pregame expectations.
On June 30, 2012, a North American Association of Sports Economists-sponsored symposium session entitled "Sports Economics on Trial" was held in conjunction with the 2012 Western Economics Association International conference in San Francisco, California. The foci of the symposium were two-fold. First, speakers discussed relevant evidentiary rules and recent legal cases that turned on sports economics issues and expert testimony related thereto. Second, the panel sought to collectively provide a primer that academics and professionals working in the sports economics realm could subsequently turn to as a guide when involved in litigation pertaining to their research. This article represents an outgrowth of the symposium, highlighting four recent legal cases under the sports economics umbrella and addressing discrete issues relevant to sports economics’ role in litigation.
We examine the impact of a different cultural background on individual behavior, focusing on penalties in football matches of southern European and northern European football players in the English Premier League. Southern European football players collect on average more football penalties than their British colleagues, and northern European football players collect on average less football penalties than their British colleagues. The number of football penalties incurred by southern European players is initially higher but converges toward the local average the longer their experience in the English Premier League.
Previous research based on revealed preferences cannot assess whether (increasingly imbalanced) football competitions might be at risk of moving into territory where consumer demand will fall off as suggested by the uncertainty of outcome hypothesis. Therefore, this article provides a subsequent examination of the relationship between perceived balance (in a number of dimensions) and intention to consume based on a stated preference approach in Germany. The estimated demand functions reveal that around 70% of fans care about competitive balance in the German Bundesliga but the league is not close to any tipping point at present.
The dramatic play of the American team in the 2011 Women’s World Cup tournament brought much attention to women’s soccer in the United States. This article uses match-level data from the Women’s Professional Soccer (WPS) league to analyze the effect of the World Cup on WPS attendance. The results indicate that attendance for matches played after the World Cup roughly doubled and that matches involving star players Hope Solo and Abby Wambach received an additional 33% attendance bump although this effect is imprecisely estimated.
We complement a former study by Jørgensen, Moritzen, and Stadtmann and estimate a reversed news model for the Danish publicly listed football club Brøndby. In addition to match outcome (as in Jørgensen et al.), news related to corporate governance and the financial status are important.
Until recently, no study has found evidence for the "hot hand" in the National Basketball Association. Thus, many researchers have claimed that the hot hand and momentum effects are myths. This article presents simulations that demonstrate how the primary methods for estimating the hot hand effect understate the effect and have a low chance of detecting significance and that the infrequency of the hot hand contributes to the understated estimates and the inability of tests to detect significance. These results suggest that recent research showing a small hot hand effect for free throws is indicative of a much larger hot hand effect.
Keefer’s recent article in the Journal of Sports Economics, "Compensation discrimination for defensive players: applying quantile regression to the National Football League market for linebackers," finds wage discrimination in the National Football League market for linebackers. Following Keefer, we examine both ordinary least squares and quantile analysis, as well as Oaxaca and quantile treatment effects decompositions though we explore the market not only for linebackers but also for offensive linemen and limit our study to rookie players. We would expect to find stronger evidence of discrimination, as rookies are captured sellers. However, we find no pattern of discrimination against Blacks.
This article finds that arbitrage was possible in 2 of the 175 Japanese thoroughbred races even after taking account of (a) the size of the minimum betting unit and (b) the negative effect of arbitrage on the odds. The guaranteed profits in these two races were 5,120 yen (about US$64) and 340 yen.
This article presents a new method of calculating match importance. Match importance is defined as strength of relationship between the match result and a given season outcome. Probabilities of all necessary match result-season outcome combinations are estimated by Monte Carlo simulation. Using actual results of 12 seasons of English Premier League and betting odds, it is shown that both match result and season outcome predictions are realistic. The method provides results that are close to Jennett’s approach; however, it does not require ex post information and can be used for any type of season outcome.
We address potential racial bias by Major League Baseball umpires with respect to ball–strike calls. We offer a number of econometric specifications to test the robustness of the results, adding the role of implicit and explicit monitoring as well as pitch location. Our analysis shows mixed results regarding the matching of umpire and pitcher race. We conclude that evidence of own-race bias is sensitive to specification and methodology. How results can differ based on different data sets, specifications, time periods, and race classifications are discussed.
We observe all 1,273 players drafted into the National Football League between 2005 and 2009 to determine the effects of character concerns on draft status and performance in the National Football League. Prospects that have a history of formal criminal charges or are suspended for team or university violations fall between 16and 22 spots in the draft. The impacts of character concerns on performance depend on the nature of the issue. Players who have a history of suspension (noncriminal related) perform worse than other players but having an encounter with law enforcement does not negatively predict performance.
In the current National Hockey League (NHL) points system (PS), there are increased incentives for teams to play overtime games against nonconference opponents. We use empirical data across three recent NHL PSs to test if and when teams have responded to these incentives. We find that in the current PS, several teams are playing a significantly higher proportion of overtime games against nonconference opponents than within-conference ones, and that overtime games are also significantly more likely to occur in the months leading up to postseason play.
This study empirically tests how expected surplus and specific investments affect the structure of National Football League player contracts. Empirical results show that both length and monetary compensations of a player’s contract increase with expected surplus and specific investments. In particular, early draftees with higher expected value of future performance signed longer and more lucrative contracts than later draftees did. This correlation is affected by a team’s expected surplus from contracting with their draftees. Comparing to the other teams, teams with more empty seats and fewer wins in the previous season invested more in early draftees, but less in later draftees. The results also indicate that players requiring more specific investments negotiated longer and more lucrative contracts than did other players, particularly quarterbacks.
We apply ideas put forward in the literature on the international coordination of macroeconomic and trade policies to study the merits of an international coordination of antidoping policies. Without international coordination of antidoping policies, sports associations and National Antidoping Agencies that comply with an international regulatory framework like the World Antidoping Code are at a disadvantage. We sketch a simple game-theoretic model to illustrate this disadvantage, and the advantage of an international coordination of antidoping policies. Finally, we address the limitations of our model and how it could be extended in future research.
We provide a contingent valuation of a major cycling event, namely the Tour of Flanders. Starting from survey data, we estimate several models with different assumptions about (1) the latent willingness to pay (WTP) distribution and (2) the change in WTP when responding to the follow-up question in a double-bounded dichotomous framework. We relate the individual figures to explanatory factors and find that people residing in the event’s core region as well as spectators have a higher valuation. Incorporating the spatial effect, we arrive at an estimated aggregate value of 24.3 million euro.
A strong secondary market has emerged where National Football League (NFL) personal seat licenses (PSL) and season ticket rights (STR) are sold electronically. These data allow us to estimate determinants of market prices for long-run access to NFL attendance. The analysis finds that high-quality seating locations are a strong determinant of price. Clear differences exist between PSL and STR markets in regard to both general interest in the live NFL product and the effect of team quality on market price. Furthermore, we find that higher face value ticket prices are associated with lower secondary market PSL and STR sales prices.
Intercollegiate athletics has been a source of ongoing controversy regarding the potential conflict in pursuing athletic success while maintaining academic standards. This study examines the implicit reward system for athletic directors (ADs) in the National Collegiate Athletic Association Football Bowl Subdivision. Using AD compensation for 2010-2011, the evidence shows that base salaries are largely determined by revenues generated within the athletic department. Earned bonuses are unrelated to revenues but are correlated positively with football success, the tenure of the AD, and the number of teams sponsored by the school.
The conference and divisional system has long been a staple part of tournament design in the major pro-sports leagues of North America. This popular but highly rigid system determines on how many occasions all bilateral pairings of teams play each other during the season. Despite the virtues of this system, it necessitates removing the biases it generates in the set of win ratios from the regular season standings prior to calculating within-season measures of competitive balance. This article applies a modified version of a recent model, an extension that is generalizable to any unbalanced schedule design in professional sports leagues worldwide, to correct for this inherent bias for the NFL over the seasons 2002-2011, the results of which suggest the NFL is even more competitively balanced than thought previously.
This research is intended to assess the determinants of the television (TV) audience in Spain for professional cycling. Our data refer to cycling races broadcast on several Spanish TV channels and make it possible to compute three different audience variables: rating, share, and number of viewers. The most original contributions of this research are the new indicators of competitive balance for cycling races that are proposed here. The outcomes show that audience ratings depend mainly on the following features: competitive balance, the type of stage and race, the nationality of the race leader, and inertial behaviors on the part of viewers.
Most articles on sports economics presume the well-known Nash equilibrium concept. In this article, however, we apply evolutionary game theory in a sports-contest model. If clubs follow evolutionarily stable strategies (ESS), then ESS generate greater investments and smaller profits than predicted by Nash’s strategies, independent of whether a club is win-maximizing or profit-maximizing. Overdissipation of the rent is possible for Nash strategies and for ESS.
We study a best-of-three all-pay contest with two players in which the first player to win two games wins the contest. Each player has a value of winning the contest as well as a value of winning a single game. It is assumed that a player’s value of winning a game in his home field is higher than his value of winning a game away from home. The stronger player (the player with the higher value of winning the contest) plays twice at his home field and once away from it. We analyze the order of games that both players agree to, according to which no one has an incentive to switch to a different order, since switching would not yield a higher expected payoff. In this order, the weaker player plays at his home field in the first stage and then plays two games at the stronger player’s field.
The changing effects of wage disparity on team performance during the process of industry development are examined using data sourced from the Japanese professional football league. The results show that wage disparity leads to a reduction in team performance during the developing stage but does not influence performance during the developed stage. Unobserved fixed team effects and endogeneity bias were controlled in the study.
It is not unusual for baseball general managers (GMs) to have network ties to their potential trading partners, either to the other teams’ GMs or to the teams themselves. This article investigates whether these connections affect the degree of trading activity between specific team pairs. Estimates indicate that connections between GMs and commonalities between GMs enhance trade, although in absolute terms the effects are small. However, a GM simply having a professional tie to another team does not have any statistically significant effect. On the whole, our results are consistent with those found in the socioeconomic networking literature.
In 2008, the benefits of team formation by auction first became apparent in the field of professional cricket. The Indian Premier League organized sequential single-item auctions to allocate 77 cricketers to eight teams that participated in a Twenty20 cricket tournament. We argue in this article that the auction format used resulted in distortion of player valuations. We recommend a combinatorial auction scheme MRPF which enables bidders to exploit the complementary nature of the resources. A laboratory experiment undertaken to test the feasibility of MRPF indicated that it would result in a more efficient auction system.
With European soccer leagues in mind, a novel model of club owner objectives nests standard profit (and win) maximization, but adds benefactor behavior where owners inject personal funds to increase their team’s quality. A "generosity" parameter differentiates owners; parameter value zero equates to profit maximizers, with benefactors emerging at sufficiently positive values. The model is used to investigate consequences of Union of European Football Associations’ (UEFA) "Financial Fair Play" regulations (FFP) for the league, aimed to preclude benefactor injections. Assuming (post-Bosman) a relatively large elasticity of talent supply to the league, FFP is a poor regulatory device, creating welfare losses for fans, owners, and players.
This investigation tests the Efficient Market Hypothesis (EMH) in the National Football League (NFL) wagering market from 2002 to 2009. The current study examines simple betting strategies tested previously in the NFL and other sports leagues as well as whether there is a bias in games after a team’s bye week. The findings suggest that favorites and especially road team favorites following a bye week won statistically more bets than their opponents. Although the majority of our analysis supported the EMH, the exceptions provide evidence of inefficiencies in the NFL betting market.
Universities spend almost $2 billion subsidizing their collegiate sports programs. Even the most popular women’s sport, basketball, fails to break even. An application of Becker’s theory of customer discrimination is used to calculate the relative preference for men’s basketball for both men and women. Median willingness to pay for men’s basketball relative to women’s basketball is 180% greater for men and 37% greater for women. Pricing each sport at its revenue maximizing price, revenues from women’s basketball are only 43% of that for men, even at a school with historically strong demand for women’s sports.
Allegations of selection bias toward the major conferences and teams with committee representation have previously been levied on the National Collegiate Athletic Association (NCAA) Basketball tournament selection committee. We illustrate the source of this bias is political correctness. When using the computer ranking of Ratings Percentage Index (RPI), which uses only wins and losses in its analysis, bias in the selection process seems evident. No bias is revealed when the Sagarin "Predictor" rating is substituted for RPI. The Sagarin "Predictor" rating uses margin of victory and results compared to expectations in its analysis; the selection committee appears to use the same factors when determining at-large bids.
The "Hot Hand" hypothesis in gambling markets—belief that teams on winning streaks will continue winning—appears to exist in the National Basketball Association (NBA), but not the National Football League (NFL). Past research assumed that bookmakers set point spreads to balance betting volume on games. Recent research shows persistent imbalanced betting in most betting markets, suggesting point spreads may not fully reflect bettor preferences. We find significant increases in bets on teams on winning streaks against the spread in the NFL, suggesting that perceived "hot hand" effects exist in betting on NFL games. Betting with or against streaks does not earn profits for bettors.
"Bayesian enforcement" assumes that doping tests are imperfect. Moreover, the enforcer is interested in fostering compliant behavior and making correct decisions. Three types of perfect Bayesian equilibria exist, which differ in their punishment styles: "tyrannic," "draconian," and "lenient." The equilibrium probability of compliant behavior is highest in the lenient equilibrium; therefore, the legal framework of the enforcement should aim at unselecting the draconian and tyrannic equilibria. Total deterrence is impossible as long as the signal is imperfect. An increase in punishment would not increase the probability of compliant behavior.
This article investigates firm survival in professional football, arguing that the relegation and promotion system in football leagues is very similar to firm exits and entries in traditional goods and service markets. Empirically, we use a data set containing information on how long football teams have participated in the German Premier League over the playing seasons 1981-1982 to 2009-2010. Controlling for club- and market-specific characteristics, such as a team’s budget or its squad composition, our findings suggest that younger firms are systematically exposed to higher risks of market exit in professional football, which is often referred to as liability of newness in organizational ecology.
While the determinants of Major League Baseball attendance have been thoroughly researched, the literature is conspicuously incomplete in regard to the attendance effects of star players. Addressing two concerns in the research, this study develops two measures of players’ star power and, analyzing within-season fluctuations in game attendance from 1969-2010, demonstrates a positive and statistically significant relationship between attendance and varying gradations of star power of the home and visiting teams’ starting pitchers. Using over four decades worth of data, the results of this study also suggest that fan responsiveness to star players has declined considerably over time.
The debates on whether to bid for organizing a mega sports event like the World Cup Soccer or the Olympic Games ignore either the bidding costs or the probability not to win the bid or both. In this short article, I discuss why the bidding costs and probabilities should be taken into account and I show for the Netherlands, which is currently discussing bidding for the Olympic Games of 2028, that the Net Present Value of organizing should be 557 million to 2.8 billion positive to compensate for the bidding costs and the probability of an unsuccessful bid.
This study examines how worker productivity and risk factors affect the demand for younger and older workers modeled using concepts from labor economics. The two primary National Football League player labor markets—the draft process and veteran free agent market—provide rich empirical environments for testing hypotheses from the model. Clubs demonstrate greater demand for rookies by drafting them earlier and for veterans by signing them faster. Greater physical productivity enhances labor demand for all players, but risk factors exert a more severe labor market penalty for veterans, patterns consistent with theory and with previous research on the demand for risky workers and older workers.
Qualification in track and field events involves runners competing against individuals within their heat and runners in other heats. Given that the heats are run sequentially, runners in each heat have different information about their competitors. Using data on track and field events from 2001-2011, this article examines whether an individual’s placement in a specific heat and their peers affect their performance and qualification probability. Results indicate that runners’ times and qualification are correlated with the abilities of their peers as well as heat-specific fixed effects. In addition, these effects differ according to runner ability.
In this article, we compare daily scoring from the 1980s in periods when professional golfers were required to use local caddies at the Western Open professional golf tournament at Butler National and at the Masters professional golf tournament at Augusta National with daily scoring in adjoining periods when golfers could use their tour caddies in these tournaments. We have found daily scoring to be approximately one stroke lower in the tour caddy periods after controlling for player quality, weather, tournament round, and course changes.
Much of the past empirical analysis of the Uncertainty of Outcome Hypothesis (UOH) has gauged the responsiveness of attendance to uncertainty in either the Major League Baseball or European football regular season. This study diverges from those studies by examining broadcast ratings for National Football League playoff games and testing the UOH in teams’ local markets as well as outside of the local markets of the competing teams. The research does not support that game uncertainty is related to ratings in local markets, but, consistent with the UOH, finds a fan preference for evenly matched teams outside of the local markets.
Participants of dynamic contests sometimes play with the rules of the game by withholding effort in the beginning. Such behavior is referred to as sandbagging. I consider a two-period contest between heterogeneous players and analyze potential sandbagging of high-ability participants in period one. This sandbagging can be beneficial to avoid second-period matches against other high-ability opponents. I characterize the conditions under which sandbagging leads to a coordination problem, similar to that of the battle of the sexes. Moreover, if players' abilities have a stronger impact on the outcome of the first-period contest than effort choices, mutual sandbagging by all high-ability players can arise.
In this article, the authors present survival function estimates for elite professional golfers who have participated on the Champions professional golf tour. Kaplan–Meier survivor function estimates for these golfers show median survival of 89 years and mean life expectancy of 85 years. The authors find comparable results for winners of the U. S. Professional Golf Association (PGA) Senior Open championship, which is also restricted to players 50 years of age and over. Champions tour golfer life expectancies are high in comparison to the general male population of the United States and at the high end of the life expectancy advantages estimated for other elite athletes.
Adding value-driven attributes to sporting events has the potential to increase long-term financial growth for organizers of large sporting events. This study identifies which attributes are most valued by long-distance runners who have participated in Göteborgsvarvet, one of the world’s largest long-distance running races. Runners’ willingness to pay (WTP) for these attributes are calculated based on a choice experiment with data from 1,178 respondents. The primary findings are that (1) runners have the highest WTP for detailed stage time reporting and (2) there are significant variations in WTP among various segments.
College men’s basketball players have alleged that the National Collegiate Athletic Association’s (NCAA) cap on athletic scholarships is illegal and leads to lower scholarships than would prevail in a free market. Recently, the NCAA increased the limit on athletic scholarships. The authors compare the marginal revenue product (MRP) of men’s basketball players to athletic scholarship caps. The authors estimate MRPs using players’ playing statistics; information on the distribution of pro salaries; and players’ future draft status. The authors find that players’ MRPs are greater than the athletic scholarship caps for about 60% of men’s basketball players, not just the star players.
Popular wisdom regarding athletics is that offenses are at a relative disadvantage in the early portion of seasons. The authors present evidence that this anecdotal belief holds true over the 2000-2010 National Football League (NFL) seasons. This is reflected in lower offensive yardage, fewer first downs, and fewer points scored. While total points scored are significantly lower in Week 1 of NFL seasons, bookmakers fail to reduce the total lines posted on these games. The authors find a strategy betting under total lines of all Week 1 games over the 2000-2010 NFL seasons yields a statistically significant return of 13.6% per game.
In determining the legality of online poker—a multibillion dollar industry—courts have relied heavily on the issue of whether or not poker is a game of skill. Using newly available data, the authors analyze that question by examining the performance in the 2010 World Series of Poker of a group of poker players identified as being highly skilled prior to the start of the events. Those players identified a priori as being highly skilled achieved an average return on investment of over 30%, compared to a -15% for all other players. This large gap in returns is strong evidence in support of the idea that poker is a game of skill.
The authors conduct an empirical analysis of a hand-collected sample of 2,376 turnovers of soccer managers in the four major English leagues in the seasons from 1949-1950 to 2007-2008. While the relation between the probability of a manager being fired and long-term performance remained remarkably stable, both the absolute frequency and the sensitivity of firing decisions on the outcome of recent matches steadily and significantly increased during the six decades covered by the sample. This is likely to reflect the increased level of competition in and economic importance of the English soccer leagues.
This article assesses the relative efficiency of teams participating in Formula One (F1) World Constructors’ Championship. A nonparametric method based on data envelopment analysis (DEA) has been used. The aim is to measure each constructor’s performance, comparing its efficiency relative to all other competing constructors. The study uses financial and performance data to assess the proximity of the constructors to the best practices frontier. The analysis has been made considering the results of the 2003, 2006, 2008, 2010, and 2011 F1 seasons. In order to create a parsimonious DEA model, a variable screening method for dimensionality reduction is considered. The results indicate that, generally, a substantial reduction should be made to the constructors’ budget over the seasons in order to be efficient as compared to the identified benchmarks. In addition, scale efficiency reveals that most constructors operate below their most productive scale size.
Assessing the effect of the timing and sequencing of various policy regimes on optimizing agent behavior is both important and difficult. To offer some insights, this article examines a timing decision from sports. The penalty shootout in football (soccer) has long been seen as problematic, among other reasons because it creates incentives for excessively cautious play during extra time. One proposal to alleviate this has been to alter the timing, and stage the shootout before (rather than after) extra time with the result binding only if the subsequent extra time offers no resolution. Carrillo’s (2007) theoretical model shows that since the effect of this rule change is ambiguous in theory, the proposal’s desirability needs to be assessed empirically. Using a comprehensive match data set, the authors compare scoring outcomes of various treatment and control groups, whereby the former simulate closely players' incentives from the proposed rule change, and the latter represent the current timing. Most importantly, the authors examine how extra time scoring probabilities depend on a goal being scored in the first 5 (or 15) min of extra time. Their estimates suggest that bringing the shootout before extra time would substantially alter the players' incentives in extra time and produce more overall attacking play. Quantitatively, the rule change is predicted to increase the odds of extra time scoring about threefold. Specifically, for the FIFA World Cup and the UEFA club competitions, the probability of scoring in extra time is estimated to increase on average by 45–60%, depending on various factors such as the result in regulation time, balancedness of the teams, and home ground advantage. In summary, all these results suggest that the case for trialing the proposed rule is strong. More generally, they highlight the incentive channels through which sequencing of policies may determine their effectiveness.
This article uses data from NASCAR to examine strategic decision making with professional players and high stakes. The authors look at driver decisions to pit, enabling car performance to be improved at the cost of track position. Unlike other sports choices that have been used to test game-theoretic play, pitting decisions occur sequentially. Therefore, optimal decision making should result in the sub-game perfect equilibrium outcome. After estimating the likelihood of successfully passing another driver, the authors find some evidence that drivers make optimal decisions; however, driver behavior is also consistent with a simple heuristic of following the preceding car.
Using a unique, national data set that indicates where students choose to send their SAT scores, the authors find that college sports success has a large impact on student application decisions. For example, a school that has a stellar year in basketball or football on average receives up to 10% more SAT scores. Certain demographic groups (males, Blacks, out-of-state students, and students who played sports in high school) are more likely to be influenced by sports success than their counterparts. The authors explore the reasons why students might be influenced by these sporting events and present evidence that attention/accessibility helps explain these findings.
Transparency is usually thought to reduce favoritism and corruption by facilitating monitoring by outsiders, but there is concern it can have the perverse effect of facilitating collusion by insiders. In response to vote trading scandals in the 1998 and 2002 Olympics, the International Skating Union (ISU) introduced a number of changes to its judging system, including obscuring which judge issued which mark. The stated intent was to disrupt collusion by groups of judges, but this change also frustrates most attempts by outsiders to monitor judge behavior. The author finds that the "compatriot-judge effect," which aggregates favoritism (nationalistic bias from own-country judges) and corruption (vote trading), actually increased slightly after the reforms.
In this note, the authors analyze whether the International Cycling Union’s "index of suspicion," which reflects the extent to which a rider is suspected of using doping, correlates with performance during the 2010 Tour de France and the 1-year period before and after the 2010 Tour de France. Though our point estimates suggest a medium-sized performance improving effect of being suspected of doping, the index of suspicion can only explain a very small part of the variation in performance. This could be because the current doping practice in cycling has little effect on diverse rankings in these races.
Changes in the National Hockey League (NHL) since the lost 2004-2005 season have led to speculation about the feasibility of smaller market teams under the new structure. Recently, the NHL announced the move of the Atlanta Thrashers to Winnipeg to resurrect the Jets franchise lost in 1996. But is there any evidence that small market teams can survive where they were previously unviable? The authors address this question using data for the seasons since the structural changes. The results suggest that the Winnipeg move is likely to be successful and that other small markets may be viable under the current setup.
Using data on regular season National Football League games from 1981-2004, this study examines the impact that travel has on game outcome and whether betting markets fully incorporate this information. A visiting team travelling west to east and crossing at least one time zone is shown to significantly increase the probability of the home team winning. This impact increases with distance, but at a decreasing rate. Evidence on whether betting markets fully account for this travel effect is mixed. While there is evidence that markets do not fully account for the impact of travel and that bettors underestimate the home team’s score whenever the visitor crosses a time zone, the model does not provide a profitable betting strategy out of sample. Thus, any bias is likely too small to profitably exploit.
The authors analyze whether the scheduling changes the National Football League (NFL) made at the time to promote parity had the desired impact on the 1995-1998 and the 2003-2006 seasons compared to the 1991-1994 and the 1999-2002 seasons. Using the relative standard deviation (RSD), the authors find that the scheduling changes did not significantly influence parity. However, this result does not imply that scheduling changes do not affect competitive balance or have no benefits. Competitive balance can manifest itself in different ways and, therefore, it is imperative to look at multiple indicators before declaring policy and rule changes a failure or a success.
Researchers commonly use sports betting lines as predictions of the outcome of sporting events. Betting houses set betting lines conditional on bettors ex ante beliefs about game outcomes, which implies that the predictive power of the sports betting market could be an unintended consequence of betting house profit maximization. Using this insight, the authors propose a new test of the predictive power of the sports betting market, which incorporates a seldom-used piece of complementary betting information: the over/under—the predicted sum of scores for a game. Since the over/under has the same market properties as the betting line, it should be similarly predictive about the actual outcome, while if bettors have different beliefs about this game feature it need not be predictive. Using the universe of betting lines and over/unders on National Football League (NFL), National Basketball Association (NBA), National Collegiate Athletic Association (NCAA) college football, and NCAA college basketball games from 2004 to 2010, the authors test the predictive power of the sports betting market in a seemingly unrelated regression (SUR) structure that allows us to characterize both features of the betting market simultaneously. The joint test reveals that while the betting line is an accurate predictor of the margin of victory, the over/under is a poor predictor of the sum of scores. The authors consistently reject the hypothesis that the sports betting market overall functions well as a prediction market.
The authors investigate the salary returns to the ability to play football (soccer) with both feet. The majority of footballers are predominantly right footed. Using two data sets, a cross section of footballers in the five main European leagues and a panel of players in the German Bundesliga, the authors find robust evidence of a substantial salary premium for two-footed ability, even after controlling for available player performance measures. The authors assess how this premium varies across the salary distribution and by player position.
This study examines predictions based on the job search model and estimates the overpayment within the labor market in Nippon Professional Baseball using stochastic frontier analysis. The empirical results indicate that more experienced players demand a higher reservation salary, and the effect increases at a decreasing rate. In the overpayment analysis, it is found that international players receive preferential labor market treatment. Moreover, from the analysis of team-level overpayments, payment wastage in terms of a team’s overpayment in a resource-abundant team within a large market (e.g., the Tokyo Giants) results in that team not being the most successful.
There are many measures of competitive balance in the sports economics literature, each with their strengths and weaknesses. This study uses point spreads to measure competitive balance which has the advantages that they are prospective rather than retrospective and that they are determined by the sports fans and not just the outcome of a game. A total of six measures of competitive balance are developed from point spreads. These measures show a general trend toward improvement in competitive balance in the National Basketball Association over the past 20 years with no clear trend emerging for competitive balance in the National Football League.
In recent years, there has been increased research exploring the relationship between college/university intercollegiate athletic expenditures and team on-field success. Scope and methodological limitations of this previous research, however, suggest the need for further empirical research in this area. This study uses regression analyses with time and institutional fixed effects and several control variables to investigate the relationship between college/university athletic department expenditures and overall athletic department on-field success. The findings indicate that institutional athletic expenditures are strongly correlated with team on-field performance among Football Bowl Subdivision (FBS) institutions but not among non-FBS institutions.
Major League Baseball’s (MLB) Draft is a natural laboratory for the study of bargaining: There are no bonus restrictions, draft picks cannot be traded, and there are no commitment issues (i.e., players "declaring" for the draft). This article tests the implications of bargaining theory using data from the 2003-2010 MLB drafts. In 2007, new draft rules were introduced, but not uniformly across the draft, making it possible to estimate the effect of each change. Although the rule changes were designed to lower bonuses, they had the opposite effect. The rule changes led to $178 million in extra compensation to drafted players.
Many countries compete fiercely for the right to host mega-events like the World Cup. Proponents of hosting mega-events claim that yields economic gains. Many available studies focus on partial effects of hosting or concern ex post analyses. The authors utilize the existing literature to perform a detailed cost–benefit analysis (CBA) of the Netherlands bidding jointly with Belgium for the 2018 World Cup. The authors show that national pride and pleasure come at a price and financial gains are unlikely. Based on this CBA, the authors predict that the costs of the 2018 World Cup in Russia will also exceed the financial benefits.