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on Sports and Economics |
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Issue of 2006‒10‒07
eight papers chosen by Joao Carlos Correia Leitao Universidade da Beira Interior |
| By: | Helmut Dietl; Egon Franck; Markus Lang (Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | In the last decade most clubs in European football leagues have experienced the paradox of rising revenues and declining profits. The present paper applies contest theory to provide an integrated framework of a team sports league and analyses the competitive interaction between clubs. We show that dissipation of the league rev- enue arises from "overinvestment" in playing talent. This overinvestment problem increases if the discriminatory power of the contest function increases, revenue- sharing decreases, and the size of an additional exogenous prize increases. We fur- ther show that clubs invest more when they play in an open compared to a closed league. The overinvestment problem within open leagues increases with the revenue differential between leagues. |
| Keywords: | contests, sports league, overinvestment, revenue-sharing, promotion and relegation |
| JEL: | L83 C72 D43 D72 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0038&r=spo |
| By: | Leif Brandes; Egon Franck (Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | There is an on-going debate about the optimal degree of team solidarity in the German Professional soccer league. Support for a high degree of team solidarity has been coming from the theory of competitive balance and its prediction that fans would otherwise loose interest in sports due to diminished uncertainty of outcome. However, empirical observations show that core assumptions of this theory may not hold in the case of the German Bundesliga. Based on aggregate seasonal gate-attendance and di®erent measures of competitive balance, this paper presents results using vector error correction models and Granger causality tests. Whereas the role of competitive balance for fan attendance remains unclear, we ¯nd a robust positive e®ect of fan attendance on competitive balance. Possible explanations of this e®ect, in particular its channel and lag structure are exposed in greater detail. |
| Keywords: | competitive balance, sports leagues, Granger Causality, VEC models |
| JEL: | C13 C32 L83 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0041&r=spo |
| By: | Carolyn A. Dehring (Department of Insurance, Legal Studies and Real Estate, The University of Georgia); Craig A. Depken, II (Department of Economics, University of Texas at Arlington); Michael R. Ward (Department of Economics, University of Texas at Arlington) |
| Abstract: | We investigate the impact of a potential new sports venue on residential property values, focusing on the National Football League's Dallas Cowboys' search for a new host city in the Dallas-Fort Worth area. We find that residential property values in the city of Dallas increased following the announcement of a possible new stadium in the city of Dallas. At the same time, property values fell throughout the rest of Dallas County, which would have paid for the proposed stadium. These patterns reversed when the Dallas stadium proposal was abandoned. Subsequently, a series of announcements regarding a new publicly-subsidized stadium in nearby Arlington, Texas, had a deleterious effect on residential property values in Arlington. In aggregate, average property values declined approximately 1.5% relative to the surrounding area before stadium construction commenced. This decline was almost equal to the anticipated household sales tax burden, suggesting that the average expected amenity effect of hosting the Cowboys in Arlington was not significantly different from zero. |
| Keywords: | economic impact, event studies, sports, property values, stadiums |
| JEL: | L83 R53 H73 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0616&r=spo |
| By: | Men-Andri Benz; Leif Brandes; Egon Franck (Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | The relationship between match attendance and the corresponding degree of uncertainty of outcome has been studied by many researchers in the field of sports economics. Although this relationship seems intuitively appealing, the empirical results have been far from unambiguous. We suggest that these results might (at least) partly be driven by the application of estimation techniques, which exclusively focus on conditional mean attendance. These techniques assume that regressors exclusively affect the location of the conditional distribution. Still, it could be that regressors influence the shape of the distribution, which would mean that there is a certain kind of heterogeneity in the demand for sport. To identify this heterogeneity, we use quantile regression techniques as this approach allows for a better understanding of the complete conditional distribution. Based on data from the first division of professional German football (soccer), we present empirical evidence for the existence of heterogeneity in fan demand, which exhibits significant influence on uncertainty of outcome variables. |
| Keywords: | heterogeneous fan demand, censored quantile regression |
| JEL: | C14 C24 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0048&r=spo |
| By: | Leif Brandes; Egon Franck; Stephan Nüesch (Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | Recent studies of the demand for sports clearly indicate that stars play an important role in promoting fan interest. However, on theoretical grounds it is controversial if a star’s talent superiority and/or a star’s popularity drive match attendance and hence gate revenues. Using longitudinal gate revenue and match attendance data of all clubs in the first German soccer league in a nine year period, the authors analyze star attraction of both locally rooted heroes and national superstars. We find empirical evidence that these groups differ in the way they attract fans: While local heroes enhance home game attendance, superstars mainly increase attendance on the road. Local heroes attract fans by outstanding field performances, whereas superstars facilitate fan support by mere popularity. |
| Keywords: | superstar effect, consumer demand, soccer, talent, popularity |
| JEL: | D L |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0046&r=spo |
| By: | Men-Andri Benz; Egon Franck (Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | Despite its long tradition the practice of releasing star players for association matches without compensating the clubs has become increasingly controversial. The clubs claim that their players play in the tournaments organized by the associations while earning club money. However, the clubs do not receive any shares of the relevant revenues. Additionally they claim that they have to bear costs that arise from fatigued or injured players. The clubs want to be compensated for these (external) costs arising from association games. The purpose of this paper is to evaluate the extent to which it is necessary to compensate clubs for the releasing of star players to the national team. Using a contract theory based model one can show that compensation may not be necessary, since clubs are able to write efficient contracts with their player. Externalities do not occur under the assumption of efficient contracting. |
| Keywords: | Soccer, Long-Term Contracts, Reputation |
| JEL: | D83 D62 J31 J44 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0034&r=spo |
| By: | Egon Franck; Stephan Nüesch (Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | Based on the competing theories of superstar formation proposed by Rosen (1981) and Adler (1985) it is controversial if firsthand observable talent or other factors like past consumption and popularity influence stardom. This article investigates the emergence of superstars in German soccer. We use data on market values and individual player performance and publicity data to differentiate between Rosen’s and Adler’s theory of superstar formation. Running quantile regression we find evidence that Adler’s theory applies to German soccer stars. |
| Keywords: | superstars, soccer, talent, popularity |
| JEL: | J J L |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0043&r=spo |
| By: | Men-Andri Benz; Leif Brandes; Egon Franck (Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich; Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | Football matches are by no means homogenous goods. Rather, there are big differences in single match quality, which is ex-ante unobservable to consumers. We argue that quality uncertainty leads consumers to search for quality proxies which are observable in advance. Aggregate demand functions are shown to depend merely on prices, ex-ante quality perception and stochastic influence factors. Following the work by Kahneman, Tversky and Slovic, we suggest that consumer behaviour is to some extent driven by mental anchoring. Therefore, the usual approach to rely on absolute measures only, seems doubtful. The main focus of our empirical analysis is to introduce relative quality measures, which are based on different anchor levels. Besides seasonal-dynamic and seasonal-static anchors, this specification allows us to include absolute quality proxies as a special case. Applying median regression on a sample from over 2000 individual matches in the German Bundesliga, we find evidence for mental anchoring in the demand for sport. Our results indicate that consumers tend to compare current values for quality proxies to last season’s indicator values instead of last match’s indicator values. |
| Keywords: | mental anchor, censored median regression, fan demand |
| JEL: | C14 C24 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0047&r=spo |