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on Sports and Economics |
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Issue of 2009‒10‒24
two papers chosen by Joao Carlos Correia Leitao Polytechnic Institute of Portalegre and Technical University of Lisbon |
| By: | Robert Baumann (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross); Cara Howe (Department of Economics, College of the Holy Cross) |
| Abstract: | Tournament design is of crucial importance in competitive sports. The primary goal of effective tournament design is to provide incentives for the participants to maximize their performance both during the tournament and in the time period leading up to the tournament. In spectator sports, a secondary goal of tournament design is to also promote interesting match ups that generate fan interest. Seeded tournaments, in general, promote both goals. Teams or individuals with strong performances leading up to a tournament receive higher seeds which increase their chances of progressing further in the tournament. Furthermore, seeding ensures that the strongest teams or players are most likely to meet in the final rounds of the tournament when fan interest is at its peak. Under some distributions of team or player skill, however, a seeding system can introduce anomalies that could affect incentives. Our analysis of the NCAA men’s basketball tournament uncovers such an anomaly. The seeding system in this tournament gives teams with better success in the regular season more favorable first round match ups, but the tournament is not reseeded as the games progress. Therefore, while higher seeds progress to the 2nd round of the tournament at uniformly higher rates than lower seeds, this relationship breaks down in later rounds. We find that 10th and 11th seeds average more wins and typically progress farther in the tournament than 8th and 9th seeds. This finding violates the intended incentive structure of seeded tournaments. |
| Keywords: | basketball, tournament design, sports, NCAA |
| JEL: | L83 D02 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0910&r=spo |
| By: | Biner, Burhan |
| Abstract: | In North America, professional sports leagues operate mostly as cartels. They employ certain policies such as revenue sharing, salary caps to ensure that teams get high revenues and players get high wages. There are two major hypotheses regarding the talent distribution among the teams that would maximize the total revenues, dominant teams rule and equal strength team rule. This paper examines the revenue structure of National Football League and proposes policy recommendations regarding talent distribution among the teams. By using a unique, rich data set on game day stadium attendance and TV ratings I am able to measure the total demand as a function of involved teams’ talent levels. Reduced form regression results indicates that TV viewers are more interested in close games, on the other hand stadium attendees are more interested in home teams’ dominance. In order to identify the true effects of possible policy experiments, I estimate the parameters of the demand for TV as functions of team talent , fixed team and market variables by using partial linear model described as in Yatchew (1998) which uses non-parametric and difference-based estimators. I then estimate the demand for stadium attendance using random coefficients model by using normative priors for the 32 cities that hosts the teams. Estimated demand for TV ratings and stadium attendance corroborates the findings of reduced form regressions, stadium demand and TV demand working against each other. We therefore propose a “somewhat” equal strength team policy where big market teams has a slight advantage over the others. Total revenues of the league is maximized under such a policy. |
| Keywords: | Perfect Competition; Dominant Team; Cartels |
| JEL: | C14 C34 L52 L83 |
| Date: | 2009–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17920&r=spo |