nep-spo New Economics Papers
on Sports and Economics
Issue of 2011‒06‒11
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Applying conditional DEA to measure football clubs’ performance: Evidence from the top 25 European clubs By Halkos, George; Tzeremes, Nickolaos
  2. Testing for Home Team and Favorite Biases in the Australian Rules Football Fixed Odds and Point Spread Betting Markets By Adi Schnytzer; Guy Weinberg
  3. The Prediction Market for the Australian Football League By Adi Schnytzer
  4. Scores, Bets and Abnormal Returns: Evidence from the European Soccer Teams By Massimiliano Castellani; Enrico Maria Cervellati; Pierpaolo Pattitoni

  1. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper applies a probabilistic approach to investigate how the top European football clubs’ current value and debt levels influence their performance. Specifically, a bootstrapped conditional data envelopment analysis (DEA) is used in order to measure the effect of football clubs’ current value and debt levels on their obtained efficiency performances. The results indicate that football clubs’ current value levels have a positive influence up to a certain point. But as the current value increases the effect is neutral to football clubs’ performance. At the same time, the empirical evidence suggests that there is no influence on football clubs’ efficiencies associated with lower and medium football clubs’ debt levels while higher debt levels appear to have a direct negative effect.
    Keywords: European football clubs; Data Envelopment Analysis; Nonparametric regression; Bootstrapping; Probabilistic approach
    JEL: C69 C14 L83
    Date: 2011–06
  2. By: Adi Schnytzer (Bar-Ilan University); Guy Weinberg (Bar-Ilan University)
    Abstract: In this paper, we test two different kinds of bias; the favorite-longshot/favorite-underdog and the home team bias, and distinguish between the two, using a distinctive feature of the Australian Football League (AFL), that many games are played on neutral grounds. This is the first empirical study, to the best of our knowledge, to make a clear distinction between the two types of bias. We conduct our tests by subjecting 2001-2004 data for the AFL to detailed scrutiny, using standard econometric weak-form efficiency models of point spread and fixed odds betting markets. Where the results suggest the presence of a bias, we test potential profitability via betting simulation. We are able to reject the existence of any significant pure favorite-longshot/favorite-underdog bias in either market, and to demonstrate the existence of a significant bias in favor of teams with an apparent home ground advantage in games played outside Victoria in the point spread market and in the fixed odds market during 2002, 2004 and the period as a whole. Games in Melbourne and in Geelong are free of such a bias (except for 2003 in the point spread market in Geelong). Betting simulations which attempt to exploit these inefficiencies yield modest profits.
    Keywords: market efficiency; betting markets; sports economics; Australian Rules football
    Date: 2011–03
  3. By: Adi Schnytzer (Department of Economics, Bar Ilan University)
    Abstract: The purpose of this paper is to make a novel contribution to the literature on the prediction market for the Australian Football League, the major sports league in which Australian Rules Football is played. Taking advantage of a novel micro-level data set which includes detailed per-game player statistics, predictions are presented and tested out-of-sample for the simplest kind of bet: fixed odds win betting. It is shown that player-level statistics may be used to yield very modest profits net of transaction costs over a number of seasons, provided some more global variables are added to the model. A comparison of different specifications of the linear probability model (LPM) versus conditional logit (CLOGIT) regressions reveals that the LPM usually outperforms CLOGIT in terms of profitability. It is further shown that adding significant variables to a regression specification which is clearly superior in econometric terms may reduce the efficacy of the prediction and thus profits.
    Date: 2011–03
  4. By: Massimiliano Castellani (Department of Economics, University of Bologna, Bologna, Italy; The Rimini Centre for Economic Analysis (RCEA), Rimini, Italy); Enrico Maria Cervellati (Department of Management, University of Bologna, Bologna, Italy; Luiss Guido Carli, Rome, Italy); Pierpaolo Pattitoni (Department of Management, University of Bologna, Italy; The Rimini Centre for Economic Analysis (RCEA), Rimini, Italy)
    Abstract: Given the relevance of the soccer industry in the economies of several European coun-tries, we analyze the links between soccer match scores, bets and stock returns of all listed European soccer teams. Through an event study methodology, we measure ab-normal returns following wins, ties and losses. Using a Seemingly Unrelated Regres-sion (SUR) model to setup our event study, we find positive abnormal returns follow-ing wins and negative abnormal returns following both ties and losses. Furthermore, using the information of pre-match betting odds, we show that abnormal returns are magnified by unexpected scores.
    Keywords: Information and Market Efficiency; Event Studies; Sports; Gambling; Seemingly Unrelated Regression Equation (SUR)
    JEL: G14 L83 C30
    Date: 2011–05

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