nep-spo New Economics Papers
on Sports and Economics
Issue of 2016‒07‒02
two papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Emergence of a Market for Football Stars: Talent Development and Competitive Balance in European Football By Norbäck, Pehr-Johan; Olsson, Martin; Persson, Lars
  2. Team Vs. Individual Tournaments: Evidence From Prize Structure In Esports By Dennis Coates; Petr Parshakov

  1. By: Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Olsson, Martin (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: We analyze how the Bosman ruling affected the market for star players and talent development in the European football market. We develop a model with sports competition and endogenous ownership of star players in which we show how the stiffer bidding competition over star players after the Bosman ruling has spurred talent development foremost in EU nations lacking established top clubs. This has a positive impact on their national teams’ performance. However, the stiffer bidding competition has also lead to less competition in the Champions League, as non-established clubs prefer to sell their star players instead of challenging the top clubs. We provide empirical evidence consistent with these findings.
    Keywords: Sports industry; Star players; Champions League; Bosman ruling
    JEL: J44 L50 L83
    Date: 2016–05–31
  2. By: Dennis Coates; Petr Parshakov (National Research University Higher School of Economics)
    Abstract: This study tests the implications of tournament theory using data on eSports (video game) competitions. We incorporate team production with the theory of rank order elimination tournaments since in our analysis, competitors in an elimination tournament are groups rather than individuals. In this setting, the issue of proper incentives becomes more complicated than in the normal tournament model. Our findings demonstrate that the prize structure is convex in rank order which means that the contestants in eSports tournaments are risk averse. The results for the team games are more consistent with the tournament theory than the results for individual games. From the practical point of view, we provide decision-makers in both sports and business with the insights about the compensation design with respect to importance of the competition and its type.
    Keywords: tournament theory, eSports, video games, team production.
    JEL: Z20 J3
    Date: 2016

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