nep-spo New Economics Papers
on Sports and Economics
Issue of 2017‒03‒26
three papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Risk Diversification from Revenue Sharing in a Professional Sports League: Measuring Welfare Gains By Rockerbie, Duane; Easton, Stephen
  2. What makes you "super-rich"? New evidence from an analysis of football players' earnings By Carrieri, Vincenzo; Principe, Francesco; Raitano, Michele
  3. Fooled by performance randomness: over-rewarding luck By Romain Gauriot; Lionel Page

  1. By: Rockerbie, Duane; Easton, Stephen
    Abstract: Revenue sharing is a common league policy in professional sports leagues. Several motivations for revenue sharing have been explored in the literature, including supporting small market teams, affecting league parity, suppressing player salaries and improving team profitability. We investigate a different motivation. Risk-averse team owners may be able to increase league welfare by using revenue sharing to reduce the variance and affect the skewness of the league distribution of team local revenues. We first determine the extent to which revenue sharing affects these moments in theory, then we attempt to quantify the effects on league welfare for Major League Baseball. Our results suggest that revenue sharing had significant welfare gains, obtained at little cost, that enhance the positive effects noted by other studies.
    Keywords: revenue sharing, risk aversion, welfare
    JEL: G32 L83
    Date: 2017–02
  2. By: Carrieri, Vincenzo; Principe, Francesco; Raitano, Michele
    Abstract: This article investigates the influence of performance, popularity and power on "superearnings" using a unique panel dataset of Italian football players built on various sources of data. Using OLS, Panel and Unconditional Quantile regression techniques, we find that detailed measures of these factors are all significantly associated with higher wages. Popularity dominates all the other factors at the right tail of earnings distribution and the agent's power contributes mostly to allocate players in richer teams. These new findings challenge the interpretations of super-earnings based only on very talented workers who "win and take all".
    Keywords: superstars,top incomes,football players' earnings,panel data,unconditional quantile regressions
    JEL: J31 L83 J24 C23 D31
    Date: 2017
  3. By: Romain Gauriot; Lionel Page
    Abstract: We provide evidence of a violation of the informativeness principle whereby lucky successes are overly rewarded. We isolate a quasi-experimental situation where the success of an agent is as good as random. To do so, we use high quality data on football (soccer) matches and select shots on goal which landed on the goal posts. Using non scoring shots, taken from a similar location on the pitch, as counterfactuals to scoring shots, we estimate the causal effect of a lucky success (goal) on the evaluation of the player’s performance. We find clear evidence that luck is overly influencing managers’ decisions and evaluators’ ratings. Our results suggest that this phenomenon is likely to be widespread in economic organizations.
    Keywords: contract theory, informativeness principle, quasi-experiment, outcome bias, behavioural economics.
    JEL: D23 D83 D86 L14
    Date: 2017–03–17

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