nep-spo New Economics Papers
on Sports and Economics
Issue of 2017‒07‒02
four papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Decomposing competitive balance in the major European football leagues : a Rawlsian approach By Santiago-Caballero, Carlos; Fernández-Roldán Díaz, Alejandro
  2. Off Pitch: Football’s Financial Integrity Weaknesses, and How to Strengthen them By Matt Andrews; Peter Harrington
  3. The Educated Underdog Becomes the Ultimate Superstar By Hjertstrand, Per; Norbäck, Pehr-Johan; Persson, lars
  4. Major Sports Events: Economic Impact By Wolfgang Maennig

  1. By: Santiago-Caballero, Carlos; Fernández-Roldán Díaz, Alejandro
    Abstract: The study of competitive balance in sports has received considerable attention in the academic literature, mainly as a consequence of the effect that it could have on the interest of society in the competitions analyzed. However, most of the studies have focused on the total competitive balance, without taking into account the methodological importance of decomposing it. This paper analyzes competitive balance in the Spanish, English, Italian and German football leagues between 1975 and 2016, and the internal dynamics behind the changes experienced. Our results show a considerable decrease in the total competitive balance in recent decades, although the dynamics behind the increases in inequality are different in the four leagues. Focusing on Rawlsian principles, our analysis shows that the Spanish competition is the only league in which the promoted teams do not have a higher probability of being relegated, and therefore, the competition in which incumbent teams suffer lower entry barriers and have higher chances of survival.
    Keywords: Rawlsian; inequality; competitive balance; European leagues; Football
    JEL: D63 L13 L83 Z20
    Date: 2017–06
  2. By: Matt Andrews (Center for International Development at Harvard University); Peter Harrington (Center for International Development at Harvard University)
    Abstract: Men’s professional football is the biggest sport in the world, producing (by our estimate) US $33 billion a year. All is not well in the sector, however, with regular scandals raising questions about the role of money in the sport. The 2015 turmoil around FIFA is obviously the most well known example, creating a crisis in confidence in the sector. This study examines these questions, and the financial integrity weaknesses they reveal; it also offers ideas to strengthen the weaknesses. The study argues that football’s financial integrity weaknesses extend far beyond FIFA. These weaknesses have emerged largely because the sector is dominated by a small elite of clubs, players and owners centered in Europe’s top leagues. The thousands of clubs beyond this elite have very little resources, constituting a vast base of ‘have-nots’ in football’s financial pyramid. This pyramid developed in recent decades, fuelled by concentrated growth in new revenue sources (like sponsorships, and broadcasting). The growth has also led to increasingly complex transactions—in player transfers, club ownership and financing (and more)—and an expansion in opportunities for illicit practices like match-fixing, money laundering and human trafficking. We argue that football’s governing bodies – including FIFA – helped establish this pyramid. We explore the structural weaknesses of this pyramid by looking at five pillars of financial integrity (using data drawn from UEFA, FIFA, clubs, primary research, and interviews). In the first pillar of Financial Transparency and Literacy we find that a vast majority of the world’s clubs and governing bodies publish no financial data, leaving a vast dark space with no transparency. In the second pillar of Financial Sustainability we estimate that a majority of global clubs and governing bodies are at ‘medium to high risk’ of financial failure. We find, additionally, that European tax debts have grown despite Financial Fair Play, and confederations and FIFA contribute to a pattern of weak Fiscal Responsibility. We then create a new metric of Financial Concentration and find that the football sector is at ‘high risk’ of over-concentration, which poses existential questions for many clubs and even leagues. In the final pillar of Social Responsibility and Moral Reputation, we find that football’s governing bodies face a crisis of legitimacy stemming from a failure to tackle moral turpitude, set standards and regulate effectively. We suggest a set of reforms to re-structure FIFA in particular, separating its functions and stressing its regulatory role.
    Keywords: Europe, Football, Integrity, Weaknesses
    Date: 2016–01
  3. By: Hjertstrand, Per (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, lars (Research Institute of Industrial Economics (IFN))
    Abstract: We fi…nd an inverted relation between a player'’s birthday and the likelihood of receiving the Ballon d'’Or (awarded to the best football player in the world). We develop a multi-period skill formation model with selection into elite education. We show that those born late (underdogs) need to work harder to be selected for elite educational programs. However, those born too late will not make the cut-off. Those born late –– but not too late –– will thus end up with the highest skill levels as adults (educated underdogs). We use detailed data on the performance of elite Swedish football players to illustrate our model. These data provide strong support for the predictions of the model.
    Keywords: Superstar; Skill formation; Expertise; Relative age effect; Football; Elite education
    JEL: D10 I20 J70 M50 Z20
    Date: 2017–06–22
  4. By: Wolfgang Maennig (Chair for Economic Policy, University of Hamburg)
    Date: 2017–06–21

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