Teaching competition in professional sports leagues

In recent years there has been some dispute over the appropriate way to model decision-making in professional sports leagues. In particular, Szymanski and Kesenne (2004), argue that formulating the decision-making problem as a noncooperative game leads to radically different conclusions about the nature of competition in sports leagues. This paper describes a simulation model that van be used in a classroom to demonstrate how competition works in a noncooperative context. The supporting Excel spreadsheet used to conduct the game can be downloaded from the author’s personal webpage http://www3.imperial.ac.uk/people/s.szymanski.

The Champions League and the Coase Theorem

The Coase Theorem is both one of the simplest and most profound ideas in economics. Coase’s insight was first expressed in print as a theorem by George Stigler, following the publication of the famous article “The Problem of Social Cost” by Nobel Laureate Ronald Coase (1960). Stigler stated it thus: “with zero transactions costs, private and social costs will be equal”. In this paper the Coase Theorem is approached through the medium of a sports league. While Coase’s article dates from 1960, a colleague at Chicago University published a discussion of the market for baseball players in 1956 which almost completely anticipates the more famous paper (Rottenberg (1956)).Coase

Tilting the Playing Field: Why a sports league planner would choose less, not more, competitive balance

It has traditionally been argued that the organizer of a sports league would prefer more competitive balance to the level that emerges in a noncooperative equilibrium. This argument has been used to justify restraints on competition between teams, which also tend to raise profits at the expense of players and consumers. This paper shows that in theory a planner would prefer less, not more, competitive balance. The paper uses data from Major League Baseball to show just how unbalanced a league planner would choose.competitive balance, sports leagues, baseball

The impact of compulsory competitive tendering on refuse collection services

Compulsory competitive tendering (CCT) of blue-collar services such as refuse collection and street cleaning was introduced in the UK by the Local Government Act 1988. This law, imposed by central government, obliged elected local authorities to expose specific services to competitive tendering at fixed intervals and subject to national guidelines. Whilst the issue of competitive tendering of public services has generated a substantial literature over recent years (see Domberger and Rimmer (1994) for a review), there have been relatively few studies of compulsory competitive tendering.2 This paper uses a dataset on refuse collection costs and services for the 365 English local authorities over the period 1984-94. It follows on from Szymanski and Wilkins (1993) who analysed the same database using data up until 1988

A Theory of the Evolution of Modern Sport

This paper argues that modern sport developed out of new forms of associativity created during the European enlightenment. It argues that the fundamental unit of modern sport is the club, and that these associations developed autonomously in Britain during the eighteenth century following the retreat of the state from the control of associative activities. The evolution of modern sports thus formed part of the expansion of private associative activity that occurred in the Anglo-Saxon world. By contrast, in countries such as France and Germany where associativity continued to require the explicit or implicit license of the state, modern sports developed in ways consistent with or even in the service of the objectives of the state, most notably the need to maintain military preparedness.sports history

Competitive balance in sports leagues and the paradox of power

It is generally thought that competitive equilibrium in sports leagues involves too little competitive balance (the strong dominate the weak too much- a more even contest would be more attractive). However, it is possible to sow in a standard logit contest model that the reverse is true – the strong do not win “enough”- i.e. more wins by the strong team would increase attendance or revenues. This is consistent with Hirshleifer’s paradox of power. However, this is only true so long as the strong do not become too dominant- otherwise the regime switches to one of pre-emption: the strong never lose. This paper identifies the conditions under which the paradox of power and pre-emption will manifest themselves.

National Wellbeing and International Sports Events

The widely proclaimed economic benefits of hosting major sporting events have received substantial criticism by academic economists and have been shown to be negligible, at best. The aim of this paper is to formally examine the existence of another potential impact: national wellbeing or the so-called “feelgood” factor. Using data on self-reported life satisfaction (happiness) for twelve European countries we test for the impact of hosting and of national athletic success on happiness. Our data covers three different major events: the Olympic Games, the FIFA World Cup and the UEFA European Championship. We find that the “feelgood” factor associated with hosting football events is large and significant, but that the impact of national athletic success on happiness, while correctly signed, is statistically insignificant.Life satisfaction; Happiness; Feel-good factor; Sporting events; Economic impact

Tilting the Playing Field (Why a sports league planner would choose less, not more, competitive balance): The case of English Football

It has traditionally been argued that the organizer of a sports league would prefer more competitive balance to the level that emerges in a noncooperative equilibrium. This argument has been used to justify restraints on competition between teams, which also tend to raise profits at the expense of players and consumers. This paper shows that in theory a planner would prefer less, not more, competitive balance. The paper uses data from the second tier of professional English league football to show just how unbalanced a league planner would choose.competitive balance, sports leagues, football, soccer

Promotion and Relegation in Sporting Contests

The conventional model of a team sports league is based on the North American major leagues which have a fixed number of members, entry is rare and only granted by permission of the incumbents (the closed system). European soccer leagues operate a system of promotion and relegation, effectively permitting entry on merit to all-comers (the open system). This paper examines the impact of openness on the incentive of teams to invest (expend effort) and share resources (redistribution) in the context of a Tullock contest. The main conclusion of the paper is that openness tends to enhance effort incentives, but diminishes the incentive to share income.

Entry into exit: insolvency in English professional football

This study uses a unique database of financial accounts for English football clubs between 1974 and 2010 to examine the process by which firms fail, which in this context means entering insolvency proceedings. From the data it is possible to estimate shocks to demand and productivity and to show that failing firms typically experience a series of negative shocks. This is consistent with the standard IO theory models of exit.Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/138218/1/sjpe12134.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/138218/2/sjpe12134_am.pd