Funcas Social and Economic Studies

Portada publicación
Sports (and) Economics
April - 2019

Sumario

List of Contributors Introduction / Jaume García The Stones of Galileo: Sports as Economics / Ignacio Palacios-Huerta

EN: The general applicability of the economic approach to human behavior means that any data about human activity is potentially useful to evaluate economic theories, including sports.
And sports are in many ways the perfect laboratory to try to obtain novel insights into human decision-making. There is an abundance of data, the goals of the participants are often uncomplicated, the outcomes extremely clear, the stakes high, and the subjects professionals with experience.
This is a novel field in Economics that is gaining substantial attention in the literature. This chapter reviews recent research that uses sports data to help Economics from this perspective.

PART I SPORTS ECONOMICS: ITS PECULIARITY How Can the Competitive Balance Be Improved? / Stefan Kesenne

EN: In this contribution we present an overview of the most important policies and regulations by team sports leagues to improve the competitive balance, such as revenue sharing, salary caps and restrictions on player mobility, The impact of revenue sharing on competitive balance turn out to be rather complicated, depending mainly on the objectives of team owners and on the inclusion of absolute league quality in the teams’ revenue functions. We also consider different types of salary caps and restrictions on player mobility including the transfer system.

A Practical Guide to Measuring Competitive Balance / Brad R. Humphreys

EN: Competitive balance (CB) represents a core concept in sports economics. Measuring competitive balance constitutes a key aspect of empirical research. Researchers face many choices when analyzing competitive balance. This paper summarizes several commonly used CB measures, their calculation, and strengths and weaknesses. I argue that static CB measures display sensitivity to league characteristics and an inability to reflect relative changes in standings over time. Less commonly used dynamic CB measures can reflect relative changes in standings, but can be analytically more difficult to implement and applied only to outcomes over time, not to individual seasons. Application of these CB measures to Major League Baseball 1906-2015 illustrates key differences between static and dynamic measures that researchers should take into account when choosing a CB balance measure.

European and North American Sports Differences (?): A Retrospective / Rodney Fort

EN: I take a retrospective look at my earlier paper (Fort, 2000) that argued the differences between North American and European sports leagues (and some elements of sport in general) are overblown. I stick to my guns, primarily on “objective functions are different” but subsequent work in sports economics clearly shows that “fans are different” and “organizations are different”. As a result, further comparative work on differences between North American and European sports leagues is certainly in order.

Behavioral Economics in Sports / Carlos Varela-Quintana and Julio Del Corral

EN: In the present study, the relationship between behavioral economics and sports economics is analyzed. To that end, we first present a review of the existing literature on the main cognitive biases. Secondly, behavioral biases are analyzed from the perspective of agents participating in sport: players, coaches, managers, referees, fans, recreational sport practitioners. Last, prospects for future research are considered.

PART II PROFESSIONAL SPORT: MARKETS Dominance and Distress / Stefan Szymanski

EN: This chapter describes the two states which best describe the condition of any given football club: either dominance or (financial) distress. Organized professional football has been characterized for one hundred years or more by a system in which a small number of clubs dominate the competition and the remainder struggle to break even financially, and frequently experience episodes of financial distress. The chapter outlines the extent and similarity of dominance across European leagues, describes the various routes by which some leading clubs have become dominant, and then outlines how Sutton’s exogenous sunk cost theory can account generically for the phenomenon of dominance. The chapter then reviews the extent of financial distress in European football.

Demand of Professional Sports: Attendance and Audience / Isabel Artero, Eduardo Bandrés, Jaume García and Plácido Rodríguez

EN: In this article a review of the most recent developments in analysis of demand for professional sports is carried out, with particular emphasis on the role played by uncertainty of outcome, suspense, and surprise. In turn, two empirical analyses on Spanish First Division football games attendance and television audience of matches played by the Spain national football team are presented. Findings show that, while uncertainty of outcome renders games more appealing for television viewers, its effect on stadium attendance is somewhat contradictory, suggesting a greater interest in attending games with more talented players in both teams, increased competitiveness, and higher probability of their (local) team winning.

Betting: The Benefits and Risks to Sport / David Forrest and Levi Pérez

EN: Online technology has facilitated a huge growth in the scale of sports betting Worldwide and a shift towards betting in-play rather than pre-match. These developments provide benefits and costs to sport. In-play betting is strongly complementary with sports consumption and provides new opportunities for revenue from data sales. At the same time, high liquidity in sports betting markets and enhanced opportunities for match-fixers to make profits in-play raise integrity risk. The paper discusses both the new opportunities for sport from betting and the nature of and reasons for the match-fixing threat and how sports should respond.

Labor Markets in Professional Team Sports / Rob Simmons and David Berri

EN: The purpose of this paper is to summarise the state of research on labor markets in professional sports leagues around the world. We report the main theoretical contributions to sports labor markets and set out the main research findings in North American and European team sports as applied to four core themes: labor market institutions, monopsony exploitation, labor market efficiency, and salary discrimination.

Investment in Talent and Visibility in the Media: A Study of Professional Football in Europe / Pedro García-del-Barrio and Juan de Dios Tena Horrillo

EN: In this paper we analyse empirically the factors explaining the degree of media visibility in four major European football leagues, by means of an econometric model in which clubs' visibility in the media is estimated as a function of clubs’ and leagues’ aggregate wages. Controlling for a number of factors, the analysis enables us to study the way in which a club could improve its media exposure through greater investment in talent. By applying the Blinder-Oaxaca decomposition, we furthermore examine the extent to which differences across football clubs regarding interest in the media is a consequence of changes in resources allocations, or else a reaction to changes in such allocations. Our results suggest that a club’s media visibility is greatly determined by its environment, that is, by the domestic competition in which it participates. Finally, we discuss policy implications that may be drawn from these findings.

Productivity and its Determinants in the UEFA Champions League Competition / Manuel Espitia-Escuer, Lucía Isabel García-Cebrián and Ramón Sala-Garrido

EN: In the present study, results of the international sport competition UEFA Champions League are analyzed from the perspective of productivity of the participant teams. The analysis covers the period stretching between the seasons 2014-2015 and 2017-2018. Efficient frontier analysis will be employed as methodology, which enables to determine, among all participants, the group of teams achieving highest productivity values, given the available resources. Efficient teams are therefore a model for all other teams, which may identify the aspects to be improved in order to reach the level of the most productive teams. Variables pertinent to game development are considered in the analysis, including desirable and undesirable outputs from a competitive perspective.

Sports Finance: Revenue Sources and Financial Regulations in European Football / Luis Carlos Sánchez, Ángel Barajas and Patricio Sánchez-Fernández

EN: The purpose of this study is to examine how the evolution of revenue sources and economic control measures has affected European football. Turnovers in European football have experienced strong growth, especially as far as television rights and commercial revenue are concerned. Such growth did not prevent clubs from undergoing financial difficulties, which led UEFA and national leagues to impose stricter financial controls. These events brought about an overall increased profitability for European clubs, as well as divergent developments in debt and expenditure on wages, which were furthermore concurrent with the fact that sporting successes concentrate in the strongest teams, both in continental and national competitions.

PART III ECONOMIC RELEVANCE OF SPORT AND PHYSICAL ACTIVITY IN THE SOCIETY Sports Participation and Sport Public Policies in Spain / Fernando Lera López and María José Suárez Fernández

EN: The purpose of this article is to provide an overview of the recent evolution of sports participation and associated variables in Spain, as well as of public policies developed in the sphere of sport. The article is structured into three parts: First, a descriptive analysis of the evolution of sporting habits in Spain over the past few decades is carried out. Secondly, a review of the economic literature on factors associated with the sports participation of Spanish population is provided. Moreover, an econometric analysis of regular sports participation probabilities is also carried out on the basis of the last four Surveys of Sporting Habits from years 2000, 2005, 2010 and 2015. Thus, changes in the relative importance of variables associated with sports participation may be identified. Thirdly, the structure of policies promoting sport in Spain is described, and recent evolution of public expenditure on sport reviewed, both generally at national scale and specifically according to the type of administration considered.

The Outcomes Related to Sport and Physical Activity: A Better Understanding of Health, Social, Labour and Academic Impacts / Cristina Muñiz and Paul Downward

EN: Sport and physical activity are recognized as central to the delivery of both economic and non-economic outcomes in society. In terms of economic outcomes, they contribute on a macro level to Gross Domestic Product (GDP) and also to the level of employment. Sport and physical activity also has microeconomic outcomes as well through the labour market. In addition to direct economic outcomes, sport also has impacts on health and education as well as the development of social capital and integration. Whilst these are important outcomes in themselves, they also indirectly influence labour market outcomes. This chapter consequently provides insight into the role of sport with respect to these outcomes. Gaps in the literature and methodological weaknesses are also identified. Finally, implications for the Spanish context are presented which could be informative for policy-makers in fostering an array of desirable outcomes by means of engagement in sports.

The Economic Importance of the Sports Sector and the Economic Impact of Sporting Events / Júlia Bosch, Carles Murillo and Josep Maria Raya

EN: In this chapter, the issue of measuring the economic importance of sport is addressed from two points of view, which are related but different in terms of conception and methodological approach: first, weighting of sport considered as economic sector; secondly, quantification of the economic impact of sporting events. The conceptual framework, empirical evidence, and main methodological problems are detailed in both cases. Finally, the closing section includes key recommendations for future studies adopting either approach.

Public Sector and Professional Sport / Pablo Castellanos-García and José Manuel Sánchez-Santos

EN: This paper deals with some of the most relevant aspects of the relationship between the public sector and professional sport. First, we basically focus on the assessment of arguments providing the rationale for public subsidies to professional sport both in terms of efficiency and equity. In the second part of this study, we focus on the analysis of the degree to which residents in a given urban environment consume the public goods generated by the local club, and on how such consumption might in turn affect the well-being of both fans and other residents. In order to provide empirical evidence on these issues, we use, on the one hand, data from two surveys carried out specifically for the case of RCD de La Coruña, and, on the other hand, results from the Centro de Investigaciones Sociológicas (i.e. Center for Sociological Research) barometer on the sporting habits of Spaniards.

eSports: A New Era for the Sports Industry and a New Impulse for the Research in Sports (and) Economics? / Yulia Chikish, Miquel Carreras and Jaume García

EN: In recent years, electronic sports (eSports) have showed explosive growth, both in market value and number of participants. This paper discusses three issues associated with eSports: the structure and the economic dimensions of the eSports industry; the relationship between eSports and traditional sports; and the current and future research devoted to eSports. We find that the roles of stakeholders in the eSports industry are not as clearly defined and stable as in traditional sports. To assure stable growth of eSports, governance institutions and financial structures will be required to continuously adapt to changing conditions in the industry. The paper supports previous evidence in the literature emphasizing the complementarity between eSports and traditional sports. Finally, the increasing availability of eSports data and institutional peculiarities of the industry provide vast research opportunities not only in the field of sport economics but also in economics in general.

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