By Stephen Brosnan

Recently, I discussed how the rules governing the National Basketball Association (NBA) draft system have contributed to the phenomenon of ‘tanking’ in the NBA. Tanking involves NBA organisations implementing a strategy of losing games on purpose with the aim of securing a high draft pick in the following season’s draft. Last week, another scandal has rocked the NBA with the news that several universities, players, coaches and agents have been implicated in FBI surveillance focused on ‘loans’ paid to NCAA players by agents. The players involved include LA Lakers forward Kyle Kuzma, Dallas Mavericks point guard Dennis Smith Jr., and the Philadelphia 76’s number one overall draft pick, Markelle Fultz.

The scale of the corruption has many commentators questioning the amateur structure of NCAA teams. Under NCAA rules, college players cannot receive any financial compensation for playing college basketball. This is despite the fact the college basketball is a multi-million dollar business which generates revenue for both universities and coaching staff. Louisville coach Rick Pitino is the highest paid NCAA coach in 2018, earning an annual salary of over $7 million. Overall, there are 40 NCAA coaches earning $1 million or more per year. The NCAA tournament, known as March Madness, is an American sports extravaganza which is a single-elimination tournament featuring 68 college basketball teams to determine the national championship. The tournament has grossed $19.6 billion in TV money for the NCAA Tournament over the past 22 years.

The NCAA model has contributed to the creation of what economists call a ‘black market’. A black market is a market characterised by some form of illegality or noncompliance with an institutional set of rules. The NBA requires players entering the draft to be at least 19 years of age which has produced one-and-done players that play college basketball for one year before declaring for the draft. As such, recruiters, agents and managers with an in-depth knowledge of the NCAA market can identify the likely NBA draft picks. Highly coveted college players offer an essentially risk free investment to an agent. Given the salaries earned by players on their rookie contracts is likely to be tens of millions of dollars, the agent will hope to recoup his ‘loan’ as well as a percentage of future earnings.

The latest controversies surrounding payments to NCAA players has led to a number of proposed solutions to:

1. A reduction in the age limit required to enter the NBA draft which will reduce the number of one-and-done players i.e. those most likely to receive payments.
2. An introduction of player salaries in college basketball in line with revenues generated through the basketball programs.
3. Allowing college players to generate their own incomes through sponsorships etc.
4. Increased regulation in the market for NCAA players with increased punishment for universities and players found in breach of the rules.

The financial implications for universities, advertisers and media companies will likely lead to changes being made in the near future. CBS and Turner, a division of Time Warner, having extended their media rights deal with the NCAA for $8.8 billion over eight years. While previously being considered a safe bet in terms of TV ratings, with the current scandal there is a fear surrounding ratings and advertising dollars for March Madness should star players and teams miss the tournament.

By Robbie Butler

The 2018 Winter Olympics closed in Pyeongchang, South Korea in the early hours of this morning to much fan fare. The ceremonial event involved the passing of the Olympic Torch to Beijing where the 2022 Winter Games will take place. Beijing will host its second Olympics in 14 years, following on from the Summer Games in 2008.

Much has been written on this blog about the hosting of major sporting events and the costs involved. In a previous post, I also addressed the number of bidders prior to the voting for the Summer Games. Not surprisingly, given the costs involved there has been a gradual decline in the number of bidders, from a high point in the 1990s, to more recent times. The graphic below presents the number of bidders for both the Summer and Winter Games from 1984 to the Summer Games in 2028. 

The Winter Games appear to be following a similar trend to Summer version. For the years 1984 to 1992 all Games were held in the same years. This changed in 1994 when the Winter Games broke for the Summer schedule.

Since the start of this decade there has been a consistent decline in the number of bidders for both sets of Games. The Winter Games has seen a fall from 8 in 2010, to 7 in 2014, to 3 in 2018, to just 2 for the 2022 Games. 

The Summer Games went one step further when Paris and Los Angeles effectively agreed to let each other have a solo run at the 2024 and 2028 Games respectively.

While the destination of the 2026 Winter Olympics will not be known until the 134th International Olympic Committee Session in Milan, Italy during September 2019, it will be interesting to see if all four potential hosts currently suggesting they will be, will actually do so. If Sion, Sapporo, Stockholm and Calgary all do, they will buck the recent trend in host bidding.

By John Considine

"[A] university's decision to discontinue collegiate football reduces the size of its applicant pool by 32% of the size of the typical applicant pool ... [and] reduces the quality of the incoming class by 4.7% of the value of the typical institution's ACT composite score".  These are the findings in a recent Applied Economics paper by Caudill, Hourican, and Mixon.  The latter, Franklin Mixon, being one of those with a long history of looking at the issue.

The authors say they use a unique data set comprising of universities who added or eliminated football in the 20 year period to 2015.

The findings are impressive in themselves. However, when I read the paper, I was looking for the causal model linking the institution's decision on football with the students' decisions on applications.  When conducting a balanced review of the literature the authors suggest media exposure could play a role.  Later they discuss the possibility that college football brings economic benefits to surrounding community and the possibility that football provides "students with an outlet for garnering extra-curricular benefits".

I'm hampered by my lack of knowledge of the US system to make a full judgement on the paper.  However, it is the latest in a line of literature that raises all sorts of interesting questions.  There are questions surrounding the role of sport in academic institutions.  There are questions about the extent to which sporting success provides information to potential students.  And, there are questions about what goes on in the mind of a student where the college football programme is the deciding factor.  Are their decisions the based on careful consideration of all the alternatives or some rule-of-thumb they have acquired?

By Robbie Butler

The graphic below is the best way I could illustrate the fluctuation of Premier League clubs influence on the destination of the UEFA Champions League since Liverpool's famous recovery in Istanbul back in 2005. The good news for supporters of English clubs is, given the evidence of the past week, it's likely we will see a Premier League club crowned champions of Europe sooner rather than later. 

Starting with the 2004/5 competition, I illustrate the percentage success rate for Premier League clubs in reaching the last 16 of the competition, QF, SF, Final and being crowned winners. A Champions League trophy icon marks the three occasions this happened (2005, 2008 and 2012).

Where a bar is fully red it means 100% of Premier League clubs that could get to that stage did. For example, if the Last 16 bar is all red, the four clubs representing England reached the knockout stage of the competition. This happened on 6 occasions. The final bar in the graphic actually corresponds to 5 clubs as Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspurs have all reached the knockout stage. In fact, there is a decent chance that all 5 could make the last 8 of the competition. Liverpool and Man City are probably guaranteed to be there already following the first leg of their Last 16 round matches. 

It should be evident from the graphic that the dominant days of the Premier League clubs in the Champions League ran from around 2007 to 2009 and are marked clearly by more red than yellow. All four English clubs qualified for the last 16 in 2007, 2008 and 2009. All four progressed to the QF stage in 2008 and 2009. 

The semi finals in 2007, 2008 and 2009 each had three English clubs, therefore an all-English semi-final and by extension an English club in the final. 2008 is probably the high point of dominance, and the only all Premier League Final to date, with Chelsea lining up against Manchester United.

Barren years did follow, and despite Chelsea's success in the competition in 2012, much of the red disappears in the second half of the graphic. In reality this represents the rise of  the Spanish in the form of Barcelona, Real Madrid and Atletico Madrid. A low point was reached in 2013 when just two English clubs made the knockout stage with neither progressing to the QF. In fact, since Chelsea's win in 2012 only two Premier League clubs have reached the semi-finals (Chelsea 2014 and Man City 2016).

I believe that trend is about to change. Don't discount two or even three English clubs in the semi-finals (depending on the draw) and even the possibility of a repeat of 2008 -  an all-English Final. 

by Declan Jordan

Today sees the return of the Airtricity League of Ireland for a new season. It seems there is hardly a season goes by in this league where there hasn't been a change of format, and so it is with this season. The Premier Division is once again reduced to 10 teams for the first time since 2011. This will be the sixth season out of sixteen since the move to summer football that there have been 10 teams in the Premier Division.

For fans in Munster there is also the added excitement of three clubs from the province in the League for the first time since 1994, when Limerick, Cork, and Cobh were in the top division.

This season Cork City (the champions), Limerick FC, and Waterford FC will play each other four times in the league. Clubs from these cities were mainstays in the top tier of the league right up to the early 1990s and it is a common complaint about the league that Dublin clubs have dominated in the last two decades or so. There are well-founded worries about the viability of clubs in the provincial cities because of that Dublin dominance.

However, a look at the experience of the league since the move to summer football in 2003 suggests that Dublin dominance may be waning. The table below shows the spread of top tier clubs by province, including a column for Dublin. The location of the champions is indicated by a box for each season, with a tick when the champion was based in the capital. Note that I have included Bray Wanderers as a Dublin team, which might not make too many Seagull supporters happy, but most functional region factors would suggest they are within the Greater Dublin Area (not least its connection to the Dublin by light rail). 

The data suggests a decline in the dominance of Dublin clubs, indicated by the lack of a champion since 2013 and a reduction in clubs from Dublin in the top tier. It seems there is a concentration within Dublin among a smaller group of clubs - Shamrock Rovers, Bohemian FC, St Patricks Athletic, and Bray Wanderers. In the early to mid part of the last decade there were clubs that have since failed to keep up (Shelbourne and UCD) or gone out of business (Dublin City, Sporting Fingal). Cabinteely joined the league in 2015 but have not come near to promotion in that time. Is it a coincidence that Dublin football clubs have slipped away just as the Dublin gaelic football team has dominated their sport?

Perhaps too much shouldn't be read into the last couple of seasons for Dublin clubs, as the league has been dominated by Dundalk and Cork City. The former were champions for 3 seasons and runners-up last year. The latter were runners-up for 3 seasons before their breakthrough last season. These clubs have been able to reinvest money earned from European competition and player transfers to the UK to maintain their hold on the best playing talent in Ireland and keep ahead of any chasing pack.

The distribution of clubs outside of Dublin, and greater success for those clubs, can only be good for the sustainability of the league. It remains to be seen if Dublin clubs can be revitalised to challenge again. The sports economist in me wants to see strong Dublin clubs, because competitive balance and regional balance are good for the league. The Limerick FC fan in me however wants to see Munster dominance for a while.
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By Robbie Butler

Last month I wrote about the upcoming auction for the 2019-22 Premier League seasons. Yesterday is was announced that BSkyB and BT had won the rights to 5 of the 7 packages on offer. This means a possible continuation of the status quo. Only when the final two package winners are revealed will it become clear if the current duopoly is move towards an oligopoly of sorts. 

To update on what we now know, the table below is an updated version of last month's blog post. The only significant change is BT's recapturing of the Saturday lunchtime kick-off, a slot they held from 2013-2016. Sky's monopoly of Sunday football will last for at least 20 years (1992 to 2022).

In terms of what has been paid so far, it seems a levelling off has occurred. The exponential increase in revenues, which started in 2013 and ran to 2019, does not seem to have continued. While the overall figure paid for the 200 games on offer is likely to eclipse the £5.136 billion paid last time around, the percentage increase in fee is likely to be more modest than the last two rounds of bidding. 

With Package F and G still up for grabs the current outlay by BSkyB and BT has reached $4.46 billion. The two smaller packages of 20 games each will probably push the total somewhere close to £5.5 billion. The graphic below illustrates where things stand right now.

A maximum of 148 games can be held by one operate so it is possible that BSkyB could win Package F or G. BT Sport could also win one or both, resulting in a continuation of the current duopoly. However, don't rule out a third entrant. Amazon probably being the most likely.

by Declan Jordan

Any cursory analysis of sports would demonstrate that there are spatial or geographical differences in the performance of sports clubs or athletes, and in the popularity and participation of various sports.

What is striking about the current Winter Olympics is the concentration of competitors and medallists among a smaller number of countries than the Summer Olympics. This is hardly surprising given that some countries have an advantage in winter sports because they see lots of snow in winter. Ireland will never be a powerhouse in men's snowboarding or women's mogul.

Even in popular sports that do not require specific climactic conditions, like football or rugby, there are spatial concentrations in participation and performance. Within many football leagues there are persistent high performing clubs and at international level there are some countries who consistently excel. In 20 years of the FIFA World Cup, only 12 different teams have played in the final, with just 8 different winners.

It is surprising to me that there has not been greater application of spatial analysis to sports performance. To date, most academic literature focused on the spatial aspects of sports have been concerned with the localised impacts of sports clubs or the hosting of large sports events. That is the literature has tended to look at the effect of sports on locations, rather than the effect of location on sports.

In a recent paper in Regional Studies, Justin Doran and I examined the effect of geographic proximity between clubs on performance in the English football League over 21 seasons. We tested for spatial interdependence, that is that a given club would perform better if it is nearer to a high-performing club and worse if it is near a poorly performing club, all other things being equal. We controlled for club wealth, managerial churn, and other locational factors, such as location in London and population density. 

The map on the left shows the location of all clubs that have played in the English football leagues in every season between 1993 and 2013, weighted by average performance. Performance is measured by end of season position. More detail is available in the paper.

We found that location matters for performance, even after controlling for those other factors. We found that "clubs perform better when they are located closer to other well-performing clubs, and the poor performance of some clubs is explained by the relatively poor performance of close clubs. This suggests that location matters for performance in English football, just as it has been found to matter in other sectors, even though clubs are largely immobile, do not share locally provided intermediate inputs, and rely (increasingly) on global labour markets rather than on local labour markets".

There is, in my view, a potential rich research agenda on the effects of location on sports performance.

To tap into this agenda I am co-convening a special session on Spatial Aspects of Sports Performance at the Annual Congress of the European Regional Science Association (ERSA) in Cork at the end of August. My co-conveners are Robbie Butler of this parish and Paulo Mourao of the University of Minho. Details of the call for papers for the special session can be accessed here. It is intended that the special session could lead to a special issue in REGION, the journal of ERSA. 

If you would like to take part please submit an abstract proposal by the deadline of February 28.

By John Considine

A quarter of a century ago, the staff list in the Department of Economics in UCC would change every September as a new set of visitors would arrive for an annual visit.  The new arrivals would include Oxford graduates dipping their toes in the teaching waters before deciding what to do next.  Included in that group was Tim Harford, author of a range of popular book on economics such as The Undercover Economist.

Then there were the Americans.  On balance, these were older academics, committed to a career in academia.  Some brought their families.  Charley Clark and Terry Langan were in this latter category.  They also brought a positive outlook and a sense of humour.  Then there were those who travelled east to Ireland and added to their numbers while in Cork.  One of those additions is now about to represent Ireland in the Winter Olympics.  Brendan Newby is one of a handful of Irish competitors.  We wish him well.

Brendan is a halfpipe skier.  The sport is describes as a dangerous one where competitors have to perform a variety of tricks.  Brendan should have the genetics.  His father, Van, survived amongst the econ in Cork.  Van had to perform some tricky routines himself during one assessment session - but that's a whole different story.

Go Bubba!

By Stephen Brosnan

Competitive balance (CB) is one of the most researched concepts in the sports economics literature. CB relates to the overall balance of a sports leagues or championships, i.e. the closeness of all participants. Empirical studies suggest higher degrees of uncertainty contribute to greater interest in sporting activities, increased attendances at matches and larger television audiences. As such, sporting bodies across a range of sports have implemented policies with the aim of increasing CB across their leagues. One strategy employed by the NBA to promote CB is linked to the draft system.

The NBA draft is an imperfect system, which rewards the teams with the worst win percentages with a greater opportunity of obtaining a high draft picks. The markets for NBA players are similar to other markets insofar as individuals and firms respond to incentives. As such, in the NBA teams are incentivised to ‘tank’ i.e. intentionally losing games in order to increase their chances of receiving the number 1 pick in the NBA draft. Tanking is particularly relevant for the NBA where one player can transform a team with a losing record to championship contenders e.g. previous Number One draft picks such as Tim Duncan or LeBron James have made their respective teams a championship contender for more than a decade.

The latest team to have implemented a tanking strategy are the Philadelphia 76ers. The 76ers have accumulated a three year record of 47 wins and 199 losses. However, the franchise has urged fans to “Trust the Process”. The process has led to the 76ers accumulating a number of highly ranked draft picks including recently voted All-Star Joel Embiid, NBA Rookie of the Year favourite Ben Simmons and the 2017 Number One draft pick, Markelle Fultz. The strategy of short term pain in return for long term gain is beginning to pay dividends with the 76ers currently ranked 8th in the Eastern Conference. However, Philadelphia are not serious challengers for the NBA championship and the likelihood of success using the draft system is far from certain. In a recent study, Motomura et al (2016) find that the draft is not necessarily the best road to success as identifying the talent that will improve team performance proves very difficult.
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The NBA have approved a new draft system for 2019 with the three worst teams in the league each having the same chance—16 percent—at the top overall pick. Under the previous system, the team with the worst record in the league had a 25 percent chance at the top spot. The new system also smooths out the odds across the board so that the teams ranked from 4 to 14 get a slightly better chance at the top pick. These measures have been implemented in an attempt to reduce the incentive for teams to tank. However, given the imperfect nature of the draft system, these new measures are unlikely to provide an effective deterrent for teams engaging in tanking behaviour.