By Robbie Butler

In a recent post I spoke about the 4,000 plus employees that a 2012 Indecon report prepared for the Department of Agriculture, Food and the Marine suggested are directly employed in the racing industry. As a country that actively participates and follows sport, horse racing continues to be a sport where the Irish can compete with and beat the best. Ireland is arguably home to the best flat and national hunt jockeys and trainers. In a time where Irish teams often fail to compete on the international stage, horse racing continues to buck the trend.
 
Why might this be the case? Well, government support is probably the key. This year, the Horse and Greyhound Racing Fund will receive €55,020,000 according to the government’s Revised for Public Services 2013. A ESRI report by Fahey and Delaney states that Horse Racing Ireland (HRI) will receive 80% of this fund - €44,016,000.

In order to attract the best owners to Ireland and no doubt keep the best trainers and jockeys here, Horse Racing Ireland supports the prize fund quite heavily during the racing season. The industry has seen a large drop in the prize fund since 2008 which has fallen from approximately €60 million to €45 million last year. The pie chart below illustrates the sources of funding and is sourced from the HRI Fact Book 2012.
 
More than 60% of the direct government funding is used in the form of prize money. Bearing in mind that ownership of a horse is very much a luxury good, more so now than ever, one has to question the merit of funding this section of the industry so heavily and where the money is ending up. It further proves that you can be good at any sport internationally, you just have to be willing to pay for it. Imagine what €44 million a year could do for Shamrock Rovers, Munster Rugby or Cricket Ireland… 

The Federation of Irish Sport is the lobby group for a range of Irish sport organisations.  It made a pre-Budget presentation to members of the Oireachtas (Parliament) last week.  Their presentation and press release can be found (here).

By John Considine

The GAA and the NCAA have more in common than the double As (Athletic Association) that complete their acronyms.  There is one remarkable similarity in their commercial realities – the players don’t get paid to play.  The issue involved are examined in GAAconomics and Schooled.  The former is a new book on the economics of the Gaelic Athletic Association while the latter is  a forthcoming documentary on the National Collegiate Athletic Association.

This week Michael Moynihan launched his book GAAconomics.  The issue of professionalism pokes its head above the surface in a couple of chapters.  In chapter 12, Moynihan details a conversation with Sean Potts, GPA communication officer.  Potts makes the point that “in long term, we would see the GPA as a bulwark against professionalism”.   Potts does admit there is the “potential for a Kerry Packer – type situation”.

The Kerry Packer scenario gets a full chapter to itself later in the book.  While the chances of an alternative GAA being established are between slim and none, there is the acceptance that greater resources could be sourced from SKY if the GAA were willing to sell the rights to that organisation.  Paraic Duffy admits the GAA could get up to five times more from SKY than RTE but he says it is a route the association is unlikely to travel.

The issue of payments to players is never far from the surface in the chapters that examine payment to administrators and county managers.  The differences between those who populate a country dressing room on championship day are highlighted.

Of course the issue of payment to players is always a hot topic when it comes to the NCAA.  In the NC-double A world, the coach can be one of the highest paid employees of a college or university.  However, athletes who are suspected of profiting from their sporting role can end up in trouble like Johnny Manziel did at the start of August (see previous blog entry here).

The amateurism rule in the NCAA is coming under increasing pressure as the Ed O’Bannon lawsuit confirms.  Now Bobby Valentine is about to release his documentary on the issue.  This week he talked to Rick Horrow on Bloomberg’s Sportfolio about the upcoming documentary (here).  The documentary is eagerly awaited in the US.  There will probably be a few GAA people amongst the viewers.

There is an interesting story about a 26 year old Englishman who is potentially going to challenge the transfer window.  The story is covered by BBC sport (here) and by ESPN (here).

By David Butler

A recent  paper published in the Journal of Economic Psychology by Haifang Huang and Brad Humphreys asks an interesting question; does participating in physical activity improve reported happiness? The authors' results should be of interest to our Minister for Transport, Tourism and Sport as we approach the budget as the research finds that individuals are more likely to participate in physical activity if living in an area that has greater access to fitness and sports establishments. Those individuals with this access report higher life satisfaction. The research concludes that this correlation between participation in physical activity and happiness, when a number of controls are made, relates to the effect of physical activity on health. 

Using data from the U.S the authors look at this relationship across genders too and conclude that “both men and women gain happiness from participating in physical activity, and men appear to benefit more”. 
 
While there may be cultural effects at work, meaning that this research is not wholly applicable to other countries, investment in sporting organisations appears to have a dual health benefit; one physical, in that it helps to combat obesity and one mental, in that access to sporting organisations makes us happier. 

The lesson is perhaps that spending on sporting institutions is not just about entertainment, it’s about public health, both physical and mental, in addition to viewing sporting institutions as a vehicle to grow social capital and create positve externalities for communities.

by Declan Jordan

This year's European adventure has been a particularly disappointing one for League of Ireland supporters. No club managed a win and despite two draws (St Pat's away to Zalgiris of Lithuania and Drogheda United at home to Malmo) no club came out of the qualifying rounds in their respective European competitions (Champions League or Europa League).

There is always great solidarity among fans in the league to support whoever is representing them in Europe (sometimes even Shamrock Rovers will find support from other clubs). This is not just altruistic or nationalistic. All clubs have a stake in the European results because they go towards calculating the UEFA country ranking coefficient which is used for seeding in subsequent tournaments. So the poor showing by this year's teams will have an impact on the clubs representing the league, not just next year but over the next 5 years as the country coefficient is the aggregate of 5 years' country coefficients.

The Irish performance in European competitions down the years has been pretty dismal. Most of the victories have been of the moral variety. This may not be surprising given that the league has been semi-professional for most of its history. When making the step up to the next level the Irish clubs have been found wanting.

There are a couple of interesting details to take from an analysis of our record in Europe though. The graph below has an index showing Ireland's ranking among the clubs each year based on the country coefficient for that season. The country coefficient is calculated as the average score for all clubs from that country in European competition that season. This ranking is expressed as a percentage of the number of countries who participated in European competition in that season. So for example, if Ireland was ranked as 16th with 32 countries participating it would have a score of 0.5. If it was the lowest ranked country it would have a score of 1. The lower the index the better.

It's necessary to create an index as the number of countries participating in UEFA competitions has increased hugely from 32 in 1969 to 53 this year. 

It's clear that Ireland has routinely been among the lower ranked teams. There is one period where the league's representatives began to really punch above their weight. This is between 2003 and 007. Any League of Ireland supporter will immediately recognise 2003 as the start of the move to a summer season. It also coincided with a period of professionalism in the league when many clubs went full-time. The most obvious example was Shelbourne who had a great run in the European Cup, losing out in the final qualifying round before the league stages to Deportiva la Coruna. In 2007 Derry City beat Gothenburg and drew with Paris St Germain before losing in Paris. That was the high point for our ranking. Since then we have dropped back towards the bottom of the rankings.

The European dividend from summer football (where the teams playing in European competition will be well into their season compared to opponents who will be just starting a new season) seemed to be evident in the middle 2000s. This has evaporated and it would seem the real source of Irish success in Europe was due to the move to full-time squads. The picture above shows Wes Hoolahan against La Coruna - a player who is now an established Premier League player and who is touted as the key player for the national team. This is not good news for the future as the League has moved back, by and large, to a semi-professional status with many clubs still reeling from the excesses of the professional era.

The bad news not shown on the graph is that this year will see Irish clubs complete the fall to the lowest rank teamed in European competition as all of our clubs have now been knocked out so we cannot gain any more ranking points. And we sit at 53rd spot among the UEFA nations for this year's tournaments below the mighty Andorra, San Marino, Faroe Islands and Lichtenstein. 

By Robbie Butler

The Irish flat racing season comes to a close shortly and all eyes will turn to the national hunt scene in the months ahead. Without doubt, this has been another successful year for Irish trained horse both at home and abroad. Continued domestic dominance by the top Irish trainers has been coupled with Group 1 successes abroad in races including the Coronation Cup, 2000 Guineas, Epsom Derby, International Stakes, Queen Anne Stakes and St. James’s Palace Stakes. This despite the fact government funding to the state-arm of the industry, Horse Racing Ireland, has been reduced year-on-year since the onset of the financial crisis.
 
Most involved in the game would argue the reduction in funding has seen the industry suffer somewhat. A decline in horse ownership, breeding numbers, race entries and prize money over the past five years has no doubt been cause for concern for those employed directly in the sport of kings. That said, a 2012 Indecon report prepared for the Department of Agriculture, Food and the Marine confirms racing is still a significant employer in Ireland. The report states that:
"In 2011, the thoroughbred industry directly employed more than 4,000 people and earlier estimates suggested that if betting and racehorse sectors and other related employment are included horse racing supports over 20,000 employees- Dukes (report update 2010) indicates 17,351 employed”. 
 
This puts the employment figures in the racing industry on par with the likes of Intel, Boston Scientific and Pfizer.  For this reason, one must assume government support for the industry remains steadfast,  despite deeper cutbacks in other key areas.  

Last Friday's Financial Times carried a story saying that at least five clubs in this year UEFA competitions risk breaking the new financial rules.  The headline on the story was "Clubs risk breach of Uefa rules on finance".  These clubs risk breaching the £45m losses over two seasons.  Another 35 are in danger of exceeding £5m losses.  The story details how the financial rules are working so far.  It also lists some of the initial problems.  One problem is the way clubs are seeking to circumvent the rules with inflated sponsorship deals "with entity closely linked to their owners".  Another problem is dealing with the involvement of sovereign states becoming involved in clubs.

By David Butler

With AVB labelling Tottenham’s Capital One Cup clash with Aston Villa tonight as ‘impossible’ given his clubs congested fixture list, I asked the question - how much should fans worry about winning the competition? Over the last decade, the League Cup has been viewed as an opportunity for managers of top clubs to give young talent an opportunity. The ‘Big 6’ usually see fighting on all fronts (Premier League, Europe, F.A Cup and League Cup) as a strategy that can lead to disaster as overstretched squads fail to achieve any one particular target and instead perform to an average level on all fronts. This is in contrast to smaller Premier League clubs who often see the competition as a potential route to Europe (outside of the league) and a source of much needed silverware. 

Below is a table that shows the prize money for the Capital One Cup, the F.A Cup, The Premier League and the Champions League. In the case of cup competitions finishing 3rd means being a beaten semi-finalist. I acquired
the data from official websites and some newspaper articles too (that didn’t cite any sources), thus I would take the figures as estimates at best. 

Even if these figures are partially of the mark there is still a significant gap between the prize money for the Capital One Cup and other competitions (I couldn’t get data on the Europa League). The prize money on offer appears to match the big team’s allocation of their human resources and is probably a reason why we may not see any of the usual stars on show tonight and tomorrow. 

The real incentive however to win the League Cup is of course the payments that would be received from a team’s European qualification where clubs are paid based their performance in each stage of the Europa League  (there's plenty of bonuses to pick up along the way too). So maybe it's best for AVB to field the youths tonight and to worry about the prize money and subsequent European qualification on offer elsewhere.

by John Considine

Are some sports teams cursed?  Mayo fans who saw their team fail to win the All-Ireland senior football final for the 7th time since 1989 might think so.  So might the fans of the Chicago Cubs baseball team.  The Cubs have not won a World Series since 1908 (Mayo won titles in the early 1950s).  However, two Cubs fans believe they have found the reason for the poor  record of the Cubs.  It is not being cursed with bad luck.

Tobais Moskowitz and Jon Wertheim show that 93% of MLB winning percentages can be explained by the performance of players on the field.  That only leaves, at best, 7% for luck.  They find that 94% of the Chicago Cubs winning percentages can be explained by the performance of the team.  The problem is that the teams have not been that good.  Luck has little to do with it.

In their book Sportscasting, Moskowitz & Wertheim trace the source of the losing culture to the transfer of the club to P. K. Wrigley from his father William Wrigley (of chewing gum fame and fortune).  PK decided to make visiting the ball park an experience independent of the team’s on-field performance.  The result was that the Cubs did not always put the best team on the field.  By making attendances less sensitive to the performance of the team, the economic incentives to have a good team diminished.

Using a century of data, they estimate that the Cubs have one of the lowest sensitivity of attendances to winning percentages.  The result is one of the top-5 most valuable franchises in MLB.
 
Wrigley’s decision seems to have cultural as well as economic implications.  Moskowitz & Wertheim believe it has  fostered a losing culture. Despite being Cubs fans themselves, they seem to suggest that the Cubs fans feel  comfortable with losing.  The fans are more concerned with beer prices at the stadium than ticket prices.  An analysis of the increase in ticket prices since 1990 reveals that the Cubs have the third largest ticket price increase.  Yet, they have the third lowest price for beer.

The Chicago Cubs changed hands in 2009. The new owners seem interested in changing the culture.  It is difficult to say if they will succeed.  It is also difficult to say if Cubs fans like Moskowitz & Wertheim want them to succeed!!!