By Robbie Butler

The 2019 SSE Airtricity League Of Ireland Premier Division kicks off tonight with reigning champions Dundalk's game at home to Sligo Rovers broadcast on free-to-air television. State broadcaster RTE have so far announced plans to screen 18 live games from the domestic league, with further games inevitable as the season progresses. 

As the national league recommences, talk turns to which teams are likely to be successful. The currently stability within the Premier Division is something this has never happened before in the near 100 year history of the league. Many are predicting that Dundalk will continue their dominance at domestic level, which has been broken just once since 2014. The current champions are odds on to retain their crown in 2019.

Whether the reduction in competition witnessed over the past 5 seasons (thanks to the success of Dundalk and Cork City), has caused a negative impact on interest is debateable. In fact, some may argue the opposite. 

Since the emergence of the Dundalk-Cork "duopoly" in 2014 demand for attendance at games does not seem to have been dramatically effected. Figures from last season (2018) show attendance levels of almost 36%, relative to stadium capacity. This is higher than any of the four season previous.

​The figure below chart this, and also presents total ticket sales, as a fraction of stadium capacity, for the six clubs that have appeared constantly in the Premier Division from 2014 to 2019. 

Total attendance as a percentage of total stadium capacity (thick black line) has risen from 28.5% in 2014 to 35.7%.

It is interesting to observe the drop in 2016 to 25.04%. What might be causing this? It seems to be largely driven be declines in attendance demand at the top clubs; Dundalk, Cork City and Shamrock Rovers.

​There are a number of possible explanations. The first is that Dundalk's domination was viewed as a reason not to go to games. The club won their third league title in a row in 2016. The Louth club also performed remarkably well in the Europa League that season, reaching the group stages. Maybe supporters became less attracted to the domestic game after being treated to Maccabi Tel Aviv, Zenit Saint Petersburg and AZ Alkmaar in Oriel Park?

​The upside is that demand has risen in 2017 and again in 2018. Let's hope interest in the domestic game can continue to build . This can only be good news for Irish football and its domestic clubs. 

By Robbie Butler

In August last year, Sky Sports lost the right to screen live La Liga matches in the UK and Ireland. I wrote above this here. It was a blow to subscribers of the sports channel, as games were regularly shown live on Friday, Saturday and Sunday evening. Along with this, Sky Sports News regularly showed highlights of games from Spain's top division.

There may be an upside however. With the Champions League returning to our screens this week and next, it is the first opportunity to watch the likes of Lionel Messi, Antoine Griezmann and Luka Modric, crowned both "The Best FIFA Men's Player" and " Ballon d'Or" winner in 2018, since the World Cup in Russia last July. In the case of Gareth Bale, many have not watched him play since his Man of the Match performance in the 2018 Champions League Final last May. 

Before we were saturated with the best players in the world through the broadcasting deal Sky had secured. The loss of La Liga has reversed this trend.This brings me back to my childhood, and memories of watching many of the best players rather infrequently. It wasn't that I didn't want to watch these players, but rather that games were not broadcast and access was not available.

The UEFA European Championships and FIFA World Cup provided a rare chance to watch some of the best players in the world. In the case of top European talent, there would be a chance to see these players every two years at international competitions or maybe on a Sunday morning highlights reel. The top South American talent, particularly those playing in Brazil and Argentina, only appeared on our screens every four years. 

I often wonder how much I suffered from an availability bias - to only use salient examples that come readily to mind to make judgments - and representativeness  - drawing conclusions from very small and biased samples. Did this play a part in our evaluation of  all of these players were rarely encountered. For example, Brazilian players were held in awe. We couldn't watch these players on a regular basis and footage that did arrive on our screens was always showcasing the best talent.

For example, Denílson de Oliveira Araújo became the most expensive player in the world in 1998, when Spanish club Real Betis paid São Paulo £21.5 million for his services. At the time I had heard about his remarkable step-over routine. I built a narrative around this. Whilst he was a player of talent, that came on in the 2002 World Cup Final, he was not the player I expected him to be, having watched him at length. In fact, many of the international players that were showcased as being far better than the players we watched on a regular basis, were in fact no better. 

As broadcasting of all players across the world has become more readily available, I wonder to what extent the diminished mystery of those coming from places that were once largely unknown to everyone but scouts (Brazil and Argentina come to mind) has impacted upon their chances of success at global football tournaments?

17/23 and 19/23 players from the 2018 World Cup squads for Argentina and Brazil played with a UEFA affiliated league. European opponents at the 2018 World Cup would have been very much aware of their strengths and weakness. The 1970 World Cup winning squad from Brazil didn't have a single European based player. Argentina had just 6 European based players in their 1986 winning squad, only 3 of whom started the Final. Even the most recent South American winners, the 2002 Brazil squad, had a majority home-based squad with just 10 UEFA based players.

The rise of broadcasting, of not just domestic players, but all players globally, has coincided with a decline in success of teams outside of Europe at the World Cup. Maybe this is coincidence. Maybe not - perhaps the dissemination of information plays a greater role?. Regardless, I am looking forward to watching players that I have not seen in months, live on television over the coming weeks. 

By David Butler

For those who are not familiar with the game, the Premier League runs an official ‘fantasy football’ competition online.  Laypeople can pick a team each week, accumulate points and pit their knowledge of the Premier League against other fans from around the world. The game is one of strategy and luck; fans have a limited budget and must select which players to back.

Recently it came to my attention that Magnus Carlsen, Norwegian chess grandmaster and the current World Chess Champion, was placed 111th in the fantasy football premier league. According to The Fédération Internationale des Échecs (FIDE), Magnus Carlsen is the best male chess player in the world as of February 1st. At the time of writing his position in fantasy football’ had dropped slightly to 224. This is remains an exceptional performance, particularly as he competes against over six million others.

Maybe I am wrong to think luck has a major role in this game? Perhaps strategic competency plays a greater part.  In this case perhaps Carlsen’s strategic genius, when it comes to chess, spills over into other domains?

This reminds me of a paper by Palacios-Huerta and Volij from 2009 published in the American Economic Review called Field Centipedes. Their paper considers the psychologically difficult process of backward induction between laypeople and chess players. The latter group habitually practice the art of thinking multiple steps ahead and reasoning backwards.  In this game two players take turns deciding whether to earn a marginally greater share of a growing pot of money, or to pass the money over to their counterpart. The equilibrium prediction is that defection should occur on the first round – the game unravels from every other stage back to the first. The major finding of the Palacios-Huerta and Volij study is that expert chess players play this game quite differently from students. 69 percent of chess players show signs of sophisticated strategic reasoning and stop immediately, mirroring the predictions of game theory. All Grandmasters in the experiment stopped at the first round.

I don’t know how many other grandmasters play fantasy football but perhaps they should be the source of advice for all things Premier League!

By John Eakins

If there was ever evidence of the importance that sport plays in our everyday lives it must be the recently released list of the top 50 viewed TV programmes for 2018 (here). Sport dominates the list with 26 of the top 50 programmes comprising of live sporting events. Three sports are represented in this list, Football, Rugby and GAA with 14, 9 and 3 events respectively. The fact that Football and Rugby were particularly prevalent is not entirely surprising given that the FIFA Football World Cup took place last year and also given the success of the Ireland rugby team in winning the Grand Slam and Six Nations tournament and attaining a clean sweep of wins in the Autumn internationals including a win over the World Champions, New Zealand.

It is perhaps difficult to capture the relative popularities of the different sports using the data we have. If we take a simple measure of the most watched programme for each sport, Rugby had the most viewers (Six Nations: England V Ireland, 975,600) followed by Football (2018 FIFA World Cup: Croatia V England, 924,400) and then the GAA (All Ireland Hurling Final: Galway V Limerick, 854,400). But if we take (albeit rather crude) measures of the average rank and average viewership for the top 3 programmes for each sport, the GAA fairs a little better with a higher average viewership of its top 3 programmes in comparison to the top 3 programmes in Football. Both sports still lag behind Rugby on both counts however (Rugby: Average Rank of Top 3, 4.7, Average Viewership of Top 3, 877,200; Football: Average Rank of Top 3, 12.3, Average Viewership of Top 3, 739,133; GAA: Average Rank of Top 3, 13.3, Average Viewership of Top 3, 747,900).

An examination of these figures over time can provide some additional insights. I collected equivalent data for the top 20 viewed TV programmes from 2012 to 2018. The first graph below shows the number of sporting events in the top 20 across these years and a breakdown by sport. The first observation is that the number of sporting events with high viewership figures is generally increasing over time with 5 sporting events in the top 20 in 2012 and 2013, 12 in 2015 and 2016 and 10 in 2018. Rugby and Football figure prominently with these figures, being boosted by Ireland’s involvement in the 2015 Rugby World Cup and EURO 2016. But even in Non-World Cup years such as 2017 the figures hold up well with a relatively even distribution across the three sports.

By Robbie Butler

Our 5th annual gathering will take place on Friday 24th of May 2019 at University College Cork.

This year’s workshop will focus on demand issues in sport. 

The event this year is co-funded by the Department of Economics, Cork University Business School and College of Business and Law at University College Cork.

More information relating to the event can be found here.

By Stephen Brosnan

Last week, I discussed the principal-agent problem in college basketball between Duke University’s star forward Zion Williamson and their three-time Olympic gold medal winning Coach Mike Krzyzewski. The principal agent problem arises when two parties have different incentives and the principal cannot ensure the agent acts in their best interest. This led to me thinking about the incentives facing NBA teams vying for Zion’s signature.

The best chance an NBA team has of drafting Zion Williamson is by winning the NBA draft lottery and receiving the number one overall pick. However, in order to do so teams are faced with a perverse incentive. A perverse incentive is an incentive that has an unintended and undesirable result which is contrary to the interests of the incentive makers.

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. As such, NBA teams are incentivised to ‘tank’ i.e. intentionally lose games in order to increase their chances of receiving the number one pick in the NBA draft. Tanking is associated with multiple problems in relation to the treatment of season ticket holders that have paid to watch the team for the season without full knowledge of the team’s ‘strategy’, distortion to betting markets which can have significant financial implications, detrimental effects on team moral and the creation of a losing culture within the organisation. 

However, the power of perverse incentives in the NBA is even greater than other sports leagues given that the NBA is considered a star dominated league where an exceptional player has the ability to transform a franchise from no-hopers to championship contenders. Of course, the opposite is also true – when a star player leaves the fortunes of the team often leave with them. Case in point: Lebron James.

• Lebron James was drafted as the number one overall pick in the 2003 NBA draft by his hometown team, the Cleveland Cavaliers. He led Cleveland to their first playoffs in eight years and their first ever NBA finals in 2007.
• In 2010, Lebron left the Cavs and ‘took his talents to South Beach’ by joining the Miami Heat. Following James’ departure, the Cavs had the worst record in the entire NBA over the next four seasons (97–215).
• In 2014, Lebron returned to Cleveland and transformed the team from the worst to one of the best teams in the NBA, leading the team to three straight NBA championship finals and winning the city's first professional sports title in 52 years.
• In 2018, ‘King’ James left once again but this time to Los Angeles Lakers and the Cavs winning record left with him. This season, the Cavs have the third worst record in the entire league (11-41).

As such, given a team’s success can often be determined by one player there will always be perverse incentives at play in the NBA, particularly in the case of tanking for the number one pick. However, winning the number one pick in the draft should not be considered a strategic panacea for NBA teams as traditionally selectors have found it very difficult to identify individual talent that will develop in star NBA players.
 

 Robbie Butler

In early December I addressed the current title race in the Premier League and the remarkable pace being set by both Liverpool and Manchester City. As the league enters February it appears that the title will end up in either Anfield or the Eithad come May, unless one of the chasing pack can put a remarkable run of results together.

Whilst this is the normal course of events for Man City in recent years - the club have won 3 Premier League title since May 2013 - this is not so for Liverpool. Older fans of the Reds will recall the 1989/90 season with fondest, but the title has not returned to Liverpool since then. There have been a couple of near misses since.

Gerard Houllier's treble-wining squad of 2001 ran an excellent Arsenal close the following season. Rafa Benetiz managed to put Manchester United under pressure during the 2008/09 season without ever really looking like winning the title. The closest since 1990 is surely Brendan Roger's squad which came unstuck in the final 3 games during April/May 2013, having had the title destiny in their own hand.

So what might be different this time around? Like most things in football, the answer can be explained by money. Most that watch the Premier League would agree Virgil van Dijk and Alisson, both signed since January 2018 have transformed Liverpool's defence. Jurgen Klopp's acquisitions appear to be reaping their rewards. Since his arrival in October 2015, the German has added 16 "senior" players to his squad. A further 27 have left permanently.. In that time Klopp's net spend has been €128.23 million. 

Liverpool's improvement this season, when compared to Klopp's previous years coincides with a big increase in net spending. The graphic below illustrates this for Klopp's time in charge.

In total the club has spent €437.13 million on player purchases since the winter transfer window, during the 2015/16 season.

Klopp's spending effectively remained neutral until the summer of 2018. During that time the German added Sadio Mane, Georginio Wijnaldum, Virgil van Dijk, Alex Oxlade-Chamberlain, Andy Robertson and Mohamed Salah to the squad! 

These signings were financed by the sale of the likes of Christian Benteke, Jordon Ibe, Joe Allen, Philippe Coutinho and Mamadou Sakho. In fact, Benteke, Ibe, Allen and Sakho fetched €92.9 miilion. Salah, Mane and Robertson cost €92.2 million; a profit of €700,000. Coutinho sale for €135 meant the combined cost of van Dijk and Alisson stands at just €6.3 million. 

The improvement this season may be explained by a net spend of €134.7 million. This has been driven by the additions of Alisson, Naby Keïta, Fabinho and Xherdan Shaqiri. Only time will tell if this is enough to bring the league title back to Anfield.

If it is it, Liverpool fans will unanimously agree it was the best €134.7 million the club ever spent.  

By John Considine

An official makes a bad call on the sports field and someone from the sideline roars "Are you blind, referee?"  The official is unimpressed.  He takes out his black book and makes his way to the sideline.  When he arrives at the sideline he asks the offending party "What did you say?"  The offending party replies "Are you deaf too?"

I heard the above story four decades ago.  In the meantime, I have observed an increase in the willingness to question officials (and a decrease in the acceptability of telling the above story).  I have also noted that one company (Specsavers) uses similar humour to the benefit of themselves and the sports entities they sponsor.

The use of technology by officials in sport gets plenty of attention.  When should it be used?  How is it used?  How is it changing the game?  The last couple of weeks have produced a few examples.  New Orleans Saints might be heading to the Super Bowl if the rules allowed technology to be used to review a late game collision in their game against the Rams.  It is suggested that the NFL are now considering using video evidence for pass interference calls (see a report here).  The debates surrounding the FA Cup fourth round and the Carabao Cup semi-final between Chelsea and Spurs should caution against expecting technology to solve all potential issues.

The managers of Chelsea and Spurs raised a few interesting points (read a report here).  Mauricio Pochettino (Spurs) suggested he is in favour of goal line technology but not Video Assessed Refereeing (VAR).  One of his complaints was about the time wasted waiting for a decision.  In the case of goal line technology the referee knows the computer based decision in a matter of seconds.  Maurizio Sarri (Chelsea) had two complaints.  First, he produced video evidence to suggest that the Spurs goal was offside.  Maybe this complaint is that the technology was not good enough.  Second, he said the officials are not able to use it.  Specifically, one official raised his flag and, in doing so, gave an incorrect signal to the players.

Pochettino's reason for supporting goal line technology is undermined somewhat in the context of gaelic games.  Decisions could be made as quickly as in Premier League game but the Gaelic Athletic Association (GAA) actually slows down the relaying of the decision.  Some say it builds excitement.  Some say it is to allows Specsavers to advertise.  Most agree with the introduction of the system and the improved decision making (although "human error" can still occur as discussed here).  There is greater disagreement on whether the time delay is worth the sponsorship money.

Technology and other changes have implications for the way we govern sport in the same way that they have implications for how we govern society.  Even economists have known this for centuries.  When Adam Smith wrote Book III in The Wealth of Nations he drew attention to the impact of change on the efficiency of rules and institutions (the Book that probably most directly deals with the overall title of his work).  Smith highlighted the fact that the progress of some countries was hindered by rules that had become outdated by changes elsewhere.  For Smith, the requirement to pass landed estates to the eldest son, with restrictions on how it could be disposed, hindered the movement of that same property to hands that might better develop it.  For Sarri, the official running the line was effectively a relic of the pre-VAR days.  The on-field official was not needed.  Worse, they caused confusion.  They need to be removed or their roles redefined.

Technology is changing the way sport in governed and the rate of change is increasing.

By Stephen Brosnan

In economics, the principal-agent problem occurs when one person (the “agent”) is able to make decisions and/or take actions on behalf of another person (the “principal”). The problem arises where the two parties have different interests and asymmetric information, such that the principal cannot directly ensure that the agent is always acting in their (the principal's) best interest.

Previous work by Purcell (2009) examined the presence of the principal-agent problem in professional basketball. The findings of the study suggest that imperfect competition between managers and players, coupled with long-term highly lucrative contracts, altered player’s effort over the course of their contract. Specifically, player effort is reduced the year after signing a long-term contract. This post examines whether similar effects may be evident in college basketball.

In recent years, few college basketball players have generated as much interest and excitement as Duke University’s Zion Williamson. The 6’7, 285 pound forward is widely considered a lock for the number one overall pick in the 2019 NBA Draft with comparisons being drawn to NBA greats Lebron James, Shawn Kemp and ‘Sir’ Charles Barkley.

Before the beginning of the 2019 college season, Williamson was projected to be a top 5 NBA Draft pick. However, there were worries over his weight and how this would impact his ability to get up and down the court and avoid injuries. Furthermore, many commentators suggested that he wasn’t even the best player on his team, with that honour going to RJ Barrett. This provided an incentive for Williamson to maximise his effort, learn from legendary Duke coach Mike Krzyzewski (‘Coach K’) and improve his performance in order to climb up the rankings, thus maximising the interest of both Coach K (principle) and Williamson (agent).

However, now that he is the consensus number one overall pick, which is rewarded with lucrative long-term contracts and sponsorship deals, there may be an incentive for Williamson to rest up in order to avoid injury and protect his future earnings. Six-time NBA champion Scotty Pippen said recently on ESPN “I think he’s locked up the biggest shoe deal, I think he’s definitely going to be the No. 1 pick, I think he’s done enough for college basketball, that it’s more about him personally” Pippen went on “I would shut it down. I would stop playing because I feel he could risk a major injury that could really hurt his career”.

These interests will obviously not be shared by his coach who needs Williamson to play in order maximise his chances of winning his sixth NCAA Championship. Thus, according to the principal-agent problem, Coach K needs to incentivise Williamson in order to align the interest of the agent with those of the principle. However, judging by recent comments this may have already happened with Williamson stating “I can't just stop playing. I'd be letting my teammates down, I'd be letting Coach K down, I'd be letting a lot of people down. If I wanted to sit out, I wouldn't have went to college. I came to Duke to play."

By Robbie Butler

This week the GAA announced that ticket prices would increase for the 2019 season following ratification of this by the organisation's Central Council. The move will see price hikes in both the National League and Championship matches. As one might expect, the reaction to this decision amongst supporters has been mixed. 

To understand the motivation behind this decision, economic theory can help. 

A standard sports economics textbook will address the demand function for sport (normally match tickets) at an early stage. Teams, or in this case the organisation running Gaelic Games, will set prices based on the typical fan’s willingness to pay. This prices is related to consumer surplus: the difference between what one is willing to pay and what one actually pays.

It is intuitive to reason that as prices go up, demand falls. Raising the price of a ticket will invariably reduce the number of fans willing to spend money to attend matches. This is offset by the increase in price. Whether the increase in ticket prices is worth the cost (loss of some fans) depends on the price elasticity of demand for match tickets. And herein lies the key.

• If one increases the price of a good or service, demand falls (as expected) yet total revenue (PxQd) goes UP then the decision was correct, from a revenue-raising perspective. 
• If one increases the price of a good or service, demand falls (as expected) and total revenue (PxQd) goes DOWN then the decision was incorrect, from a revenue-raising perspective, and prices should revert to their original level. 

Most research examining ticket prices and attendance find inelastic ticket pricing. In other words, teams and organisations could increase the price and in doing so increase total revenue.

So why don't they? Various reasons are proposed such as empathy with supporters, a desire to maximise attendance or the “fan experience, due to pressure exerted by supporter interest groups to keep prices down, maximising non-gate revenue, etc. It might even be the case that increases in ticket prices have no effect on quantity demand; none that is visible anyway. e.g. a stadium continues to sell out.

The GAA implicitly believe this to be the case anyway. The organisation as gone to great lengths to explain that this is their first major pricing increase since 2011. A statement released by the GAA ensured supporters that the additional revenue that is expected to be generated will be ring-fenced and benefit all counties as:
                    “A national pool will ensure that counties in lower tiers with smaller crowds are accommodated via the                            national pool. Additional revenue from these Championship ticket changes will be ring-fenced to fund an                        increase in grants to club facility redevelopments to a new high of €3 million, fund additional grant aid to                        overseas units and the staging of the GAA World Games in July, and make increases in capital grants                            and funding to county boards.”

The key words in this statement are at the start of the second sentence. "Additional revenue". In other words the Association is implicitly stating that they believe they are currently undercharging, if the objective is to maximise total revenue. 

At a practical level here are two of the changes:

1. All-Ireland senior final stand tickets go to €90 from €80 while a Hill 16 ticket will now cost €45, as opposed to €40 previously.
2. Rounds 1 to 3 of the All-Ireland Senior Football Championship Qualifiers tickets will rise from €15 to €20.

Attendance (quantity demanded) for point 1. above will remain unchanged (sold-out) hence total revenue will rise.

In the case of point 2. a 25% increase in price would need to result in a 25% drop in attendance in order to this decision to backfire. If 40,000 fans attended at Round 3 qualifier last year when the price was €15 will this drop, ceteris paribus, to 30,000?

​I think not. Demand is inelastic.