by Declan Jordan

​Just over 40 years ago my hometown football club had one its biggest games. Limerick United played Real Madrid in the European Cup in October 1980. The ‘home’ game was moved to Dublin in a vain attempt to raise some extra money. It turned out to be a bad idea, as only 6,000 people turned up to see the part-timers lose 2-1 against a late goal and a very suspect penalty. We also had a goal disallowed, but we are not holding on to it too much.
 
For Irish football fans the days of attracting big clubs for European fixtures are now very rare. Shamrock Rovers played AC Milan earlier this season in the Europa League, but typically our clubs now are more likely have early round games against clubs from other lesser leagues.
 
These games came about because the European Cup used to be a competition between European league champions. Now it is a much bigger competition with the larger leagues now having up to four qualifiers. The teams from the big leagues are seeded so they are kept away from clubs in less illustrious leagues in the earlier rounds.
 
I think it is clear that the inclusion of more teams from the stronger leagues has improved the quality of the competition and we see much better games, particularly in the knock-out stages. The television viewer cannot complain and the Champions League is arguably the best club competition in the world.
 
However, as a supporter of a team in a less fashionable league I do also have a sense of the loss of these big occasions for fans like me.
 
There is also the implication for balance in the competition. Allowing more big clubs into the competition should mean that more clubs have a better chance of winning, since it is not necessary to win the domestic league to qualify. What we might also expect though is that the number of different countries producing winners may decrease, as more qualifiers from the stronger leagues, and the more forgiving move away from straight knockout, favour the better (and richer) countries.
 
The table below shows the number of different clubs and the number of different leagues that have won, lost the final, and lost a semi-final in the Champions League compared to the European Cup experience over a similar time period.
 
It is important to note that one of the strongest leagues (England) had no representatives in the European Cup from 1985 to 1990 after the Heysel tragedy. This gap does not change the different number of countries that won the European Cup, though it is interesting to note that no English team featured in a semi-final from the Liverpool defeat at Heysel in 1985 until Manchester United lost in the then Champions League the 1996/7 season.

​The table shows that the number of clubs that have won or reached the last four of the Champions League from 1993 to 2020 is lower than the corresponding number of number of clubs that won the European Cup over the same time period (1964 to 1992).  This difference is even more pronounced in the last 10 years relative to the final 10 years of the European Cup.
 
It is also the case that we have seen fewer leagues represented in the final four places of the Champions League.
 
This has been particularly noticeable in the last 10 years. Since the 2010/11 season only five clubs from three leagues have won the tournament – Bayern, Liverpool, Chelsea, Barcelona, and Real Madrid. More remarkably, only five leagues have been represented in the finals (adding in PSG and Juventus) and six leagues when we drop down to include semi-finalists (Ajax). This means the last four places have been monopolised by the top 6 leagues (Spain, England, Italy, France, Germany, and the Netherlands).
 
Compare this to the final places in the last 10 years before the establishment of the Champions League. There 9 winners in 10 seasons – Hamburg, Liverpool, Juventus, Steaua, Porto, PSV, Milan, Red Star, and Barcelona. Eighteen different leagues had teams in at least the semi-finals.
 
I should note that I have used the current nations in the analysis – so that winners before 1989 that played in the Soviet and Czechoslovakian league are counted as Russian, Ukrainian, Cezh or Slovakian as appropriate. This turned out to be a minor issue as, for example, no East German teams featured and only Sebrian teams featured for Yugoslavia.
 
Allowing more teams from the stronger leagues is associated with greater concentration of success, at club and league levels. For the stronger, and richer, leagues in Europe this may very well be a feature rather than a bug.

By Daragh O'Leary

A phrase that I’ve always liked is demography is destiny. The phrase is attributed to French sociologist and philosopher Auguste Comte. The idea behind the saying is simple enough, the shape of the population shapes the population’s future. In his book The Demographic Cliff, Harry Dent Jr. describes how demographics can impact on future levels of economic activity. He gives many examples of how generations with proportionately high birth rates go on to increase economic activity a disproportionate amount 20 or 30 years after their births. The book got me thinking about whether or not this could be applied to the case of sport, specifically soccer, in Ireland.

If you look at the ages of players in national football teams you can see that most are in their 20s. A few veterans will be in their early 30s but as a rule of thumb, international soccer is a young man’s game. This means that when a footballer is born it will take them around 20 odd years before they go on to represent their national team. The Irish men’s national team reached their first ever major tournament in 1988 which means that we would be looking at the birth rates for Irish males in the mid to late 1960s. Coincidentally, this period of time just happens to be an era of high births rates for Irish males. By 1963, Irish male births had reached levels similar to the baby boom period in the late 1940s and early 1950s. The number of male births in Ireland continued to increase upwards from the 1960s up until 1980 where it peaked at 38,267. It seems suspicious that the most fertile period for male births was from the early 1960s to 1980 and Ireland also just happened to begin qualifying for major international tournaments in the very late 1980s, 1990s, and early 2000s. Around the time when these players would be coming of age. 

This is illustrated in the below graph which shows the number of Irish males born in blue and the years the Irish national men’s team played in a major international tournament in green from 1950-2019. 

It seems noteworthy that from 1980 onwards Ireland’s number of male births declined considerably. In fact, in 1987 Ireland hits as low as 29,931 male births which is lower than the trough period just before the 1960s. Ireland failed to qualify for major tournaments in 2006, 2008, and 2010 as the generation which brought them their most success on the football pitch started to age. There was a brief resurgence in participation at major tournaments in the 2012 and 2016 Euros which could have been as a result of the brief plateau in male births in the late 1980s before it began its really heavy decline into the 1990s.This decline continues until it hits rock-bottom in 1994 at just 24,957 male births. It seems extremely telling that if we were to move forward roughly 20 years from this rock-bottom period for male births it would bring us up to around the current day Irish team which has failed to qualify for the last two major international tournaments. The current team’s stock of available players is so low they seem to be increasingly relying on older players or players born in different populations which qualify to play for Ireland and choose not to play for their birth country.

It seems demographic change has quite a decent level of explanatory power over Irish sporting success. Now it does have to be said that demographic change seems to offer little explanation for Ireland’s poor participation in major international tournaments up until 1988. This is most likely as a result of the famous ban which the GAA had in place on foreign sports up until 1971. This meant that people who played non-Irish sports like soccer would have been banned from playing our national sports like hurling and Gaelic football. It is very likely that this may explain Ireland’s lack of participation in major soccer tournaments up to this stage. None the less demographic change seems to explain Irish success fairly well from the 1980s on.
​
Lastly, it should be noted that there is no way this demographic change could predict Ireland’s success on the pitch exactly. Historical demographic change can only give us an indication as to the era in which we may be most likely to qualify for a major tournament because we will have a relatively larger stock of potential players to pick from. Considering this, it seems a relatively safe bet that the Irish men’s team will start to improve toward the end of this decade and go on to qualify for the 2030 World Cup and the 2032 Euros, which will both take place just over 20 years after the record high number of 38,682 male births set in 2008.  COYBIG!

By Robbie Butler

Unfortunately, due to the on-going public health situation, it has been decided to delay the 12th ESEA Conference in Helsinki, Finland for another year (until 2022).

This means that the arrival of the conference at University College Cork, originally planned for 2021, but delayed until 2022, has now been delayed for another year until August 2023.

The next three events are therefore as follows:

• 12th ESEA Conference on Sport Economics – Online Conference hosted by Bielefeld University, Germany 25th August – 27th August 2021
• 13th ESEA Conference on Sport Economics – Haaga-Helia University of Applied Sciences, Helsinki, Finland from 24th to 26th August 2022.
  
• 14th ESEA Conference on Sport Economics – University College Cork, Cork, Ireland. August 2023 (dates to be confirmed).

By David Butler

It was interesting to see that the impact of 'bots' on football was receiving attention this week. For those not aware, automated software now exists to track fantasy football teams of Premier League players and staff. The story took off when it was ‘leaked’ on social media that Jack Grealish was injured before Aston Villa's game against Leicester.

An interview with the creator of the software can be read on the BBC website. In short, the ‘FLP insider’ twitter account reveals information on the strategic choices of players/staff within clubs (those who have private information on player fitness, injures etc.). The software was created based on publicly available information accessible via linkedIn, Football Manager and other sources.

While the use of this software doesn’t have much impact on the fantasy game itself, there is a monetary implication - the information could affect betting exchanges where a myriad of exotics bets can be laid. i.e. if player X took out his team-mate from his fantasy team, and this team had a late kick-off, say on a Sunday evening, there would be time for this new information to be potentially exploited.  

Regarding on-the-field implications, the managers seem either somewhat upset, citing ethical issues, or are indifferent to it. The information might give a club a strategic advantage, if they can make the right inferences from the fantasy choices of their opponents. There is scope here as football has a tradition that see's the team sheet released close to kick-off (usually 1 hour prior). This is part of the suspense for fans and adds a strategic dimension for managers. Other sports differ. In rugby for instance, it is common that line-ups are announced 24 hours in advance.

There is another factor however linked to these leaks that is in the hands of the clubs – training ground pictures. Often savvy fans can reverse engineer starting line ups based on the positioning of players on the training ground or based on which group of players are conducting routines. Obviously, missing players from training also spark injury concerns.

​Rules to prevent footballers from gambling on the sport already exist, so should Fantasy Football also be forbidden? I think that would be somewhat draconian. Perhaps players should be encouraged to play anonymously and clubs themselves should keep a closer eye on who they allow take pictures during training. Perhaps clubs themselves need to be more transparent – maybe injuries need to be logged with the Premier League and published well in advance of matches. 

By John Considine

This website started in the middle of 2013.  One of the first Journal of Sports Economics (JSE) articles reviewed was written by Nola Agha and examined the economic impact of teams and stadiums (here).  It was unusual in finding a positive impact.  Now, in 2021, Agha returns to the pages of the JSE in a paper that highlights the difficulties finding a positive impact.  The reference to the 2013 paper is shoehorned in as a sentence in the conclusions.  This change in emphasis was the latest in a series of readings that prompted what follows.
 
A decade ago I was struck by a sentence in Stefan Szymanski’s brilliant Playbooks and Checkbooks.  The sentence is "Here is a roll call of some of the hero-economists who have dispassionately reported the evidence on the impact of major sporting events, without fear or favor, often suffering personal abuse, and frequently denying themselves the opportunity to line their own pockets for the price of what the politicians would like to hear”.
 
When it comes to telling politicians what they would like to hear in return for monetary gain, there is a long queue of professional firms, employing economists, that are willing to do so.  Should we call these the anti-heroes?  Maybe we should consider the distinction made by Daniel Drezner in his 2017 book called The Ideas Industry.  Drezner is mainly concerned with ideas in the area of foreign affairs and he distinguishes between what he calls “public intellectuals” and “thought leaders”.  The latter are second-hand dealers in ideas who package these ideas and sell them for direct financial gain.  They provide the intellectual justification for actions that the politicians may wish to take.  When it comes to major sports events, there plenty of thought leaders that will provide economic justification for a course of action.
 
While Drezner can be critical of the thought leaders, he does highlight the areas that they can do superior work to the public intellectuals.  A prime example is their access to industry financial information that is not publically available.  In addition, they can be more open-minded whereas some ideas held by the public intellectuals are elevated to ideology.  Moreover, it should also be pointed out that public intellectuals can gain indirectly from their ideological position, e.g. peer esteem and associated promotions.
 
More recently, I was reviewing a number of textbooks in sports economics.  Many of the testbooks accepted that there may be a theoretical case for public spending on sport but they struggle to provide concrete examples.  Here is a quotation from one of those textbooks, “while a coherent theoretical case can be made for public sector investment in sports, the evidence in support of this case is weak, and suggests considerable caution and planning is required to harness the spillover effects from the investment”.  Reference to public goods, externalities, and merit goods arise in the textbooks but very few unambigious concrete examples are present.

It was suggested that my review of the sports economic literature showed a bias and it was overly critical view of public funding.  If there was bias then is it mine or is it present in the literature?

By David Butler

A central way bookies make money is through the overround (vig) on a given bet. This involves bookies factoring in their cut to the prices offered to bettors. How much bookies want to take from each bet is key to what prices are offered. If bookmakers consistently price effectively, regardless of the outcome, they should not lose significant sums. In most cases, by pricing optimally they will nearly always win. 

This can be seen by looking at betting odds for any sports market. The implied probabilities derived from the odds will always be over 1.  Take the most recent EPL match between Everton and Manchester City – the odds suggested that Everton had an 9% chance of success while Manchester City held a 77% chance of success. There was a 17% chance of a draw.  The extra 3% goes to the bookies.

How does this overround vary in football? The graph below shows the overround for the Premier League last season prior to the COVID break. What can be seen is that the overround on each match usually varies between just under 3% up to nearly 4.5%. On average they factor in about 3.61% for themselves on each match. 

There can be some interesting things seen in this trend. First, the bookies take far less of a cut on the first round of matches where competition might be more intense in the market. Getting bettors onto your platform, with more competitive pricing (effectively a sale), might be seen as a useful strategy to keeping them.    

Second, the bookies take trends upward as the season progresses. In particular, after the turn of the New Year, the bookies start to increase their cut. 

Professor of sports economics Alex Krumer has recently uploaded content to YouTube that provides many intersting examples that illustrate the usefulness of sports data in economic research.

His most recent video can be viewed below - ​'Sports for economics like apples for physics'

By Robbie Butler

As expected, release of the 2020 financial accounts for the GAA did not make for good reading. The national game and Association were badly hit by the Covid-19 pandemic and reported a deficit of €34.1 million for the calendar year. These losses were a combinations of both central (€27.1m) and county (€7m) level deficits, and compare to a surplus in 2019 of about €10 million.

The core problem facing the Association in 2020 was both the decline in commercial and gate revenues. Combined, these revenues sources fell 60%, from €73.9m to €31.4m. According to the Association "In 2019 the GAA earned €36M from gate receipts, whereas in 2020 income from gate receipts was just €3.6M". This means that both revenue sources added about 50% each in 2019 but gate revenues obviously collapsed in 2020.  

While few could have predicted in early 2020 that there would be a collapse in gate revenues, reliance on this source of revenue makes the GAA look more like lower-tier football clubs in England or the early years of the Premier League. Broadcasting revenues now dwarf gate receipts in almost all major sports with the NFL and Premier League being the two best examples.

The GAA have sought to rectify this in recent years by selling broadcasting rights to subscriptions channels such as Eir Sport and Sky Sports. However, the sums involved still do not match ticket sales. For example, the current BSkyB/GAA broadcasting agreement, which runs until 2022, is worth about €11 million per year. This is about the same value as a single Premier League game broadcast by Sky Sports, BT or Amazon.

News that Amazon may be about to bid for GAA matches from 2023 could be good news for the Association. It might move the game away from a reliance on state aid (currently more than half of all revenue) and gate receipts.

The reliance on gate receipts is probably the main reason why a rescheduled calendar for 2021 would see club games start first, with inter-county matches starting later in the year. If the latter were to start in October, for example, restricted attendance might be possible, assuming vaccine rollout continues apace. Any revenue in this form would be welcome news following a dreadful 2020 season. 

By Robbie Butler

We received some great news recently when learning that our paper "Contracts, Pay and Performance in the Sport of Kings: Evidence from Horse Racing" had been accepted by the British Journal of Industrial Relations. The paper is co-authored with David Butler and Robert Simmons (Lancaster University). 

Using twenty year of data from 2000-2019 we explore the relationship between jockey pay and performance for flat racing in Great Britain. In essence, the work is an extension of Fernie and Metclaf (1999) and seeks to understand if  performance-related pay schemes can raise worker productivity with much of this increase due to worker sorting. The beauty of horse racing in the context is that it allows us to consider variations in the power of performance-related pay contracts which can be rarely observed in other employment settings.

Unlike previous findings, we find no evidence of worker shirking when the power of incentive contracts is reduced through jockeys switching from complete performance-related pay scheme into a salaried (retainer) contract. Moreover, salary contracts result in legacy effects with superior performance continuing for elite jockeys even after their salary agreements have expired. Amongst other things, we argue this is due to a reduction in monitoring costs. 

The acceptance marks our 4th peer-reviewed acceptance in sports economics over the past 10 months. It is also the 4th sport (rugby, football and boxing the other three) we have explored. I wish to thank attendees at the 2018 ESEA Conference in Liverpool and the 2020 NAASE virtual conference for their many helpful suggestions. 

Once ready, we will make a link to the paper available.  

By Robbie Butler

Last weekend there was a televised discussion about betting markets during live horse racing from Leopardstown’s Dublin Festival. The conversation discussed how gamblers bet today with all non-essential retail closed in Ireland. The answer of course is online. 

The switch to online betting – growing in popularity before Covid-19 – has increased at an even faster speed. With bricks and mortar betting shops closed for the foreseeable future, it will be interesting to observe if habits change once they reopen.

The other important element of the betting market that remains shut is the on-course betting market. On-course betting was a cornerstone of the betting market. Prior to government legislation in 1920s and 1940s, the only place one could have a bet in Ireland was at the course. This market therefore created the crucial “starting price” (SP) from which all off-course betting services then anchored upon. 

The on-course betting ring is a sight to behold. In fact, it provides a wonderful illustration of how a financial market – albeit a very short-lived one – works. The ring is a hive of information and prices. Bookmakers list prices and bettor (punters) respond. Part of the fun of going racing is walking around the betting ring looking for the best price. If positive information about the chances of a horse reaches the betting ring, punters will back the horse and the price will tumble. There are times when you might miss a price because you move to late.

Sometimes the betting ring will reach an impasse as punters and bookies are not prepared to trade at current prices. One bookie may increase the price of a horse and a rush will ensue. Observing this is both fun and interesting. If the bookie takes all bets and the price remains unchanged, those that backed might regret their rush. If however the punters force the bookie back to his/her original price, or lower, they might have been right to rush for the higher price. Often, you can observe bookies rushing to 'lay off' with other bookies, attempting to hedge against potential losses following a big gamble. Indeed, a handful of big bets can shift the on-course market.   
 
The return of the betting ring will be interesting to witness post-Covid. As someone said to me recently, they wonder if bookies will attempt to move over to debit card (tap) devices. Currently, the market is almost all cash. This would be an interesting step and could help the betting ring survive and maybe even grow. 

​Racing would be a much lesser place without on-course betting market. The last year has proved (to me at least) that betting online is a poor substitute to the fun and enjoyment of being in the betting ring. Maybe one consequence of the past year might be to reserve the fortunes of on-course betting.