By Robbie Butler

As is tradition this week, we turn to the Cheltenham Festival. Over the past years we have tested whether rules of thumb such as following certain jockeys or trainers offer a successful strategy for beating the market. This year I will try something different and am deferring to the knowledge of those within the industry.

For the next 4 days we will follow a selection of industry professionals listed in the Irish Daily Star and Paddy Power supplement, making predictions across all races each day.  

I will assume a consistent betting stake with updates to follow during the week.

Let's see if the "experts" can beat the bookies!

DAY 1

Day 1 appears to be a day for the bookies. The table below presents the results for our ten experts, that are sourced from many aspects of the racing industry.

We assume a €10 stake in all races. Each way predictions are assumed to be €5 on win and €5 on the place. In a number of instances the expert tips two horses. In these cases we split the stake, and put €5 on both. 

Only two experts are ahead after Day 1. Both are sports journalists. Brian Flanagan correctly tipped both Klassical Dream (6/1) and Beware The Bear (10/1). David Coughlan selected Espoir D'Allen each way (16/1). 

Matt Chapman, Ruby Walsh and Mick Fitzgerald all mention a winner but cite another horse in the same race. Hence a 0.5 correct score is reported. 3 of the 4 jockeys listed failed to pick a winner in any of the seven races. 

DAY 2 
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Just two of our experts finished ahead after Day 2. TV Presenter Matt Chapman was certainly the man to follow. He tipped no less than 5 winners (including one each way) yesterday including Band of Outlaws and Envoi Allen, as well as Brewin'upastorm each way at 11/1. In total, the flamboyant television presenter made a profit of just over €57 on an even €10 stake.  

Mick Fitzgerald was the only other pundit to finish ahead and reported an impressive 90% increase in stake having correctly picked 2 from 3.

Overall results for Day 1 and 2 below. Just 3 of our 10 experts are ahead after the combined first two days of the Festival.

By John Eakins

This post is possibly opportune given the week that is in it. The end of last month saw the release of a survey on gambling prevalence by the Department of Health in Ireland (press release here, report here). It is part of a wider survey on the Prevalence of Drug Use and Gambling in Ireland and Northern Ireland. While the survey has been carried out at regular 4-yearly intervals since 2002, the most recent survey was the first to capture detailed information regarding gambling habits in Ireland. The survey sampled a representative number of people aged 15+ from August 2014 to August 2015, resulting in a sample of 7,005 respondents, a response rate of 61%.

The definition of gambling used in the survey was a broad one and included buying a national lottery ticket or scratch card, playing lottery games online, gambling in a bookmaker’s shop, gambling online or by telephone, placing a bet at a horse or dog race meeting, playing games at a casino, playing a gaming/slot machine, playing card games for money with friends/family and playing bingo. Table 1.1 reports the prevalence of gambling in Ireland where prevalence refers to the proportion of the adult population (15+) who have gambled in a particular time period (i.e. last year or last month). The table is reproduced below.

As can be seen, 64.5% of respondents report some form of gambling in the last year, while 41.4% report gambling on a monthly basis or more often. The most common form of gambling is on national lottery tickets or scratch cards, with 56.7% reporting this form of gambling in the last year, and 35.4% reporting this form of gambling on a monthly (or more frequent) basis. The next most common forms of gambling in the last year are gambling in a bookmaker’s shop (15.3%), and placing a bet at a horse or dog racing meeting (12.7%). It is interesting that online gambling at 7.3% last year and 3.9% monthly (or more frequently) is not as prevalent as perhaps one might have expected.

Table 2 in the report breaks down the figures on last year gambling by age. Overall gambling prevalence appears to increase with age with higher proportions in the 35-44, 45-54 and 55-64 age categories. The effect is non-linear however as it decreases for those aged 65+. In general, older people are more likely to buy national lottery tickets while younger people gamble in a bookmakers shop, at race meetings and online.

Table 4.1 and 4.2 separates last year prevalence by gender. In terms of all gambling activities, prevalence for males was slightly higher than females across all age groups except interestingly, in the 65+ age category. When broken down by the gambling activities, females gamble on the national lottery or play bingo to a greater extent while males gamble in a bookmakers shop, at race meetings and online. When looking at more frequent (monthly or more frequently) gambling (Tables 5.1. and 5.2), the figures are weighted significantly more towards males, that is, males engage in all forms of gambling on a more frequent basis than females and also across the different forms of gambling. In fact the only frequent forms of gambling than females really engage in is buying national lottery tickets.

Males also spend larger amounts on gambling than females, with high spending defined as spending more than €250 on gambling in the last year (Tables 6.1 and 6.2). The prevalence of high spending on gambling across all adults is greatest for the national lottery (11.2%), gambling in a bookmakers shop (4.9%), gambling at a race meeting (1.8%) and online or telephone (1.4%). The equivalent figures for males are 12.9%, 9.5%, 3.4%, 2.9% respectively.

Table 7 reports gambling prevalence by socio-economic group. Some interesting patterns are present here. Taking all forms of gambling initially, the report finds that higher socio-economic groups gambling more prevalently, a probable income effect. This effect is also present for most of the gambling activities particularly gambling online and placing bets at race meetings (the latter of which, interestingly, displays a very strong positive socio-economic effect). There is a weaker positive effect for playing the national lottery (i.e. effectively similar levels of prevalence across all socio-economic groups) and a strong negative socio-economic effect for gambling in a bookmakers shop.

Finally figures for the prevalence of problem gambling were also reported. Perhaps unsurprisingly, males are found to have a higher prevalence of problem gambling than females (1.4% vs. 0.2%) with problem gambling most common in young males (2.9% in the 25-34 age group).

So what can be taken from the survey? Generally the results are as expected. Males gamble more than females. Older people play the national lottery, younger people gamble in bookmakers, at race meetings and online. Males are more likely to be problem gamblers. One thing that I think is interesting to see, is the fact that the ‘traditional’ ways of gambling are still the ones that are the most popular. I would have expected larger values for online gambling for example but this did not arise.

Couple of points on this however, which are relevant for the rest of the results also. The survey was undertaken almost 4 years ago and even since then, one would expect online gambling to have increased. It is also hard to judge the values when there is no comparison with previous surveys i.e. no trend. It could be the case that online gambling, while low, is trending upwards and the traditional forms of gambling are trending downwards. Finally, as is the case with all gambling surveys, the level of non-reporting of gambling can be high because people may not want to report their gambling habits truthfully and they may also subconsciously tend to underestimate how frequently the engage in the activity and how much they spend. Not so much as problem with Robbie Butler however, as we will see over the coming days!

By John Considine

The latest Deloitte Football Money League (DFML) publication shows that the Top-20 clubs share approximately €8.34bn in revenue in 2018.  Just over 42% of that revenue comes from Broadcasting, 40% from Commercial revenue, and the other 18% from Matchday revenue.  However, there are some interesting differences in the distribution of that revenue.

The table below groups the clubs according to the country in which they operate.  There are 9 English clubs in the Top-20 and they share €3.73bn.  For these clubs broadcast revenue is by far the most important.  It is the source of just under half their revenue.  By contrast, the one French club in the Top-20 (PSG) receives less than 24% of their income from Broadcasting.

Broadcast revenue is the most important source of revenue for 7 of the 9 English clubs.  However, there are large differences in the level of importance - as illustrated in the table below.  Everton is the standout example.  Three-quarters of the club's revenue comes from the Broadcasting source.  Newcastle United and West Ham United are not far behind.

Daragh O'Leary

Economic frameworks are built around the idea that people respond to incentives and government policies are often designed around them. Incentives can be observed anywhere in the world of sport but seen as it’s RBS Six Nations time again I thought I’d write something on what I think is a rather clever incentive in the competition which was recently discussed by Irish Examiner writer Peter Jackson. The incentive is the bonus prize money awarded to the team which wins the Grand Slam.

For those not familiar with the competition, the Grand Slam is when one nation manages to win all of their matches in the Six Nations. It’s a difficult task to accomplish but for the team that can pull it off it’s worth an additional €1.15 million to their prize money. This is obviously a great incentive for teams to try and remain unbeaten on the final day of the competition even if they have managed to win the Championship before the final whistle, but there is another key factor in this incentive structure which makes it great.

The Grand Slam prize money is taken from the other 5 nations in the competition, so teams like Italy who could be in last position with no hope of doing better on the final day of the Championship still have an incentive to try and beat a team that is going for the Grand Slam because it will save them €230,000.

Due to the structure of league formatted competitions, it can often be the case that top performing teams which are secure in their position often see no need to field fully strengthened teams and risk injuries to their players; it can also be the case that low performing teams who cannot escape their poor points tally regardless of their last few performances in a league also don’t play with as much desire to win. Consequentially this leads to less exciting games for fans to watch towards the end of league competitions if the winners and losers of the overall competition are known before the final few games of the league. The RBS Six Nation however, has found an interesting way to keep teams motivated to beat each other.

By David Butler

Moneyball: The Art of Winning an Unfair Game is a well-known book by Michael Lewis, that tells the story the Oakland A’s innovative use of statistical techniques (sabermetrics) to exploit a hole in the labour market. The A’s commonly had one of the lowest team payroll’s in the league but won games at a discount relative to the competition. They did this by identifying how certain skills were mispriced such as on-base percentages and slugging percentages. While the A’s approach diffused relatively slowly, it could be imitated, and the competition caught up. In time, the anomaly was worked out of the market. 

In general, Moneyball is about developing an objective approach to valuing talent. As Lewis himself suggests the lessons go well beyond baseball and in many ways the book is not about baseball.

This brings me to the English Premier League and, in particular, Tottenham Hotspur.  The question is whether Tottenham should be considered in a similar light. Stephen’s post below considers wage efficiency. Here I look at transfer spend. All of the data for this analysis is sourced from Transfermarkt.

Are Spurs “doing a Moneyball”? While they may not be winning trophies they are paying far less per point in comparison to other Premier League clubs.

Spurs were the only English professional club not to make a single signing in this summer’s transfer window. Nor did Tottenham invest in talent in the most recent transfer window. They actually weakened their squad and let Mousa Dembélé go for £4.82m. An added complication is that Spurs are playing away from their home stadium.

Over 3 seasons from 15/16-17/18 Spurs have collected 233 points. Their net spend over this period (transfer incomes and expenditures only) was just over £27m. It works out that Spurs paid £116,180 per point in the English Premier League over the last three seasons.

The chart considers all clubs that have competed in the Premier League in the last three seasons. One exception is made. Over the past three seasons Southampton have ran a transfer surplus.  For every point they earned they actually earned £7,793. As the chart below shows Spurs have paid far less per point when compared to the competition. While this analysis does not control for wage budgets, Tottenham’s chairman Daniel Levy is renowned for his frugality and tough negotiation tactics when it comes to player remuneration.

Tottenham’s limited transfer market activity has been very successful from a purely economic perspective. The second chart below shows the difference between the estimated total market value of transfers minus the purchase value. Tottenham come out on top again. Transfermarkt data suggests that Tottenham have an added value of 60.9% to their squad. The second highest is Chelsea with an added value of 42.6%.

By Stephen Brosnan

This post explores the relationship between Premier League club’s spending on both salaries and transfers and the number of points won during the current Premier League season.

Since 2015, Man United have had the highest annual player salaries amongst Premier League clubs. This year total salary paid out to players at Old Trafford topped £148 million. This includes the Premier Leagues top earner Alexis Sanchez, often founding warming up the United bench while picking up a hefty £315,000 p/w.

Cardiff City have the lowest wage bill in the Premier League this season. The newly promoted Bluebirds remained conservative in their approach to top flight survival. Cardiff’s summer transfer spending (£29m) was a fraction of the other promoted team’s spending. Fulham spent a hefty £105m during the summer while Wolves brought in £65m worth of talent. Only Tottenham (£0), Crystal Palace (£9.5m) and Newcastle (£23.2m) spent less than Cardiff last summer.

The question remains who have been the most efficient club in terms of spending on annual salaries? The figure below shows Premier League team’s total points and spending on salaries. 

All the teams above the line can be considered ‘efficient’. Wolves rank first for points per £m spent on player’s salaries. So far this season, Wolves have accumulated 40 points in the Premier League having spent £39 million on player’s salaries. This represents 1.02 points per million pounds spent on player’s salaries. Other ‘efficient’ teams include Manchester City, Liverpool, Tottenham, Watford and Brighton.

Manchester United are the most inefficient team in terms of points per £ spent on player’s salaries. The team has only won 0.37 points per million pounds spent on player’s salaries. This may be surprising given their recent form under Ole Gunnar Solskjaer but also may go a long way in explaining why they replaced former manager Jose Mourinho.
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The other ‘inefficient’ teams include relegation candidates Huddersfield and Fulham along with Southampton, Crystal Palace, Everton, Leicester and West Ham. Over half of these teams have changed manager throughout the season which suggests that the team’s inefficiencies were no secret. Meanwhile, none of the managers of the ten ‘efficient’ teams have lost their jobs. 

By Robbie Butler

On the 1st of January 2019 Irish racing was shown for the first time on the newly launched Racing TV (formerly Racing UK). The move ended more than a decade of coverage by Attheraces (now Sky Sports Racing) and effectively placed Irish racing behind a paywall for the first time. 

I should be clear, Attheraces was not free to all Irish television users, but came as part of Sky's "Entertainment" pack – 90 channels that formed part of Sky TV's basic package. Other sports channels in this offering include Eurosport, Sports News and Sky Sports Mix. Up to the end of 2018, Attheraces had provided 100% coverage of all Irish racing. Not a single meeting nor race, at any of the 26 tracks on this island, failed to be covered live.

Some cited their concern, when it was announced last year Irish racing would move to Racing TV until at least 2023, and argued that the packed UK schedule might see Irish racing slide down the list of priorities. A recent piece in the Irish Examiner supports this view and cites a Saturday card at Gowran Park where races were short of lead-in time and lacked information of betting markets. Spilt screens were used during broadcasts, and some races were only joined midway through. The most damning of all was the failure to show any coverage of the last race at Gowran.

In the weeks leading up to it's launch, Racing TV advertised a price of €31 to Irish customers. If my memory is correct, the price was subsequently dropped to €12 for a promotional period, and can currently be purchased for €15 per month for one year. 

Aside from the fact that €31 is more expensive than my Sky Sports subscription, which provides access to many sports, and Irish racing does not get the same coverage as it has done previously, I fear there is a bigger problem for those selling the product. 

Pay-walled sport works because it is the only way to access coverage. Sky Sports has been a spectacular success since its launch in 1992 because it was the only way to watch live Premier League action until 2007. Since then it has been joined by others such as ESPN, BT Sport and soon Amazon; all also subscription channels.

28 days of Irish racing will be shown this year on free-to-air RTÉ. These include the biggest days on the Irish racing calendar and events such as the Irish Grand National and Irish Derby (which must be shown free-to-air),  Punchestown Festival, Galway Festival, Leopardstown and most recently Thyestes Day from Gowran.

Think of this comparison. If BBC or ITV had the right to show the 28 biggest Premier League games each season, how many people would subscribe to Sky Sport or BT Sport? The 28 would include Liverpool vs Man Utd, the North London Derby, the Manchester and Liverpool Derbies, Chelsea vs Arsenal all home and away, and a smattering of other games.

The business model works because this is not the case. Free-to-air customers have to waiting until 10.30pm on Saturday evenings to watch Match of the Day. While some would continue to pay subscription sports channels, I suspect the number of subscribers would collapse dramatically if free-to-air providers could cherry-pick the best games, as happens with Irish racing. 

From the perspective of the Irish racing consumer, long may the cherry-picking continue. 

By Robbie Butler

In the last year or so, I have encountered a number of research papers that focus on the economics of horse racing. This culminated in (what I believe was) the first ever horse racing session at the European Sports Economics Conference at the University of Liverpool last August.

Work in the area is now developing and members of this blog, as well as colleagues in the UK at the University of Lancaster and University of Liverpool are exploring the economics of horse racing. There is really so much to explore (e.g. labour markets, betting tax, efficient markets, government support of the industry, and the impact of Brexit).

Some focus has recently turned to UK’s pending exit from the European Union and the impact on the industry, but this has been limited. The scale of a hard Brexit, which is now becoming more likely by each passing day, has the potential to decimate the industry. Remember, this is an industry that only survives in Ireland thanks to generous Exchequer support each year. More than half of all public monies are then used as prize money at Irish racecourses. 
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I have explored the issue on prize money on a number of occasions in the past. While the biggest prize funds on offer are on the other side of the Irish Sea (see here and here) the average level of prize money across all tracks remains higher in Ireland. This is particularly obvious at lower grade racing and has encouraged English horses to travel to Ireland (see here and here).

The difference in funding may be set to grow further. Last week Arena Racing Company which owns and operates 16 racecourses in Great Britain, announced that it would be reducing prize-money by £3 million as a direct response to the British government's recent decision on Fixed Odds Betting Terminal (FOBT) stakes. Leading trainer Mark Johnston’s response to this decision was:

“The prize-money is quite ridiculous and the whole situation of Arc cutting prize-money in anticipation of a potential cut in the number of betting shops and funding due to the FOBT reduction, which is hypothetical at the moment, is out of order. It gets to a point where it’s just not viable to take a horse all the way to Lingfield for that sort of money”. 

Others have responded in a similar fashion to ARC's decision. This resulted in a reduced card at Lingfield on Saturday, and one race on the card not attracting a single entry! The solution to the problem may be reduced cards in the short run, but in the long run trainers may need to look elsewhere. Independently owned Chelmsford City Racecourse is being used as an exemplar to demonstrate the type of money that should be put on offer, at lower grade races, to attract entries. 

Of course, another solution is for more horses to travel from the UK to Ireland to compete. Generally, horses and labour flow one way and not the other. A glance at prize money on offer last Friday night at Dundalk (Ireland) and Lingfield (England) demonstrates the difference. 

Dundalk's 8 race card had an average prize fund of €8,543.75 per race. Lingfield's 6 race card reports a figure of just €3,839.75. 

The total amount of money on offer at the Irish race course was €68,350, which is some €45,000 more than the €23,039 on offer at the English track. 

​All things equal, this should incentivise trainers in the UK to send more horses across the Irish Sea to race at venues such as Dundalk.

However, the extent to which this may now happen will largely not be decided to prize money on offer at Irish courses, nor reduced stakes at FOBTs in the UK, but rather events in Westminster over the coming weeks.

By Stephen Brosnan

Previously, I have written about the effect of star players on team performance in the Premier League. The piece identifies the usefulness of Collis and Montgomery’s resource-based view of the firm (RBV) in explaining the impact of ‘star’ players on team competitiveness. RBV explains how a firm’s resources drive its performance in a dynamic competitive environment. In a sporting context, team performance may be driven by a key resource e.g. star player. However, given the risk of injury, suspension, fatigue and loss of form over the course of the season, the over reliance of a team on the contribution of one ‘star’ player can significantly impact their long-term competitiveness.

Table 1 highlights the contribution of each Premier League clubs ‘star’ player during the current season. The players selected have amassed the highest number of Fantasy Premier League (FPL) points for their respective clubs. The analysis considers the percentage of team’s goals in which the player was involved in, the points lost in the absence of this contribution and the players contribution to the team’s Premier League points total. 

Three team’s leading FPL points scorer are their goalkeepers: Neil Etheridge (Cardiff), Jonas Lössl (Huddersfield) and Martin Dubravka (Newcastle). Given the reliance on goals and assists to determine the contribution of star players to team performance, this analysis is limited to outfield players only. Therefore, these players have been replaced with highest outfield FPL points scorer for this analysis.

Aleksandar Mitrovic has the highest overall contribution to his team’s outcomes, both in terms of contribution to goals scored and contribution to points accumulated. Mitrovic has been involved in over half of all Fulham’s goals (52%) and has contributed to 76% of all their points earned. Fulham’s (over)reliance on their talisman may be summed up by their failure to win any game in which Mitrovic has not scored and he has had to score two goals in three of these games to ensure victory: Burnley 4 – 2 (2 goals, 1 assist), Southampton 3 – 2 (2 goals), Huddersfield 1-0 (1 goal) and Brighton 4-2 (2 goals).

However, it appears not all goals are created equal as Glenn Murray has been involved in 35% of Brighton’s goals this season with these goals contributing to 41% of the team’s overall points. Meanwhile, Everton’s Gylfi Sigurdsson has been involved in a similar number of Everton’s goals (33%) but these goals have only contributed to 12% of the team’s overall points.
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In the Premier League title race, Liverpool appear to be more reliant on their star man, Mo Salah, compared with rivals Man City and Tottenham. Salah has contributed to 31% of Liverpool’s points while Man City and Tottenham have been less reliant on their star players Sterling and Son (18%). Both these teams have already shown their ability to succeed with numerous injury problems e.g. Spurs winning every game since Harry Kane’s injury. Liverpool have yet to have significant injury setback and their ability to deal with potential injury or loss of form to Salah may go a long way to deciding the outcome of this season’s Premier League.

By John Considine

There are three teams in the last-16 of the Champions League that have not featured in the last five editions of Deloitte Football Money League.  Ajax, Lyon and Porto have not featured amongst the Top-20 revenue generating clubs.  The table below shows that the first two of these three clubs face two of the financial and footballing giants of the game.

Ajax are 2-1 down to Real Madrid after playing the first-leg at home.  Madrid were 1st in the Deloitte Football Money League (DFML) in three of the last five editions.  They are number 1 in the latest edition of DFML with revenues of €750.9m (47% of which came from Commercial revenues including the sale of Ronaldo).  During the last five years they have also collected the Champions League trophy a few times.  Is it any surprise that Sergio Ramos might have decided to serve a suspension during the second-leg (rather than play in it)?

Lyon held Barcelona to a scoreless draw and will now head to Barcelona.  They may only need a score draw to progress but it seems a tall order.  Barcelona have been 2nd three times in the last five editions of the DFML.  DFML shows that Barcelona have total revenues of €690m and a similar distribution of revenues to Real Madrid (i.e. Commercial, Broadcast, and Matchday).  In the case of Barcelona, they benefitted from a new four-year deal with Rakuten (there was a time when they spun a different story about shirt sponsorship).

Porto are the third club not to have featured in the Top-20 revenue generating clubs in the DFML.  Porto lost 2-1 away to Roma.  The gap between the two clubs is narrower than in the other two cases.  There opponents, Roma, have only broke into the Top-20 on three occasions (twice at 15th and once at 16th).

Tonight Schalke 04 host Manchester City in one game and Atletico host Juventus in the other game.  The away sides have better revenue generating records.  It may count for little on a given night.  However, it would be natural to expect those with the deeper pockets to advance.