By David Butler

​Last week, the Irish government published legislation to facilitate the establishment of a gambling regulator. Among other rules, new legislation could be on the way to end free bet offerings , credit or loans to players, and VIP services.  

To date, I have not seen much on rules relating to how information is presented to gamblers. A myriad of behavioural research has shown that how information is displayed, it’s context and where it is positioned can impact decision-making.

For example, bookmakers commonly offer ‘specials’ to customers that are prominently positioned and brightly coloured to attract attention.  A common tactic in football betting markets is to combine two very short priced favourites with one longer priced team. All three must win (the conjunction fallacy comes to mind). The extra value to the gambler is often displayed.

I tracked this for football specials for a week on a popular gambling website. About 20% of these specials were winners. Indeed, there doesn’t seem to be anything very special about them.  

If one was to accept that we cannot eradicate problem gambling, maybe it in the interest to improve gamblers literacy of the tricks and traps used by betting firms in an attempt to reduce losses.

By Robbie Butler

Last month our paper "Changing Competition Design and Spectator Turnout: Evidence from the League of Ireland" was published in the Economic and Social Review. The very last line of the paper says:

"While specific strategies to foster habit formation are challenging to pinpoint, a precise policy recommendation arises from the scheduling effect we identify – there is a need to ensure as many fixtures as possible take place between Friday night and Sunday afternoon."

This is one of the key recommendations of the paper. Attendances are higher for Friday and Saturday matches. Last weekend provided a very nice example of this.

Bohemian (Bohs) played Waterford twice in 36 hours. Both games were at Dalymount Park in Dublin. The first was an FAI Cup Semi-Final on Friday night and had full capacity (3,100 approx.). The second was a league match on Monday night. Attendance is reported as "2,000".

Admittedly the games are not the same competition. The cup match generated significant interest and had 900 away fans. The league game was more important to Waterford (from a relegation perspective) but saw a sizable decline in travelling support. This is to be expected as it was played on a Monday night.

Even accepting the changing circumstances and competitions, a fall in attendance of about 35% in the space of 36 hours is quite something and demonstrates the importance of scheduling.

The full paper can be accessed here.

By Robbie Butler

The issue of the European Super League appears to have raised its head again. The three surviving members from the failed April 2021 project – Barcelona, Juventus and Real Madrid – appear to be continuing with the project in the hope that others will follow. A revised format was issued this week, which included major revisions. The more obvious changes include the removal of the “closed system” so that promotion and relegation are now possible, and qualification to the Super League through national leagues.

While the clubs behind this new idea may think it could be enough to win the argument, the obstacle of UEFA remains. And in here lies the inherent contradiction of the who debate. UEFA is an monopsony when it comes to European football. It is the only buyer of talent. Of course, it does not do this directly but rather indirectly through the national associations it regulates. It is within these national associations that the clubs exist and, as these are governed by the national associations, they are all indirectly (in most instances) answerable to UEFA (and ultimately FIFA). It is like the chain of command in any organisation. UEFA object to the European Super League because it will be outside the control of the organisation and end the monopsony power of UEFA. It is difficult to have any sympathy for an organisation that objects to the arrival of a competitor because it will end its market dominance.

There is a catch of course. Competition law – or antitrust law as it is known in the United States – often treats sporting organisations differently. It is very much debatable whether UEFA’s position is actually anti-competitive. Would European football be better off if there was more than one federation governing the sport, so that clubs or players could decide where to play or who they were answerable to? Boxing is an example of this. Competing international governing bodies exist side by side e.g. WBA, WBC, WBO and IBF. Other combat sports such as MMA and pro-wrestling illustrate this point. Are the sporting interests of these sports better achieved by this?

The monopsony power of UEFA can be traced to its foundation in 1954. Football was very different almost 70 years ago. One can reasonably argue that the only competition that existed then was sporting competition. The national leagues existed because they were interested in finding the best national teams and made economic sense as they were the most efficient way for teams to compete under a league format.

Today things are very different because sporting competition is now rivalled by economic competition. Football is big business. Economic competition has grown so much that today some European clubs are owned by nation-states.

UEFA’s role as both organiser of competitions and regulator of the European league system may now appear to be anti-competitive. But is “competition” via an alternative organiser like the European Super League the answer? I think not. This is because I believe UEFA’s position as sole buyer of talent is not as anti-competitive as it may appear to be. This can be contrasted with the competition design they regularly tinker within European club and national competitions. Some of this clearly gives an advantage to some stakeholders over others and could be deemed anti-competitive, but UEFA in and of itself is not.

Better regulation is the route forward. The governing body needs to ensure that the wealth generated from European clubs is spread as equitably as possible through UEFA members, and that sporting competition is aligned with the interest of all member clubs, not just those that previously wished to create a European Super League.

What’s more, the fans – the most important people in this debate – have no desire to end the UEFA dominance of European football. Nor do most EU member states. Sky Sports reports that “The EU countries want to protect the "European Sports Model" which allows football to have exemptions from competition laws, defends grassroots level sport and sporting integrity; the European Court of Justice (ECJ) is also due to hold a public hearing in 2022”.
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It might be the case that, yet again, football is just a little bit special.

By David Butler

​The new owners at Newcastle United have the Manchester City template to work from when trying to improve the club’s fortunes.  Newcastle fans will have to be patient – club building takes time. The chart below shows the Premier League points-per-game tally of Manchester City since the new owners took over in 2008. It took City four seasons to win the league and three seasons to break into the Champions League.  It might take Newcastle a little longer too – when Chelsea and later Manchester City were bought-out they had fewer teams to catch up with. The Newcastle owners are later to the party.

By Robbie Butler

Soon the Journal of Sports Economics will publish "The Journal of Sports Economics: 20 Years and Counting". The special issue will take a look at the first twenty years of the journal, published first in 2000.

An introductory note from founding editor Leo Kahane is now available online here. The abstract states that "This invited piece provides some thoughts and insights regarding the development and growth of the Journal of Sports Economics from its founding editor." 

I eagerly await publication of the full issue. 

By John Considine

The title is an overstatement.  It is part click bait.  Another part is designed to draw attention to the way that research results can be manipulated.  More manipulation to follow.

A 2021 paper in the Journal of Business Economics finds that the introduction of VAR eliminated the stoppage-time bias of Italian referees (or to be more precise, referees of Italian Serie A games).  The statistical analysis shows that, before the introduction of VAR, Italian referees reduced the amount of stoppage-time when the home team had a slight lead.  After the introduction of VAR there was no evidence of such bias.  By contrast, those refereeing in German games did not show a stoppage-time bias (in either the pre-VAR or post-VAR periods).

How might we explain the statistical results in the last paragraph?  As economists, possibly ones influenced by the presentation of material in books like Freakonomics, we might look to the incentives.  Let us look at the financial incentives.  The first footnote in the same Journal of Business Economics paper says German and Italian referees are paid different amounts.  Both are paid a fix annual fee of €80,000.  However, those doing German games get €5,000 per game whereas those doing Italian games get €3,800 per game.  Now we can tell a story or two.  Better pay means better performance.  Or Italian referees are borderline corrupt due to "low" pay and the introduction of monitoring technology like VAR is elimination some of these questionable practices.

The above is my spin on some of the results presented in a paper by Ulrike Holder, Thomas Ehrmann and Arne Konig.  It is my manipulation of their result.  The authors are much more measured in the presentation of their results.  They explicitly say that their paper shows that referees are NOT the channel through which potential home bias might operate.   Unlike my presentation above, they highlight the small size of the bias in Italian games.  It is less than 9 seconds.  When are games likely to be decided?  In those 9 seconds or in the other 5,400+ seconds?  Or in any one of the 5,409+ seconds?  If one wants to rely on the statistics and probabilities then one should do it consistently.

Last week I posted a piece about how the Holder, Ehrmann and Konig paper raises important issues in the identification of home bias and the channels through which home bias might operate (here).  Hidden in the text and reference list is another paper worth some consideration.  It gets away from the preoccupation with psychological explanation of home bias to examine the impact of physiology.  That will be the subject of my next post.

By Robbie Butler

With a further easing of restrictions likely in Ireland later this month, the return of inflation and an estimated annual growth rate in 2021 of around 15%, it is easy to understand why many people are starting to think we are entering the post-pandemic phase of our economic cycle. The export-orientated Irish economy has generally proved remarkably resilient to the economic shock caused by Covid-19.

Another aspect of the Irish economy that has held up well is our taxation base. Unlike the Irish Financial Crisis (2008-12) when the tax base imploded, Exchequer revenues have been largely robust to the pandemic and remain ahead of target for 2021. This is before November tax returns arrive - a very important month for corporation tax reciepts in this country. 

While Ireland's corporation tax rate has made international headline again this week, and will move from 12.5% to 15% for any company with revenue in excess of €750 per annum, the focus of this post is on another tax; the sport-related betting duty. 

First established in 1926 as one of the first revenue-generating measures of the new Free State government, the betting duty is levied on all off-course bets. Until 1986 the duty was applied at a rate of 20%. The decades that followed saw the duty collapse to just 1% on all bets in 2006, with an increase to 2% initiated in 2019. 2015 was also a significant year as the duty was expanded from 3 sources to 7, with the 4 new areas subject to the duty able to capture remote betting and remote bookmakers.

The broadening of the tax base has proved to be very effective.

In 2014, the narrow betting duty generated €26.67 million. In 2016, the broadened duty generated €51.96 million (almost double the amount collected in 2014). Increasing the duty from 1% to 2% in 2019 brought the total amount collected to €96.75 million and demonstrates the highly inelastic nature of the betting product.

2020 figures indicate that the betting duty fell substantially to €87.24 million. However, this can be explained by the shutdown of the economy and society from March to June 2020, where no sport took place. The reduction in revenue can be explained by a fall in the "Traditional Betting Duty" from bricks and mortar betting shops which were forced to close their doors.

However, 2020 figures show that "Remote Betting" increased from €40.6 million in 2019 to €44.94 million in 2020. These figures also mean that for the first time ever, revenue collected from remote betting activities now exceeds the traditional betting duty.

While this can be partially explained by the pandemic, one now has to question whether this change will be permanent. Have habits changed? Will bricks and mortar betting shops go the way of retail banks? This is an appropriate example on the day that Bank of Ireland will close 88 of their banks (1/3 of their locations) for the last time. 

Due to restrictions throughout the first half of 2021, betting duty figures, when available next year, may not yet fully explain how people bet in Ireland. It could be only in 2022 or 2023 that a clearer pattern emerges, and it may be the case that remote betting is now the primary source of the betting duty.

​By David Butler

I’ve made various posts using xG recently. Here’s another using xG difference (the difference between xG for and against) for the 21/22 EPL. After just 7 games we are starting to see some structure and how things will probably play out – below plots the relationship between xG difference and points accrued.
 
Should Thomas Tuchel be concerned? Chelsea are top for now, but both Manchester City’s and Liverpool’s significantly greater (positive) xG difference is cause for concern.  Winning the league and not scoring the most goals doesn’t usually go together. On occasion this happens but usually teams that score the most win the league (or are second). Tuchel will probably need to bump up the Xg (for). If not, Chelsea will be under pressure to continue to be very efficient with the chances they create.  Any increase in xG may have to come at the expense of their excellent defensive record. At a market price of 23/10, Chelsea might not be good value. Liverpool at 4/1 champions might be slightly overpriced. 

At the other end of the table, Daniel Farke should definitely be concerned. Priced at 1/4 to be relegated, everything suggests it's going to be a tough watch this season for a Canaries fan. 

By John Considine

There is a recent paper in the Journal of Business Economics that further illustrates the benefits of technology in understanding referee bias.  I will focus almost entirely on the methods used by Ulrike Holder, Thomas Ehrmann, and Arne Konig.  (I will return to other elements of the paper in a later post.)

A decade ago, Tobias Moskowitz and Jon Wertheim published Scorecasting.  It included the analysis of 1.15 million baseball pitches that umpires called as either balls or strikes.  Technology allowed Moskowitz and Wertheim to identify umpire error.  The error rate was 14%.  However, that error rate changed systematically with some non-rule factors.  These systematic changes are classed as a bias.  For example, the player behind in the count got more favourable calls.  Technology allowed Moskowitz and Wertheim to identify umpire errors directly.  The Holder et al (2021) paper is a step in this direction for soccer.

The beauty of the Journal of Business Economics paper is that it uses VAR technology to focus on referee error directly.  It uses four successive seasons of data (two pre-VAR and two post-VAR) from the German Bundesliga and Italian Serie A.  Impressively, the authors also "validated all VAR decisions by examining video recordings via youtube.de of the respective situations".  I want to highlight one of their findings.  Home teams were awarded more penalty kicks than away teams but the "introduction of VAR did not change this distribution, and the VAR system intervened with comparable frequency for both the home and away teams".  In other words, there was no referee bias in the errors.

For a variety of reasons, not all of the literature seeks to identify the referee bias directly.  Much of the literature on referee bias attempts to identify the bias by purely statistical methods.  The biggest difficult is separating referee behaviour from player behaviour.  One prominent paper from 2012 compares the rate at which the referee decides the ball must be turned over (“mainly traveling violations and offensive fouls”) with the rate of turnover by players (“mainly bad passes and lost balls”).  Tens of thousands of observations are then used to establish the statistical significance of the relationship between these turnovers and other variables, e.g. home team.  The authors of this paper understand the limits of this approach.

It is encouraging that more papers like Holder, Ehrmann and Konig are starting to appear in the literature.  Technology is facilitating a better approach to understanding referee bias.

By Robbie Butler

Our latest paper is now available free online. 

We contribute to the literature on demand for football by investigating the effect of variations in competition design on spectator turnout. We examine attendance in the League of Ireland Premier Division for two periods with alternative league formats, estimating club-fixed effects regressions.

Our results show that the change did not increase average attendance. Many determinants of attendance are robust to the reorganisation and balance measures are consistent under both formats. Like past evidence from the League, habit, team form, scheduling and travel are important determinants.

Our results speak to league administrators and club owners attempting to optimise revenues.

You can download the full PDF from the Economic and Social Review website here.