By John Considine

This month Deloitte released their Football Money League report.  The report confirms the increasing importance of the Barclays Premier League (BPL) within Europe.  All 17 teams that survived in the BPL in 2014-5 are listed in Europe's Top-30. More than half of the teams come from one league.  The Barclays Premier League.  Spain may have the top 2 clubs listed but only three Spanish club make the Top-30.  After England, Italy has the most number of clubs in the Top-30.  There are five Italian clubs, three German clubs, and one club from France and Turkey.  One can only imagine the new BPL TV deal will further strengthen the English league clubs financial power in the years ahead.

The link between financial strength is neither absolute nor unidirectional.  Performance on the field of play helps financial performance, e.g. it helps bring patrons through the turnstiles and there is usually prize money involved.  Financial performance helps footballing results as wealthier clubs can buy better player and pay better wages.  The relationship between financial performance and footballing performances for the 2014-5 Barclays Premier League is presented in the picture below.  Those above the line produced footballing results above what their their financial performance might suggest.

Manchester United is dropping down both the Barclays and Deloitte Football Leagues.  They have slipped one place in the Deloitte Football Money League from last year.  They have slipped down the Barclays Premier League over the last two months.  It seems strange to find that Deloitte suggest that the Red Devils will top their money league next year.  The exact quote that Deloitte promote is "The return of Champions League football in 2015/16, despite having suffered a disappointing exit from the group stage, plus commencement of the adidas partnership, should help United to top next year's Money League."

Chelsea have gone from over performing on the field to under performing.  This can be seen in the picture below where current league positions are used.  Manchester United and Newcastle remain below the line.  Fans of Aston Villa must wonder if their 2015-6 footballing performance will mean losing out on the financial riches that are due to come with the TV deal.  It is not a good time to lose your Premier League status.  Maybe that is why Newcastle are splashing the cash in the current transfer window.

By John Eakins
 
It’s not often that I find myself agreeing with Joe Brolly but his article in last Sundays Independent proved to be an exception (see here). Brolly was writing about the GAA’s proposal to create a new ‘B’ Gaelic football championship, comprising teams that are in Division 4 at the conclusion of the National Football League. These teams can play in their provincial championship but will not be allowed into the football qualifiers with the ‘B’ championship instead provided them with an opportunity to play for some silverware.
 
For those of you who know the GAA, this proposal will bring back memories of the Tommy Murphy Cup that ran for a number of years in the 2000’s but was ultimately scrapped. Brolly recalls the Tommy Murphy Cup in his article, but not fondly, giving a number of reasons why the competition ultimately failed. So if it failed then why would it work now? It doesn’t take a genius to work out the merits of this argument.
 
Instead of the ‘B’ championship/Tommy Murphy Cup, Brolly favours a two-tier Gaelic football championship system with 16 teams competing in the Sam Maguire and 16 in the second tier. Most information on the proposal is given in the article but essentially, the ranking of teams (from 1 to 32) would be determined by finishing position in the national football league and finishing position in the provincial football championships. Importantly the winner of the second tier competition would automatically compete in the top tier competition in the following year. The 16 teams in both tiers would play on a knock-out basis for their respective ‘All-Irelands’.

What strikes me as the most important element of the European rugby competitions is that whilst one is a top tier competition and the other is a second tier competition, the perception of one being a secondary competition doesn’t appear to be great. In sports economics jargon, the competitive balance within each competition and between each competition is strong. How this is developed is down to a number of factors. Branding is one, not calling the challenge cup a ‘B’ competition for example and also treating both competitions equally in terms of when the matches are played from groups games all the way up to the final (with the challenge cup final on the Friday and the champions cup final on the Saturday as opposed to the example given by Brolly of the Tommy Murphy Cup being played at 12.15 on All Ireland Quarter Final day!). Having a reasonably high turnover rate of teams which move between both competitions also helps to close the gap.    
 
The GAA should scrap their proposal for a ‘B’ Gaelic football championship and go with the two-tier championship system which Brolly outlines. Creating a perception where one is not a secondary competition is key to the success of such a proposal however with the European rugby competitions as a model that could be followed.

By Farai Jena & Barry Reilly
 
In a recently published book (Money and Football: A Soccernomics Guide) Stefan Szymanski examines, inter alia, the concept of club dominance in European football leagues over the last 50 years. Szymanski reports, using data from 20 European leagues, that an average of only 10 different clubs have won their domestic league titles over this half century, ‘….way below what you would expect to see if there were balance in the league’. The League of Ireland, providing 15 different champions over this period, is identified by Szymanski as one where the number of different winners is considerably above the average.  This could be taken to suggest that it is one of the better balanced leagues in Europe.

There are a number of alternative methods available to determine a league’s long-run competitive balance. One such measure is known as the Herfindahl Index of Competitive Balance (HICB). In an extreme hypothetical case where all teams complete the season with the same number of points (i.e., a perfectly balanced league), the HICB value is one.  In contrast, the greater the inequity in the distribution of points across teams at the end of the season, the higher above unity is the HICB and the poorer is the league’s competitive balance.

In order to explore the issue of competitive balance for the League of Ireland we use the HICB to compare its degree of balance with a set of neighbouring leagues in England, Scotland, Wales and Northern Ireland over 16 recent seasons. The leagues are selected on the basis of arguably possessing comparable playing standards to the League of Ireland. 
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Figure 1 plots the HICB for the League of Ireland Premier Division, the average of tiers three to five in England, and the average of tiers two and three in Scotland. The averages are used here because little material difference in index values is detected across these leagues over the relevant seasons. In contrast to the leagues in England and Scotland, competitive balance is found to be markedly inferior in the League of Ireland. In addition, the league’s index also exhibits a greater degree of volatility over time particularly with respect to its English counterparts. 

Figure 2 plots the League of Ireland’s HICB with those for the top tiers in Wales and Northern Ireland. These two close neighbours register a fairly high degree of competitive imbalance in common with the League of Ireland, though the index for the latter is characterised by a greater degree of volatility compared to the former two. 

Further, and not reported here in detail, the top tier leagues described by Syzmanski as the most plutocratic (viz., England, Germany, Spain and Italy) all register lower average HICB values than the League of Ireland over these 16 seasons, though the most dominated league in Europe (i.e., Scotland’s top tier) averages slightly higher.    
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A reason why a league’s long-run competitive balance might actually matter is because of its potential relationship with attendance.  A poorly balanced league is likely to prove unattractive to spectators.  Figure 3 plots average attendance and the HICB values (both standardized) for the League of Ireland over these 16 seasons in order to discern any informative patterns. The plots reveal an inverse relationship between competitive imbalance and average attendance. The correlation coefficient is computed at –0.60 and is statistically significant at the 5% level using a t-test with 14 degrees of feedom. It should be emphasized that this finding is best interpreted as suggestive since nothing informing the causal relationship between these two variables can be inferred from this statistic.  However, competitive imbalance and attendance appear to move inversely in this league.

The domination of a league over time by a small number of teams may suggest long-run competitive imbalance but it does not imply that less dominated leagues by this defintion are competitively balanced.  The descriptive evidence reported here covering 16 recent seasons, and over which time seven different teams won the League of Ireland title (suggesting even weaker dominance than that reported by Syzmanski’s analysis), reveals the domestic league is competitively imbalanced when compared to either neighbouring lower tier leagues in England and Scotland or even Syzmanski’s set of plutocratic European leagues.  The very casual empirical evidence provided here also suggests that the lack of competitive balance within the League of Ireland might actually matter for attendance. 
 
Farai Jena is a Teaching Fellow in the Department of Economics at the University of Sussex.  Her research interests are in the area of applied microeconomics and include the economics of migration, migrant remittance behaviour, and the demand for football. 

Barry Reilly is Professor of Econometrics in the Department of Economics at the University of Sussex. His research interest include labour economics and the economics of sports.  He has published research on developing country labour markets and on racial discrimination in football.  

By Robbie Butler

Previously, I explored the concept of opportunity cost by looking at the decisions that players of the Premier League’s Fantasy Premier League face on a weekly basis. For those unfamiliar with the concept, opportunity cost is what one must give up to get something else. The Fantasy Premier League provides us with an excellent example of this on a weekly basis.

First conceptualised for the Premier League in the mid-1990s, the game has grown in popularity and now consists of an on-line competition where football fans get to pick players from a given league, with fictitious money, to form their own team. One of the most popular versions of the game is run by the official Premier League website.

At the start of the season a budget of £100 million is allocated to each player in order to form a squad. In total fifteen players must be purchased from this money. One free player swap can be made each week. Further player changes result in a points reduction.

What might seem like an easy task (picking fifteen players) becomes very difficult. Finite resources and decision making, both central tenants of economics, come to the fore. For example, in order to have an expensive goalkeeper or striker, something else must be sacrificed e.g. relatively expensive defenders.  

My previous post illustrates this point. The cost of the most expensive 15 players from last season was £135.1 million pounds. This point lies far beyond the budget constraint and is unattainable. The Dream Team from last season (highest scoring players) is also beyond our means at £116.5 million.

This season is quite different. Most would admit it was been a rather unusual season to date, highlighted by the fact that Leicester City, 5000-1 to win the league in August 2015, sit top of the table with just fifteen games to play. Players such as Jamie Vardy, Riyad Mahrez, Odion Ighalo, Scott Dann, Georginio Wijnaldum, Andre Ayew and Jack Butland are all among the top scorers. Collectively, these seven players cost just £45 million, an average of just £6.4 million. The total cost of the highest scoring team to date comes in at just £101.3 million. (See picture).

The most expensive team on paper costs a whooping £129.3 million but cannot be assembled.
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The market is adjusting. The players listed above are all increasing in value as demand for their services goes up amongst fantasy football players. However, it seems this season the cost of operating effectively within ones budget is far easier than in seasons gone by. We can thank Vardy, Ighalo, et al. for this. 

by Kathy Stout

In previous posts John Considine has extensively examined the allocation of the Irish Sports Capital Grant (here, here, here, here and here). This post examines the allocation, between 2009 and 2014, for one such county; Wexford.

Wexford’s sports capital payments are an example of a matching grant which is where the relevant governmental department matches funds contributed by the applicant. In this scenario of 100% of the funding, the state pays for 70%, the other 30% by the sporting institution. Wexford did not engage in any major development projects so is below the average level of payments per county from 2009 to 2014. One of the main observations found is despite the GAA receiving the highest number of payments, football associations were allocated the highest amount of funding per sport due to their ability to give more to the matching grant scheme from the profits they make.

Table 1 below provides information on the annual grant provided to the county and the annual percentage change in allocation. The striking drop in funding is explained in part by its correspondence with the Irish fiscal crisis,as the economy had contracted from $273.7bn in 2008 to $233.5bn in 2009 with a further drop to $218.4bn in 2011.

Another explanation for this initial drop is the restriction on grant applications in 2008. After this year applications for grants by sporting institutions were not accepted, however payments were still being made for the following years based on previous applications. In Wexford’s case the majority of these had been paid in 2009, accounting for the considerable decrease in 2010. 

​Whilst the average payment size does see a drop from 2009 to 2010, there is substantial variation over the following years showing that it is the number of payments made, and not the average payment size, which makes the most impact on the overall yearly amounts paid out. The average payment in 2012 is €41,736, relatively speaking not far from the 2009 figure of €48,554.26 however the difference of eleven payments in 2012 versus thirty-eight in 2009 explain the difference in total funding. It is apparent from the data that GAA and football clubs receive the largest grants (for the most part), due to their ability to contribute more money to the grant to be matched, and sports with lower levels of engagement (and profitability in general) such as rowing, gymnastics, swimming, and athletics receive the smallest sized grants. Figure 1 below illustrates the dominance of GAA and football in terms of the number of grants awards. 

As you might expect, the greater number of grants directed towards GAA and football translates into greater payments to these sports (Figure 2). The GAA received 38% of the number of payments approved and 36% of the total monetary funds paid out. In comparison, football payments accounted for 25% of the number of payments allocated but gained 34% of the total monetary value. This indicates that while there were less football grants, on average they were of a larger value.

What is also evident is football clubs were in the position to contribute more to the grant scheme in this time showing that within Wexford, this is the most profitable sport.

Kathy Stout is a final year Bachelor of Arts student. She is a recipient of a University College Cork Quercus Academic Scholarships and is currently Auditor of the UCC Economics Society.

by Declan Jordan

​This has been a pretty dismal season for Irish rugby clubs in European competition. Both Leinster and Munster were out of the competition with two games to play in the group stages. Ulster require a bonus point win and a string of favourable results to emerge from their group. Connacht, in the Challenge Cup, is likely to be the only Irish team in European competition after the Six Nations.
 
It’s probable that this will be the first season since 1998 that an Irish side will not appear in the knock-out stages of the elite European club competition. The situation was very different in the not-so-distant past when Munster and Leinster between them shared five titles in the six seasons between 2006 and 2012. It is important not to overstate the perceived decline of Irish club rugby based on one season (after all Munster and Leinster have appeared in the semi-finals in the last three seasons – sharing that with Toulon, Clermont and Saracens), there are persistent warnings that Irish clubs are no longer in a position to compete, and that this problem is likely to get worse before it gets better. There have been accusing fingers pointed at French Top 14 clubs (particularly Toulon) and English Premiership clubs for distorting the market for rugby playing talent with their large chequebooks – often funded by wealthy owners.
 
Toulon has now won the trophy for the last three years. Over that time their squads have boasted some the greatest names in world rugby – and this year even has former Munster and Ireland talisman Paul O’Connell. It is argued that Pro-12 clubs cannot hope to compete with the financial muscle of the French and English leagues. There are almost daily reports of threats of elite Irish players being lured to France and England to play their rugby. This is likely to be true but the claims that this prevents a level playing field ring a little hollow when the benefits that Irish clubs in particular have enjoyed during their recent successful years.
 
The success of the Irish clubs in Europe was an obvious motivating factor in the changes demanded by French and English clubs in the new qualification rules for the European Cup (formerly the Heineken Cup). In a previous post I noted that elite players at French clubs played more championship games for their clubs than their Irish counterparts.

​Since top players were centrally contracted to the Irish governing body for rugby (the IRFU), players were used more sparingly. There was very little at stake in the ‘domestic’ competition of the Pro12 (or whatever it was called at the time) since Irish clubs were guaranteed their places in the following season’s Heineken Cup. This has now changed so Irish clubs are likely to take the Pro-12 much  more seriously. (In that context, Connacht’s resurgence is even more worrying for the more dominant Irish clubs with limited country representation in European competition).
 
The lack of qualifying pressure and the implicit financial subsidy involved in the central contracting of Irish players were distortions in the “level playing field” in European rugby in Irish clubs’ favour. The lack of concern at these distortions at the time from Irish rugby commentators and officials makes their current protests less credible.

By John Considine

In a previous post I examined the age at which individuals achieved the title of Grandmaster in chess (here).  It could be argued that that technology has facilitated younger people achieving the title of Grandmaster.  A student suggested to me that something similar might be happening in F1 (Tiago gave me the data on F1 below).  He argued that the advent of Karting allowed kids to get involved in racing four-wheeled vehicles at a competitive level earlier.  He could have a point.  It is worth looking at the age of F1 champions.

The F1 championship began in 1950.  The oldest ever winner took the title that first year.  The red circles represent new winners while the white circles represent repeat winners.  Sebastian Vettel being the last new winner in 2010.  He also collected the 2011, 2012 and 2013 titles.  It is 20 years since someone over 35 years of age won it for the first time.  Damon Hill won the title as a 36 year old in 1996 and a few years earlier his compatriot Nigel Mansell won it as a 39 year old.

The F1 champion is determined over the course of a season.  It is also fair to say that the driver is heavily dependent on the car they are driving.  The dependence of the man on the machine is less in cycling.  Therefore, I wondered if the age of cycling champions is declining.  I looked at the UCI World Championship Road Race for the same 1950-2015 period.  It is a far from perfect comparison as it is a one-day race.  However, it does have the "advantage" of being more a race of individuals than any of the grand tours (although one could argue that there are national teams and tactics).  Here is the age of cycling world champions.  The same colour coding applies to the circles.

It is far more difficult to say if there is any trend in the age profile of UCI Cycling World Champions.  There are also far less repeat winners than there are in F1 but this could be because the F1 title is decided over multiple races.  It could also be that the ratio of physical/mental effort is greater in cycling compared to F1 or chess.

Below is a direct comparison of the F1 and Cycling World Champions ages for the period.  I'd be slow to say there is any firm conclusions.

By David Butler

As is the case with other sports such as tennis or horseracing, a golfer’s earnings is dependent on their relative performance. As each players performance can be precisely measured and we have access to all of the information regarding the distribution of the purse, researchers can gain some useful insights into a pure prize economy. The graph below represents the mean and median earnings for golfers on the PGA tour from 2000 to 2015.  

On average PGA tour golfers earned $658,300 in 2000. They earned $829,726 on average in 2015. During the mid-00’s this mean was higher. Of course these averages mask the substantial variation in the distribution, with the vast majority of golfers earning a relatively modest sum. For instance, in 2015 the top 20% of earners (77 out of 386 PGA tour golfers) accounted for 68.25% ($218m) of the total purse. The standard deviation for most years in the dataset is over $1m. While the size of the pie has increased over the last 15 years, inequality in the earnings distribution has also amplified. It has been greatest in the final two years of the dataset, 2014 and 2015. This growing inequality has largely been driven by more players participating on the tour since 2010.

Given the skewed prize structure of golf tournaments, where prize money is allocated in a descending order from 1st place, it is not surprising that this degree of inequality exists. That said, there is a long list of earners in all PGA tour events, sports such as horseracing see a much shorter list of earners (usually 1st to 4th only), so while golf may be unequal as sports go, it is not the worst.

For a more detailed take on earnings in PGA tour golf see Gerald Scully’s 2002 paper on The Distribution of Performance and Earnings in a Prize Economy in the Journal of Sports Economics.

By Robbie Butler

A number of months back I took a look at ticket prices for the 2015 Rugby World Cup held in England and Wales. When the ticket prices were announced for the event by England Rugby 2015 Chief Executive Debbie Jevans stated "we have a range of ticket prices for every budget - for fans and families who want to come to one of the world's greatest sports events”. IRB Chief Executive Brett Gosper added that "there are affordable and accessible options to suit every need".  The extended work can be read here.

This summer Euro 2016 will be staged in France. The UEFA lottery for tickets closes next week and gives us a chance to compare ticket prices across both tournaments. While not a perfect match, the tournaments are very similar in the number of matches played and the categorisation of match tickets into four classes. The 2015 Rugby World Cup consisted of 48 games. Euro 2016 will see 51 played. While the latter has only six group games and no 3rd/4th place play-off (Bronze Final), it does include a Round of 16.
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Ticket prices in each category, for both events, are presented below. These are joined with an additional table calculating the difference in prices from one tournament to the other, across each ticket category. (The price of Group Phase tickets is calculated using a weighted average and is particularly relevant for the RWC, as six different price structures were used during the pool stages of the competition). 

With the exception of a single category (Group/Last 16 tickets in Category B/Category 2) ticket prices at RWC 2015 are more expensive than the equivalent tickets at Euro 2016. In some cases the differences are quite large. For example, a quarter-finals ticket at the RWC is at least €90 more expensive than at Euro 2016. These differences become even larger for the semi-finals and final.

​The RWC had a total stadium capacity of over 610,000 seats. The Euros are somewhat lower at 496,431 seats. That said, there are more tickets available for the latter, with just over 2.67 million seats for the 51 game football tournament as opposed to 2.59 million for the 40 games at the RWC. A difference of roughly 3%. This may be one reason why Euro 2016 tickets are cheaper, although on balance, the difference between the two tournaments seems quite large given that just 3% more tickets are available.  Income levels may be generally higher amongst rugby supporters, and greater purchasing power might enable RWC organisers to charge higher prices. Or it might simply be the case that the public are prepared to pay more to watch rugby than football.

Regardless of the reasons, football supporters should count themselves lucky that they will not be faced with the same ticket prices in France that many rugby fans faced when travelling to England Wales and last year. 

By John Considine

It is almost certain that Irish fans will be singing “The Fields of Athenry” during this year’s 2016 UEFA European Championships.  The song is an Irish sporting anthem.  It has been heard at Olympic Games and at European Rugby Union’s premier club competition.  It is also sung by the fans of Celtic FC while fans of Liverpool FC sing a slightly altered version.

The song is about an Irishman due to be transported to the other side of the world for stealing the corn from the ruling British aristocrat (Trevelyan) during the famine.  One hundred years after the Easter 1916 rising, the song will ring out in France.  I was reminded of the importance of both the famine and Irish independence when I recently reread Development as Freedom.  The book is written by Nobel Prize winning economist Amartya Sen.  In the book Sen says “It is not surprising that no famine has ever taken place in the history of the world in a functioning democracy … Famines have tended to occur in colonial territories governed by rulers from elsewhere (as in British India or in an Ireland administrated by alienated English rulers), or in one-party states … or in military dictatorships …”.  He says that what happened in Ireland in the 1840s killed a “higher proportion of the population than any other famine anywhere in recorded history”.

Development as Freedom prompted more thoughts about the Irish soccer team than those related to “The Fields of Athenry”.  In the book, Sen explains the difference between “culminating outcomes” and “comprehensive outcomes”.  One is about the level of economic development while the other is about how you get there.  Sen’s perspective is similar to that of those sports commentators who stress the importance of how the game is played.  Sen proposes a thought experiment.  He asks the reader to imagine two identical outcomes.  One is achieved under a democratic market regime where participants have the freedom to produce and buy what they want.  The other outcome is achieved under a command economy where a central force determines what is produced and consumed.  He asks which outcome is better.  Most sporting fans will only say they prefer their team playing to a system while that team is winning.  History suggests the Irish fans will accept any type of winning football but when they are losing they will complain about any imposed system.

As we start a new calendar year, and make decisions about sporting participation, the economists amongst us might consider Sen’s discussion of human capital in the book.  Amartya Sen appeals for a wider definition of human capital than is sometimes presented in the economics textbooks.  He wants to focus on human capability rather than human capital.  It is easy to say that our participation in sport is an investment in our health.  However, we might also engage in a sport to become someone different.  To change ourselves.  There is the character building part.  It can promote change (individual and social).  This is easier to see when we consider why parents get their kids involved in sport and other pastimes.

Sen notes that the human capabilities element was important to Adam Smith (Sen quotes a passage from Smith that would not be out of place in Bounce by Mathew Syed).  However, he worries that it is being forgotten in the human capital literature.  James Buchanan expresses similar concerns about the elements of character formation missing from the economic literature in his collection of essays published as What Should Economists Do?

I’m not sure if there is a need to guard against forgetfulness or amnesia in economics.  And, if so then what should be done.  Maybe the profession could use songs!  Jane Jacobs (author of The Death and Life of Great American Cities), highlights the importance of song to the maintenance of Irish identity and culture during 800 years of British rule.  She was not talking about “The Fields of Athenry” but it is probably appropriate that the song rings out at a tournament of one of the most democratic sports in the world.  A sport that the British codifed and gave to the world.

It seems fair to say that the English sport is a more democratic one than the national pastimes of its former colonies. Soccer spread on the back of the expansion of the British empire.  The result was a game the rest of the world plays while Americans play baseball (to paraphrase a Stefan Szymanski and Andrew Zimbalist book title).  Szymanski and Zimbalist contrast the motivations behind the spread of soccer while the owners of US sport teams were more concerned with protecting their home market.  Some of the motivating forces for gaelic games militated (or militates) against them thriving outside Ireland (see Sport & Ireland by Paul Rouse for a more comprehensive account).  Only this week did we see a situation where a club wanted a British Army side banned from the London championship (here).  And, it is not that long since members of the British forces were banned from playing gaelic games (via Rule 21).  Maybe that is why "The Fields of Athenry" will be sung without too much intended political significance.