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Is Hawk-Eye Really Worth It?

15/8/2013

 
By David Butler

The introduction of the Hawk-Eye goal line technology at the start of the 2013-2014 Premier League season has been broadly welcomed by most and viewed as a sign of football’s gradually progressive stance toward the introduction of technology. The Hawk-Eye system has been rigorously tested over a three-year period and is, by most accounts, accurate to within 4mm. 

But is this goal-line technology system really worth it?

According to the Daily Telegraph last week, It costs £250,000 to install 14 cameras (7 per goal) in any Premier League ground. That works out at a cost of £5m for the introduction of the Hawk-Eye system in all Premier League stadia.  There are 380 matches in a Premier League season, so the cost of the technology is £13,157 per game for one season. While the introduction of Hawk-Eye is a fixed cost and can be spread out over numerous years, this figure seems high, especially when one takes account of the frequency of goal line incidents. 

Although we have a tendency to remember goal-line incidents, often due to the sense of controversy and injustice they can create, there are in fact few occurrences of contentious goal line decisions. There was a reported 31 occasions in the 2012-2013 Premier League where goal line technology would have been useful for the match officials. That works out at a cost of £161,290m per incident. This is especially worrying when in fact most of these decisions (90%) were actually called correctly by the officials. 
Premier League referee's, of course, want to remove this error. Official Anthony Taylor recently welcomed the system saying that “although we had 31 incidents in the Premier League where such a system may have aided our decision making, three of those decisions were called incorrectly so anything that can help us improve our accuracy on major decisions is always welcome."

Even if we assume that the technology will not depreciate or require further expenditure, the costs remain high. Estimating with last season’s statistics on goal-line incidents, it would still cost £16,129 per incident over a ten year period and £1,315 for each of the 3800 matches (thats not even taking account of the additional expenditure required for installing camera's in the stadiums of newly promoted clubs).

Given that the accuracy of the Hawk-Eye system has been previously doubted in a 2008 paper by Harry Collins and Robert Evans, I think the burning question is whether the difference in the margin of error between a referee’s eyes and the Hawk-Eye system is really worth the price? As ever, notions of fairness and justice can often fly in the face of our traditional understanding of rational decision-making.  

Power 100 is 50% Sport and 50% Economics

15/8/2013

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By John Considine
It is hard to beat the Bloomberg Sports Portfolio Power 100 list when it comes to sports economics.  The Power 100 list is literally 50% sport and 50% economics.
 
As a result of the mix of economics and sport, Tiger Woods is the top golfer for 2012 and 2nd on the list overall behind LeBron James. While Rory McElroy is ranked number 1 “on the course”, his performance off the golf course means he is only ranked 14th overall for 2012.  Given his current dip in his golf ranking he will probably drop down the list in  2013.

Because of the way the list is constructed it is dominated by US sports stars and, in particular, by those from  American football.  Fifty-five per cent of the list is made up of individuals from American football (24%), basketball (17%) and baseball (14%).  The US nature of the list can also be seen in soccer.  The only three soccer players that make the list are David Becham (No. 13), Thierry Henry (No. 85) and Landon Donovan (No. 94).  Donovan made the list for all four of the years 2009-2012.  He reached his highest position of 40th in the World Cup year of 2010.  World Cups and other championships have a big influence on the list.
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The importance of major sporting events for the list is illustrated by the impact of the Olympics.  US gymnast Gabby Douglas is ranked 18th.  She was not ranked in the top 100 in any of the preceding three years.  It also made her the 2nd highest ranked woman behind Serena Williams (No. 12) but ahead of two other tennis players in Maria Sharapova (No. 20) and Victoria Azarenka (No. 32).  [Tennis is clearly the game with the least  disparity between men and women in terms of earnings.]

The Olympics also propelled Usain Bolt to 15th on the list.  Bolt is clearly one of the highest earners in sport.  In the  book Sportsonomic$ the journalist Gavin Newsham says Bolt commands appearance fees of $350,000 for approximately 10 seconds of work.  Newsham goes on to show how many other Olympians earn very little.  For example, US discus thrower Lance Brooks is listed as having an annual salary of $45,521 (and this is from his day job).

One other feature of the Power 100 is worth noting.  The list is headed by the four sports people who have topped the list in its first four years.  The top four are LeBron James, Tiger Woods (No. 1 in 2009), Peyton Manning (No. 1 in 2010) and Drew Brees (No.1 in 2011).  This shows real star qualities and staying power.

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Planned alcohol sponsorship ban could lead to a short-term financial boost for sports

14/8/2013

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by Declan Jordan
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The Irish government has kicked to touch on the issue of alcohol sponsorship of sports. The Minster for Sport, Leo Varadkar, and the Minister for Arts and Culture, Jimmy Deenihan, (who may also be worried that a ban for sports will be extended to a ban for cultural events), have accepted the arguments from the Health ministers for a ban. However, providing a really good example of regulatory capture, said the ban cannot go ahead until alternative funding is identified to compensate sports organisations.

It's notable that the ministers should take the line of the sports organisations that they should be compensated. It is hard to think of another industry or commercial organisation that would demand compensation from a government decision to implement policy designed to improve health. The government didn't compensate pharmacists when it introduced restrictive regulations on the sale of codeine-based products. It didn't compensate retailers when introducing plain packaging for cigarettes. Then again I suppose those industries don't have ministers representing them at cabinet.


There is of course politics at play. The ministers want to protect their budgets and pressure on income for the sporting bodies may result in greater call on scarce public funding for sport. There are legitimate questions regarding public funding for professional sports (including rugby, football and GAA - the latter being amateur in terms of players but not in terms of the organisation). 

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The announcement of the government of it's requirement that alternative funding be put in place to compensate sports bodies after a ban on alcohol sponsorship creates a potentially counter-productive incentive for sports bodies and the drinks industry. The larger the gap that needs to be filled the more difficult it will be to implement such a ban. This means drinks firms could have an incentive to dramatically increase their sponsorship of sports organisations to make government think twice when they come to look at how much compensation will cost them. It would be in the government's interest to indicate that compensation will be based on 2012 levels.
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Show Me The Money - Why Irish Horse Racing Continues To Thrive

13/8/2013

 
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By Robbie Butler

Last week news broke that former Celebration Chase and Desert Orchid Chase winner Sanctuaire will be based in Ireland for the coming season. Willie Mullins will take charge of the seven-year-old French bred star who looks certain to land a graded chase in Ireland this winter and could possibly land further success for Ireland at next year's Cheltenham Festival.

For those unfamiliar with racing a horse, unlike a person, is deemed to be ‘from’ the country that they are trained in. Hence, Sanctuaire will now be referred to as an Irish horse, albeit French bred. 

This is a coup for the Irish racing industry and will further strengthen the hand of the likes of Mullins, who was part of an Irish team that won more than half of the races (14/27) at the 2013 Cheltenham Festival. This incredible achievement is testament to the hard work (and no shortage of funding) that has been channelled into the industry over the past two decades. 

A closer look at yesertday’s racing in the British Isles might explain why you are likely to see more top class horses move to these shores. The answer is simple - money! 

The graphs below present information on the total prize fund at each race track (August 12th) and the total prize money given to winning horses (there are prizes for up to 5th place usually).

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Ballinrobe flew the flag for Ireland yesterday and comes out as the clear winner. The total prize fund in Co. Mayo yesterday evening was nearly £64,000 (GBP). (For the purposes of comparison with UK tracks, all amounts are quoted in pounds sterling). Ballinrobe’s prize fund was nearly twice as high as Ayr (£35,500), Thirsk (£35,000) and Windsor  (£35,000) and more than double what was on offer at Wolverhampton (£28,750). 
  
A similar story occurred with first place prize money. Ballinrobe again came out on top. The seven winners yesterday evening shared more than £43,000! The winners at Ayr, Thirsk and Windsor shared just £23,279, £22,573 and £22,643 respectively, while those at Wolverhampton divided under £19,000 between themselves.

From the economist perspective, If you’ve got a horse in training there’s only one place to be – Ireland! 

Why do golfers earn more than tennis players?

12/8/2013

 
by Declan Jordan
Last Saturday week (July 27), Johnny Watterson wrote in the Irish Times about the inequality in prize-money in tennis relative to golf. He compared two recent major winners in each sport, Marion Bartoli at Wimbledon and Phil Mickelson at the Open. He said
So Marion Bartoli endures laddish stick from John Inverdale, puts a trembling Sabine Lisicki to the sword and walks away €183,350 richer for a fortnight at Wimbledon than Phil Mickelson did for winning the Scottish Open and British Open in successive weeks. That’s no surprise to those in the lower rungs of tennis, where new racquet strings and food poisoning are more pressing than the fantasy of a staged warm down or massage session.

The Californian lefty earned €579, 080 for his Scottish Open win and €1,097,570 from Muirfield, while Bartoli took €1.86 million for her 1 hour 21 minute win over Lisicki.
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The point is that at the elite end of the sport, tennis players earn as much as their golfing counterparts. However, moving down the ranking list the earnings of golfers far outstrip those of tennis players. Of course, why the comparison is made between Bartoli and Mickelson, rather than Murray and Mickelson is unclear. It should be noted that since 2007 men and women earn the same prize money at Wimbledon. It's also a little misleading to say that Marion Bartoli won €1.86m for her final victory over Sabine Lisicki. It's a little like saying Phil Mickelson won just over €1m for his final putt on Sunday at Muirfield. In fact Bartoli won £800,000 for winning the final. She had already earned that amount at a minimum by winning her previous 6 matches.

The analysis referred to in the Irish Times article comes from a report by Tennis New Zealand on the 'Tennis Poor'. The article points out, among other evidence, that:

The 400th ranked golfer on the money list earned $203,000 (€153,470) in 2011. To reach that kind of income in men’s tennis, a player in 2012 needed to be ranked 137 in the world and a woman needed to be ranked 107.

The Kiwis used the comparison with golf to show how the money alarmingly falls off in tennis after the 200 mark and how the game of Mickelson and McIlroy better catered for their entirety of players.

In 2012 the 200th ranked male on the ATP Tour earned $98,000 (€74,000). In golf the 200th ranked male that year earned $639,000 (€483,000). In 2012 the 250th male on the ATP Tour did not make any profit, while the equivalently ranked golfer made $461,000. Golf in fact kept on giving with the 300th ranked player earning $358,000 (€271,000) and the 350th male taking $264,000 (€200,000).
The report "noted that, given choice, it made more economical sense for an aspiring athlete to play golf." Some may be less sympathetic to tennis players at lower income levels. There are many professions where the elite earn significantly more than the other 99% of those in the profession. I am sure Paul Krugman earns more than I do and if I was unable to earn a living as an economist would I able to convince our Nobel laureates to reduce their salaries and talking fees to help University College Cork to keep me on? I would expect a tough time.

But of course this analysis is overly simplistic because economists do not 'compete' as sports people do and sports people require competition and rivalry, without which no sport exists. In any event, in this post I am more interested in trying to explain at least some of the difference in earnings between the two sports (golf and tennis). 
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The first aspect is being in the top 400 golfers in the world may not be equivalent to being in the top 400 tennis players in the world. It is very difficult to get an idea of how many people play each sport. Golf World suggests there were 61m golfers in the world in 2003. Of these, 37.1m were in America. I couldn't find a comparison for tennis, but the Tennis Industry Association claim 27.1m tennis players in the US in 2011. Even assuming no growth in the number of golfers since 2003 and assuming the same proportionate relationship in the rest of the world as the US, it's likely that there are more golfers than tennis players. This means it's harder to be a top ranked golfer than a top ranked tennis player simply by weight of numbers. This however can't completely explain difference in prize money earnings. 

Another, possibly more convincing, explanation has to do with the structure of competition in each sport. Golf typically has 'first past the post' tournament styles. In a field of up to 120 golfers only one can win and it can be clear after the first round (maybe even sooner) whether a particular golfer is likely to win or not. So how can organisers of tournaments incentivise competitors to keep playing and trying even when it looks like they will finish well down the field. The prize money at the Open at Muirfield shows that there are incentives for players to finish one place higher in the tournament rankings. (Of course some tournaments will also pay appearance fees to select golfers- though this will not affect effort directly so we can ignore this for the purpose of this argument). It's also notable from that prize list that players who miss the cut also receive prize money. 

Tennis tournaments are generally operated on a knock-out basis. This means that the incentive structure has to be such to encourage the player to win the current match. A relatively smaller fee for winning the marginal match will be sufficient incentive to encourage players to put in greater effort. The Wimbledon prize fee structure shows that players will be incentivised by the increased prize from each game. It also means that while one great match will win a lower ranked player some prize money but this is less likely to happen over a week or two-week long tournament. 
In both sports of course the non-prize money earnings are very important elements of overall income. Golfers tend to have significant tournaments each weekend, attracting significant sponsorship (and related prize money). The higher prize money attracts the best golfers which attracts the bigger sponsors. And more players can play in each tournament. Typically in a knock-out tournament with one game per day (at most) there is a limit in the number of players that can be accommodated at the higher ranked tournaments (not all tournaments can run for two weeks like the majors). This limits the opportunities for lower ranked players to play at the top tournaments with the better money. 

Shirtonomics

12/8/2013

 
By David Butler

Last week the Sky Sports News reporter Gary Cotterill visited Norwich City's club shop as canary fans flocked to have their new strikers name  and number 9. printed on the back of their shirts. Ricky Van Wolfswinkel was shortened to v.wolfswinkel and cost £17 to print  along with his number. The breakdown of this cost was £4 per number and £1 per letter. The dot between the 'v' and the 'w' in his name must have been considered a 'letter'.

Ricky is not however the most expensive player in the Premier League to have printed on the back of your shirt. If we were to assume Norwich City's cost structure for printing names and numbers is uniform across the Premier League, the table below shows the most expensive players to get on the back of your shirt.
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West Ham fans would have to cough up the most for their Finnish goalkeeper Jussi Jääskeläinen due to the diaeresis used above the a's in his name (with each dot costing a pound!). Everton's goalkeeper Mason Springthorpe comes in second while more househould names (and probably more profitable ones) like Chelsea's Azpilicueta and Mancherster City's summer signing Fernandinho come joint third, with many others, at £19.

Its hard to find a bargain and you'd be fooled if you thought Ba (Chelsea), Ki (Swansea), Ibe (Liverpool), Aké (Chelsea), Fox (Norwich), Fox (Southampton) or Maurice Edu (Stoke) were the cheapest as all of these players have a squad number with two figures. West Ham fans may think they also have the cheapest name in their new signing Răzvan Raț, who has been handed the number 8 shirt but on close inspection, you will see his name is made up of four 'letters' when you include the cedilla (the grammatical attchment that looks like a comma below the t).

The 'best' option to go for (making an unfair assumption that all clubs charged the same price for their shirts) would be Mancherster United's Patrice Evra and his number 3 at £8. The Premier Leage Actim Index ranks him as the 8th best performer in the 2012-2013 season and with this name length and number combination he'd probably be the 'best' buy. If however, you could spare an additional £4 you could always upgrade to Gareth Bale on your Tottenham shirt or if you wished to stick to the Irish nationality, Damien Duff and his number 16. 
Maybe there was someone else but from what I can remember, Hull's Vennegoor of Hesselink (20) who played during the 2009-2010 season must have been the most expensive. At Norwich's cost structure and a squad number of 29, he would have been priced at  £28, just over £10 less than the new Hull City shirt at £39.99! As for the cheapest ever, all I can think of is players with three letter surnames. Newscastle's Rob Lee and Tottenham's Ruel Fox both wore the number 7 and if they were lining out today would have been priced at £7, a proper bargain!

Decision Making - Small Margins Between The Good and The Great.

10/8/2013

 
PictureFloyd 'Money' Mayweather, Jr
By Gary Burns

On the 14th of September, Floyd Mayweather Jr will take on Saul Alvarez at the MGM Grand, Las Vegas, Nevada at a catchweight limit of 152lbs. The fight is major box office business and to the general public the weight limit of the fight is of little consequence. To Floyd Mayweather Jr the fight at a catchweight is indicative of his decision-making in the latter part of his career.
 
Floyd Mayweather jr is undoubtedly the elite boxer of his generation as he is undefeated after 44 professional bouts and was the highest paid athlete according to Forbes in 2012, earning a reported $85 million (knocking Tiger Woods off the top earners spot for the first time since 2002). Added to this, he was involved in the biggest Pay Per View of all time in 2007 when he fought Oscar De La Hoya.

While Mayweather’s decisions in his personal life have recently landed him in prison, when it comes to making decisions in the ring, concerning which opponent to take on, he is the shrewdest operator of them all. His choices here have allowed him to surpass his peers and have cemented his legacy as an undoubted future Hall of Famer.

Boxing is of interest to economists and decision theorists as there is no other sport with a comparable competitive structure to it. Boxing has no central governing body, there is no set league or competition and no set future schedule. What it has is a number of governing organisations, each with their own belts in each weight division. The problem with such a structure is that fighters may not end up fighting the best available opponent. A singular weight division for example can have numerous legitimate world champions at any one time (IBF, WBC, WBA and WBO are all considered the most legitimate governing bodies but there is a number of others including WBF and IBO). Champions then have to defend their belts against mandatory challengers within their organisation or risk losing their 'world champion' status. Champions in a singular weight division however, do not end up facing each other, mainly due to organisations having different rankings and for the fear that defeat could mean a downward trend in a fighter’s career and in some cases, the end of a career.

If a team or individual lose in another sport it is often looked upon as a reason to come back stronger. Boxing however, due to the explicit physical dangers, is different. A fighter carries a high cost if defeated. It is not unusual if a fighter is defeated for many to question their ability to continue (certainly at the level they are defeated).Decisions on opponents are therefore all the more important and it has become a highly strategic game. 
 
But this is only one blade of the scissors; the economics of a fight is essential for it to go ahead also. The success of bouts is dependent on the interest the public take in the fight. No matter how talented a fighter is, it will not necessarily mean they will be financially successful. The market truly decides on whether a fighter will be financially successful or not.
  
Thus to have a successful career you not only need the ability but you must tick both the boxes of choosing wisely over opponents and meeting the market’s needs, something Floyd Mayweather excels at.

Mayweather’s impressive record is in no small part due to his decision-making where he evaluates his position in the market and the abilities of his opponent. The risks of fighting remain the same for every boxer but what Mayweather has done particularly well in the latter half of his career is make calculated risks and chosen opponents whereby most of his challengers have to leave their ‘comfort zone’ while he remains in his. Mayweather understands that having that zero on his record allows him to earn more than any other fighter. Boxers, outside of the heavyweight division and local fighters, find it difficult to catch the general public’s imagination at the consistent level of other sports. Mayweather understands his undefeated status is a signal that allows him to stimulate interest amongst the general public and make more money through Pay Per View sales. On the flip side, he also understands a defeat would be detrimental to his earning potential. A good example of this was his decision not to fight Manny Pacquiao that was widely criticised.

PictureMayweather - weighing in
While not denying his superior talent, his excellent decisions on who to fight support his record. In particular Mayweather has chosen wisely over the last six years if one considers the optimum weight of an opponent and the weight they fight Mayweather at.

For most fighters there is a positive correlation between their weight and number of fights. Weight increases as fighters get into the ring more. Mayweather is no different here (see below). When fighters are younger they can maintain a lower weight but as they age this becomes more difficult. Naturally they move up in
weight classifications. Mayweather has followed this trend with few deviations. Furthermore, It is generally accepted that fighters lose speed and may potentially not maintain their punching power as they go up through weight divisions fighting naturally bigger opponents. On the other hand, fighters may lose conditioning which effects their durability if they are forced to come down weightdivisions and fight opponents who are more natural at lighter weights. 

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PictureThe 'Pretty Boy' in action
If we look at the De La Hoya fight in 2007 as a starting point in achieving his worldwide elite status, Mayweather actually jumped up in weight from welterweight (147lbs), his most comfortable weight, to junior middleweight (154lbs). This was a calculated risk. De La Hoya fought only twice in the previous three years and one was a loss at middleweight (160lbs). Mayweather won a largely unimpressive bout but it helped elevate him to a household name outside of boxing and the United States.

His next opponent was Ricky Hatton. This fight was at welterweight,
Mayweathers optimum weight. Hatton had only fought as high as light welterweight (140lbs) before this fight. Mayweather won by impressive TKO in round 10. 
 
The following bout was against Juan Manuel Marquez. Again the fight was at welterweight. Marquez had previously fought as high as junior welterweight but many would argue lightweight was his optimum weight (135lbs). Mayweather won an easy unanimous decision.

Following this he took on Shane Mosley, again at welterweight. Like the De La Hoya fight, the decision to fight Mosley was calculated. Mosley was campaigning at welterweight but was in his 39th year and had fought at a higher weight some four years earlier. He also had five defeats on his record by the time he stepped into the ring. Mayweather won an easy unanimous decision. 

Mayweather won his next bout against Victor Ortiz with a 4th round KO in controversial fashion. Again, Ortiz had only fought once at welterweight and had mainly campaigned as a light welterweight in the previous years.
  
Perhaps Mayweathers biggest risk in recent years was moving up to light middleweight for the first time since fighting De La Hoya for his fight with Miguel Cotto. His classed showed over twelve rounds with a unanimous decision victory over Cotto.

The most recent bout of Mayweather was against Robert Guerrero at welterweight once more. Guerrero, while fighting at welterweight twice was only three bouts previous campaigning at lightweight (135lbs).

So what’s next for Floyd?

PictureMayweather vs. De La Hoya
As I mentioned at the beginning, this September he will take on Saul Alvarez, a young undefeated Mexican World Champion at light middleweight. The fight will take place at a catchweight 152lbs even though the light middleweight limit is higher at 154lbs. Alvarez is a relatively big light middleweight with many boxing analysts saying he may be a more natural middleweight. In between fights he certainly walks around at a much bigger weight than light middleweight. Mayweather on the other hand says his natural weight between fights is about 150lbs. While Alvarez has shown no problems in getting down to the light middleweight limit of 154lbs, those extra two pounds may not seem a lot but at this elite level of sport fine margins are where victory is gained or loss is suffered. 

This is, in my opinion, why Floyd Mayweather Jr is the undefeated fighter he is. He never has to push his body beyond its limits to meet weight limits. His opponents more often than not, do. Since his 2005 fight against Sharmba Mitchell, Mayweather has fought at welterweight with only two exceptions, Cotto and De La Hoya. His ability and undefeated status has allowed him the bargaining power to stay within his preferred weight category, removing a variable that could potentially damage his chances of success. His opponents however often do not fight in their preferred weight division. In addition, the comfort zone of Maywether is extended to only fighting in Las Vegas since 2006 which happens to be his city of residence.

Perphaps the take home message is that boxing at an elite level leaves very little room for error. A sport like boxing, unlike others, affords fighters the opportunity to choose opponents. Because of this and the due to the high price of loss, fighter must do a cost-benefit analysis like very few other athletes. Floyd Mayweather Jr and his team have perfected this. 

This was a guest contribution by Gary Burns - Gary holds a degree in economics and has made various contributions both to print and online media on Boxing

Corruption and Mismanagement in the Indian Premier League

9/8/2013

 
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By Robbie Butler

The term anti-climax probably best sums up England’s retention of the Ashes this week. The arrival of heavy rain on Monday morning ensured Australia did not have the opportunity to bowl out Alastair Cook’s men at Old Trafford, leaving England 2 – 0 in front with just two tests remaining.

The third test was littered with Game Theory, an idea conceptualised by the great John Nash, as England attempted to slow the game down and wait for Mother Nature to extinguish any slim hopes the Aussies had of wrestling the famous Ashes back from their great rivals.

Despite this test series being probably the most high profile between any cricketing nations, the real power in the game lies not in England or Australia but India. The Indian Premier League (IPL) is generally considered the most highest-profile showcase in the world for Twenty20 (T20) cricket, the shortened form of the game, with a brand value was estimated at over €2 billion. However, all is not well. The Economist provides a greater insight into mismanagement and corruption in India’s most popular sport.


 

It's Always Darkest Just Before The Dawn

8/8/2013

 
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By Robbie Butler

Liverpool begin their Premier League campaign at home to Stoke City on Saturday week and in doing so will kick-off the 2013-2014 Premier League season. Even the most partisan of Liverpool fans will admit a 19th league title is as far away as ever. In fact, Captain Steven Gerrard has openly admitted that he will probably retire without ever winning the Premier League.

Just as Gerrard comes to the end of his journey, another Merseyside favourite of the past decade David Moyes, starts a new journey up the M62 in Old Trafford. The former Everton manager takes charge of the most successful club in the domestic game. No doubt Moyes will hope to end his trophy duck and is odd-on to end the season will sliverwear.

However, things were not always so sweet in the red half of Manchester. Just as Liverpool continue to endure a league title famine, United experienced an even longer period in the wilderness. By the time Steve Bruce, Bryan Robson and co. lifted the title in May 1993, United had gone 26 years without landing the ultimate prize in domestic football. Liverpool have now gone 23 years.

The graphs below plot both Manchester United and Liverpool league finishing positions during both periods, something akin to a business cycle in the case of United (1967 – 1993). 

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The interesting point to note is that United’s decline was far more dramatic, with the Red Devils even relegated in 1974! Liverpool on the other hand, have never been outside the top eight. United’s average league position over the 26 years was 6.88 with a standard deviation of 5.16, while Liverpool’s average league position since 1990 has been 4.46. (stdev 2.02).

Incredibly, United’s third worst league finish between 1967 and 1993 occurred under Alex Ferguson in 1990 and was just three years before they were crowned kings of England again!

So maybe Stevie G is closer than he thinks. After all, it’s always darkest just before the dawn… 

The Economics of Doping

7/8/2013

 
By David Butler

The news that baseball’s highest paid player, Alex Rodriguez, along with twelve others have been suspended over doping has once again raised the issue of drugs in sports and there effect on performance. While I’m sure the philosophy behind regulating against performance enhancing drugs is intended to ensure fairness in one pillar of competition, economists may traditionally look at the topic differently leaving the normative issues aside. 

More than likely an economist would evaluate the issue of banning drugs in a game theoretic sense. What I mean by this is that regulating against doping prevents a race to the bottom between athletes, who could strive to find superior drugs if they were permissible but alas would maintain the same relative position in the ranking (all the while carrying the increased costs of risks to their health). 

A sub-optimal doping arms race could transpire. In the words of the Red Queen from Lewis Carrols’ Through the Looking Glass “it takes all the running you can do, to keep in the same place”. Taking the usual microeconomic assumptions of rationality, preference stability etc,  I could see how economists would recommend a third party to regulate against drug use in sport given that game theory would predict that competition between athletes would lead to a ‘failed’ outcome. 

What are the economic arguments for permitting the use of drugs to improve performance in sport?
The first, I suppose, is an economic ideology; athletes should be allowed the freedom to choose and should bear the costs of that choice. Third parties need not interfere.  Economists model trade-offs for all consumers using what are called indifference curves, so why not for athletes too? In this case the trade-off is between improved performance and (to indulge in the jargon of the economist) an ‘economic bad’ of increased health risks. For improved performance, one must take on more risk and vice versa. 

A second reason may be to admit that all competitions are inherently unfair; the rules of the game, no matter how they are organised, will naturally confer a greater advantage on one party over another. Improved training methods and infrastructure may be available to some simply as they are luckily enough to have a particular nationality. By allowing drugs to be used it could counter intuitively ensure a fairer contest by allowing equal access to enhancements.

Thinking about the economics off doping and policy measures designed to prevent it does however carry with it a range of explicit and implicit psychological assumptions that are highly restrictive but allow economists model behaviours in a simplified manner, facilitatating formal predictions. To solve the doping problem, if it is a problem at all, economists may need to look beyond these tools. The works of Nobel laureate Elinor Ostrom would be a good place to start as sports, like the bulk of Ostrom's works, are about communities. Whether it is athletics, cycling or baseball the force of prohibiting third parties may be no match for the power of local social norms that are fostered and enforced within groups. Saying this and achieving this are however two different matters.
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