By David Butler

On Wednesday 28th of October from 7pm-8pm in West Wing 5, University College Cork, Robbie Butler and myself gave a joint lecture for the UCC Economics Society entitled, The English Premier League; Media & Sponsorship.  The talk focussed on the football industry in England, how it is perceived by the media and how commercial aspects have evolved over the last 20 years. The talk was intended to be fun yet informative!

The slides from the lecture can be accessed below

By Robbie Butler

Over the course of the past number of years various sources have raised the issue of the tax on betting (gambling) in Ireland. This year it was reported that on-line gambling in Ireland would incur a similar tax to bets that take place within a bookmakers.
 
Currently, bookmakers in Ireland 'cover' the cost of the 1% tax so that punters are not forced to hand over the tax along with their stake. Previous taxes of 3% and 5% were not covered by the bookies so punters will more than likely pay if this tax is increased.

What impact might tax changes likely have?

A 2015 paper by Philip Newall from the University of Sterling called How Bookies Make Your Money suggests that bookmakers herd geographically in less-affluent areas. Their increased presence in less-affluent areas is supported by the work of Ramesh (2014) and Reed (2014). There is a logic behind this which is supported by anecdotal evidence if one ever decides to visit a bookmakers.

Of course, it can be argued, that taxation of this product is designed to reduce or prevent people from gambling. Sadly, the evidence of increased taxation on products such as cigarettes demonstrates does little to deter consumption.

How much might this cost the average punter? Let’s try three scenarios where the tax is raised by 2%.

• Weekly stake of €70: The Casual Punter. A daily allowance of €10 per day. The total tax paid over the course of the year is. €109.20.
• Weekly stake of €175: The Seasoned Gambler. A daily allowance of €25. Total tax liability of €273
• Weekly stake of €350: The Serious Punter. A daily stake of €50 equates to a tax bill €546.

A return to the 5% tax would see the three named punters pay annual tax charges of €182, €455 and €910. 

By John Considine

Listening to the radio sports bulletins as I drove to work, I was amused by some of the commentary.  One broadcaster drew attention to the way the baseball world series was delayed a few minutes because of technical problems the broadcaster was experiencing.  The radio voice went on to suggest that this would not happen for an All-Ireland final.  I'm not so sure.  The GAA has plenty of experience of delaying big games when traffic problems mean spectators are late arriving to the ground.  Why might it be any different when armchair viewers are delayed?

The sports bulletins also carried stories relating to today's meeting between the Irish Amateur Boxing Association (IABA) and Sport Ireland. The parties will appear before the Transport Committee of the Department of Transport, Tourism and Sport (here).  The meeting will discuss the departure of Billy Walsh to coach in the United States.  Given the funding provided to Irish boxing by the government, the meeting is "an offer the parties could not refuse" (I realise an IABA representative also suggested that Walsh might have received this type of an offer from the US).

The extent of the funding provided by the state to sport may be a recent phenomenon but the interaction between sport and politics has a long history.  The relationship between sport and politics in Ireland is one of the themes in Paul Rouse's superb book Sport & Ireland.  It does the book an injustice to highlight only some of the accounts provided but it does give a flavour of the impact politics has on sport.  During the 18th century, and early 19th century, the state was concerned with the way sport brought people together in one place.  In such gatherings political unrest could ferment.  It was through legislation that small powerful minorities sought to shape or ban sport.  It could be the temperance movement or those concerned about animal rights.  There was a time when bear and bull baiting drew large crowds!  The concerns surrounding the relationship between alcohol, gambling and sport has been a constant theme in sport.

Those who worry about the potential success of the "national" boxing team post-Walsh might ponder what exactly "national" means.  Again, Sport & Ireland provides an amount of food for thought.   For example, Manchester United captain Johnny Carey "played for the IFA Ireland team against England at Windsor Park on 28 February 1946 and did the same for the FAI Ireland team at Dalymount Park two days later".  Other examples arise in relation to the Olympic games.  Over a century ago, Peter O'Connor unofficially raised an Irish flag in an effort to ensure the British did not claim credit for an Irish success.

There is also a history of difficulties in the funding of sport and sport events.  Rouse gives an almost comical account of the Tailteann Games where different elements of the state seemed to be pulling in different directions.  That would not happen nowadays.  Or would it?

By Robbie Butler

On the 13th of September 2013 I wrote about the remarkable rise of the Belgian football team. Following defeat in the Second Round of the 2002 World Cup, the Belgians were not seen again at a major competition until last summer in Brazil. Today they boast a who's who of some of the worlds top club players, with the likes of Eden Hazard, Thibaut Courtois, Vincent Kompany and Kevin De Bruyne all part of their squad.

The previous post plotted the FIFA World Ranking from their exit at the 2002 World Cup up to September 2013, and compared their fortunates to that of the Irish national side. The illustration below is an update of this, with the additional FIFA World Ranking positions from October 2013 to next month (for Belgium only) included. 

When writing the piece two years ago I never could have imagined that Belgium would get to the number one spot. Next month they will achieve this. This is a far cry from the national team that hit an all-time low in June 2007, when ranked 71st in the world.

Irish supporters should draw comfort from this. The Republic of Ireland have been between 55th to 70th over the past two years. The record lowt of 70th in the world (one better off than Belgium were in 2007!) was reached in the summer of 2014. Improvement since has not been unlike Belgium during late 2007.

What can this teach us?

Decline is not inevitable. We need to look at the Belgian model and replicate it. It is possible for Ireland to produce a Hazard, Kompany or De Bruyne. Just because we haven't done it recently does not mean it's impossible. It took Belgium just over eight years to go from 71st to 1st. That's generation of players almost, and with a population of just over 11 million, proves what can be done with a relatively small stock of players.

Can Ireland be world number one by early 2023? It's possible and reminds me of the Jamaican political leader Marcus Garvey quote "Emancipate yourselves from mental slavery, none but ourselves can free our minds!"

By Stephen Brosnan - Stephen is a research assistant in the Department of Economics, University College Cork
 
Recently, German car manufacturer, Volkswagen, have been hit by a scandal involving the fitting of their diesel powered cars in the United States and Europe with software which manipulates emissions testing results. The company admits that over 11 million vehicles were fitted with emissions- cheating software and as a result the company’s share price fell from over €160 to €111.5 within three days, with shares currently valued just under €100. The company could also face penalty fines of up to $18 billion (€16.1bn) in the U.S., for which they have already set aside €6.5bn.

Volkswagen is the leading firm in the automotive cluster in the Wolfsburg-Hannover-Braunschweig region of Germany. As such, the performance of the company could potentially have negative implications for other companies within the cluster.

Martin et al (2013) studied the capacity of firms in clusters to resist economic shocks. They show that, on average, both agglomeration and cluster policy are associated with a higher survival probability of firms on export markets, and conditioning on survival, a higher growth rate of their exports. However, during economic shocks the authors find the opposite to be true with cluster firms displaying weaker resilience probably due to the fact that firms in clusters are more dependent on the fate of the “leader”. Volkswagen is the largest car manufacturer in the world and as such the financial shock to the company is likely to have wider economic impacts on other firms in the cluster.

Another area of uncertainty surrounds the fate of Wolfsburg F.C. The Bundesliga side are owned by Volkswagen and have used funding from the company in recent years to finance big money transfers for players such as Luiz Gustavo, Andre Schurrle and most recently Julian Draxler. In fact, the club recorded the second highest spend on transfer fees of all German sides over the past ten years, behind Bayern Munich.

In the wake of the controversy German newspaper Bild reported Volkswagen will cut their investment in the club by more than half from an annual €80 million to €30 million.  This could seriously hamper the club's ambitions of competing at the top of the Bundesliga and in the Champions League. Furthermore, concerns are not limited to Wolfsburg, but also other clubs across several leagues. The Volkswagen group, and its subsidiaries, are sponsors of 17 professional clubs in Germany which suggests many clubs could yet face financial difficulties as a result of the actions of Volkswagen.

By John Considine

Billy Walsh in now in the US where he is taking up a position with the US women's boxing team (here).  Now that he is gone, the media storm is likely to die down.  The media coverage seemed to reflect the saga itself.  The issue simmered in the background until this week when it became news as well as sports news.  The Minister for Sport, the Chief Executive of the Irish Sports Council (ISC), and the Chairman of the ISC all seemed to be caught by surprise.  They believed (rather than knew) that a deal was sorted to keep Walsh in Ireland.  They had invested significant time into solving this potential problem.  When the "news" broke of the collapse of the deal, Messrs Ring, Treacy and Mulvey, were not happy.  They took to the airwaves on primetime news and current affairs programmes.  Their anger and upset was genuine.  Mulvey threatened to review the funding of the IABA if Walsh departed.  It seems the government and the ISC were disappointed that their view did not carry greater weight given the way they have funded the IABA.

In the period since 2008, ISC funding for National Governing Bodies as a whole has declined by around 20%.  However, during this same period the funding for boxing increased by over 60%.  This can be seen in the chart below.

The increased funding of boxing largely reflects the performance of Irish boxers, lead by Walsh, on the European and World stages.  Irish boxing receives other state funding.  For example, Irish boxing receives funding via High Performance Grants.  Again, as the graph below shows, boxing punches above its weight (pun intended).  In addition, individual athletes receive state funding under the International Carding Scheme.

Those who paid the piper were left wondering what tune that piper was playing.

By David Butler

Recently, I asked whether the  League of Ireland was the most complex football league in the world. The graphic in that entry provided a preview of work I’m conducting with Dr.Robbie Butler that analyses the changing incentive structures in the League of Ireland – here’s another one.  The chart below shows the average number of goals per game in the league from the 1971 to 2014.

The average number of goals per game  is on a downward trajectory over these years. In the League of Ireland, as in other football leagues worldwide, goals are becoming scarcer.

Since the 1993 season (where the lowest average number of goals per game is observed), the average has slightly increased. This coincided with a change in the competition design; 3 points, instead of 2, were awarded for a win. You could interpret this rule change as an incentive for teams to increase attacking play and the switch to a 3 point system may have stemmed the decrease somewhat.
 
If readers are interested in the idea of goals being under threat, I would encourage them to check out Anderson and Sally’s excellent book The Numbers Game.

By Sean O'Connor - Sean is a research assistance in the Department of Economics at University College Cork.
 
After the disappointing result against Poland, which ensured Martin O’Neill’s team would have to contest a play-off to secure a spot in France come next summer, pundit Eamon Dunphy provided some interesting analysis. 

Dunphy stated how ‘after last week, when we really put on a bit of a performance against a strong German team....It was back to the bad stuff’. When it was put to him that had Richard Keogh’s header went in Martin O’Neill style of play would of been vindicated, he added ‘You see it in the lower levels in England, you see it in the Phoenix Park; guys are desperate and they start lumping balls forward, the defender makes a mistake and you get a half chance. International football requires more sophistication.’’ 

I’m sure many would agree with Dunphy, in the sense that playing a long ball game is not only ineffective, but also not particularly easy on the eye. However, if we were to measure different styles of football under the guise of national comparative advantage, Ireland would surely top the table.  

Ask any Irish fan of memorable results which stick in their memory and I’m positive you’ll hear tales of Euro 88, Italia 90 or Japan and Korea 02. Unfortunately, while shock results don’t occur too often for our national football team, when they do, a common formula seems to occur.

12 June 1988 – European Championship Finals: Ireland 1-0 England
Long ball from defence resulting in an eventual Houghton goal

15 June 1988  - European Championship Finals: Ireland 1-1 Soviet Union
Long throw into USSR box results in Whelan volley

26 April 1989 – World Cup Qualifier: Ireland 1-0 Spain
Long ball by Bonner, flick by Cascarino, cross by Houghton results in Miguel OG

14 November 1990 – European Championship Qualifier: Ireland 1-1 England
Long ball by Staunton results in Cascarino header

11 June 1990 – World Cup Finals: Ireland 1-1 England
Long ball by Bonner eventually leads to Sheedy equaliser

21 June 1990 – World Cup Finals: Ireland 1-1 Netherlands
Long ball eventually leads to Quinn goal

18 June 1994 – World Cup Finals: Ireland 1-0 Italy
Long ball eventually drops to Houghton who scores

5 June 2002 – World Cup Finals: Ireland 1-1 Germany
Long ball by Kinsella, Quinn flick on, Robbie Keane goal

1 April 2009 – World Cup Qualifier: Italy 1-1 Ireland
Long ball from defence, Folan flick on, Keane goal

8 October 2015 – European Championship Qualifier: Ireland 1-0 Germany
Long ball from Randolph leads to Long goal

It would appear that the vast majority of memorable Irish results over the last thirty years have been thanks to a more direct style of football. Obviously there are certain outliers, most notably the home and away results against the Netherlands in the qualifying campaign for Japan and Korea. However, the next time you hear someone complain about an Irish player booting a ball towards the opposition goal, think of all the remarkable Irish footballing moments of the past that may not have occurred if we had not.  

By Mark Fallon

A number of weeks ago John Considine wrote about the business of German football and touched on the 50+1 rule. One team showing disregard for this rule is promotion seeking Bundesliga 2 side – RB Leipzig. The German club are the latest team leveraged by energy drink brand - Red Bull, in order to increase exposure of the brand’s sports portfolio.

This is just one example of the various types of sports marketing policies implemented by Red Bull over the course of their 30-year history. Readers may be familiar with their sponsorship of football teams in New York and Austria, as well as involvement in extreme sports and Formula One racing. Does this strategy see a positive return on investment?

I decided to investigate this question as part of my undergraduate thesis.  

Take RB Leipzig for example. What has the club done for the Red Bull brand? Bundesliga rules do not permit a company name to appear in a team name - hence the club is officially called RasenBall Leipzig. While promotion to the top division in Germany is the aim, Red Bull’s primary focus is increased exposure of its product.

One could argue most football clubs have a very different strategy. In recent years almost ever top club has incurred a sizeable loss each year, but the primary aim is to win trophies. 

However, soccer is not the only sport Red Bull have invested in heavily, particularly since their switch from cult and extreme sports to the mainstream according to Prof. Gerd Nufer, from ESB Reutlingen.

The other big sport that most readers would be familiar with is Formula One. The sport does is very expensive to engage in, and Red Bull’s major source of revenue has come from the exposure of winning the constructor and drivers championships repeatedly. It is not measured in terms of real money, but rather by ad-equivalent – the price the brand would have to pay for similar media exposure. This came to $283.2 million in 2012. Whether the company remains in the sport is open to debate, given their recent lack of podium finishes, despite investing over a $1 billion since 2004.

A golden rule to measure sponsorship is that for every 4 euro a sponsor invests, they should receive 5 euro back. Ferrell, Lucas and Niininen (2014) state that for every euro Red Bull invest, they are gaining 3 euro back. There is more to take into account in the overall measuring of the sustainability of Red Bull’s Sports Marketing model, but they definitely provide a model, that others could learn from.
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(Mark can be contacted directly mark.fallon22@mail.dcu.ie).