The Economics of Sport
  • Sports Economics
  • About
  • Workshop
  • Media
  • Selected Publications
  • Book Reviews
  • A Primer on Gaelic Games
  • Upcoming Events
  • Education
  • Resources & Links
  • Data

Economics & Pele's Boots

2/10/2015

 
By David Butler

Last week I came across an interesting story* that explained why Pelé tied his boots just before the start of a 1970 World Cup quarter final match against Peru. What seemed an innocent act by the Brazilian was actually a key juncture in the ‘sneaker wars’  that was on-going during the second half of the 20th century
between sports wear firms Puma and Adidas. The narrative provides another nice example of how concepts from game theory can be applied to the sports industry.

As the story goes, the two shoe manufacturers went through a period of intense rivalry in the 1960’s.  Both firms vied for a greater market share on the back of growing demand for sneakers, and endorsing athletes became an important advertising tool for the firms. Financially savvy athletes soon wised up to this rivalry and began demanding increasingly significant sums to wear their products. In response to these rising demands, Adidas and Puma began to cooperate with each other, attempting to scale down what had become an arms race for the top sports stars.  The most notable form of cooperation at the time was the Pelé Pact; both Adidas and Puma agreed that neither would endorse the world’s greatest footballer for the upcoming 1970 World Cup.

Was the cooperative Pele Pact  stable? Well, when Pelé asked the referee for those extra few seconds before kick-off to lace his boots (isn’t it amazing how he decided to tie them just then?), the camera zoomed in to show him wearing a shiny new pair of Puma's.

Apparently, Puma sent a company representative to the Brazil squad and after some negotiations Pelé accepted a lucrative deal to wear the Puma’s. Adidas were naturally furious that Puma breached the Pelé Pact and the fierce rivalry between the two firms recommenced. If Adidas had known that the pure conditions necessary for cooperation were absent they may not have acted so naïvely. The rational Puma scooped the prize!

My first thoughts when I heard this was that it was an urban legend but with a little research it seems the story checks out.  For those that want to explore the sneaker wars between Adidas and Puma further, see Barbara Smit's 2009  book  
Sneaker Wars: The Enemy Brothers Who Founded Adidas and Puma and the Family Feud That Forever Changed the Business of Sports.

*thanks to Sportseconomics.org contributor Gary Burns for introducing this story to me. 

George Hook The Game Theorist

18/3/2014

 
By David Butler

Game theory is a mathematical tool that allows social scientists think about strategic interactions. The benefits are that it provides a mathematical device that is designed for the social sciences and brings a formal dimension to studying choice that can strip away sometimes trivial details. At its core are arguable assumptions relating to an individual’s accurate beliefs, preference consistency and skill levels (which are mostly deemed to be comparable). With these assumptions social scientists have a general framework that holds the potential to integrate the behavioural sciences.

Since its emergence, decline and resurgence in economics game theory has provided a framework to cross the micro-macro dichotomy, offering a broad method to study how self-interested individuals, firms and governments behave strategically. It’s most famous game, the prisoner’s dilemma, has been applied to everything from international trade and taxation policy to croaking frogs, elk’s antler size and to the costs and benefits of females wearing high heels! At the heart of this symmetric game remains a simple logic; what’s good for the individual and what’s good for the group is often at odds. One has to ask, what choice should I make given that somebody else also has to make a choice – a mutual dependency exists. 

Game theorists often use instances from sport to provide examples of such abstract logic that in a large part is not intended to reproduce how people actually make decisions but rather to reproduce what the end results of a person that uses cold logic would reach. Sport provides perfect examples as parties with different interests meet in relatively controlled environments where specific rules exist. The most famous being a penalty kick or a tennis rally (often thought of as mixed strategy games). All the components of games exist in the settings mentioned; strategic interdependence, objective pay-off functions, strategic sets and a defined set of players.

One wouldn’t usually associate George Hook with game theory but his words on RTE last weekend during the Six-Nations final round of games was another brilliant example of how game theory can be applied to sport. While I didn’t hear all of Hook’s argument his sentiment was clear; having different kick-off times for the England-Italy and Ireland-France ties altered the incentive structure and strategic choices of both teams.

In the language of the game theorist the players moves were not synchronised. England moved first by playing earlier in the day and then the Irish team could respond based on the outcome of the English tie. If Hook was questioning the fairness of last weekend’s rugby, I think he was definitely right. Ireland had the benefit of knowing exactly what they had to achieve to win the six nations when their tie in France began. 

One of the most celebrated examples of an interaction like this is discussed in chapter twelve of Richard Dawkins the selfish gene where using Robert Axelrod’s classic book the evolution of cooperation Dawkins outlines how sports which are characteristically zero-sum games (where we have a winner and a loser) can become non-zero sum games when time is involved.

On the 18th of May 1977 in the English first division this strange instance of sport becoming a non-zero sum game occurred. Coventry City were taking on Bristol City and both teams were fighting against relegation. The bottom of the table is below. One team from three had to go down, Tottenham and Stoke were already relegated. Sunderland who were playing their last game at Everton would stay up on goal difference even if they lost providing there was a loser in the Coventry Bristol tie. As expected Coventry and Bristol played ferociously as their status in the division was at stake. Coventry went two up thanks to two Tommy Hutchinson goals but Bristol remarkably pulled it back to 2-2 with a Gary Rowell equaliser. Both teams pushed for the win.

The rub was however that due to the immense crowds that arrived at Highfield Road that day (reportedly 36,903) the Coventry and Bristol match kicked off fifteen minutes late and apparently the Coventry manager had the full time 'Everton 2-0 Sunderland’ result flashed up on the electronic scoreboard in the dying minutes of the tie. Both teams could now be safe if the score could be kept at 2-2. The game became farcical as the side in possession did not attempt to score, the players decided to consciously cooperate rather than to complete. Highlights from the match can be seen
here. 

The power of this instance and several others afterwards is why George Hook is right to suggest that timing is very important, not only to maintain fairness but also to keep things as competitive as possible. Alas, the T.V companies may think otherwise.

    Archives

    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013

    About

    This website was founded in July 2013.

    RSS Feed

    Categories

    All
    American Football
    Athletics
    Baseball
    Basketball
    Behavioural Economics
    Boxing
    Broadcasting
    Competitive Balance
    Cricket
    Cycling
    Darts
    David Butler
    Declan Jordan
    Drugs
    Ed Valentine
    Epl
    Esports
    Expenditure
    F1
    Fifa World Cup
    Finances
    Funding
    Gaa
    Gaelic Games
    Gambling
    Game Theory
    Gary Burns
    Geography
    Golf
    Greyhound Racing
    Guest Posts
    Horse Racing
    Impact Studies
    John Considine
    John Eakins
    League Of Ireland
    Location
    Media
    Mls
    Mma
    Olympics
    Participation
    Paul O'Sullivan
    Premier League
    Regulation
    Research
    Robbie Butler
    Rugby
    Simpsonomics
    Snooker
    Soccer
    Spatial Analysis
    Sporting Bodies
    Stephen Brosnan
    Swimming
    Taxation
    Teaching
    Technology
    Tennis
    Transfers
    Uefa
    Ufc
    World Cup
    Wwe

Related

The website is not formally affiliated to any institution and all of the entries represent the personal views and opinions of an individual contributor. The website operates on a not-for-profit basis. For this reason we decline all advertisement opportunities. 

Contact

To contact us email sportseconomics2013@gmail.com or find us on Twitter @SportEcon.