By Robbie Butler,

When teaching undergraduate students’ introductory economics, I speak about different market structures at an early point. The classification of these, from perfect competition at one extreme to monopoly at the other, is aided by using examples. Sport can help here. There are many examples of sports operating as “monopolies”. For example, The International Olympic Committee has a monopoly right on the sale of the Summer and Winter Olympic Games. They use this power to maximise their position with would-be-host cities.

The Major League Baseball has an effective monopoly of professional baseball in the United States. It administers the 15 teams in the National League (NL) and 15 in the American League (AL). MLB also oversees Minor League Baseball, which comprises 256 teams affiliated with the major league clubs. The owners of these franchises often operate as a monopsony - a market situation in which there is only one buyer – and use their power to maximise their welfare.

The next step from monopoly is a duopoly - a situation in which two suppliers dominate the market for a commodity or service. Golf can provide a nice illustration of this. While not a perfect representation of an industry with just 2 suppliers, the PGA Tour based in the United States and PGA European Tour are an effective duopoly. There are other professional tours (the Japan Golf Tour or the Southern Africa–based Sunshine Tour) but few can compete in money terms with the US or Europe. For example, the top golfer in Japan would rank about 40th in European Tour money standing. The leading US player earns about 3 times are much as those in Europe.

The power of the PGA Tour and European Tour has worked well for decades. However, change may be afoot with recent talk of the Premier Golf League. This would involve the worlds best players in the US and Europe, creating their own tour of about 48 players, and playing weekly competitions over 54 rather than 72 holes. Leading players have suggested that they do not play each other outside of the 4 Majors and the Player’s Championship (5 events in total) and that there is demand for more frequent battles between the world’s best.

Both current tours could not be impressed. This is not dissimilar to a decision by 22 English Football Clubs in the early 1990s who decided to break away from an administrator founded in 1888. The English Premier League was born, and the rest is history.

It may be that case that the duopoly of golf is coming to an end. If the Premier Golf League is successful the supply of professional golf will not be the same again.

By Robbie Butler,

While the annual majors in golf are widely anticipated, it is probably this month's biennial event that is most coveted in the sport. On Friday the 28th of September, the Ryder Cup will return to our television screens from Le Golf National, Albatros Course, Saint-Quentin-en-Yvelines, Paris, France.

It is the first time that France has hosted the three-day event, and only the third time in the history of European staged-events that the tournament has left the United Kingdom. The two previous times being Spain (1997) and Ireland (2006). It is to Ireland that I now turn.

There is speculation that the 2026 Ryder Cup could return to Ireland, with Adare Manor a possible location. In terms of major sporting events, the Ryder Cup is on the boundary of what Ireland should be attempting to host. The 2006 event is widely regarded as a success .

While state support is probably necessary, this would be nowhere near the scale required for the 2023 Rugby World Cup, which the island unsuccessfully bid for. The three-day golf tournament would require some capital investment, as well as temporary overlay, but nothing like the government promised support for our most recent mega-event bid. 

The Shannon region is reasonably well equipped at this point in time, and fulfils one of the major European Tour requirements for hosting - a major international airport. The airport is also importantly connected to the US.  Owner of Adare Mannor JP McManus has said it is his "dream" to see Adare Manor host the Ryder Cup.

I for one hope his dream becomes a reality. 

By Robbie Butler

The Royal and Ancient (R&A) and United States Golf Association last week announced proposals to make significant changes to the rules of golf. There are at present 34 rule in the sport, and if the proposals are permanently accepted, this will reduce the number of rules by 10, to just 24.

R&A’ executive director David Rickman says that such rules changes are motivated by the need to modernise the game and make golf easier to understand and play. A closer look at some of the key changes (courtsey of the Irish Times) is available here.

I noticed a commonality in some of the changes, that have also been adopted in other sports, that of the speed of the game. David Butler has previously considered the rise of instant gratification in sport with reference to Fast4 Tennis. One need only look at cricket to see how the sport's organisers have attempted to make the game faster and more exciting, with the move from 5 day cricket, to 1 day cricket, to T20 cricket. Power Snooker is an attempt by World Snooker to make their sport more exciting, by speeding up play.

This is what many of the golf rule changes target; explicitly and implicitly. The reduction in ball searching time from 5 to 3 minutes, and the recommendation that players take no longer than 40 seconds to play a shot, will instantly impact the speed of play.

Relaxed rules on the putting surface will also make the game faster, as pins do not need to be removed before putting. Additionally, it will be possible to play out of turn in stroke play. Traditionally viewed as disrespectful, this will prevent excessive and sometimes unnecessary waiting times, and should get players around the course faster.

The R&A and USGA must be a little worried. We live in a world where many people constantly require instant results. I remember listening to Curtly Ambrose bowl over after over for the West Indies against England in a Test Match at the Oval on BBC Radio 5 Live. Yes radio! After 4.5 days the game ended in a draw because of rain.

Delayed gratification is tough but I'd take it any day over some of the faster outcomes evolving in sports we see today.

By Robbie Butler

Those of us from Europe that stayed up to watch the wonderful display of golf (primarily displayed by Team USA) woke up disappointed in Monday morning. During the course of the week, golf headlines collapsed as people moved on from last weekend's event at Hazentline National. Much of this week has been domianted by talk of BREXIT, the potential trigger of Article 50 in the Treaty of the European Union, and the collapse of the pound sterling on world markets this week.

It got me thinking. I wonder did Brexit have any impact on the team spirit or togetherness of Team Europe? The last number of decades, Team Europe has become  known for the bond between players, team spirit and sense of believe. Team USA has often been criticised in the past for lacking this same team spirit.

The single matches on Sunday saw twelve Europeans compete against Team USA. Five players were from mainland European countries all in the EU. These were Belgium, Germany, Spain and Sweden. Six players were from England (five were born there while Justin Rose was born in South Africa but moved to England as a child). One (Rory McElroy) was born in Northern Ireland.

The table below presents the points won, matches played, and points per match of the players from Brexit (Red) and non-Brexit (Blue) countries. McElroy (Green) is a special case. While the Brexit referendum passed, a majority in Northern Ireland rejected the proposal in June. 

The European score in the Singles Matches on Sunday reads EU 4.5 - 0 Britain and Northern Ireland.

Of course, this is not the reasons for this. Pieters, Cabera-Bello, Garcia, Stenson, and Kaymer played exceptional well on Sunday and were deserving of their points.

The most efficient Team Europe  players over the course of the three days were rookies Cabera-Bello and Pieters. This is probably a first for Team Europe and even the Ryder Cup. 

Let's hope this is just a blip, in what has been a remarkable two decades for Team Europe, and that the trophy will return once more to these shores following the event in Paris in two years time. 

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 David Butler

I gave a short lecture to senior cycle secondary school students (high school) on the Economics of Sport yesterday. The talk focussed on prize money distributions across sports. The event took place in University College Cork and my slides from the talk can be viewed below.

By Robbie Butler

The Ryder Cup was in the news today, despite the fact we are not in a Ryder Cup year, when it was announced that the Marco Simone Golf and Country Club (not to be confused with the former AC Milan striker), on the outskirts of Rome would become the first Italian golf course to host the event. Italy will become only the third mainland European country to host the biennial event, after beating off competition from Austria, Germany and Spain.  

The economic forecasts have already begun, and the value of the event to the local and national economy. To be fair to the event, which is the biggest in golf, it does not possess some of the cost associated with the ‘biggest’ events in other sports. For a start it’s just three days long. While investment in some sport infrastructure is required, most of this is temporary, and can be dismantled afterwards. Just one venue is also required.

It’s likely the majority of spectators will be from outside of Italy, as was the case in Celtic Manor in 2010 and Gleneagles in 2014. It’s estimated that the value of the event to Wales in 2010 was around £80 million pounds with less than 30% of spectators from the host country. Scotland claims to have had a similar positive experience. An impact study by Sheffield Hallam University's Sport Industry Research Centre (SIRC) suggested that the 2014 event was worth in excess of £100 million to the Scottish economy.

I’m sure Rome and Italy will hope for an even better result.

By David Butler

The Pareto distribution is quite famous in Economics and is named after the Italian polymath Vilfredo Pareto (1848-1923). Mathematically,  the distribution is referred to as a power law probability distribution (see graph) and it is applicable to phenomena in both the natural and social sciences.

The distribution has its origins in the income data Pareto  published in 1897 when he explored how wealth across society was allocated. Pareto found that the income distribution was not a bell shaped curve. There was many people at the bottom end of the wealth distribution, a wide middle class and some super wealthy individuals. His distribution is usually explained through the 80-20 rule of thumb.  80% of the wealth is usually owned by 20% of the people. This is usually a good approximation.

A fun and accessible way to  learn about the Pareto (and Pareto-like) distribution is through sports data.

The graph below shows the PGA Tour Earnings for Golfers in 2015. Out of the 385 golfers on the tour Jordan Spieth has the highest earnings.  Like Spieth, there are a few very high earners but these are in the minority (e.g. Jason Day, Bubba Watson, Rickie Fowler, Dustin Johnson, Justin Rose and Rory McIlroy). There are some golfers earning a reasonable sum, the middle-class,  and then a glut of lower earners. The top 20% (77 Golfers) earned $218,010,501 together, that’s 68% of the total earnings. The remaining 80% (308) golfers divided the remaining $101,434,093 between them.

What about a different sport? The second graph shows the prize money earned by Irish National Hunt Jockey's (all race types) for the 2014-2015 season. While the earnings are far less than in golf, we still see a similar pattern. Ruby Walsh tops the list out of 152 jockeys. Bryan Cooper, Jonathon Burke,  Paul Townend and  Paul Carberry all perform very well too.  The top 20% (30) of the jockeys shared €18,785,125 between them. That’s 78% of the pie.  This left only €5,211,170 worth of earnings for the other 122 jockeys.

Of course, the more interesting question is why do such patterns emerge? The answer to this question has puzzled social scientists for years and is far too complex to address in detail here. To hazard a guess, these outcomes are not unicausal; no exclusive factor is probably causing the outcomes above. Albeit somewhat of a weasel word, the skewed distributions are often referred to as an ‘emergent property' of a system. Small, random differences at the start can amplify themselves and lead to significant differences down the road.

By Robbie Butler

In 2006 renowned institutional economist Geoffrey Hodgson published a paper in the Journal of Economic Issues called What Are Institutions?  Whilst an exact and acceptable definition of what comprises an ‘institution’ remains elusive, most writers acknowledge institutions are a set of formal and informal rules, norms and habits with the objective of providing an incentive structure which human activity relies upon. The following definitions are provided: 

        A rule is defined as “a socially transmitted and customary normative injunction or immanently normative                     disposition, that in circumstances X do Y”. (Hodgson, 2006:3)

       A norm “involves approval or disapproval” whereas rules do not. (Hodgson, 2006:5)

       A habit is “a disposition to engage in previously adopted behaviour or thoughts, triggered by an appropriate               stimulus or context” and require “repeated behaviour” in order to be established. (Hodgson, 2006:6)

These three definitions can go a long way in helping to explain the controversy at the Solheim Cup. For those unfamiliar with golf, the Solheim Cup is the women's equivalent of the Ryder Cup. The 2015 tournament was staged last week in south-west Germany. Mirroring the format of the Ryder Cup, the European Team held a 9-6 lead on Saturday afternoon. Charley Hull and Suzann Peterson of Europe, and Alison Lee and Brittany Lincicome of the USA stood on the 17th green at all square in their game, with American Lee standing over a putt for the hole. Then this happened.

The picture of the right is the moment just after the putt stops beyond the hole. The ball is just visible below.

One of the first rules of golf is that the hole is only complete when the ball enters (and stays) in the cup. Therefore, Lee was required to putt out the hole in order to complete it. However, it's not that simple. Golf relies heavily on etiquette and a sense of what is appropriate and not appropriate on the golf course. Here norms can come into play. Opposition players can instruct the putter to pick the ball up if they believe the putt won't be missed (known as a gimme). 

Another interesting side-story is the body language of European Peterson (blue jumper above) who strides off the green once the putt is struck, with only one glance behind, after Lee has picked up her ball. Those familiar with golf would probably agree this is the behaviour of a player that has deemed the hole to be completed. This may be a habit of Peterson that has developed over years of playing the game. Lee may also habitually pick up putts inside two feet and assume they are gimmes. One would have to know the players better to confirm this. 

The end result of course is that the putt had not been conceded and Lee's decision to pick up her ball resulted in Europe winning the hole, and eventually the four-ball. Neither Peterson broke any rules. However, former World Number One Laura Davis hit the nail on the head when she said "Suzann was within the rules but it's just not in the spirit of the game and in the spirit of the Solheim Cup".

Pettersen has since apologised and said: "I've never felt more gutted and truly sad about what went down on Sunday. I am so sorry for not thinking about the bigger picture in the heat of the battle and competition.I was trying my hardest for my team and put the single match and the point that could be earned ahead of sportsmanship and the game of golf itself! I feel like I let my team down and I am sorry."

By Robbie Butler

As the dusts settles on the 2014 Ryder Cup American Captain Tom Watson has started to come in for criticism. Many commentators were quick to point out the failings of the nine time Major win. Even Phil Mickelson launched a broadside attack on his captain in the post-tournament press conference! Watson was quick to respond and argued that he and Phil simply had a difference of opinion. Public opinion is split on whether Mickelson was right to attack a golfing legend in this manner so soon after the event ended.

What isn’t up for debate is the captaincy of Irishman Paul McGinley. Many of the players, including world number one Rory McElroy have put on record that he is the best European captain the have played under. McGinley’s meticulous preparation, which allegedly included following Victor Dubuisson around that world so that they could have dinner and make the French man feel at ease about the Ryder Cup, has been lauded by all quarters. Success was inevitable.

Below is the breakdown of Ryder Cup points per player over the three day event. The three Captain’s Picks (Wildcards) are highlighted in red and blue. It makes for interesting reading.

The correlation between World Ranking and the number of Ryder Cup Points is negative (as expected) but is below 0.3. Only two players failed to contribute to their teams score. Europe’s Stevie Gallagher and somewhat incredibly, the number one US Ryder Cup points holder, Bubba Watson.

The next two tables give some more detail. The Europeans basically won the Ryder Cup over the course of the foursome matches, hammering the USA 7 – 1. This it could be argued is where Watson went astray. But how much control does he have other than pairing up players? These same players were able to deliver a victory in the Fourball version of the game, on both Friday and Saturday.

What about the Captain’s Picks. Commentators have been very slow to point out that Watson’s picks outperformed those of McGinley. In fact, this is one of the very few metrics that we can compare captains on as they have total control as to who to select. McGinley is lucky that Europe prevailed because had they not, no doubt he would have been attacked for including Gallagher over former world number one and Ryder Cup veteran Luke Donald. Victory ensures questions will never be asked. They probably should be. The Scot looked way out of his depth.

The role of the captain is very much overstated in much the same way that the role of politicians is over the economy. Paul Seabright’s 2010 book The Company of Strangers: A Natural History of Economic Life sums this up very well with the quote "Politicians are in charge of the modern economy in much the same way as a sailor is in charge of a small boat in a storm. The consequences of their losing control completely may be catastrophic (as civil war and hyperinflation in parts of the former Soviet empire have recently reminded us), but even while they keep afloat, their influence over the course of events is tiny in comparison with that of the storm around them. We who are their passengers may focus our hopes and fears upon them, and express profound gratitude toward them if we reach harbour safely, but that is chiefly because it seems pointless to thank the storm”.

But as New York Yankees star "Lefty" Gomez once said "I'd rather be lucky than good."