By Robbie Butler,

This blog/website was launched in July 2013. Not long after Tokyo, Japan was awarded the 2020 Summer Olympic Games. Two of the very first posts I ever wrote focused on this and can be found here and here. In the second post from September 2013 I say:

       "A projected cost of $8 billion by the Japanese seems way too conservative.  An examination of recent past games would suggest, a figure of $15 billion to $18 billion is more likely to represent the true cost of the games. Eight years is a long time to wait but watch this space…"

As we know all too well, the Games were postponed in 2021 until this summer. By last year the cost of the Games had risen from the original $8 billion to $12.6 billion. No surprise there for anyone that has read any past literature on the topic. 

The delay in. the Games to this summer has not helped and has cost both Tokyo and the International Olympic Committee (IOC) money. A recent study by the University of Oxford estimates that the Toyko Games could now cost almost $16 billion.

And it could get worse. Those in favour of hosting such mega-events often point to the economic gains that can be made. Sure, these exist, but they are often in the private domain. The 'public gain' is found in the net increase in tourist arrivals which generates welfare effects from additional consumption and tax revenue. If recent reports emerging from Japan are correct, there may be an outright ban on foreign tourist arriving for the Games due to Coivd-19, thus eliminating one of the single biggest benefits in the public domain.  

if the Games are attended by Japanese fans only, there will be substitution effects but little or no income effects. It is simply the replacement of one purchase (a ticket to watch track events) with another (an endless list of alternatives). Japan might be on-course to record one of the single biggest public losses on any Summer Games if this is the case. Not that the revenue generated from foreign arrivals could go anywhere near the $16 billion costs to date, but it could close this gap by $3bn-$5bn potentially. 

Such evidence is now overwhelming and needs to be kept in mind for future suitors. 

By Robbie Butler

As expected, release of the 2020 financial accounts for the GAA did not make for good reading. The national game and Association were badly hit by the Covid-19 pandemic and reported a deficit of €34.1 million for the calendar year. These losses were a combinations of both central (€27.1m) and county (€7m) level deficits, and compare to a surplus in 2019 of about €10 million.

The core problem facing the Association in 2020 was both the decline in commercial and gate revenues. Combined, these revenues sources fell 60%, from €73.9m to €31.4m. According to the Association "In 2019 the GAA earned €36M from gate receipts, whereas in 2020 income from gate receipts was just €3.6M". This means that both revenue sources added about 50% each in 2019 but gate revenues obviously collapsed in 2020.  

While few could have predicted in early 2020 that there would be a collapse in gate revenues, reliance on this source of revenue makes the GAA look more like lower-tier football clubs in England or the early years of the Premier League. Broadcasting revenues now dwarf gate receipts in almost all major sports with the NFL and Premier League being the two best examples.

The GAA have sought to rectify this in recent years by selling broadcasting rights to subscriptions channels such as Eir Sport and Sky Sports. However, the sums involved still do not match ticket sales. For example, the current BSkyB/GAA broadcasting agreement, which runs until 2022, is worth about €11 million per year. This is about the same value as a single Premier League game broadcast by Sky Sports, BT or Amazon.

News that Amazon may be about to bid for GAA matches from 2023 could be good news for the Association. It might move the game away from a reliance on state aid (currently more than half of all revenue) and gate receipts.

The reliance on gate receipts is probably the main reason why a rescheduled calendar for 2021 would see club games start first, with inter-county matches starting later in the year. If the latter were to start in October, for example, restricted attendance might be possible, assuming vaccine rollout continues apace. Any revenue in this form would be welcome news following a dreadful 2020 season. 

By Robbie Butler

We received some great news recently when learning that our paper "Contracts, Pay and Performance in the Sport of Kings: Evidence from Horse Racing" had been accepted by the British Journal of Industrial Relations. The paper is co-authored with David Butler and Robert Simmons (Lancaster University). 

Using twenty year of data from 2000-2019 we explore the relationship between jockey pay and performance for flat racing in Great Britain. In essence, the work is an extension of Fernie and Metclaf (1999) and seeks to understand if  performance-related pay schemes can raise worker productivity with much of this increase due to worker sorting. The beauty of horse racing in the context is that it allows us to consider variations in the power of performance-related pay contracts which can be rarely observed in other employment settings.

Unlike previous findings, we find no evidence of worker shirking when the power of incentive contracts is reduced through jockeys switching from complete performance-related pay scheme into a salaried (retainer) contract. Moreover, salary contracts result in legacy effects with superior performance continuing for elite jockeys even after their salary agreements have expired. Amongst other things, we argue this is due to a reduction in monitoring costs. 

The acceptance marks our 4th peer-reviewed acceptance in sports economics over the past 10 months. It is also the 4th sport (rugby, football and boxing the other three) we have explored. I wish to thank attendees at the 2018 ESEA Conference in Liverpool and the 2020 NAASE virtual conference for their many helpful suggestions. 

Once ready, we will make a link to the paper available.  

By Robbie Butler

I have dedicated a number of posts on this site to VAR over the past 18 months or so. I must admit, my understanding of how VAR works is getting worse rather than better with the passage of time.

From the economist's perspective the beauty of VAR, indeed football, is that it is about decision making. While the rules are codified, and have been so since 1863, interpretation of these rules is open to judgement - that of the referee. Prior to VAR many believed that the introduction of technology would move us from judgement or normative analysis towards science or positive analysis. I do not believe this has happened or if it is indeed possible with our current technology.

The biggest issue with the use of VAR for me is the scientific analysis imposed on one parameter (the attacking player's position on the field of play) and the arbitrary nature of the other parameters which are equally critical. Here are three that seem to be considered at the judgement of the officials:

1. When the ball is kicked. Offside has two points and differs from a photo finish in horse racing in this regard. It does not matter where the horses started (in national hunt racing at least) only where they finish. When the ball is kicked/first touched even, it actually has not left the foot of the player. To use a freeze frame with VAR's current technology, where the ball has moved (even slightly) is then not accurate. 
2. What part of the body the vertical defending line is drawn. When imposing this restriction, I have seen the line drawn anywhere from the shoulder to below the elbow. When the arm of the defender is outstretched this could be a foot of more in distance. 
3. Where the vertical lines touch the ground. These lines should be perpendicular to the feet. The recent Burnley Man City match illustrates an example of this not being the case. For me, this is the most glaring error of all. The left knee of a defending player had a line dropped that met the ground in the wrong place (at a 90 degree angle to the right foot and not the left foot) - an error. 

One of these problems is enough to undermine VAR. Combined, they demonstrate how inaccurate it can be and instead of improving decision making it could be making it worse. As someone said to me recently, we have moved back to 1990 when in-line with the defender was actually offside. The movement in the early 1990s to make in-line onside was very positive for the game.

Maybe in time VAR will evolve and a player will be onside if any part of their body is in-line with the defender. So we could have to go backwards to the early 1990s to go forwards.

By Robbie Butler

Pick up any standard microeconomics textbook for undergraduates and you will meet a chapter explaining the theory of the firm. Readers will be introduced to issues like profit maximisation, marginal revenue, average costs and marginal costs, amongst other things.

Embedded in the theory is an explanation of "shutting down" and "exiting" the market. The former is regarded as temporary closure, while the latter is permanent. Because of this distinction, the short-run decision (shutdown) and long-run decision (to exit the market) differ for the firm. If a firm shuts down, it loses all revenue from the sale of its product, but must still cover all fixed costs. Therefore, the firm will shut down if the revenue it would get from producing is less than its variable costs of production. The firm will only exit the market if total revenue from the sale of its product is less than the total cost of production (all costs).

Sky Sports have a lovely insight to this today thanks to an interview with Tranmere chairman Mark Palios. Football clubs have essentially "shut down" in recent months - with no fans at games. The variable cost of fans (security, light, heat, insurance, health and safety, policing, etc.) have largely disappeared. However, the reopening of stadia will bring these costs back. The fixed costs never left e.g. player salaries.

Palios explains the problem this is for clubs. 
"If you just come down the tiers to 2,000 fans [tier 2], our season tickets are 3,000. So actually cash-wise we are probably worse off because if we have fans in the ground, I know the costs would be about £10,000 to open up. We'd have all the gates open for social distancing, and all the turnstiles on. As a consequence of that, we wouldn't get anymore cash and we'd have to spend £10,000 a match. If it stayed like that, in the context of about a further 18 matches, it's nearly £200,000 of costs. And if you were allowed in 4,000, it's only for the extra 1,000 of general attendance [on top of 3,000 season ticket holders], but we'd still have the costs. It would be pretty minimal, with regards any excess for us."

A lovely illustration of fixed costs, variable costs and total revenue, and the problems facing clubs that rely on match-day income as their primary source of revenue.

By Robbie Butler

In August 2018 I wrote a short piece here about the newly formed Nations League. I have to add, more than two years on, I still struggle with the competition structure and what it might mean for future qualification.

In the original piece, I wrote the following: 

"The good news for the minnows is that they not only get to play one another, and therefore have a golden opportunity to register a rare international win, the winner of this group also qualifies for the 2020 European Championships. This poses an obvious question? Is a country better-off targeting a place in Group D rather than Group C? This logic can apply to Group C/B and Group B/A."

As far as I can tell, UEFA qualifying for World Cup 2022 is based on the current standings in the Nations League. Play-off spots will be available to the two highest finishing teams that fail to finish 1st or 2nd in their qualifying groups. This encourages team to win.

What I don't now get is qualification for Euro 2024.

If the same rules hold as for Euro 2020, are Northern Ireland now better off than the Republic of Ireland? The North were relegated to Group C last night, while the Republic survived in Group B with a 0-0 draw at home to Bulgaria. 

It should be noted, neither team will play at Euro 2020, having been in Path B play-offs. Yet Scotland will be there having been seeded in Path C.

My question remains. Is a country better-off targeting a place in Group C rather than Group B?  Surely, losing can't be better than winning. Can it?

​By Robbie Butler

On Saturday afternoon, as I was watching Crystal Palace play Leeds United, I was struck by a comment from the match commentator that this was the home teams' 8th consecutive season in the Premier League.

Those that are familiar with English football will know that Crystal Palace are somewhat of a yoyo club, and have 5 different spells in the Premier League. That means 4 relegations and 4 promotions (they were in the league in 1992/3 for the first season). Their 8-year stint is by far their longest spell in England's top flight. 

Crystal Palace's current stay in the top flight was thanks to a promotion at the end of the 2012/13 season through the play-offs. The play-offs are for teams that finish the season in places 3/4/5/6 and involve semi-finals (two legs both home and away) and a final at Wembley.

The Championship Play-off Final - which Crystal Palace have incidentally won more than another other club (4 times) - is often referred to as the 'richest game in football' or the 'richest game in the world'. This is because of the enormous revenue streams that can be generated from playing the Premier League through broadcasting, sponsorship, matchday operations and merchandising. 

On the 27th of May 2013, former England and Sunderland striker Kevin Phillips, scored a penalty in added time of first half extra time to beat Watford in the 2013 Playoff Final. Crystal Palace have reaped the rewards since. Each season the clubs stays in the Premier League, the more value this goal become. Phillips, now 47, is long since retired and played his last game in 2014 for Leicester City.

However, there is a more valuable goal. A year before at Wembley West Ham United beat Blackpool in the 2012 Playoff Final.  Portuguese player Ricardo Vaz Tê - currently playing with Portimonense following spells in Turckey and the Chinese Super League scored the winning goal, 3 minutes from time, as West Ham won by two goals to one. 

West Ham have remained in the Premier League ever since. Every club to win the Playoff prior to 2012 have been relegated at least once from the Premier League. Vaz Tê's goal unlocked nine seasons of the Premier League and counting. Just like Kevin Phillips' goal a year later, the longer West Ham and Crystal Palace survive in the English Premier League, the more valuable these individual goals become. 

With the 2020/21 season well underway it seems very likely both clubs will see an 9th and 10th season in the Premier League. By then Phillips will be 48 and Vaz Tê 35. The impact both had on their respective clubs lives on. 

By Robbie Butler

The new Republic of Ireland jersey was launched today, and for the first time since 1986, fans buying the shirt will not find a sponsor of the front. While the players never wore sponsored jerseys in competitive games, fan always had to act as walking advertisements for companies such as Opel, Eircom and Three.

The Irish were very much an outlier in this regard. Very few international teams use the jersey as a means of generating sponsorship revenue. Here is a piece I wrote in April 2019 for the Cork City match day programme on the subject and why the Republic of Ireland were an international trailblazer in this regard.

"In May 1924 the Irish Free State (today known as the Republic of Ireland) played its first international football match at the Summer Olympics in Paris, France. Bulgaria were the opponents that day, with the Boys in Green claiming a 1-0 win. Some 579 games later, the Boys in Green overcame Georgia by the same score line, in our most recent UEFA Euro 2020 Qualifier.
 
Green has always been a part of our national team. The vast majority of Ireland’s performance since 1924 have been in our national colour. It was only in 1969 that a changed strip of white became an option, as the game expanded. Gold was added to jersey from 1978, in various forms, culminating with a one-off “Kerry-style” jersey against Norway on the 1st of May 1985.
 
It was around this time that much of the evolution in football jerseys globally began to gain momentum. While international jerseys remained largely the same, Ireland did something quite different. In 1986 the Football Association of Ireland became the first national association in the world to place a sponsor on replica kits. Opel became a regular feature of Irish society and fans wearing famous jerseys from Euro ’88, Italia ’90 and USA ’94 all inadvertently acted as advertisements for the German car manufacturer.
 
This decision created an anomaly that continues to exist to this day. FIFA and UEFA prohibit the use of sponsorship on the front of jerseys in competitive games. This means that Irish fans buying the replica kit today actually buy a jersey that is obviously different to the one that players will wear during match day.
 
This has not stopped the FAI from successfully selling the right to place a company name on the front of replica Irish jerseys but does provide a rare example today of FIFA and UEFA rules preventing further commercialisation of the game. The Football League were the first to encounter this issue and the history of sponsorship deals can be traced, like most things in the sport, to England.
 
In 1976, non-league Kettering Town became the first professional club to adorn their jersey with a sponsor. They were immediately reprimanded by the FA, fined, and instructed to remove such wording from their jersey.
 
The following season, a number of Football League clubs proposed rule changes that would permit the use of sponsorship on jerseys. The proposals were accepted by the FA on the 3rd of June 1977. The rest is history. This is the reason today that we are familiar will sponsorship agreements long-since lapsed and brands such as Sharp, JVC, Candy, Holsten and Opel.
 
As many Irish fans will recall, Opel was replaced by Eircom from the start of the 2002 World Cup qualifying campaign, with the communications company subsequently replaced by “3” in 2010.  For Cork City fans this translates to brands such as Guinness, Nissan, Beamish, Clonakilty black pudding, and today UCC. Kettering Town are the architects of this.
 
If the ban of sponsorship on international jerseys is ever removed, the Republic of Ireland can rightfully claim to be the “Kettering Town” of international football."​

By Robbie Butler

There is a story in football circles that when a Premier League club was bought by an overseas investor in the late 2000s the new owners were unaware of the concept of relegation. Within a couple of seasons their new club had suffered just that - relegation. 

When news broke yesterday of yet another attempt to launch a European Super League I was reminded of this story. It was no surprise to me that Liverpool and Manchester United were yet again driving this concept in England. I think this is less down to the fact that they are the two most successful clubs, and the most supported globally. For me, the common denominator is that they both have American owners.

The difference in the style of ownership is stark and clear to see. In one city the owners are probably regarded as liberators that have returned a club to its full glory. In the other, the very opposite is probably the view held by many supporters. And while on the pitch their competition is fierce, off the field, their co-operation is clear to see. 

The establishment of a European Super League could be a further Americanization of European football. While details are still emerging, one thing this new league could do is remove the threat of relegation. This would effectively "close" the league and make it operate more like the NFL, MLB, MBA or MLS.

This is the crucial difference between US and European sports leagues and shifts the bargaining power from players and supporters towards owners. The  European super league would likely become an monopsony (own buyer of talent) and not punish entrants with the threat of relegation. The recently failed 'Project Big Picture', whilst not eliminating relegation, had argued that it should be reduced to just 2 teams in season in the EPL. 

To remove relegation would undermine 140 years of league football in England. Promotion and relegation are part of the fabric of the game. As it is in football leagues right across Europe. 

Take Luton Town for example. Since 2004-05 the club has enjoyed 4 promotions but has also experienced 3 relegations. The table to the right explains this.

At the start of the 2005/06 season Luton played in the 2nd highest tier of English Football (The Championship). The club then experienced three successive relegations, to League One, League Two, and in 2008/09 the Conference Premier Division (outside of the Football League). 

However, over the course of the past decade, the club has managed to make it back to the second tier of English football, just one tier away from the English Premier League. The revenue and resources that are on offer from reaching the Premier League are motivation enough to keep clubs like Luton Town dreaming.

I am sure this was as strong as ever during the years 2009-2013 when the club wasn't even playing in the Football League. 

If Luton ever reach the ELP, what a turn around that will be. A European Super League - without promotion or relegation - would limit the possibilities of most clubs.  While great for the lucky few, it would kill the dream for most. That's not European football and it never has been.

By Robbie Butler,

In the summer of 2017 I was asked to contribute to the Cork City FC match day programme. With University College Cork as the main sponsors of the club it was a nice fit and a chance to engage with the wider community in Cork.

I decided to touch on the general issue of championship uncertainty and the unique place that the League of Ireland holds when it comes to competitive balance. Within the article, which appeared in the match-day programme on the 9th of July 2017, I said the following:

"Often league success has been followed by a period of gradual decline, ending in financial distress and in some cases even relegation. The cycle of champions to relegation could take less than a decade to be complete. This rarely happens in other European leagues where followers will probably know Bayern Munich have just won their fifth consecutive league title, Juventus secured a sixth Seria A title, while Celtic have also been crowned champions for the past six seasons, and finished the current campaign unbeaten."

This may now become all too true for Cork City [again]. It has not taken a decade, but rather three years. The club remains bottom of the Premier Division in Ireland, and while relegation is still very much avoidable, less than 3 years ago the club won a historic league and cup double.

How can you go from double winners to relegation candidates in less than 36 months?

​In few (of any) other European league does a team that wins the domestic double face relegation 3 years afterwards.  And it is not the first time. Why does it happen here?

I have previously explored the issue here and here. One of the figures in the links is presented again below. It demonstrates how quickly League of Ireland champions can go into a spiral of decline 1 to 4 years post winning the league. ​Cork City's decline is even more rapid.

The rate of decline is even more apparent when compared to other European league winners from 2017 - the last time Cork City were champions.

The official UEFA 2017 Roll of Honour lists the league and cup champions that year for each nation member.

Should Cork City be relegated, the League of Ireland will be the only UEFA member where the 2017 league champions are no longer in the top division of their national league. This is an ongoing problem, and on which seems to be uniquely Irish. There is a need for the entire competition structure of the League of Ireland to be changed.

​As I have said previously, the removal of promotion and relegation would be the first positive step in helping what was once infamously called "the problem child" of Irish football.