By Ed Valentine

Will Liverpool be awarded the title? What about relegation? Is Euro 2020 (2021) going to be moved to a single location? The football questions and comments are Twitter timelining past our eyes quicker than the rolls change on a fruit machine. In a sporting context much of the focus has been aimed on the big money Premier League and Champions League. With reduced economic activity taking place across the world sports professionals are forced to upload social media posts of paint-dry wit and humour to pass the time. While the highly paid mega starts may be financially immune the more modest sporting outfits are faced with some difficult choices.
 
Much of the headline talk of the Premier League, the Euros and the Champions League centres on who will win and the loss of revenue across the main associations. ‘Will Liverpool win the league?’ is surely the most asked question in sporting terms.
 
Outside of the footballing bubble sporting events have had cancellations pinging in like some sort of postponement vidiprinter. As most governing bodies’ event rosters were phoning in sick the Paris – Nice cycling road race was in full swing. What started as a distraction from world events it was quickly overtaken by them. With riders dropping out quicker than the sporting events were chalked off the global sports calendar the racing was cut short a day before the final stage in Nice.
 
The race isn’t normally the go to tour for this time of year however the cancellations of the Italian classics attracted the big names of Sagan, Quintana, Nibali and unsurprisingly 5 Pro Continental teams (Pro Continental is like the 2nd tier of cycling, similar to the Championship, the gulf in cash is enormous).
 
This highlights the economics of the cycling peloton. Teams had to race in order to keep the doors of their business open even though from stage 3 onwards the race took place largely behind closed doors, or at least those parts of it to which doors could be easily attached. The final stage was cancelled with the remainder of the calendar put, as you’d expect, in to doubt.
 
Road racing doesn’t have turnstiles or matchday programmes or scarf sellers outside the arena. The business model is largely one of two things - sponsorship driven with team naming rights and jersey/team car sponsoring to make up the lion’s share of income, the larger teams like INEOS (previously Team Sky) have a budget of about €35-40 million thanks to their wealthy backers; or nation state backing like Astana or UAE McLaren. Lower down the order teams are not so fortunate. Movistar, Trek-Segafredo and Sunweb get by on budgets of around half that of the hyper teams. No TV time or prize money stretches the spend as the cash burn is still quite big even in a lockdown scenario.
 
In the 1990s the cost of title sponsorship was about €2 million. Now it’s many times more than that across the UCI World Tour peloton. The smaller teams in the Continental Tour will have slightly more than €2 million in 2020. A prolonged period of no competition would be a major threat to much of the feeder series into the main tour. Teams could fold like pieces of paper. To highlight this the NetApp team were founded in 2010, they then became NetApp-Endura in 2013, then Bora Argon in 2015 and now go by the name of Bora-Hansgrohe.
 
While the sporting world remains a hostage to fortune, we can just cross our fingers that the authorities can provide the right sort of financial medicine across the sporting world. If they don’t many teams will have to get on their bike.

By David Butler

Many research papers have considered the impact of individual ‘stars’ on, for instance, ticket revenues, spectator turnout or television viewership.

Some of the earliest questions posed on this topic considered stars in the context of positive externalities - spillover effects in markets where welfare is positively affected by a third party (and no compensation is paid for this).

Much of this research can be traced to a paper by Hausmann and Leonard in 1997. They showed that Michael Jordan, when he played for the Chicago Bulls in the 1991-1992 season, increased ticket revenues at away games throughout the league and raised local advertising revenue. There has been more evidence since. Lawson, Sheehan and Stephenson's 2008 paper ‘Vend it like Beckham’ showed that Becks increased ticket sales as a share of stadium capacity by about 55 percentage points when he joined LA Galaxy in 2007. Beckham's star status was conferred by the fact that he was paid over the salary cap. As more recent work has shown, the effects of stars on MLS attendance tends to diminish over time (Jewell, 2017). 

Given the salary rules, it is easier to determine a 'star' criteria in the context of the MLS. Measuring fame in European football is trickier. Should a criteria base itself on talent, celebrity status/popularity or both? The two sources of fame are correlated but it is far from a perfect relationship. I can think of many relatively more famous Premier League stars who have not delivered on the pitch for a long time. 

For the last year, I have been working on a ‘star’ index for footballers. The idea is to capture star qualities related to talent (ability/recent performance) and characteristics related to a player’s level of global media fame (celebrity status). Importantly, the aim is to discern the relative star power of each player. I have compiled a dataset using many objective measures and have developed a formula to condense on-and-off field attributes into one 'star score'. The tool is exportable and scores are comparable across leagues. It is designed so that it can be applied to any league in the world.
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For 410 Premier League players this season, the top 10 ‘stars’ are below. The results are mostly intuitive, with the odd surprise. Mo Salah tops the list. Ngolo Kante coming in at no.2 is somewhat of a shock. My only big surprise was Mateo Kovacic coming in at 6th. Interestingly, there is no English player in the top 10. They enter the list at no.13 (Raheem Sterling) and no.15 (Harry Kane).

By Robbie Butler

In our latest post “Economic Impact of Sport in the EU” John explored the economic impact of sport in the EU. It can be seen from the bubbles in the graphic that Ireland is lower than in most countries, with sport accounting for 1.68% of total employment and 1.03% GDP. The impact that the cessation of sports fixtures as a result of Covid-19 will therefore be smaller on the Irish economy than it is in many other EU states.

It is interesting to consider this further.

There is very little professional sport in Ireland. The most recent CSO sports module in 2013 found that almost all sport in Ireland is non-professional. Rugby reported the highest number of professional/semi-professional athletes at 5.1%. Other professional sports people in Ireland are found in dance and gym related activities. Then there are the elite individual athletes that are either funded through Sport Ireland or very successful in their sport and are household names e.g. Shane Lowry and Katie Taylor spring to mind.

After rugby, the only other team sport with sizable employment is soccer. However, just 0.2% of players here are paid. The domestic league probably employees about 400-500 players on professional and semi-professional contracts. Clubs are now in serious financial trouble as fixtures have ground to a halt. The primary source of income is gate receipts and one can only wonder what is going to happen to players and other staff in the coming weeks. (More on this next week).

It is interesting to compare the current fate of the League of Ireland with another Irish sport – horse racing. Horse racing is not considered a “sport” but rather an industry in Ireland for data purposes and probably employees about 3,500-5,000 people directly. Indirect employment is much higher. If direct employees were included, the number of professional sports people working in Ireland would jump considerably.

Horse racing continues in Ireland – behind closed doors. Today Dundalk goes ahead. Tomorrow Thurles. Down Royal is on Sunday. Naas Monday. Clonmel Tuesday. Dundalk again next Wednesday. And Cork next Thursday.

Irish soccer cannot proceed like this. The reason racing can is because gate receipts are not terribly important. The broadcasting agreement with Racing TV trumps this. Irish soccer has no major broadcasting agreement. It suffers badly because of this.
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The domestic game in Ireland will require support if it is to survive. This might mean State support through Sport Ireland or elsewhere. No domestic league means no national team. No Euro 2021. No World Cup in 2022.

By John Considine

It is worth revisiting an EU study on the economic impact of sport.  In the EU, sport accounts for 2.12% of GDP and 2.72% of employment.  Individual countries differ and are presented in the graphic below.  The size of the bubbles represents each county's GDP, e.g. Germany has the largest GDP.

Sport is employment intensive.  This explains why the contribution to employment is greater than the contribution to GDP for the EU as a whole and for every county except Poland.

The economic impact of sport is largest in Austria where winter sports play a significant role.  Sport contributes 5.63% to Austria's employment and 4.12% to its GDP.  The economic impact of sport in Ireland is lower than in most countries (1.68% employment; 1.03% GDP).  The relatively small size of the green bubble illustrates the relatively small size of the Irish economy.

Study on the Economic Impact of Sport Through Sport Satellite Accounts was published in 2018 and is based on 2012 data.  It is also based on satellite accounts (a situation where the sports components are extracted from the classifications used in the regular System of National Accounts).  The study explains the contribution to these sectors to the overall impact of sport.  One might be initially surprised to find that the largest contribution comes from the education sector.  Sports services is the second largest contributor.  These relative contributions are reversed in the case of Ireland.

In Section 2.1, the authors provide an important guide to the interpretation of the multipliers derived using satellite accounts.  The authors use the example of sports tourism to illustrate their point.  This item will show up in both the sport satellite accounts and the tourism satellite account.  They point out that "[a]dding the effects of both satellite accounts would double count sports-related tourism".

By Robbie Butler

Regular readers of this blog will be familiar with posts I have written on sports broadcasting. There is a dedicated tab to the topic here. A common theme that runs through these is the ability of suppliers (broadcasters) to extract an economic profit from those seeking the product, often by virtue of the monopoly they hold in the market.

If anecdotal evidence is anything to go by, the past 5-7 days has seen an dramatic shift in power from supplier to consumer. Subscription sports channels throughout Europe, North America and elsewhere have seen their live content evaporate in a matter if days. The postponement of football, basketball, formula one, tennis, golf, and the list goes on, has surely resulted in a surge in cancellations of sports subscription channels. 

From experience, cancelling these is difficult in normal times. One can only imagine what it is like now. It begs the question, how will the providers respond?

Could a reduction in price be on the cards? Or cancellation of the March/April charges? 

A 2015 Ofcom Report which I wrote about here in 2016 identified "which specific sports and competitions within sports are important to subscribers". If these are no longer being provided to subscribers is it fair to charge full price, or even charge at all? 

It might be time for sports channels to rethink their present strategy.

By Robbie Butler

As is tradition this week, I will be following pundit predictions at the 4-day Cheltenham Festival.

Last year, the industry professionals listed in the Irish Daily Star and Paddy Power supplement, making predictions across all races each day. Just one tipster turned a profit, with the losses of others ranging from -€3.61 to -€224.86, assuming a €10 stake per race. I will follow all of these again to see who is best at picking winners. Again, I will assume a consistent betting stake.

In light of International Women's Day yesterday, I am also going to follow the superb Rachael Blackmore. The County Tipperary native is third favourite (4/1) to finish Top Jockey at the 2020 Festival, and would become the first woman to do so. 

In total, 10 experts are now predicting race outcomes. The ten are listed below. Six of these were part of the 2019 sample. 

The results of Day 1 are presented below and assume a single 1 unit stake, unless each-way is specified. Data is sourced from the Irish Daily Star. Picks from the Paddy Power Preview supplement are the bolded horses listed under each tipster.

The final standings above. Just two of the ten experts managed to beat the market over the four days. 

By Robbie Butler

​As the Coronavirus (COVID-19) continues to spread throughout the world, many sporting fixtures are having to be rescheduled,  postponed or cancelled entirely. Some of the more obvious examples of this have been a Seria A fixture between Inter Milan and Sampdoria, upcoming fixtures in Genoa, Bergamo, Ferrara and Turin (all in the North of the country), as well as Six Nations games between Ireland and Italy, and Italy and England. There has been less obvious sporting cancellations too,  such as the Top Rank Boxing event due to take place in China last month. 

Turning to the Six Nations, Italy were due in Dublin this weekend. The Italian men were set to take on the Ireland on Saturday, while the women were due to face the Ireland women's team on Sunday afternoon. Both games have been cancelled and speculation about the economic consequences has commenced. 

Such fixture postponements are rare (although Ireland Six Nations rugby games were postponed in 2001 due to the Foot and Mouth outbreak in the UK) and provide a fitting setting to examine a branch of economics that first students will meet in introductory lectures; substitution and income effects. The postponement of both games will have an effect but it is probably nothing like what people expect. 

For instance, the match on Saturday at the Avivia Stadium was due to have around 51,700. The vast bulk of these people would have been from Ireland. Probably 95% or more. The postponement of the game means that these people will simply substitute their spending to something else - most likely in Ireland.

Some sectors of the economy do feel the postponement worse than others. Pubs around the Aviva, as well as transport services, restaurants and hotels all take a hit, but someone else probably gains. The money doesn't disappear. After all, one of the functions of money is that it is a "store of value". If the game goes ahead at some point - which is more than likely - those that lost out this time should gain later down the road. The net effect might be neutral. All that will have is that the time of consumption is pushed back.  Ireland Inc. loses little or nothing either way from the 95% of domestic fans.

The 5% that were due to support Italy might be lost. This is an income effect. If they fail to travel, the money that would have been spent in Dublin does 'disappear'. However, if flights have been paid for (with Ryanair) and hotels booking with cancellation fees, the losses might be much smaller than expected. Many could still probably still travel to Dublin. The losers here are again the services in and around the stadium, but winners will exist elsewhere. Maybe other tourist attractions. 

By David Butler

In October 2018 I had an entry on this blog called ‘Not So Summer Soccer’ . It concerned the League of Ireland adoption of a February-October schedule.

I’m re-posting the chart  considering the events of last Saturday night which saw Shamrock Rovers defender Cole Omorehiomwan hospitalised due to the weather conditions – he showed signs of frost bite . Stom Jorge was raging. Numerous Galway United player’s also suffered from hypothermia and some sat out training on Monday. Shamrock Rovers have confirmed their players have now recovered.

The chart shows the (minimum) recorded temperature for each match from the nearest weather station for the 2018 season. The average temperature for a League of Ireland match that season was 9.66°C (median, 9°C).We see a similar pattern for the 2019 season.  For 2019, this average temperature fell to 7.60°C (median, 8.1°C).

As the chart shows, we can have low and, at times, freezing temperatures in February. The temperature picks up in March and ‘summer soccer’ starts to take hold from probably from April onwards. Near the end of the season we start to return to colder conditions, but not as cold as those seen at the start of the season. There's an argument that we play through two winters and a summer. 

Temperature is usually considered a factor that can change opportunity costs for fans to attend – cold, wet and windy nights might make sitting in front of the TV a more appealing option. Given what happened in Tallaght last week, the Irish weather might be turning the players off too! 

By John Considine

February 2020 saw a number of interesting developments in the GAA.  The month ended with the election of a Seton Hall academic as incoming President.  Initial press reports drew attention to Larry McCarthy's views on the Gaelic Players Association (GPA).  Earlier in the month, the GPA took exception to remarks made by the Director General of the GAA - made when he was outlining the financial position of the GAA.  It raises the potential for greater conflict between administrators and players.

All involved could do worse than to read a couple of chapters from a superb new book by John Connolly and Paddy Dolan.  The book is called Gaelic Games in Society.  Unfortunately, it does not have the most welcoming of presentations.  The cover is unexciting and it is published under the Palgrave Studies on Norbert Elias.  If it were not for the prompting of a respected colleague then I would not have read the book.

The title of this blog post is taken from the book.  The authors never let the reader forget that the economic exchange is based on players performing.  Around this reality they craft a wonderful account of the tension between amateurism and professionalism.  And between administrators and players.  Sociology (and not economics) is the main framework for their analysis but it is not a forbidding academic treatment that one might expect (even allowing for the nod to Elias).

The authors do an exceptional job explaining the way gaelic games were promoted to the playing and paying public.  Stigmatisation and gossip playing key roles.  They explain how "competitive interdependences" drove expenditure on team preparations.  They also document how the "seriousness of involvement" and "self-regulation commitments" increased the demands on unpaid players.  This all contributed to a change in the balance of power away from administrators towards players.  [There are no "owners" in the GAA.]

The book reminds me a little of National Pastime: How Americans Play Baseball and the Rest of the World Plays Soccer.  The circumstances of the late 19th century and early 20th century being crucial in both cases.  Initial differences took on a self-sustaining element.  Interests were established and these interests promoted their sports.  Within the GAA, there were also different interests.  As the authors explain, "the interdependences between players and administrators were complex and they were bonded through both conflictual and cooperative interdependences".  The bonds remain even though the balance of power has shifted.

By Ed Valentine
 
First money, then trophies, then money again. The endless race for revenue and silverware in sport reached a shock moment with UEFA handing out a two-year European Competition ban to Man City. The estimated revenue loss across the two seasons is somewhere in the region of €500 million. It’s a lot. A figure which would do serious damage to most clubs.
 
Most clubs are not owned by sovereign investment funds which, amid the private jets and 18ct gold toilets, have become football’s new best friends in the last 10 years. The Qatari Investment Authority, Abu Dhabi Group and Gazprom neatly make up the new hyper brand power club signatories across European football.
 
Gazprom is an interesting case. A gas extraction company who are majority owned by the Kremlin have been very aggressive in acquiring a presence in football and currently own Zenit St Petersburg, Red Star Belgrade plus provide lucrative sponsorship to Schalke and Chelsea as well as the UEFA Champions League and The FIFA World Cup. That’s significant money to promote a product which fans cannot buy. Why is that?
 
Russia supplies gas to much of Eastern Europe with several pipelines passing through its neighbours. Western European countries have started to phase out nuclear and coal power with gas being the prime replacement. Some of Russia’s gas pipes pass through Ukraine where skirmishes have broken out in the past decade. The Western European market represents an important goal in Gazprom’s expansion. In order to secure supply and avoid the pass-through tariffs charged by its neighbours Russia has engineered the Nord Stream pipeline which bypasses Eastern Europe and connects directly into Gelsenkirchen – the area where Schalke is based. In essence Zenit and Schalke are at opposite ends of this pipeline. Pumping money into football will help with brand perception.

It’s easy to see why football teams represent exciting investment opportunities, the brand growth and financial returns, regardless of success, may provide sovereign fund groups with additional cash streams to help plug the hole left by future dried up liquid gas fields. The game of 2 halves is now a game of 2 matches, as the teams do battle on the pitch, the investment funds do battle across the sporting brandscape.
 
You cannot buy tradition but with revenues high in the billions the next headline Sovereign sporting investment won’t be too far away. Whilst the surplus capital has to find something to do, we can hardly expect the petro gas industry to just sit there mining their own business.