OVERINVESTMENT IN TEAM SPORTS LEAGUES: A CONTEST THEORY MODEL

This paper applies contest theory to provide an integrated framework of a team sports league and analyzes the competitive interaction between clubs. We show that dissipation of the league revenue arises from 'overinvestment' in playing talent as a direct consequence of the ruinous competitive interaction between clubs. This overinvestment problem increases if the discriminatory power of the contest function increases, revenue-sharing decreases, and the size of an additional exogenous prize increases. We further show that clubs invest more when they play in an open league compared with a closed league. Moreover, the overinvestment problem within open leagues increases with the revenue differential between leagues.     

Estimating Coaching Efficiency in Professional Team Sports: Evidence from English Association Football

This study provides a review of the literature on sporting production functions with an emphasis on different input‐output specifications and alternative estimation procedures. Empirical evidence is reported for English association football on the robustness of estimates of coaching efficiency to changes in estimation methods and the definition of team performance and playing talent inputs. A measure of player quality based on predicted start‐of‐season transfer values is developed. It is found that the estimation of coaching efficiency is sensitive to the choice of time‐invariant efficiency models versus time‐varying and inefficiency effects models. It is also found that the results are little affected by different measures of team performance but are highly sensitive to the use of an ex post financial expenditure input measure. Ex ante input measures based on start‐of‐season player characteristics or predicted transfer values are recommended as more appropriate on both theoretical and empirical grounds.     

Revenue Sharing,Competitive Balance and the Contest Success Function

Abstract. This paper investigates revenue sharing in an asymmetric two‐teams contest model of a sports league with Nash behavior of team owners. The innovation of the analysis is that it focuses on the role of the contest success function (CSF). In case of an inelastic talent supply, revenue sharing turns out to worsen competitive balance regardless of the shape of the CSF. For the case of an elastic talent supply, in contrast, the effect of revenue sharing on competitive balance depends on the specification of the CSF. We fully characterize the class of CSFs for which revenue sharing leaves unaltered competitive balance and identify CSFs ensuring that revenue sharing renders the contest closer.     

SALARY CAP REGULATION IN PROFESSIONAL TEAM SPORTS

This paper analyzes the effects of a percentage‐of‐revenue salary cap in a team sports league with win‐maximizing clubs and flexible talent supply. It shows that a percentage‐of‐revenue cap produces a more balanced league and decreases aggregate salary payments. Taking into account the idiosyncrasies of European football, our paper further highlights the potential conflicts between the league and society. From the perspective of a league governing body, a percentage‐of‐revenue cap always enhances financial stability of win‐maximizing clubs. A social planner, however, will not permit the introduction of such a cap if fans and players unduly suffer. This paper shows under which conditions the social planner accepts (rejects) a salary cap proposed by the league regulator. (JEL D02, D60, L83)     

MAINTAINING MARKET POSITION: TEAM PERFORMANCE,REVENUE AND WAGE EXPENDITURE IN THE ENGLISH PREMIER LEAGUE

This paper investigates the relationship between playing success and commercial success in team sports. Utilizing a data set relating to the English Premier League that combines both financial measures and indicators of playing skills and performances, our empirical analysis is based on three behavioural equations. Our analysis indicates that on‐field success can be directly related to players’ skills and abilities and that revenue is positively related to on‐field success. Wage expenditure is also shown to systematically reflect player skills and performances. One interpretation of this evidence is that investment in players’ skills and ability buys on‐field success, with richer teams becoming ever richer and able to maintain or even build upon success by spending more on players than less successful clubs. To the extent that richer clubs are successful in their objective there is a causal link between revenue earned and competitive imbalance via investments in players. The implications of this tendency within a league are discussed in our conclusion, which also considers the potentially wider implications of our study as they relate to the evolution of firm size and issues of market share.     

A Rationale for the Coexistence of Central and Decentral Marketing in Team Sports

Abstract. In some sports leagues, the sports association sells broadcasting rights centrally in order to create competitive balance. In other ones, the market is decentral. As a result, there is competitive imbalance. In this paper, the preferred kind of marketing of sports associations is analysed. Distinctions are made between three cases. In case one, the sports association is only interested in competitive balance. In the second case, it wishes to create a single high-performing team, and in the third, it maximizes aggregate performance. It is found that, depending on the preferences of the association, both kinds of marketing can be optimal.     

Is parity good? Externalities in professional sports

In professional sports there are externalities. If one team acquires too much talent then that may impact the quality of the competition negatively. This means that the league can improve social welfare by distorting the competitive equilibrium allocation. This idea has been used to explain that there should be parity among teams to improve social welfare. We develop a theoretical model based on Biner's (2009) empirical results to capture the effect of this externality on the revenue levels and wages when local fans care about winning only. Social Planner's Problem for stadium revenues implies that it is possible to increase the total revenue made in the league compared to competitive equilibrium levels by increasing big market teams' talent level, therefore less parity. In other words due to externalities competitive market allocation is too equal compared to SPP allocation. We show when local audience is mainly interested in seeing their local team dominating the visiting team and national audience only interested in watching a close game on TV, the only way in the model for it ever to be efficient to enforce parity is if we introduce a national TV market into the analysis. For the national TV market, parity is going to lead to a wider TV audience. The greater the weight on this revenue stream, the more likely it is a parity policy can increase league revenues.     

DO MANAGERS MATTER: EVIDENCE FROM E‐SPORTS

Growing importance of human resources places the role of managers at the core of company efficiency. However, there are studies that demonstrate the efficiency of teams without a manager, so‐called self‐managed teams, is higher comparing with managed teams. Thus, despite the focus on managerial efficiency in the economic literature, the issue of whether a team needs a manager is far from settled. In this paper, we use a quasi‐experimental setting from e‐Sports (competitive video gaming) to understand whether the hiring a manager is of benefit to team performance. The empirical part of the study is based on endogenous switching regression model. This method allows investigating what performance of self‐managed team would be if it will have a manager and vice versa. The dataset includes the information of prize money and features of top e‐Sports teams in Counter‐Strike: Global Offensive (e‐Sports discipline) from 2013 to 2017. The main finding of this study is that managed teams perform better than self‐managed ones but this is not due to the manager. (JEL Z2, M54, L25)     

RATIONAL EXPECTATIONS AND PRO SPORTS LEAGUES

We put a new set of shoes on that old workhorse, the competitive talent market (CTM) model in sports economics. There exist unique rational expectations equilibria for both national football league (NFL‐type leagues) and major league baseball (MLB‐type leagues) under the CTM model. A cursory statistical test fails to reject the empirical implications for the NFL‐type league. The model also suggests empirical tests of whether or not talent demand (marginal revenues from talent), including induced effects, actually slopes down. But like all models, the competitive talent model should be applied in its context. It describes highly cooperative North American sports leagues that have a wealth of common information. But it may not do the same for other leagues if they lack this common information.     

OUTCOME UNCERTAINTY AND THE COUCH POTATO AUDIENCE

Previous studies of attendance demand for professional team sports have failed to yield clear‐cut findings on the importance of outcome uncertainty to consumers. But potentially fewer problems should arise in examining the link between outcome uncertainty and demand in the television market for team sports, which of the case of English Premier League football is in fact a more important component in total club revenue. This study models both the choice of which games to show and the size of audience attracted by each game, exploiting data on audience sizes for games between 1993 and 2002. We propose a new measure of match outcome uncertainty and, from our results, both the broadcaster and the audience appear interested in competitive balance.     

REVENUE DIVERGENCE AND COMPETITIVE BALANCE IN A DIVISIONAL SPORTS LEAGUE

The North American model of resource allocation in professional sports leagues is adapted for English (association) football. Comparisons are drawn between the equilibrium allocations of playing talent under objective functions of profit maximisation and win percent maximisation subject to a financial constraint. Empirical revenue functions are reported for 1926–1999. These indicate a shift in the composition of demand favouring big‐city teams and an increase in the sensitivity of revenue to performance. An analysis of match results in the FA Cup suggests an increase in competitive imbalance between teams at different levels of the league's divisional hierarchy, as the theory suggests.     

The Economics of American Sports Leagues

Player mobility in North American sports leagues is limited by labour market constraints designed ostensibly to allow teams to recoup player development costs and to maintain competitive balance within leagues. Theory holds that the distribution of talent will be invariant under any institutional configuration, and that while rules to constrain movement will serve to enhance monopsonistic exploitation of talent, they will have no effect on competitive balance. This paper reprises a general theory through which the effects of the labour market constraints can be comparatively analysed for American sports leagues. The economics of sports has been relegated to the realm of labour theory by the unnecessarily limiting assumption that owners of sports clubs are single‐minded profit maximisers. This paper also presents a theory that seeks to unify capital market decisions of financial leverage and ownership syndication with operational labour market decisions for athletic talent and an owner's desire to win.     

PROFESSIONAL SPORTS, HURRICANE KATRINA, AND THE ECONOMIC REDEVELOPMENT OF NEW ORLEANS

Hurricane Katrina devastated the city of New Orleans in late August 2005, resulting in damage to much of the city’s sports infrastructure and the departure of both of New Orleans’ major‐league professional sports teams, the National Football League Saints and the National Basketball Association Hornets. What should the city provide in the way of financial accommodation to encourage them to return? This paper suggests that post‐Katrina New Orleans will have a difficult time retaining their franchises over the long run and in attempting to do so may hinder the redevelopment of the city. Furthermore, the very incentives designed to attract teams in the first place leave cities vulnerable to their departure in times of crisis. Finally, playing host to professional sports and mega‐events does have symbolic significance, but it is arguable that this is an amenity the city cannot currently afford. (JEL H25, H71, H40, L83, Q54)     

Entrepreneurial Migration in an Integrated World

A growing number of developed countries offer entrepreneurial visas as a means of attracting entrepreneurial talent and capital. In this paper, we use a simple two‐sector model of international trade with heterogeneous agents and financial frictions to show that entrepreneurial migration can contribute to the international efficiency of production, even when capital also flows internationally through borrowing and lending and foreign direct investment. In our model, all cross‐border transactions are motivated by cross‐country variations in the quality of financial institutions.     

基于忠诚度影响的国际科技合作激励机制博弈设计及实证研究

以人才流出为团队忠诚度的最坏结果,分析团队忠诚度在消除"搭便车"行为以提高团队绩效方面的作用,得出了与企业相关的各种激励因素下的最佳团队忠诚度。理论结果表明,随着忠诚度的不断提高,团队成员的努力程度、团队产出和管理者的净收益都将不断趋近于团队成员努力水平可观察的情况。也就是说,提高团队成员的忠诚度对企业生产是一种帕累托改进。对重庆市外资工业企业国际科技合作团队的调查表明,精神方面的激励措施更能有效地提高员工的忠诚度,同时,不同类型企业的相同激励措施对团队忠诚度的影响差别不大。     

Housing price,talent movement,and innovation output: Evidence from Chinese cities

How housing costs would influence the job‐housing choice of talent and associated city‐level innovation performance is a question of interest for urban development policies. Recently, considerable attention has been paid to the influence of rising housing prices on the attraction of talent and the associated innovation output in major Chinese cities. In this paper, we use the housing price data of 51 cities from the China Real Estate Index System database and the corresponding macro data of China City Statistical Yearbooks from 2005 to 2014 to analyze this focal research question. The empirical analysis shows that the increase in city housing prices generally correlates positively with city innovation outcome and talent attraction, suggesting no crowding‐out effect on the innovative performance of the city. However, the positive association between housing prices and innovation outcome and talent attraction has started to disappear in first‐tier cities in recent years, suggesting potential crowding‐out effect if the increasing housing prices transform to bubbles. This research thus provides considerable policy implications concerning the impacts of housing prices on talent movement and innovation output.     

区域合作与科技成果转化效率——基于“泛珠三角”区域框架的实证分析

文章运用四阶段Bootstrap-DEA方法,对"泛珠三角"区域2000-2009年的科技成果转化效率进行了动态测算——平均技术效率值为39.7%,并进一步构建了面板模型对影响科技成果转化效率的宏观政策因素进行分析。研究发现,地方政府科技拨款、政府相关鼓励科技政策、R&D投入和风险投资等对"泛珠三角"地区科技成果转化效率具有显著正向效应,而企业所得税则抑制了科技成果转化效率。面板DID模型发现,2004年成立的"泛珠三角"合作框架显著改进了科技成果转化效率约6%。     

Foreign players,team production,and technical efficiency: Evidence from European soccer

As on-field success is nowadays the main objective of European soccer clubs, good management needs to extract the highest sport success from the squad talent at hand. Because teams differ in their quality, performance needs to be compared with the best practice of comparable units. One remarkable source of heterogeneity across teams is the squad composition, which can produce gains from diversity together with communication costs. The paper studies the efficiency in sporting performance of soccer teams, paying attention to how the number of foreign players relates to productive inefficiency. Using data for 146 teams in the top 5 European leagues during 10 seasons, we estimate a double heteroskedastic True Random Effects Stochastic Frontier team production function. We find that (i) the number of passes, ball recoveries, and shots from the penalty area improve team efficiency, and (ii) a higher number of foreign players increase inefficiency. Our findings suggest that gains from squad diversity might be offset by communication costs.     

Does sport make you happy? An analysis of the well‐being derived from sports participation

This paper examines the impact of sports participation upon the subjective well‐being of individuals. Encouraging participation in sports activity is now an important public policy issue, as it is argued that there are benefits in terms of health and well‐being to individuals as well as to society through externalities. Controlling for personal and socio‐demographic characteristics affecting well‐being, this paper examines if participation in, and the frequency and duration of, 67 sports activities affects well‐being. The form in which sports participation takes place is also investigated by examining if social‐interaction sports produce more well‐being. This paper demonstrates that sports participation has a positive affect upon the subjective well‐being of the population and, moreover, estimates its monetary value. The effects are larger if one allows for social interactions.     

A New Input‐Oriented Plant Capacity Notion: Definition and Empirical Comparison

Starting from the existing output‐oriented plant capacity measure, this paper proposes a new input‐oriented plant capacity measure. Furthermore, we empirically illustrate both input‐oriented and output‐oriented decompositions of technical efficiency integrating these technical concepts of capacity utilization. In particular, we pay attention to the impact of convexity of the technology on both input‐oriented and output‐oriented plant capacity measures.