Contemporary Research in Sports Economics
Proceedings of the 5 th ESEA Conference
Table Of Contents
- About the author
- About the book
- This eBook can be cited
- Financial Fair Play in European Football
- Financial Fair Play: Winners and Losers on and off the Pitch
- Financial Fair Play – Why Loss-Making Is a Problem: The Example of the English Football League
- The American View on Financial Fair Play
- The Competition Economics of Financial Fair Play
- Socio-economic Doping and Enhancement in Sport: A Case-based Analysis of Dynamics and Structural Similarities
- Performance and Competition in International Football
- In Urgent Need of Change? Within-season Coach Dismissals, Regression-to-the-mean, and Performance of Football Teams
- Competitive Balance and Attention Level Effects: Theoretical Considerations and Preliminary Evidence
- Spill-overs? Economic Progress, Football Facilities and the 2011 Asia Cup
- The Economics of Sports Events
- The Winner’s Curse in Sports Economics
- Sports on the Air: A GARCH Examination of the Impact of Broadcasts of Live Sporting Events on Television Audience Sizes
- Gridiron Games: A Case Analysis of Turf War Issues and the Economic, Social, Cultural, and Political Incentives for Government Subsidization
- New Research on Individual Sports
- Public Opinion on Doping in Cycling: Differences among Population Groups
- Analysis of Event Visitors’ Expenditure Patterns: The Case of Three Fis Ski Jumping World Cup Events 2013
- The Economics of Motorsport Centers
- A Survey of 5 Years of ESEA Conferences
- List of Contributors
The 5th ESEA Conference, organized by the University of Southern Denmark (SDU) and co-organized by the Ilmenau University of Technology (Germany), was celebrated on the 19th and 20th of September 2013 in Esbjerg, Denmark. The Blue Water Arena – home of the local first division football club Esbjerg fB – appeared to be an appropriate venue to hold a conference on sports economics. The conference was opened by the Vice Major of Esbjerg Jakob Lose, SDU Pro-Vice-Chancellor Bjarne G. Sørensen, ESEA President Stefan Szymanski and the local organizers Oliver Budzinski (Ilmenau University of Technology) and Arne Feddersen (University of Southern Denmark). More than 100 participants were present in Esbjerg representing 21 different countries. While the majority of participants naturally came from European counties, participants from three non-European countries (USA, Australia, Chile) have been welcome. Overall, 78 presentations were included in parallel sessions throughout the two days of the conference. A number of authors have decided to submit their papers to be published in this collected volume, which represents a compilation of the presentations and discussions at the conference.
During the almost six decades since Simon Rottenberg’s (1956) seminal contribution kicked off the economic analysis of sports markets and industries, sports economics has developed to become a serious, important and vital field of economics. Along with the proceeding commercialization of (professional) sports, understanding the economics of sport has both become more and more important and enjoyed an increasing popularity among researchers around the world. In doing so, theoretical rigor and empirical excellence of the discipline meets the standards of other branches of economics as witnessed by an increasing number of sports economics publications in the best economics journals. Notwithstanding, conceptual contributions remain important driving-forces of sports economics research. Starting with a strong North-American focus and concentrating on the American major leagues as well as on European-style football, the process of broadening the scope to include other sports disciplines and event as well as to mitigate the neglect of other geographical areas is still ongoing, offering a rich variety of open research questions and problems.
The establishment of the European Conference on Sports Economics – by now the largest annual sports economics conference in the world – initiated by ← 9 | 10 → Wladimir Andreff in Paris in 2009 and the subsequent foundation of the European Sports Economics Association in Cologne in 2010 have already contributed to this process in a considerable way. This is evidenced by the closing chapter of this volume in which Daam van Reeth (chapter 16) presents an overview and an analysis of the first five annual conferences of ESEA. It shows an impressive variety of topics and documents the growth of the conference.
It is probably not surprising, though, that European-style football (sometimes labeled as soccer) has been at the heart of the conferences and scored the highest share among the research contributions. This was the same at the Esbjerg conference and is consequently also reflected in this conference volume. Probably the hottest topic in current football economics – in science as well in (sports) politics and public discussion – is the UEFA financial fair play regulation. With it, the Union of European Football Associations seeks to avoid bankruptcies and insolvencies of clubs by implementing and enforcing rules regulating financial behavior and investment decisions of clubs. Following an impressive keynote presentation by Egon Franck (University of Zürich) at the Esbjerg conference, an intensive and controversial discussion on the merits and pitfalls of the regulation fascinated and alerted the participating researchers.1 This volume resumes this fruitful discussion with a special section on financial fair play (FFP) comprising five papers on the pros and cons of UEFA’s strategy to regulate financial behavior of football clubs. Thomas Peeters and Stefan Szymanski (chapter 2) analyze the impact of FFP’s break-even rule on individual teams in England, Spain, Italy and France. In a counterfactual analysis they show which teams would be gaining and losing on the field and in financial terms – and, thus, the effect on the sportive competition. Sean Hamil (chapter 3) highlights the reasons for and the advantages of FFP using the example of the English Football League. He argues that European football is facing an unprecedented financial crisis and that the implementation of the FFP regime is an entirely reasonable and logical response to this crisis. The next two contributions represent a more critical view on FFP. From an American perspective, Joel Maxcy (chapter 4) compares FFP to salary caps in U.S. professional sports leagues. He concludes a revenue-shift away from players as well as considerable costs of regulation because he expects that FPP compliance will be investigated and enforced neither equitably nor efficiently. Eventually, he raises doubts that FFP will benefit ← 10 | 11 → football fans, who would prefer better matches and lower prices. Against the background of European competition policy, Oliver Budzinski (chapter 5) provides an economic analysis of the competition effects of FFP. He concludes that the restrictive effects of FFP cannot be justified by a legitimate objective defense because systemic overinvestment problems are not inherent to European football. Eventually, Thomas Könecke and Mathias Schubert (chapter 6) take up the notion of ‘financial doping’ and provide a positive analysis on how once legitimate (financial) enhancement turns into something that is deemed to represent illegal doping. Thus, the authors provide important insights into the socio-economic genesis of regulations like FFP.
Next to the controversial discussion about the economics of FFP, the following part of this volume includes three papers on other performance and competition issues of contemporary football. Nikolaus Beck and Mark Meyer (chapter 7) analyze the performance effects of within-season coach turnover. Based upon parametric econometric models, the authors identify a significant long term restoration of home advantage under the new coaches. Consequently, they cannot support the common ‘ritual scapegoating’ interpretation of coach dismissals. Tim Pawlowski and Oliver Budzinski (chapter 8) contribute theoretically and empirically to a better understanding of possible reasons for deviations between statistically-measured and perceived competitive balance by focusing on so-called attention level effects from behavioural economics. The study by Peter Ochieng (chapter 9) empirically analyzes the influence of investments into football facilities and events on future success in international competitions in Asia.
The economic analysis of sports events then forms the core of the next part of this volume. Waldimir Andreff (chapter 10) presents a comprehensive analysis of the winner’s curse phenomenon in sports. Such deficient overbidding occurs in bids for hosting a mega-sporting event, when several cities compete to host a team franchise, TV channels bid for a league’s broadcasting rights, or teams overbid for recruiting a same free agent or superstar player. José Baños, Levi Pérez, Victor Puente and Plácido Rodríguez (chapter 11) analyze the impact of broadcasts of live sport events on television audience sizes, using the example of a Spanish public regional TV channel. Eventually, Christopher M. Keshock, Brooke Forester and Shelley Holden (chapter 12) tell a striking political economy story about government subsidization of amateur sports contests. The authors show how politicians use exaggerated monetary values to garner community support of the events they propagandize.
The final part of this volume (before the epilogue closes) focuses on the economic analysis of individual sports. Daam van Reeth and Wim Lagae (chapter 13) empirically analyze the opinion of people on doping in cycling. In general, ← 11 | 12 → their study shows a strong disapproval of doping use, however, with statistically significant differences among population groups. For instance, cycling fans tend to be less negative towards doping in cycling than non-cycling fans. Furthermore, the authors observe some clear gender-based and age-based differences in opinion: women and older people are much more opposed to doping than men and younger people. Grzegorz Kwiatkowski and Ove Oklevik (chapter 14) analyze the socio-demographic, psychographic and trip-related factors that determine sport event visitors’ expenditure behavior. The empirical analysis is based on primary data collected by questionnaires at three FIS Ski Jumping World Cup events staged in Norway in 2013. Eventually, Anika Müller and Oliver Budzinski (chapter 15) provide a conceptual analysis of the market for motorsport centers. The theory of platform competition (also labeled as two-sided or multisided markets) is employed in order to understand the specific characteristics of this market.
In summary, this volume presents an excellent overview on current topics of sports economics analysis. It combines the controversial discussion on a hot policy issue like financial fair play in European football with state-of-the-art theoretical, empirical and conceptual analyses of relevant economic phenomena in sports. As such it perfectly represents the outcomes of the 5th ESEA Conference and supplements the related special issue of the association’s outlet International Journal of Sports Finance (volume 9, issue 3).2
As the local organizers of the Esbjerg conference we thank the Municipality of Esbjerg and the Faculty of Business and Social Science at the University of Southern Denmark for their financial and Inspiring Denmark, VisitEsbjerg, Jesper Strandskov, Eva Roth, Ulla H. Oehlenschläger, Christian R.M. Jensen, and Grzegorz Kwiatkowski for their administrative, organizational, and/or general support. Furthermore, we would like to thank ESEA for the opportunity to organize the conference in Esbjerg. Finally, it would not have been possible to stage the conference without the voluntary help and support of the ESEA board members and the members of the Scientific Committee. This conference volume would not have been possible without the enormous editorial work of Ina Fredersdorf and Nadine Neute that we appreciate very much and are very thankful. Furthermore, we thank the Chair for Economic Theory at Ilmenau University of Technology who provided the resources for realizing this book project. ← 12 | 13 →
Cabane, C. (2014): Unemployment Duration and Sport Participation, in: International Journal of Sports Finance, Vol. 9, 3, forthcoming.
Coates, D., Wicker, P., Feiler, S. & Breuer, C. (2014): A Bivariate Probit Examination of Financial and Volunteer Problems of Non-profit Sport Clubs, in: International Journal of Sports Finance, Vol. 9, 3, forthcoming.
Franck, E. (2014): Financial Fair Play in European Club Football – What is it all about?, in: International Journal of Sports Finance, Vol. 9, 3, forthcoming.
Paul, R. & Weinbach, A. (2014): The Impact of Atmospheric Conditions on the Baseball Totals Market, International Journal of Sports Finance, Vol. 9, 3, forthcoming.
Rottenberg, S. (1956): The Baseball Player’s Labour Market, in: Journal of Political Economy, Vol. 64, 3, pp. 242–258.
1 A written version of this keynote presentation will be published in the ESEA conference special issue of the International Journal of Sport Finance (Franck 2014). See also the objection by Stefan Szymanski (2014) in the same special issue.
2 This special issue consists of Cabane (2014), Coates et al. (2014), Franck (2014), Paul & Weinbach (2014), and Szymanski (2014).
Financial Fair Play in European Football
← 15 | 16 →
In this chapter we analyze the impact of the break-even rule embedded in Financial Fair Play on individual teams in England, Spain, Italy and France. In a counterfactual analysis we show which teams would be gaining and losing on the field and in financial terms. We also compare these results to the findings of the theoretical literature on Financial Fair Play.
Financial Fair Play, break-even rule, European football
In this chapter we look at the effects of the introduction of the break-even rule embedded in UEFA’s Financial Fair Play regulations (UEFA 2012). The break-even rule forbids clubs to spend more in “relevant” costs than they earn in “relevant” revenues with some leeway in the form of an “acceptable deviation”. In practice relevant costs include transfer costs (which is not the same as net transfer spending), player and manager salaries and other operating costs, but the term excludes investments in certain assets such as stadium facilities and youth academies. Relevant revenues are mainly comprised of match-day, media and sponsorship income. Crucially this excludes direct investments by team owners to fund operational losses. The rule is gradually going into effect in four phases, where UEFA is planning to decrease the acceptable deviation over time. Starting in 2014 teams are allowed to lose €45m over the past three seasons. This declines to €30m in 2016 and then further to an unspecified amount in 2019. In the long run UEFA wants to arrive at an acceptable deviation of €5m over three seasons. We analyze four regimes of the break-even rule, where we follow UEFA’s targets for the acceptable deviation, i.e.:
- ISBN (PDF)
- ISBN (ePUB)
- ISBN (MOBI)
- ISBN (Hardcover)
- Publication date
- 2014 (September)
- Financial Fair Play Fussball Sportereignisse Wettbewerb
- Frankfurt am Main, Berlin, Bern, Bruxelles, New York, Oxford, Wien, 2014. 333 pp., 41 tables, 25 graphs