Referee home bias

Referees are supposed to be impartial. In academics, this is most of the time helped by the fact that they are anonymous. In sports, referees are public and meeting participants, including spectators, try to influence them. This becomes particularly relevant when the referee has to take a decision against the home team than leaves spectators irate. They could retaliate against him. Does this influence referees?


Andrés Picazo-Tadeo, Francisco Gónzalez-Gómez and Jorge Guardiola Wanden-Berghe look at first division football in Spain, carefully taking into account stadium capacity, how full it is, how far spectators are from the pitch, and referee experience. They find that awarding a free kick does not have a home bias, which is consistent with the fact that this is a split-second decision. The ensuing decision to give the offending player a caution is, however, affected by home bias. This decision is not instantaneous, and social pressure can be exerted on the referee, especially when the stadium is full. The presence of a running track that separates the local supporters form the action does not seem to matter, though. I wonder whether some teams have a larger home bias than others, as the fans' reputation could also influence referees.

Does hosting Olympic Games matter after all?

Is seems to be common knowledge that attracting big sports events is good for business and especially tourism. I have never found this argument particularly compelling, after all it is mostly local residents who attend such events. And previous research I reported on gives me right: in the case of the Atlanta Olympics, the impact was very short-lived and limited to the tourism industry. But maybe there is more and better evidence.

Markus Brückner and Evi Pappa take a different approach form the traditional impact study: they look at macroeconomic aggregates and focus on the anticipatory effect during the bidding process for the Olympic Games. The fact that a country is bidding gives people an indication that aggregate demand may increase in the future, especially if the country is selected into the last set of candidates. This anticipation can increase economic activity right now. Brückner and Pappa study a panel of 184 countries over 57 years. They find higher GDP growth during the five years before hosting, peaking at four years when the next host is announced. As expected, the impact fades quickly for unsuccessful bidders. And results are robust for World Exhibitions, but strangely reversed for Football World Cups. In all that, I wonder whether bidding for such large events is in fact exogenous. Indeed, you only want to bid if you have a healthy economy, especially if the event is large like the Olympic Games.

Do professional sports teams belong on the stock market?

Professional sports clubs exist to win, but this often requires money. Different models have developed in this regard. The US model is private ownership of clubs within a cartel, where private ownership is meant to be a single person, or a small group of people. The European model is broad membership with few benefactors who do not own the club, and clubs operate within an open league system (promotion and relegation based mostly on sport results). But over the last two decades a good number of European clubs went public and are now listed on stock markets. This highlights a change of priorities, profits over sport results, although the two are clearly correlated. But how well do these clubs fare?

Michel Aglietta, Wladimir Andreff and Bastien Drut note that the performance of sports stock is rather weak, and thus has not attracted institutional investors as was probably hoped for. This weak performance is not that surprising, I suppose many hold such stock to frame it above the TV set. It may also be due, as the authors argue, to the fact that sports clubs have poor governance. So, maybe the next step is to run them like a business where the objective is to maximize shareholder value, and make sport results only a means to generate these profits.

Football has an impact on college quality

US faculty members are currently quite frustrated with sports programs on their campuses as the swallow substantial budgets at the expenses of academics. Very very programs yield a profit, even (American) football is in deficit save for a handful of colleges. And coaches get salaries that are completely disproportionate to the academic mission of universities. Then why are universities willing to invest all this money in sports? The standard answer that this builds alumni loyalty cannot be good, as they typically donate to the athletic foundation, which is run independently from academic budgets. The only advantage, so to speak, are that they reduce the deficit that needs to be covered by academic funds. Another argument is that it attracts better students. I can believe that for some sports, where student athletes are better than the general student population. But there should be better ways to attract good students, like merit scholarships.

Sean Mulholland, Aleksandar Tomic and Samuel Sholander claim that even the football program improves the academic quality of the student body. It is not that the football player are academically gifted, they are certainly not, but it is all about attracting other students. Their assessment is not based on actual fact, but rather on peer evaluation of faculty and university administrators, as they are records in the US News and World Report college rankings. And the better a sports team is, also from peer evaluation by football coaches, the better is the academic reputation of the student body. Now that the rumors have been established, it would be good to back this up with facts...

Video review in football/soccer

The Australian Football Association has started to implement post-match video reviews to help in refereeing games and in particular uncover things the field referee may not have seen. The most striking example so far has been the reversal of an added-time penalty kick that followed a dive by an attacker. The diver is now suspended for two games, and the goalie got his red card reversed.

After the multiple controversies in the last World Cup about outcome determining refereeing errors, FIFA has been adamant that it is not considering overriding the authority of the referees on the field. The Australian initiative is definitively a thorn in the eye of FIFA, and it will be interesting to see how the football politics pan out.

But beyond this, this could lead to particularly interesting behavior on the field. Suppose a penalty kick is awarded on a dive. The diver, knowing that the decision could be reversed after the fact and new punishments could be handed out, could volunteer and ask the referee not to give the penalty kick. Should the referee accept this plea that undermines his authority on the field? Obviously his authority off the field is lost with post-match video reviews, but his decisions still have an impact.

In any case, I would love to see this implemented in Southern European leagues or in South America. It would make football strategy even more interesting.

Olympic Games have no long-term impact on employment

Is it worth holding mega-event like Olympic Games? Repeatedly, they turn into a financial fiasco, yet new organizers keep believing they can pull it off. Usually, they manage to obtain some public guarantees or even financing on the grounds that such an event and the infrastructure will kick-start an economy and encourage tourism beyond the event.

Arne Feddersen and Wolfgang Maennig show that these beliefs are wrong, at least for the 1996 Olympic Games in Atlanta. They concentrate on the impact of these games on employment, and using monthly data they cannot find any impact in any sector, except for the sectors directly affected by the event, and only for the duration of the Games: retail trade, accommodation and food services, arts, entertainment, and recreation. How disappointing. I can only reiterate that such events should find a permanent home.

Now that the Olympics are over

Now that the Olympics are over, Vancouver is stuck with infrastructure it will not use, and the town will soon discover that not everything is paid for and a substantial debt will need to be serviced. It is like this after every Olympic Games. And inevitably, there are calls that the Olympic Games should find a permanent home.

I agree. The is considerable waste in providing oversized infrastructure for a few weeks and the be left with while elephants. The best example is the Olympic stadium in Montreal, or the ski-jumping and luge/bobsleigh installations in most Winter game locations. If games happen in a location that needs an infrastructure push, the money is better spent in installation that are needed in the long run.

And where should the permanent home of the Olympics be? For the Summer Games, Athens seems to be an obvious choice. This is where they originated, they where held there recently, and thus the infrastructure is already in place. Summers are really hot, though, so holding them in September is probably better. And Greece could use some revenue.

As to the Winter Games, they should be held in Switzerland, and more precisely in St. Moritz. Games were there already twice, again, there is infrastructure in place. Also, Switzerland has the advantage of being neutral and thus less subject to boycotts. And do not forget that the Swiss are very efficient, have an excellent transportation system and a top tourism industry. And the International Olympic Committee has its seat in the country.

My voice does not count for much in this decision, but add me to the chorus that is calling for an end to this waste of resources.

The Boris Becker effect

Sports personalities are often packaged as role models for future generations, implying that their workj and perseverance has paid off, and one should emulate this. One consequence is that when a sport star emerges, it should attract many in his sphere of influence to do the same thing. An example would Tiger Woods enticing many blacks to pick up golf. This is much like many boys would to become firemen after seeing a firetruck rushing down the road. But does this work at all?

Arne Feddersen, Sven Jacobsen and Wolfgang Maennig analyze the supposed Boris Becker effect, that more people picked up a tennis racket with the successes of Boris Becker, Stefi Graf and Michael Stich. Well, it turns out it did not work that way at all. With the rise of these stars, tennis memberships went down, and after their retirement, they went further down. The latter efect would be expected, but not the first. While this is just one data point in studying the impact of role models, it is quite puzzling. The authors have three untested hypotheses: fatigue from over-exposure to tennis, the belief that such performances can only be the result of doping, and discouragement that the stars' results are unreachable. Intuitively, I have my doubts about all three. This remains a puzzle.

Open platforms versus cartels in professional sports leagues

What makes a sports league more competitive? More interesting? And more profitable? We have two basic models out there. The European model, with open entry, promotion and relegation on mostly athletic grounds, and the American model, a cartel with regulated entry and no exit except on economic grounds. Basic economics should tell us that an American league should be more profitable but of lesser athletic quality, while the European one should be providing more value, both in terms of quantity and the quality of the good (say, athleticism and entertainment).

Helmut Dietl and Tobias Duschl confirm this conjecture. Indeed, the six top revenue generating teams are European, but some of them are still not profitable, and as in the case of Manchester United, despite significant athletic success. Dietl and Duschl use platform organization, a form of two-sided market theory, to get some better understanding of sports league organizations. In this regard, European leagues can be compared to open source like Linux, open and performing, while American leagues are like Windows, underperforming but most profitable.

Table 2 from the paper summarizes well the differences between the leagues. In European ones, most clubs are members' associations that try to maximize wins. Leagues are open (promotion/relegation), there is full market coverage, hardly any relocations (I cannot think of one), and no salary caps. As a consequence, value (as defined by athleticism or entertainment) is maximized. Contrast this with American leagues, where clubs are privately owned and maximize profits. League are closed, there is rationing, frequent relocation and a salary cap. Thus, American leagues maximize value appropriation.

Limit foreigners in sports leagues

I have always found it difficult to root for the local sports teams knowing that very few of their players are actually locals. In professional sports, teams carry the name of a location only because this is where they happen to play half their games, or possibly because management is local, but certainly not because of the players. In fact, I have always been in favor of some rule that would force teams to have at least some local content, so that local residents can better identify with these teams: "the players are from us."

It turns out that there can be economic reasons to do so beyond local loyalty. Markus Lang, Alexander Rathke and Marco Runkel show that imposing such constraints provides for more parity in a sports league, provides more profits to leagues and local players are better paid. But such constraints need to be imposed, as teams always want to deviate from such constraints. Similar constraints have been imposed in European football, apparently with success.

Optimal doping testing

Doping appears to be pervasive in sports. If one wants to fight it, it opens the question about what the optimal strategy is, where the strategy space is comprised of the test frequency and the penalty. It is quite obvious that test should not be predictable.

Dmitry Ryvkin approaches this question using winner-take-all contests. With low participant numbers, the larger the tournament, the more frequently players need to be tested. But starting from some threshold, the frequency can decease. The reason is that as more players join, the expected payoffs of dopers and non-dopers decrease, but the payoff of doping first increases and then decreases. This is based on the assumption that the expected payoff of winning decreases in the number of players (thus prestige of winning does not increase faster than the number of players).

In terms of penalty, players that are caught doping are excluded from the contest, no surprise, but are also subject to a small penalty. This is required because it enhances the effectiveness of testing by making the testing probability non-monotonic in the number of players. This seems a rather technical argument. But I surmise that making players risk averse instead of risk neutral would not make this additional penalty necessary.

How to make soccer more exciting

Now that football (soccer) leagues are back in play, let us consider the old question of how to get more goals scored. As the play has become more defense oriented, it is obvious that attack needs to be encouraged, thereby increasing the risk. Quite obviously, to reward risk taking, it must be that the expectation of a return from wining and losing must be higher than that of a draw. This can be achieved by awarding three points instead of two for a win, a practice that is now almost uniformly adopted, and Isabelle Brocas and Juan Carrillo confirm from a theoretical point of view that this is a good way to increase risk taking.

The latter paper also recommends to have a 20-minute golden goal extra time in case of a draw: the first to score wins. I am not quite sure I follow the intuition there. Knowing that there is this extra-time, it gives less incentives to play offensively during the regular time. This is at least my observation of NHL hockey games.

What else could encourage offensive play? One could go the American football way, which is to basically regulate when a team can only play offense. But soccer is too fluid for that. But ice hockey can be very exciting when teams are short-handed due to a timed penalty. Having fewer players, even temporarily, is a disadvantage that can lead to have more goals scored. But more importantly, the fear of time penalties would lead defenders to be less aggressive (face it, yellow cards are not much of a threat), thus opening the play to attackers.

That said, one can still discuss whether more goals are really needed. If a game can be decided by a single goal, and this goal could happen at any moment and not necessarily be scored by the dominating team, this can also make a game exciting.

Why three medals at the Olympics?

It is interesting to follow Olympics in various countries. While everywhere there is focus on domestic athletes, big countries, say the US, only consider gold medals to be worth mentioning, while in small ones, say Denmark, even Olympic diplomas (ranks 4-8) make major news. This brings up the question: why reward more than the winner?

Pavlo Blavatskyy demonstrates that giving a single prize elicits a lot of effort from a few athletes. Giving several prizes reduces the effort of those few, but this may increase the overall effort as more athletes participate.

Given, as I suggested above, only gold medals are worthwhile in big countries, I wonder whether we can see more effort from the top athletes from big countries, while we see more effort from small country citizens among diploma-worthy athletes. An empirical test of this would be difficult, though. Indeed, a prediction of this theory would to find proportionally more athletes from small countries in ranks 2-8. But larger country athletes could simply be missing from because a fellow citizen won.

Who will win the Olympics?

Now that the Olympic Games are about to start and the patriots start counting medals, let us ask what determines the success of a country at these events? Obviously, size matters, in particular for team events (and this is why I frustratingly root for the little countries). Bernard and Busse show that economic development also matters. This is not surprising, as a country need to reach some development level to devote resources to sustain a competitive sports program.

Lui and Suen confirm this. Kuper and Sterken as well and argue that the home field advantage has become less important over time. Glen Roberts argues that a cold climate helps as well. Moosa and Smith add health expenditures. Stefan Szymanski claims that medals counts are very predictable and that any discrepancy should be attributable to cheating, an argument that Jacob and Levitt have used successfully in other research.

Of course, Olympic success can be a function of how much sports and in particular competitive sports enjoy public support. Rathke and Woitek make exactly this argument using stochastic frontier analysis which measures how far a country is from its potential. Tcha and Pershin find that, much like in international economics, high-income countries specialize less in particular sports.