IDEAS home Printed from https://ideas.repec.org/a/cup/nierev/v232y2015ipr30-r40_14.html
   My bibliography  Save this article

Rank-order tournaments, probability of winning and investing in talent: evidence from champions' league qualifying rules

Author

Listed:
  • Green, Colin
  • Lozano, Fernando
  • Simmons, Rob

Abstract

We analyse how a change in the probability of winning a tournament affects an agent's effort using the qualification rules for entry into the group and playoff stages of the UEFA Champions' League. Our results suggest that increasing the number of slots that a national league gets in the Champions' League leads to increases in investment in talent ex ante. This effect is largest among the teams that in the previous season just failed to qualify. This suggests that changes in prize structure leads to changes in investment decisions amongst those clubs most affected at the margin. However, we also find that incumbent teams that have already qualified for the Champions' League simultaneously raise their efforts, consistent with the occurrence of an arms race among top European football teams.

Suggested Citation

  • Green, Colin & Lozano, Fernando & Simmons, Rob, 2015. "Rank-order tournaments, probability of winning and investing in talent: evidence from champions' league qualifying rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 232, pages 30-40, May.
    • Handle: RePEc:cup:nierev:v:232:y:2015:i::p:r30-r40_14
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0027950100007110/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Marko Terviö, 2006. "Transfer Fee Regulations and Player Development," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 957-987, September.
    3. Brian P. Soebbing & Brad R. Humphreys, 2013. "Do Gamblers Think That Teams Tank? Evidence From The Nba," Contemporary Economic Policy, Western Economic Association International, vol. 31(2), pages 301-313, April.
    4. Egon Franck, 2014. "Financial Fair Play in European Club Football: What Is It All About?," International Journal of Sport Finance, Fitness Information Technology, vol. 9(3), pages 193-217, August.
    5. Andrew Schotter & Keith Weigelt, 1992. "Asymmetric Tournaments, Equal Opportunity Laws, and Affirmative Action: Some Experimental Results," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 511-539.
    6. Bernd Frick, 2003. "Contest Theory and Sport," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(4), pages 512-529, Winter.
    7. Uwe Sunde, 2009. "Heterogeneity and performance in tournaments: a test for incentive effects using professional tennis data," Applied Economics, Taylor & Francis Journals, vol. 41(25), pages 3199-3208.
    8. Jeroen Schokkaert & Johan Swinnen, 2013. "It is Harder, not Easier, to Predict the Winner of the Champions League," LICOS Discussion Papers 32913, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    9. Dana Sisak, 2009. "Multiple‐Prize Contests – The Optimal Allocation Of Prizes," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 82-114, February.
    10. Tito Boeri & Battista Severgnini, 2014. "The decline of professional football in Italy," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 19, pages 322-335, Edward Elgar Publishing.
    11. Egon Franck & Stephan Nüesch, 2012. "Talent And/Or Popularity: What Does It Take To Be A Superstar?," Economic Inquiry, Western Economic Association International, vol. 50(1), pages 202-216, January.
    12. Clark, Derek J. & Riis, Christian, 1998. "Influence and the discretionary allocation of several prizes," European Journal of Political Economy, Elsevier, vol. 14(4), pages 605-625, November.
    13. Eric J. Allen & Patricia M. Dechow & Devin G. Pope & George Wu, 2014. "Reference-Dependent Preferences: Evidence from Marathon Runners," NBER Working Papers 20343, National Bureau of Economic Research, Inc.
    14. Joseph Price & Brian P. Soebbing & David Berri & Brad R. Humphreys, 2010. "Tournament Incentives, League Policy, and NBA Team Performance Revisited," Journal of Sports Economics, , vol. 11(2), pages 117-135, April.
    15. Herm, Steffen & Callsen-Bracker, Hans-Markus & Kreis, Henning, 2014. "When the crowd evaluates soccer players’ market values: Accuracy and evaluation attributes of an online community," Sport Management Review, Elsevier, vol. 17(4), pages 484-492.
    16. Stefan Szymanski, 2010. "The Economic Design of Sporting Contests," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 1, pages 1-78, Palgrave Macmillan.
    17. Ronald G. Ehrenberg & Michael L. Bognanno, 1990. "The Incentive Effects of Tournaments Revisited: Evidence from the European PGA Tour," ILR Review, Cornell University, ILR School, vol. 43(3), pages 74, April.
    18. Szymanski, Stefan & Valletti, Tommaso M., 2005. "Incentive effects of second prizes," European Journal of Political Economy, Elsevier, vol. 21(2), pages 467-481, June.
    19. Glazer, Amihai & Hassin, Refael, 1988. "Optimal Contests," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 133-143, January.
    20. Beck A. Taylor & Justin G. Trogdon, 2002. "Losing to Win: Tournament Incentives in the National Basketball Association," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 23-41, January.
    21. Alex Bryson & Giambattista Rossi & Rob Simmons, 2014. "The Migrant Wage Premium in Professional Football: A Superstar Effect?," Kyklos, Wiley Blackwell, vol. 67(1), pages 12-28, February.
    22. Guido Ascari & Philippe Gagnepain, 2006. "Spanish Football," Journal of Sports Economics, , vol. 7(1), pages 76-89, February.
    23. Thomas Peeters & Stefan Szymanski, 2014. "Financial fair play in European football [v. National Football League, 560 (The Supreme Court May 24, 2010)]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 29(78), pages 343-390.
    24. Steffen Herm & Hans-Markus Callsen-Bracker & Henning Kreis, 2014. "When the crowd evaluates soccer players’ market values: Accuracy and evaluation attributes of an online community," Sport Management Review, Taylor & Francis Journals, vol. 17(4), pages 484-492, October.
    25. Garibaldi, Pietro, 2006. "Personnel Economics in Imperfect Labour Markets," OUP Catalogue, Oxford University Press, number 9780199280674.
    26. Chaim Fershtman & Uri Gneezy, 2011. "The Tradeoff Between Performance And Quitting In High Power Tournaments," Journal of the European Economic Association, European Economic Association, vol. 9(2), pages 318-336, April.
    27. Bentley Coffey & M. T. Maloney, 2010. "The Thrill of Victory: Measuring the Incentive to Win," Journal of Labor Economics, University of Chicago Press, vol. 28(1), pages 87-112, January.
    28. Pedro Garcia-del-Barrio & Francesc Pujol, 2007. "Hidden monopsony rents in winner-take-all markets-sport and economic contribution of Spanish soccer players," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 57-70.
    29. Feddersen, Arne & Humphreys, Brad & Soebbing, Brian, 2012. "Cost Incentives in European Football," Working Papers 2012-13, University of Alberta, Department of Economics.
    30. John Goddard & Peter Sloane (ed.), 2014. "Handbook on the Economics of Professional Football," Books, Edward Elgar Publishing, number 14821.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jason A. Winfree, 2021. "If You Don'T Like The Outcome, Change The Contest," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 329-343, January.
    2. Marc Rohde & Christoph Breuer, 2016. "Europe’s Elite Football: Financial Growth, Sporting Success, Transfer Investment, and Private Majority Investors," IJFS, MDPI, vol. 4(2), pages 1-20, June.
    3. Bryson, Alex & Buraimo, Babatunde & Farnell, Alex & Simmons, Rob, 2021. "Special Ones? The Effect of Head Coaches on Football Team Performance," IZA Discussion Papers 14104, Institute of Labor Economics (IZA).
    4. Raul Caruso & Marco Di Domizio & Domenico Rossignoli, 2017. "Aggregate wages of players and performance in Italian Serie A," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(3), pages 515-531, December.
    5. Garcia-del-Barrio, Pedro & Agnese, Pablo, 2021. "Does Compliance with Financial Fair Play Rules Improve the Football Clubs' Sport Performance and Their Chances to Reach UEFA Competitions?," IZA Discussion Papers 14474, Institute of Labor Economics (IZA).
    6. Pedro Garcia‐del‐Barrio & Pablo Agnese, 2023. "To comply or not to comply? How a UEFA wage‐to‐revenue requirement might affect the sport and managerial performance of soccer clubs," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 767-786, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    2. Feddersen, Arne & Humphreys, Brad & Soebbing, Brian, 2012. "Cost Incentives in European Football," Working Papers 2012-13, University of Alberta, Department of Economics.
    3. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    4. Michael Babington & Sebastian J. Goerg & Carl Kitchens, 2020. "Do Tournaments With Superstars Encourage or Discourage Competition?," Journal of Sports Economics, , vol. 21(1), pages 44-63, January.
    5. Marc Rohde & Christoph Breuer, 2018. "Competing by investments or efficiency? Exploring financial and sporting efficiency of club ownership structures in European football," Sport Management Review, Taylor & Francis Journals, vol. 21(5), pages 563-581, December.
    6. Fornwagner, Helena, 2019. "Incentives to lose revisited: The NHL and its tournament incentives," Journal of Economic Psychology, Elsevier, vol. 75(PB).
    7. Cedric Duvinage & Peter-J. Jost, 2019. "The Role of Referees in Professional Sports Contests," Journal of Sports Economics, , vol. 20(8), pages 1014-1050, December.
    8. Johannes Berger & Petra Nieken, 2016. "Heterogeneous Contestants and the Intensity of Tournaments," Journal of Sports Economics, , vol. 17(7), pages 631-660, October.
    9. Helena Fornwagner, 2017. "Incentives to lose revisited: The NHL and its tournament incentives," Working Papers 2017-07, Faculty of Economics and Statistics, Universität Innsbruck.
    10. Brad Humphreys & Bernd Frick, 2019. "Prize Structure and Performance: Evidence from NASCAR," Economies, MDPI, vol. 7(4), pages 1-13, October.
    11. Roman M. Sheremeta, 2011. "Contest Design: An Experimental Investigation," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 573-590, April.
    12. Oosterbeek, Hessel & van der Klaauw, Bas & Leuven, Edwin, 2010. "Splitting Tournaments," CEPR Discussion Papers 8016, C.E.P.R. Discussion Papers.
    13. Roman M. Sheremeta, 2016. "The pros and cons of workplace tournaments," IZA World of Labor, Institute of Labor Economics (IZA), pages 302-302, October.
    14. Sheremeta, Roman, 2009. "Essays on Experimental Investigation of Lottery Contests," MPRA Paper 49888, University Library of Munich, Germany.
    15. Brown, Alasdair & Chowdhury, Subhasish M., 2017. "The hidden perils of affirmative action: Sabotage in handicap contests," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 273-284.
    16. Brian Hill, 2021. "Tournament incentives and performance: Evidence from the WNBA," Contemporary Economic Policy, Western Economic Association International, vol. 39(4), pages 882-900, October.
    17. Madonia, Greg & Smith, Austin C., 2019. "All-In or checked-out? Disincentives and selection in income share agreements," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 52-67.
    18. Richau, Lukas & Follert, Florian & Frenger, Monika & Emrich, Eike, 2021. "The Rainmaker?! The impact of investors on transfer fees in the English Premier League," Working Paper 187/2021, Helmut Schmidt University, Hamburg.
    19. Giovanni Bernardo & Massimo Ruberti & Roberto Verona, 2022. "Image is everything! Professional football players' visibility and wages: evidence from the Italian Serie A," Applied Economics, Taylor & Francis Journals, vol. 54(5), pages 595-614, January.
    20. Pedro Garcia‐del‐Barrio & Pablo Agnese, 2023. "To comply or not to comply? How a UEFA wage‐to‐revenue requirement might affect the sport and managerial performance of soccer clubs," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 767-786, March.

    More about this item

    JEL classification:

    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:nierev:v:232:y:2015:i::p:r30-r40_14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://edirc.repec.org/data/niesruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.