IDEAS home Printed from https://ideas.repec.org/a/sae/niesru/v232y2015i1pr30-r40.html
   My bibliography  Save this article

Rank-Order Tournaments, Probability of Winning and Investing in Talent: Evidence from Champions' League Qualifying Rules

Author

Listed:
  • Colin Green
  • Fernando Lozano
  • Rob Simmons

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

  • Colin Green & Fernando Lozano & Rob Simmons, 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(1), pages 30-40, May.
  • Handle: RePEc:sae:niesru:v:232:y:2015:i:1:p:r30-r40
    as

    Download full text from publisher

    File URL: http://ner.sagepub.com/content/232/1/R30.abstract
    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, Oxford University Press, vol. 107(2), pages 511-539.
    6. Bernd Frick, 2003. "Contest Theory and Sport," Oxford Review of Economic Policy, Oxford University Press, 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: Handbook on the Economics of Professional Football, chapter 19, pages 322-335 Edward Elgar Publishing.
    11. Ángel Barajas & Plácido Rodríguez, 2010. "Spanish Football Clubs Finances: Crisis and Player Salaries," International Journal of Sport Finance, Fitness Information Technology, vol. 5(1), pages 52-66, February.
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. John Goddard & Peter J. Sloane, 2005. "Economics of sport," Chapters,in: Economics Uncut, chapter 12 Edward Elgar Publishing.
    17. Jan C. van Ours & Martin A. van Tuijl, 2011. "Country-Specific Goal-Scoring in the ‘Dying Seconds’ of International Football Matches," International Journal of Sport Finance, Fitness Information Technology, vol. 6(2), pages 138-154, May.
    18. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
    19. Thomas Peeters & Stefan Szymanski, 2014. "Financial fair play in European football," Economic Policy, CEPR;CES;MSH, vol. 29(78), pages 343-390, April.
    20. Szymanski, Stefan & Valletti, Tommaso M., 2005. "Incentive effects of second prizes," European Journal of Political Economy, Elsevier, vol. 21(2), pages 467-481, June.
    21. Glazer, Amihai & Hassin, Refael, 1988. "Optimal Contests," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 133-143, January.
    22. 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.
    23. 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.
    24. Bernd Frick, 2011. "Performance, Salaries and Contract Length: Empirical Evidence from German Soccer," International Journal of Sport Finance, Fitness Information Technology, vol. 6(2), pages 87-118, May.
    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. 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.
    28. Feddersen, Arne & Humphreys, Brad & Soebbing, Brian, 2012. "Cost Incentives in European Football," Working Papers 2012-13, University of Alberta, Department of Economics.
    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. Marc Rohde & Christoph Breuer, 2016. "Europe’s Elite Football: Financial Growth, Sporting Success, Transfer Investment, and Private Majority Investors," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 4(2), pages 1-20, June.
    2. repec:spr:epolit:v:34:y:2017:i:3:d:10.1007_s40888-017-0062-6 is not listed on IDEAS
    3. 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.

    More about this item

    Keywords

    Champions' League; tournaments; effort; payroll;

    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:sae:niesru:v:232:y:2015:i:1:p:r30-r40. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: http://edirc.repec.org/data/niesruk.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.