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

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  • Green, Colin P.

    (Norwegian University of Science and Technology (NTNU))

  • Lozano, Fernando A.

    (Pomona College)

  • 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 P. & Lozano, Fernando A. & Simmons, Rob, 2015. "Rank-Order Tournaments, Probability of Winning and Investing in Talent: Evidence from Champions League Qualifying Rules," IZA Discussion Papers 8950, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8950
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    Cited by:

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    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. Alex Bryson & Babatunde Buraimo & Alex Farnell & Rob Simmons, 2024. "Special ones? The effect of head coaches on football team performance," Scottish Journal of Political Economy, Scottish Economic Society, vol. 71(3), pages 295-322, July.
    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. 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.
    6. 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).

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    Keywords

    UEFA Champions League; tournaments;

    JEL classification:

    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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