IJSF Issue 13:3

Abstract:International Journal of Sport Finance, Volume 13, No. 3, August 2018.

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TV Rights, Financial Inequality, and Competitive Balance in European Football: Evidence from the English Premier League and the Spanish LaLiga
Authors: Miquel Carreras and Jaume Garcia
Abstract:The recently signed TV deals by the English Premier League and LaLiga imply that income from TV rights are expected to increase significantly in both football championships. We analyzed the impact of these revenue increases in terms of the effect on financial inequality. We conclude, and provide empirical evidence, that the expected financial imbalance between clubs will suffer an increase in absolute terms, but a decrease in relative terms for both competitions. The aim of this paper is to measure the effect of the new TV deals on the competitive balance of these championships. We estimate an econometric model in which the result of a particular game (and the final standings and points in the championship) depends on the financial inequality in absolute terms, using this model to carry out a simulation exercise. We conclude that the new TV deals are not helping to make both competitions more balanced.

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Estimating the Implied Probabilities in the Tennis Betting Market: A New Normalization Procedure
Authors: Vincenzo Candila and Antonio Scognamillo
Abstract:The prices offered by the fixed-odds bookmakers in the tennis betting market are biased because of the favorite-longshot phenomenon. How to derive unbiased implied probabilities underlying the published odds is the focus of this study. This paper proposes a new normalization procedure that yields unbiased probabilities, regardless of the presence of heavy underdogs. In-sample, the proposed normalization has a superior forecasting ability than the other methods. Moreover, it enables betting strategies, which produce superior returns than those obtained from the Bradley Terry type model.

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The Economic Impact of Olympic Games: Effects of Host Country Announcements on Stock Market Returns
Authors: Bryan Engelhardt, Victor Matheson, Alex Yen and Maxwell Chisolm
Abstract:Roughly seven years before an Olympic Games, the International Olympic Committee (IOC) accepts bids from countries to host an Olympics. Subsequently, the IOC deter-mines and announces to the world who has won (and lost) the right to host. Contrary to prior evidence, we find the announcements do not affect the bidding countries’ stock markets. We complement prior studies by including additional, more recent, years of announcements, by investigating whether there are effects prior to the announcement, and by testing for an effect both parametrically and nonparametrically.

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Willingness-to-Pay for Memberships in Nonprofit Sports Clubs: The Role of Organizational Capacity
Authors: Philipp Swierzy, Pamela Wicker and Christoph Breuer
Abstract:Empirical research analyzing willingness-to-pay (WTP) for memberships in nonprofit sports clubs has focused on individual factors and neglected the role of organizational characteristics. However, social ecological theory suggests that contextual factors also determine individual behavior. This study’s purpose is to examine the relationship between sports club organizational capacity and individual WTP for memberships. Members participated in an online survey including a contingent valuation method (CVM) scenario to elicit WTP (n = 648). Organizational capacity was assessed in a separate club survey (n = 228). Mean WTP is approximately €10.50 per month, representing a 30% increase in the current membership fee. Multi-level analyses reveal that human resources, financial, and structural capacities significantly influence WTP: If clubs break even, but also in case of financial problems, members are willing to pay higher fees. Problems concerning the availability of facilities are positively related to relative WTP, while problems concerning their condition are negatively associated with it.

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The Efficiency of Sport Betting Markets: An Analysis Using Arbitrage Trading within Super Rugby
Authors: Matthew Buckle and Chun-Sung Huang
Abstract:A topic of ongoing interest is the level of market efficiency within sports betting. This paper analyzes the inefficiency embedded in the Super Rugby betting market. Robust methodologies widely utilized in the European football betting market are adapted and applied in our analysis of Super Rugby betting. Surprisingly, one in every three trades was found to provide an arbitrage opportunity, strongly suggesting at least weak form market inefficiency. We provide empirical evidence of differing odds quoted by bookmakers from different geographical areas, and show how such phenomena contributed to the above-mentioned inefficiency. Finally, a simple betting strategy to exploit arbitrage is implemented and analyzed for robust conclusions. Despite testing with varying degrees of assumptions in our practical experiment, positive returns above the benchmark risk-free rate were observed.

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