Measuring the Competitiveness of Sport: Are the Top Teams Getting Too Strong?

Measuring the competitiveness of sport: are the top teams getting too strong?

1. Introduction It is characterised by abnormally In England and Scotland, there have high levels of brand loyalty, been growing concerns that football’s combined with a high degree of co- top tier (currently the Barclay’s operation between rivals. Owners are Premier League and the Clydesdale often prepared to pour their own Bank Premier League respectively) resources into loss-making teams, has become too polarised. Recently long beyond the point when a in England, Manchester United, ‘traditional’ firm would have exited Chelsea and Arsenal have been the from its industry. Furthermore, sport dominant sides, whereas Scotland’s generates the news and gossip which top spot has been the preserve of not only sells specialist media either Glasgow Rangers or Glasgow packages to enthusiasts, but also Celtic. Similar patterns can be found provides newspapers and magazines across Europe, for example in with a constant flow of copy from Germany, Italy and Spain. which they can earn revenue from At the start of the season, the people who are simply intrigued by fans of clubs such as Chelsea and the celebrity lifestyle that many Manchester United, can anticipate sports stars enjoy. the possibility of winning the Our support for a particular Premiership and even the Champions team can be unwavering. In League. For supporters whose teams contrast, a manufacturer of are likely to congregate around the televisions or mobile phones knows bottom end of the Premiership table, that its customers’ allegiance can be the battle to avoid relegation can transitory, reflecting changes in its also be perversely exciting. However, products’ relative value for money, there remains a significant group of reliability, technical attributes and teams whose respective squads have image. Nonetheless, fan interest in a enough strength to make relegation particular season will reflect, to some unlikely, but simultaneously lack the degree, the amount of uncertainty talent to be a serious title contender. that characterises the outcome of For supporters of these teams, the individual games and indeed, entire Premier League may not seem so fixture lists. If too many matches competitive. are foregone conclusions, demand In this brief, we are going to will start to decline, initially from the consider how we might measure the marginal supporter. Thus, although degree of polarisation that exists teams will do all they can to be more within the English Premiership and successful than their rivals, they will the implications for top level football recognize also that they are if it persists. economically dependent on the quality of their competitors. 2. Sport has ‘peculiar economics’ In the economics of sport Those of us who follow professional literature, researchers often refer to team sports, such as football or the term ‘competitive balance’ when cricket, are consuming a product that referring to the comparative playing Walter Neale (1964)1 once referred strengths of teams within a given to as having ‘peculiar economics’. competitive environment. Since it Sport is not like any other industry. would not be desirable for matches to be determined entirely by random 1 Neale W (1964), The peculiar economics of factors, the key issue revolves professional sports, Quarterly Journal of Economics, Volume 78, pp 1-14. Page 2 of 5

around the degree of where Si denotes the share of points competitiveness that should prevail. enjoyed by the ith team. The Σ sign Traditionally, some teams means ‘the sum of’. In [1], the limits have had greater revenue-raising of the summation process are set out opportunities than others. Those by i=1 and 3 in the case of the located large conurbations have numerator in expression [1] (in other always had the propensity to attract words, add together the total points larger attendances than rivals accumulated of the top three teams) situated in smaller population while i=1 and k identify the limits for centres, thereby providing the the summation for the denominator former with more resources to (add together all the points won by attract better players than the latter. all of the teams, including the top In today’s sport, bigger clubs not three). only benefit from higher Figure 1 plots the three-team attendances, but also the concentration ratio for ten seasons corresponding opportunity to attract from 1997/98-2006/07. Two things major sponsorship deals and to raise emerge. First, the dominance of the revenues derived from the club’s top three sides varies from year to brand name and corporate year as their strength changes hospitality. Thus, taken as a whole, relative to the rest of the league. there is an inbuilt tendency for some Starting at a given peak, the top teams to become stronger while sides set a standard of play which others grow weaker. This process strongly differentiates them from the can mean that the outcome of games rest of the division. In subsequent will become more predictable, seasons, the chasing pack revise potentially detracting from the their own level of play (usually by attractiveness of the overall product. recruiting better quality players and changes in tactics), enabling some 3. Can We Measure degree of ‘catch-up’. Eventually, the Competitiveness? top sides raise the bar again and the There are a number of ways in which process continues. Second, there is we can measure the degree of an underlying increase in the competition that exists between dominance of the top three sides, the teams. One such measure is the implication being that the concentration ratio. This is often Premiership is showing signs of used by industrial economists who falling competitiveness. This may are interested in the degree to which arise because the top sides are the largest n firms dominate a benefiting from playing in the particular industry. Champions League and as a result Applied to a sporting context, are learning new tactics from outside the concentration ratio can be used the domestic league and in addition to measure the proportion of a are acquiring the resources to hire season’s points won by the top n even better quality players. sides within a k team league (where n

CR3 = ΣSi / ΣSi [1] i=1 i=1 Page 3 of 5

Figure 1: Dominance of The Top the runners up (Manchester United Three Teams in the English and Arsenal). Premiership 1997/8 - 2006/7 At this point, we might wish to take the analysis a stage further.

0.25 One of the arguments often put o i

t 0.245 forward as to why bigger teams a R 0.24 seem to be getting stronger is that n o i

t 0.235

a the reward system is biased in their r t

b 0.23

n favour. The emergence of the e

c 0.225 n Premiership in the 1992/93 season o

C 0.22 was a major watershed in English m

a 0.215 e

T football. Its evolution reflected the 0.21 3 0.205 larger clubs’ desire to get a larger 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 share of a bigger cake. Year Since 1888, the top professional teams had contested Division One of the Football League. In the last three seasons, the top However, by the 1980s, football was three teams accumulated almost a suffering from a serious image quarter of all the points accrued problem as hooliganism worsened. throughout the league, As attendances declined, teams demonstrating their dominance over throughout all four divisions of the the remaining seventeen teams. Football League experienced The concentration ratio is an worsening financial problems. example of what economists refer to By 1988, there were threats by 10 as a ‘summary statistic’. Summary major teams to break away from the statistics are convenient in that they Football League to form a ‘super- condense a lot of information into a league’, a vehicle through which the single indicator, but they inevitably product could be re-branded and sacrifice what can be interesting and additional television monies relevant detail. For example, let us attracted. Although this re- look more closely at the relative organization did not come to fruition, performance of specific teams. the emergence of a break-away In the 2003/04 season, the league became inevitable. Eventually gap between Premiership winners the top teams resigned from the Arsenal and runners-up Chelsea was Football League and in 1992/93, eleven points. Fifteen points was the contested the first season for the difference between Arsenal and third newly formed FA Premiership. placed Manchester United while a However, this was not the massive thirty points separated only major change to take place. Arsenal and fourth place Liverpool. The television rights for the newly Thus, although the top three were created Premiership migrated from well ahead of their nearest rival, terrestrial television to BSkyB, a deal Arsenal, Chelsea and Manchester which generated a four-fold increase United were not themselves involved in television revenue for clubs. in a close finish to the season. In Inevitably, the financial gap between other words, the concentration ratio the top tier of football and the three did not tell us that competition at the tiers below it widened. Additional top of the Premiership during that rewards from qualifying for European season was not that intense. In fact, club competition (The Champions the last time that there was a League and the UEFA Cup) generated genuinely close finish was in the further incentives for the very top 1997/98 and 1998/99 seasons. In teams to deepen the size and quality both cases, one point separated the their playing squads. eventual winners (Arsenal and In the light of these changes, Manchester United respectively) from we could take our analysis a stage further and consider whether the Page 4 of 5 emergence of the Premiership has Figure 2: Dominance of the Top Three reduced competitiveness in football’s Teams in Top Tier English Football top tier. One of the problems we face 1982/3-2006/7 is that the number of teams 170 contesting the First Division and the 165 )

Premiership has not remained s 160 m a constant. When the Premiership was e t

155 3 (

formed, it was made up of 22 teams. n

o 150 i t a

This figure was reduced to 20 from r t 145 n e the start of the 1995/96 season, a c

n 140 o C figure that applies today. f 135 o

Furthermore, during its last three e

d 130 n seasons the old First Division was a I 125 20 team league, it having been a 21 120 team league in 1987/88 and a 22 1982 1985 1988 1991 1994 1997 2000 2003 2006 team competition prior to that. Year However, if we were to use expression [1] to extend our The oscillations identified in Figure 1 analysis, we face a problem. The can be seen to apply to seasons prior basic concentration ratio is sensitive to 1997/98. However, taking the to the size of k. To take account of trend as a whole, the evidence this, we can standardise the suggests that the emergence of the concentration ratio figure by dividing Premiership enabled the top three it through by (n/k), thereby enabling teams to pull away further from the us to make comparisons over longer rest of the teams in the league. periods of time. This produces a This does not mean that concentration index (CI). Sometimes teams did not dominate the old First this will be multiplied through by 100 Division. Between 1982/83 and meaning that any perfectly balanced 1991/92, Liverpool won the title five league (irrespective of the size of k) times and were runners-up on four will produce a figure of 100. other occasions. In other words, Increasing levels of competitive Manchester United’s dominance of imbalance will produce outcomes in the Premiership is not in itself a new excess of 100. Thus, if n=3 we get: phenomenon. However, the gap between the top three and the ‘rest’ CI3 = [CR3 / (3/k) ] x 100 [2] has widened.

Using equation [2], a range of CI3 6. Some Policy Implications estimates have been estimated, By using some simple mathematics starting with the season 1982/83 and has enabled us to gain an insight into ending in 2006/07. These are shown a trend that is affecting football. in Figure 2. Although the emergence of the Premiership has brought a significant reversal in the decline in attendances that was characterising football in the 1980s, its strength may become its weakness if the top teams become too strong or start to feel that they are over-subsidising weaker rivals. We often hear talk about a breakaway European ‘super- league’. Although this may provide a financially attractive and highly competitive environment for the very top teams, the outward migration of the major teams would affect the Page 5 of 5 financial viability of the domestic game. When a new season starts, our interest should perhaps focus on the teams are going to finish in fourth, fifth, sixth and seventh place rather than whether Manchester United or Chelsea are going to be overall champions. If this gap continues to grow, it must be asked whether the game of football is actually becoming better off.

7. Following up on this brief If you have found the content of this paper interesting, you might wish to try and do some calculations of your own. Although the focus has been on football’s Premiership, there is no reason why you shouldn’t produce estimates for football’s lower divisions. You could even consider football leagues elsewhere in the world or indeed, other sports. League tables from which these data can be obtained can be found readily on the internet. Consider also the policy implications of your findings. Remember that completing the calculations is not the end-point; you will have simply generated an evidence-base that can be used to inform and to prompt debate.