Measuring Technical Efficiency of the Japanese Professional Football (Soccer) League (J1 and J2) Dan Zhao University of South Florida, [email protected]
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University of South Florida Scholar Commons Graduate Theses and Dissertations Graduate School January 2013 Measuring Technical Efficiency of the Japanese Professional Football (Soccer) League (J1 and J2) Dan Zhao University of South Florida, [email protected] Follow this and additional works at: http://scholarcommons.usf.edu/etd Part of the Economics Commons, and the Statistics and Probability Commons Scholar Commons Citation Zhao, Dan, "Measuring Technical Efficiency of the Japanese Professional Football (Soccer) League (J1 and J2)" (2013). Graduate Theses and Dissertations. http://scholarcommons.usf.edu/etd/4972 This Dissertation is brought to you for free and open access by the Graduate School at Scholar Commons. It has been accepted for inclusion in Graduate Theses and Dissertations by an authorized administrator of Scholar Commons. For more information, please contact [email protected]. Measuring Technical Efficiency of the Japanese Professional Football (Soccer) League (J1 and J2) by Dan Zhao A dissertation defense submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy Department of Economics College of Arts and Sciences University of South Florida Co-Major Professor: Yi Deng, Ph.D. Co-Major Professor: Philip Porter, Ph.D. Gabriel Picone, Ph.D. Murat Munkin, Ph.D. Date of Approval: November 19th, 2013 Keywords: Microeconomics, Productivity and Efficiency, Sports Economics, Data Envelopment Analysis, Malmquist Index © 2013, Dan Zhao Acknowledgments I would like to express my sincerest thanks to the members of my dissertation committee: Dr. Yi Deng, Dr. Philip Porter, Dr. Gabriel Picone, and Dr. Murat Munkin for their guidance, understanding, patience, and ideas during my graduate studies at the University of South Florida. I also thank Dr. Jianping Qi for chairing my defense committee and for his kind help. I would also thank the Department of Economics at the University of South Florida for the nomination for the Presidential Doctoral Fellowship six years ago. This financial support allowed me to be an efficient and successful graduate student. My family and I are proud of my being a Fellow of University of South Florida for the rest of my career. I am eternally grateful to my parents in China. They spent all they had to support my study from the very beginning. They were always comforting me and encouraging me with their best wishes. Finally, I would like to thank my wife, Yun Yun. Her support, encouragement, and understanding were undeniably important to my academic and professional career. She is always there cheering me up and she has stood by me through the good and bad. Table of Contents List of Tables ii List of Figures iv Abstract v Chapter 1: Measuring Technical Efficiency of the Japanese Professional Football (Soccer) League (J1 and J2) 1.1 Introduction 1 1.2 Professional Football in Japan 4 1.3 Literature Survey 7 1.4 Methodology 13 1.5 Data 19 1.6 Results 22 1.7 Discussion and Conclusion 27 1.8 Endnotes 30 Chapter 2: Factors Affecting the Production Efficiency in Japan Professional Football League 2.1 Introduction 39 2.2 Data 40 2.3 The OLS Estimation and Result 43 2.4 Conclusion 47 Chapter 3: Measuring the Change of Total Factor Productivity in the Japan Professional Football League Using the Malmquist Index 3.1 Introduction 54 3.2 Literature Review 55 3.3 DEA and Malmquist TFP Index 59 3.4 Data 62 3.5 Result 63 3.6 Conclusion and Discussion 71 References 92 Appendix: Primal and Dual Problems in DEA 98 i List of Tables Table 1.1: The Time Table of the Clubs in J1 and J2 32 Table 1.2: Data Description J1 League 33 Table 1.3: Data Description J2 League 34 Table 1.4: Results From J1 35 Table 1.5: Results From J2 36 Table 1.6: DEA Result for Different Output Combination J1 37 Table 1.7: DEA Result for Different Output Combination J2 38 Table 2.1: Data on J1 48 Table 2.2: Data on J2 49 Table 2.3: Result for J1 50 Table 2.4: Result for J2 51 Table 2.5: Regression Statistics 52 Table 2.6: Japan Professional Leagues 53 Table 3.1: J1 Malmquist TFP Index Database 79 Table 3.2: J2 Malmquist TFP Index Database 80 Table 3.3: Yearly Input and Output Data in J1 81 Table 3.4: Yearly Input and Output Data in J2 83 Table 3.5: DEA Scores in J1 85 Table 3.6: DEA Scores in J2 86 ii Table 3.7: Malmquist Index in J1 87 Table 3.8: Malmquist Index in J2 89 Table 3.9: (2007) Technical Change in J1 91 iii List of Figures Figure 1.1: Trend of Attendance and Revenue of J. League 31 Figure 3.1: Average Efficiency Levels in J1 75 Figure 3.2: Average Efficiency Levels in J2 76 Figure 3.3: Malmquist Index Trends in J1 and J2 77 Figure 3.4: Average Revenue and Cost in J. League 78 iv Abstract This is the first paper to measure the efficiency of the Japan Professional Football League clubs both the first and the second divisions. In Chapter 1, a non-parametric method Data Envelopment Development (DEA) is used and the data covers six seasons from 2005 to 2010. The input variables are payroll, cost besides payroll, and total assets. The output variables are attendance, revenue, and points awarded. I use different output combinations in order to check the sensitivity of the efficiency of the clubs after the original composition. This is also the first research to include more than one division of the Professional Football League and hence, the promotion and relegation impact on the efficiency can be analyzed using unique data such as Tokyo Verdy 1969. Tokyo Verdy 1969 operated inefficiently in the second division because it spent so much on inputs hoping for promotion. It was efficient when in the first division. The results indicate that athletic rank in the league is not correlated with the efficiency scores. The efficient clubs in the second division are all ranked at the bottom in the league and this is because they have limited resource inputs, no expectation to promote, and because the expansion policy of the league precludes relegation. Chapter 2 is an extension of Chapter 1. In this chapter I check the exogenous factors impacting the efficiency scores but not involved in the DEA analysis as the input variables. I aim to estimate the relationship between the input-oriented DEA efficiency scores under the constant returns to scale assumption and use an exogenous variable ordinary least square (OLS) model to v check the relationship between the efficiency scores and exogenous variables. I regress the DEA efficiency scores on all of the exogenous variables collected from various resources during the sample period. Chapter 3 estimates the productivity and efficiencies of the football clubs in Japan Professional Football League. This chapter is an extension of the first chapter. In this chapter I check the dynamic change of Total Factor Productivity (TFP) based on the calculation of the Malmquist Index, which consists of efficiency change and technical change between two time periods. Additionally, the production frontier used in this chapter was built by the non-parametric input- oriented CRS DEA approach as applied in the first chapter. Based on the results of the Malmquist Index, we find if the change in the TFP growth as increasing, declining or remaining the same. vi Chapter 1: Measuring Technical Efficiency of the Japanese Professional Football (Soccer) League (J1 and J2) 1.1 Introduction In this paper, I present a data envelopment analysis (DEA) model to measure the technical efficiency (TE) of the Japanese Professional Football League including both the first and second divisions. Research on TE of Japanese professional football clubs is very rare in the current literature. The data set used in this paper covers six seasons from 2005 to 2010 for the first and second divisions and variables used in this research include both the financial side, such as revenue, payroll, costs beside payroll and total assets, and the athletic side, such as points awarded in each season. This research can help us answer questions like the following: Why are some clubs efficient and others not? Is the athletic ranking in the league at the end of the regular season correlated with the efficiency scores? What can the clubs do to enhance the efficiency of the club? These questions and answers provide insights for the fans and researchers of Japanese professional football not only on the athletic competition but also on the operations and administration of the clubs. As in many countries in Africa, Asia, South America and Europe, football (soccer) is one of the most popular sports in Japan. There is a long history of football in Japan with its first 1 introduction during the Meiji-period along with many other foreign sports including baseball. As early as 1917 the first Japanese football club was founded in Tokyo and interscholastic and regional tournaments have been organized in sequence since then. The Japan Football (Soccer) Association (JFA), the governing and administrative body of football in Japan, was founded in 1921 and became affiliated with FIFA in 1929. From the early 1990s Japanese football experienced an extremely high-speed development due to the successful reforms directed by JFA. After winning four Asian Football Confederation (AFC) championships (Asian Cup in 1992, 2000, 2004 and 2011), the Japan national team became one of the most competitive teams worldwide. The Japan national team is the only one which won this tournament four times in the history of the Asian Cup (Iran and Saudi Arabia have both won three times).