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‘The Sports Market Will Survive, Although It’ll Be Cast Back to Where It Was Years Ago’

‘The Sports Market Will Survive, Although It’ll Be Cast Back to Where It Was Years Ago’

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On July 3, 2020, the 4th Eastern Conference on Football Economics and the 6th Western Conference on Football and Finance were held. Jointly organized by HSE University, the University Paderborn, the New Economic School, the EWG OR in Sports, and the University of Reading, the conference was dedicated to the economic, financial and social aspects of football. Some of the organizers and participants of the conference spoke to the HSE News Service about the conference and their research.

Initially, the plan was to hold the conference in St. Petersburg, but the organizers were forced to switch to an online format due to the COVID-19 pandemic. Nevertheless, they were able to gather a very strong group of participants, which was helped by the reputation that the conference had developed in previous years.

According to Dmitry Dagaev, Deputy Vice Rector and Laboratory Head of the Laboratory of Sports Studies, this conference differs in two ways from the ‘Sports Research’ section of the April Conference. ‘First, the economics and finance conference in football focuses only on football,’ he said. ‘Second, whereas the framework of the April Conference is focused mainly on Russian students and young scientists, our conference is significantly more international in nature. That said, both conferences are very important for strengthening ties between different research teams working in the field of sports research.’

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At the conference, Dmitry Dagaev presented a study written in collaboration with Igor Karpov, Research Assistant at the Laboratory for Sports Research and a graduate of the Joint Economics Program at HSE and NES. Their study was devoted to evaluating the broadcast strategy of the Russian Premier League that was chosen by the television holding that includes MATCH-TV and MATCH-Premier channels. Recently, the matches broadcast by Match TV have been far from the most interesting – the more interesting matches have been left to paid TV channels. Their study shows that this really can be the optimal strategy in terms of maximizing income from broadcasts.

Dmitry Dagaev, Deputy Vice Rector and Laboratory Head of the Laboratory of Sports Studies

Recently, sports federations and clubs have been paying increasing attention to analytics, which can’t be achieved without careful data analysis. Departments are appearing in sports clubs where professional statisticians study competitor strategies. Economists are involved in pricing issues. The experience of mathematicians is used in scheduling tournaments. All of this shows a positive trend in the relationship between science and sports management. However, compared with Europe and the United States, in Russia the gap in terms of this integration is still catastrophically large.

If we list all the industries that have suffered damage as a result of the coronavirus, the sports industry would be in the middle.

In reassessing spending priorities, the state has reduced funding for professional sports. Clubs are losing profits due to cancellation of matches or holding them without spectators. Dates for large sporting events are shifting, which has not happened since the Second World War.

However, in general, the sports market will survive, although it’ll be cast back to where it was years ago. There will be no massive bankruptcies of sports clubs. All competitions will surely resume. The industry’s media development strategies will be revised, and production of online content will grow from live broadcasts of competitions to the creation of new interactive formats.

Dennis Coates, Professor of Economics at the University of Maryland (Baltimore County) and Leading Research Fellow at the International Laboratory of Intangible-driven Economy (HSE Perm)

Football is without a doubt the sport that has the largest following world-wide. Whatever the impact or role of sport in the global economy, football is the single largest contributor. The financial losses to the clubs and businesses that rely on competitions being held for audiences in the stadium or arena will undoubtedly be significant.

For those sports clubs for which broadcasts are the primary source of revenue, the consequences may be substantially smaller than for those without broadcast revenues, at least to the extent games are still held, and broadcast, without fans in attendance. The main brunt of the losses will almost surely fall on small clubs, clubs in lower divisions and clubs from smaller cities; these are the types of clubs whose revenues are entirely determined by attendance.  Without fans in the seats buying food and drinks, these clubs are very likely to face bankruptcy.

Photo by Thomas Serer on Unsplash

The role of sports in the global economy is complicated for a couple of reasons. At the most basic level, the issue of measurement of sports is problematic.  For example, if one limits sports to those competitions that attract paying spectators and television viewers, then the role of sports in the economy is quite small and would barely register in calculations of the value of world production of goods and services. One could expand to include sport clubs, fitness training centres and training programs for youth and adults, and even include sports equipment, clothing and footwear. Still, the aggregate value is very small.

Of course, there is far more to the role of sports in the global economy than simply the value of the goods and services produced and consumed in the market.

Participating in sports contributes to physical and mental health. Sports builds community among disparate people who come together to cheer for a common player or team. These sorts of contributions to the global economy from sports are very difficult to estimate, but they are surely important and probably more valuable than the simple market value of the goods and services connected to sports.

My latest research in sports relates to the interaction between co-workers within a team. In many firms, groups of workers form a team with a specific purpose, like developing a new marketing plan, maximizing the amount of production during a specific time period, or minimizing the breakage or waste in the process. The issue that arises is to align the incentives of the workers in a way that gets them to reach that team goal most effectively.

My research, with HSE colleagues Anna Bykova and Petr Parshakov, uses data from football to evaluate whether teams are most productive when all workers are paid about the same or when some players are paid a great deal and others far less.  This topic has been examined widely with a variety of sports, but we have some ideas that have not been explored by other researchers.

Petr Parshakov, Deputy Head of the International Laboratory of Intangible-driven Economy at HSE Perm

I reviewed the papers presented at the conference, and also presented a study on the impact of fWHR (Facial width to height ratio—an indicator that is sometimes used to measure masculinity) on team results.

Until last year, I didn’t think there was a connection between scientists and representatives of the sports industry in Russia. A variety of attempts to establish contacts failed. But an important event happened last year when colleagues from Dmitry Dagaev’s Laboratory of Sports Studies developed a calendar that was adopted by the Russian Football Premier League (the Premier League combines 16 Russian football clubs). This is a very important breakthrough. It is hoped that such ties will strengthen in the future.

The research that Dennis Coates and I collaborate on is based on eSports data. There are two reasons why studying sports is attractive and promising. The first is simple curiosity – interest allows one to invest more time studying a primary subject area, methods, and articles. The second is data availability. Data inaccessibility is the chief problem faced in empirical studies. As companies typically don’t disclose data on their employees’ wages and productivity, only something very aggregate in nature can be considered.

In sports, data is available on an individual level over a long period of time. This allows us to test different theories from labour economics and management.

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