More on soccer economics

I had a lot of good feedback on my post on soccer. In particular, there were quite a few suggestions for related material.

Check out Branko Milanovic's paper, which covers closely related ground. I had actually read this paper a while back; I simply forgot to refer to it. Here is the video version.  Chris Dillow has interesting thoughts here.  An interesting paper by Baur and Lehmann asks "Does the Mobility of Football Players Influence the Success of the National Team?" and answers that yes, it improves national teams.  And Alex Edman points me to a recent paper of his on the importance of loyalty to national teams: the paper shows that international soccer losses lead to investor depression and stock market declines; it was published in the August issue of the Journal or Finance.

Where I think we still need work is on the quality of domestic league play in countries which export most of their star players. As some commentators pointed out, Latin America is the right testing ground for this (in view of the pervasiveness of the phenomenon and the better data), and one can look at stadium attendance, value of TV contracts, or ticket prices as indicators of trends in quality.  Whether on balance the average Brazilian or Argentinean soccer fan is better off or not seems to me to be an open question.

Now who else is rooting with me for ManUtd to win against Arsenal this weekend and rise to the top of the table?

Comments

[A]

Stick to economics; leave the beautiful game to Arsenal.

[nu]

Someone still needs to work on a model that integrates youth national teams performances and investment in development.
And more emphasis on timelines would be a good idea. It's hard to figure out if national teams get better because more players play abroad or if more players play abroad because the national team is better.
And there are a couple of other outliner/externality cases that should be avoided because it distorts the data.
And nobody makes any reference to policy.. legal status, tax breaks, don't they all matter ?

[Jim]

I wonder if Latin America is really the best area to test the hypothesis. If you are looking at gate receipts and the like as a measure, sure, but wouldn't those be dependent on the state of the national economies, and not the quality of the national leagues? Why not look at performance in the UEFA Champions League and UEFA Cup instead. The dataset would be rich, the results related directly to on field performance, and you could examine pre- and post-Bosman data. A national league like the Dutch, which produced a lot of cup winners in the past (before Bosman and the wholesale export of their entire national team to Italy, England, and Spain) may never win a Champions League medal again. Nor, most likely, will Steaua Bucharest or Red Star Belgrade.

But maybe there's something in the Latin American leagues that I'm not seeing which would better lend it to your research. At any rate it should be interesting.

[Random African]

I partially agree with Jim.
(even if i argued that Latin America leagues suffered the most before)

If you look at gate or TV rights receipt for Latin America, I'd bet Argentina will do a LOT better than Brazil.
But that wouldn't be only explained by globalization. Brazil's league is a mess, with regional championships, a weak national league, often changed formulas, no clear hierarchy.. etc..
Crime also has an effect. The number of players who decided to leave early after kidnappings is quite large and i bet stadium attendance is higher in Buenos Aires than in Rio for similar reasons.
Performance in European Competitions seems to be a better way to measure "quality of leagues", even if that ManU, Milan, Barça or Ajax performances don't tell you much about the quality produced by Watford, Sienna, Mallorca or Willem II. Measuring stadium attendance/tv rights poses a problem as not every country has the same fan structure: Greece and Turkey have very vibrant and loyal fans and relatively rich clubs for a medium quality football while France or Italy have empty-stadium big clubs.
Measuring growth of stadium attendance may be a better idea.

[Random African]

check these:
http://www.xs4all.nl/~kassiesa/bert/uefa/plots.html
For the evolution of UEFA country ranking over time (don't forget to check the preceeding decades). There are a bunch of things one can conclude for that:
- France's ranking was rising in the early 90's before and started decreasing RIGHT AFTER the Bosman ruling. (and France's worse performance was in 86, the year when they win the Euro) France's previous peak was in 82. When did Platini leave ?
- the Netherlands, oddly enough, got better right after Bosman before slowly declining after 99.
- Portugal had a short decline from 97 to 2000.. when did the Figo, Rui Costa and the rest of the golden generation leave ?
- Greece and Turkey has been steadily improving since Bosman.
- Italy has slowly declined since Bosman

and many more..
Development and "generations" matter, A LOT.

(you can use the makechart function to compare some countries)

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[athreya]

Dani, do you really follow the Premier League and are a fan of ManUtd or are you just attempting to throw some names around? As an exemplar of the benefits of globalisation, Arsenal would make for an interesting case study.

Apart from effects on leagues and countries, the free movement of players and the huge stakes in football may have also created other consequences. The frequent club vs country spats are an example. Clubs pay their players. Countries 'borrow' them for international matches. When said players get injured in these matches the clubs bear the cost. Can an economic arrangement be worked out to share the costs of injuries between national football associations and clubs? Another interesting issue is what are the incentives for players to turn out for their national teams and perform to the best of their abilities? In the case of younger players or players from weaker countries/leagues the incentive is to get noticed by a big club. But what is the incentive for a player turning out for say England, Spain, Italy which probably have the richest leagues and the best clubs in the world?

[Wu]

Man U 2 Arsenal 1. For some strange reason, all my Nepalese and Indian students are Arsenal fans. It'll be Black Monday if Man U loses.

[sb]

Another interesting soccer econ paper is Chiappori, Levitt & Groseclose (2002?) on the game-theoretic underpinnings of behavior in penalty kicks.

[Saif]

Dani,

I think there is one very important problem when assessing the impact of liberalization on football: international football is a zero-sum game. If France's team improves over the next 4 years, they become world champion, and that means that Italy can't be world champions anymore, no matter how much they improve.

Player transfer liberalization rarely ever happens due to domestic or national policies, it happens when Fifa or Uefa make big decisions that change the rules for everyone. This means that all the countries experience the same effect at the same time. If they all improve or all get worse, there will still be one team that wins the world cup, one team that finishes second, one team that wins the Champions League, and one team that wins the Uefa Cup.

It's impossible to estimate whether it is related to the liberalization, since this is a zero-sum game.

This is in contrast to international trade, where the answer to the question is more open to investigation, since trade can be a positive-sum-game, but it could also lead to negative results for one or several countries.

I think a much more important marker would be the effect of liberalization on the quality of the domestic players.

In that regard, I think English and Italian football have certainly benefitted a lot from liberalization, as the current crop of English and Italian players are some of the best in their history. It's true that the medicore and bad players in England are now playing in lower divisions because of the imported players, so in that regards it is bad for them, but they still benefit from much more money in the game. It is arguable that even when they drop a divison, they still make more money than they would've made if they were in the top division and the top division didn't contain all these great players. That England is an absolutely terrible national team is more down to the laughable incompetence of the English FA and their amazing choices for team coach, but anyone can see that the quality of the players is there.

Similarly, I don't think anyone would argue that if we locked up all Brazilian players in Brazil, they would be as good as they are today. The same can be said for French players.

We also need to remember that liberalizing football, allowing it to become more rich and loaded with money, generates a lot of interest and a lot of money that is redistributed from the top of the footballing pyramid to the bottom.

The World Cup is the biggest spectacle in the world, it generates billions in revenues, and all the money goes to FIFA to fund the development of the game. This is what funds FIFA's Youth and Women's World Cups, and funds countless projects aimed at developing the game in poor countries. Providing countless jobs, as well as an enormous opportunity for the children of poor countries to practice and become world superstars, further fuelling the game's popularity and generating more money.

In that regard, I think Fifa, with all its problems, serves as a very good model for global institutions' governance. If only the IMF, WTO and World Bank worked like this!

[Random African]

Saif,

"Player transfer liberalization rarely ever happens due to domestic or national policies, it happens when Fifa or Uefa make big decisions that change the rules for everyone. "

Yes and no. "Rules" depends on UEFA (the european courts) but the domestic policies still have an effect.. Mostly changes in taxation. Ronaldo was transferred to Inter from Barcelona after just one (fantastic) year because he had a "net income" contract and a change on spanish tax law was about to make his gross salary enormous. This is also a big reason why the french league is loosing players, in order to afford an equal net income, they have to spend a lot more on gross income.

"Similarly, I don't think anyone would argue that if we locked up all Brazilian players in Brazil, they would be as good as they are today. The same can be said for French players."

well i would, to an extend.
Brazil over the past 30 years has really improve in one domain: they produce better central defenders. Given their past performance and given the performance of their players at their arrival in Europe, it's really hard to argue that they got better because they play in Europe.
France is an even harder case. Improvement of their national team has been preceeded by improvement of their club performance in european cups and by improvement of their youth teams performance. Also improvement of their national team performance has preceeded massive exodus (only 4 french players, including 3 who left Marseille after the OM-VA scandal, were playing abroad during euro 96, and 7 left that summer. those 11 eleven guys were the backbone both in 96 and 98). Another way to look at it is to think about the new addition to the national team in 2006 compared to 2004 and 2002 (or 1998/2000 compared to 96 and before), Ribery, Malouda, Abidal all played in France (just like Henry, Trezeguet, Pires in 98).
The evidence is really weak on that case. And the fact that France has a national devellopment policy and a national devellopment center that openned its door in 1988 and produced some of the best players during the past 20 years would suggest that the french players improved in general, no matter if they played abroad or not, because of better development policies.

[Jim Bach]

Central defenders? They also produce competent keepers now, something that couldn't always be said. When two top Serie A clubs (AC Milan and Internazionale) play Brazilians in goal it says something about the quality of keeping among both Brazilians and Italians...

[Random African]

AS Roma too plays a brazillian keeper.
Did they really improve ? I'm not sure.. Dida, Julio Cesar or Doni have the typical flaws Taffarel or Carlos Gallo had.. Mainly inconsistency.

However, I agree that the fact that those 3 clubs and Fiorentina have foreign keepers says something about Italy's failure to renew its stock of goalkeepers after Buffon.

[saifedean]

"Random",

These are very interesting points. I agree with you to an extent on the importance of domestic policies, but you still have to admit that these issues are secondary to what UEFA and Fifa decree... French taxes only become an issue after player mobility increases and players can move freely and compare the different taxes. But I take your point, and I think it is at these local little quirks that perhaps the most interesting studies can be performed.

As for the French team, I think you are discounting how much these players have improved when they moved abroad. I don't think anyone can argue that Henry didn't improve from years of playing in Arsenal, which, incidentally, allowed Wenger, who is also French, to build his dream empire.

Jim Bach,

I'm a person who refuses to entertain any national steretypes in ANYTHING. However, one stereotype that I think is undeniably true and will remain true forever is that Brazilians can NOT ever make good goalkeepers. There is something about that country that instills in the genes of its population the genes that make them bad 'keepers. Even their best keepers have always been disasters-waiting-to-happen.

[Random African]

Saif,

"As for the French team, I think you are discounting how much these players have improved when they moved abroad."

How do you prove that ?
I mean, yes, they did improve but usually a player is better when he's 28 than when he's 23.

Henry was 22 when he moved to Arsenal. And to play under the french coach that found and nurtured him when he was 15 and made him debut when he was 18.
I don't see why BEING in England should be credited for his improvement. Or rather I don't see why he would not have improved had he and Wenger stayed at Monaco.
On the other hand, Desailly often says that he learned a lot by playing next to Maldini and Baresi but then again, he did win a C1 before he moved to Milan.
Same for Dechamps, Angloma or even Zidane, Trezeguet, Lizarazu, Thuram.. They moved abroad because they were good and improved partially because of where they moved but mostly because of natural improvement curves.
And some sort of reverse argument could be used too: Cantona and Ginola who performed better in England than in France. Not because they improved but because they moved to a weaker league.

And as i mentionned before:
the same generation that won an euro and a world cup was actually responsible for better performances in youth team then better performances of french clubs then a better performance at euro 96 before they moved abroad.
It's even more obvious for the sudden better performance of Portugal (though in this case, playing abroad does have something to do with it but not in the way most would think)

[Random African]

Saif,

"As for the French team, I think you are discounting how much these players have improved when they moved abroad."

How do you prove that ?
I mean, yes, they did improve but usually a player is better when he's 28 than when he's 23.

Henry was 22 when he moved to Arsenal. And to play under the french coach that found and nurtured him when he was 15 and made him debut when he was 18.
I don't see why BEING in England should be credited for his improvement. Or rather I don't see why he would not have improved had he and Wenger stayed at Monaco.
On the other hand, Desailly often says that he learned a lot by playing next to Maldini and Baresi but then again, he did win a C1 before he moved to Milan.
Same for Dechamps, Angloma or even Zidane, Trezeguet, Lizarazu, Thuram.. They moved abroad because they were good and improved partially because of where they moved but mostly because of natural improvement curves.
And some sort of reverse argument could be used too: Cantona and Ginola who performed better in England than in France. Not because they improved but because they moved to a weaker league.

And as i mentionned before:
the same generation that won an euro and a world cup was actually responsible for better performances in youth team then better performances of french clubs then a better performance at euro 96 before they moved abroad.
It's even more obvious for the sudden better performance of Portugal (though in this case, playing abroad does have something to do with it but not in the way most would think)

[Random African]

Saif,

"As for the French team, I think you are discounting how much these players have improved when they moved abroad."

How do you prove that ?
I mean, yes, they did improve but usually a player is better when he's 28 than when he's 23.

Henry was 22 when he moved to Arsenal. And to play under the french coach that found and nurtured him when he was 15 and made him debut when he was 18.
I don't see why BEING in England should be credited for his improvement. Or rather I don't see why he would not have improved had he and Wenger stayed at Monaco.
On the other hand, Desailly often says that he learned a lot by playing next to Maldini and Baresi but then again, he did win a C1 before he moved to Milan.
Same for Dechamps, Angloma or even Zidane, Trezeguet, Lizarazu, Thuram.. They moved abroad because they were good and improved partially because of where they moved but mostly because of natural improvement curves.
And some sort of reverse argument could be used too: Cantona and Ginola who performed better in England than in France. Not because they improved but because they moved to a weaker league.

And as i mentionned before:
the same generation that won an euro and a world cup was actually responsible for better performances in youth team then better performances of french clubs then a better performance at euro 96 before they moved abroad.
It's even more obvious for the sudden better performance of Portugal (though in this case, playing abroad does have something to do with it but not in the way most would think)

[Thorstein Veblen]

I'll give the paper a read, and I don't doubt the thesis is true, but I'd be willing to bet my entire bank account against one dollar that the paper is bullshit. Why? Countries who send more players abroad tend to have better players. Countries who have good national leagues gain nothing by exporting their players. These two factors are likely to render bullshit any research on the subject, but I'll take a look anyway...

[Thorstein Veblen]

Yes, Bauer & Lehmann's paper is crap. They did nothing to try to tease out the fact that if a country has better players, they are more likely to play abroad than if they have weaker players. And if they have better players, then they are more likely to win games. The authors don't show what they claim -- that playing abroad, by itself, helps the national teams performance. I don't think England, for example, loses anything by having most of its national team playing w/in the UK... On the other hand, the US clearly does benefit by sending national team players to Europe. But I knew that before Bauer & Lehmann's stupid regression.

[Thorstein Veblen]

It's also worth mentioning that Bauer & Lehmann's second point is also wrong. If a country attracts more foreign nationals to its country to play, it will tend to be a country that is more interested in soccer, which implies a better national team. Again, Bauer & Lehmann did nothing to try to account for this. Yes, England has loads of foreign national league players playing in its home league, but the English are straight crazy about soccer. One would expect them to be better than, say, France or the US. (yet, they aren't)

[Hafiz]

Arsenal's second goal is beautiful =p

[Random African]

"If a country attracts more foreign nationals to its country to play, it will tend to be a country that is more interested in soccer, which implies a better national team. "

errrrr ?

Saudi Arabia, Greece, Russia all attract more foreign players in their leagues than Brazil.
Do you really believe Saudis,Greeks and Russians are more soccer-crazy than brazillians ?

I think institutions matter to explain why some leagues have more foreign players.
Capital movements, taxation, legal structure, political benefit all explain why some leagues/clubs are better explanation for "outliners" that happen when you use another definition.

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I think its safe to say that being in England is definately the reason for Henry's improvement. After all, if he was going to improve there is no better place to do so in the best and toughest league in the world

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