Competitive Balance in Individual Sports: An Empirical Evidence of Uncertainty of Outcome Hypothesis
|Thesis title in Czech:||Soutěžní rovnováha v individuálních sportech: Empirický důkaz hypotézy o nepředvídatelnosti výsledku|
|Thesis title in English:||Competitive Balance in Individual Sports: An Empirical Evidence of Uncertainty of Outcome Hypothesis|
|Academic year of topic announcement:||2019/2020|
|Type of assignment:||Bachelor's thesis|
|Department:||Institute of Economic Studies (23-IES)|
|Supervisor:||PhDr. Radek Janhuba, M.A., Ph.D.|
|Author:||hidden - assigned by the advisor|
|Date of registration:||04.06.2020|
|Date of assignment:||04.06.2020|
|Date and time of defence:||09.06.2021 09:00|
|Date of electronic submission:||03.05.2021|
|Date of proceeded defence:||09.06.2021|
|Reviewers:||Mgr. Matěj Opatrný, Ph.D.|
Babatunde, B. & Rob, S. (2008). Do sports fans really value uncertainty of outcome? Evidence from the English Premier League. International journal of sport finance. 3. 146-155.
Forrest, D., & Simmons, R. (2002). Outcome uncertainty and attendance demand in sport: the case of English soccer. Journal of the Royal Statistical Society: Series D (The Statistician), 51(2), 229–241. doi: 10.1111/1467-9884.00314
Knowles, G., Sherony, K., & Haupert, M. (1992). The Demand for Major League Baseball: A Test of the Uncertainty of Outcome Hypothesis. The American Economist, 36(2), 72–80. doi: 10.1177/056943459203600210
Rascher, Daniel A., and John Solmes. (2007). Do Fans Want Close Contests? A Test of the Uncertainty of Outcome Hypothesis in the National Basketball Association. SSRN Electronic Journal, doi:10.2139/ssrn.1690886.
Rottenberg, S. (1956). The Baseball Players Labor Market. Journal of Political Economy, 64(3), 242–258. doi: 10.1086/257790
Schreyer, Torgler, B., & Schmidt, S. L. (2018). Game Outcome Uncertainty and Television Audience Demand: New Evidence from German Football. German Economic Review, 19(2), 140–161. doi: 10.1111/geer.12120
|Preliminary scope of work|
|Research question and motivation
The main research question I want to address is whether a contest is more exciting the more uncertain the outcome is, and therefore more attractive to fans in for tournament style sports.
The paper by Rottenberg from 1956 described uncertainty of outcome as necessary for consumer to be willing to pay admission to the game. Many papers have been written since to empirically test this hypothesis. However, the great majority of them is focusing on collective sports that are played with leagues format. Results showed mixed evidence that that fans like to watch their home team when they have a slightly better chances of winning the game (Rascher and Solmes 2007, Forrest and Simmons 2002). This does not give a clear statement about the hypothesis as there is always the home-away team bias and in some sport disciplines there is also the influence of a draw (Buraimo and Simmons 2008). However, in tournament-style sports most od the games are played on neutral ground and always have a winner.
In my thesis I would like to test the uncertainty of outcome hypothesis (UOH) on tournament-type individual sports that do not have an option of a draw as a result. I will use econometric methods to determine the relationship between viewership of beach volleyball and tennis games, outcome uncertainty of both games and whole tournaments and attendance of “star” players in those games.
My own motivation for studying this topic is that I have been playing beach volleyball professionally since high school and in the last years I see that there is a shift in priorities of the Fédération Internationale de Volleyball (FIVB) to focus all media attention as well as financial support to the very top teams which do dominate the competition right now. However, for the last two years only two teams have won a major tournament, making all the tournaments basically predetermined. In most of the research papers on uncertainty of outcome and competitive balance in league games, the uncertainty of the game's outcome was, however, a significant determinant of attendance. This makes me wonder, whether it holds in tournament-style sports as well.
My work should contribute in the field of uncertainty-of-outcome hypothesis and benefits of competitive balance.
In 2016 Schreyer and Schmidt’s paper on soccer TV demand, they came with a conclusion that UOH holds for league games but not for knock-out tournament games. In my study I would like to follow up on their work and to test whether the second statement holds for individual sports as well.
In practice, conclusions of my study could provide useful information for the sport competitions promoters, such as FIVB Beach Major Series, ATP and WTA. I can see at least three potential benefits for sport promoters.
First one would be that the gained knowledge would help with distributing the games between side courts and centre court and with deciding which games should get better media coverage (as the goal should be to provide fans with the games they want to watch the most). By knowing the tendencies of viewership based on the odds of given match, organizer would be able to have more attractive games with better tv coverage thus meeting the demand and maximizing profit.
Secondly, it can help the organization with the long-term strategy of the development of teams. It should provide a hint on whether it is better to focus on improving teams that do not perform at the very top level and thus to get more teams with similar performance or to only focus on the top teams and making them even more dominant. This can ultimately also give evidence on effective distribution of prize money.
Thirdly, it can give a data-based evidence from which a further research on the effectiveness of sport competitions can be done. That study could answer the question whether it is better to make competition restricted to limited number of teams (thus guaranteeing that every game will have both high uncertainty of result and star teams) or opening it to many teams and having more games played.
I will use data from online streaming services. For tennis I will use data from ATP TV and WTA TV and for beach volleyball from BeachStream, an official streaming platform of Beach volleyball Major Series. To determine the uncertainty of outcome I will use a priori measure of uncertainty in estimating the viewership equation (like Knowles, Sherony and Haupert 1992). To determine the probabilities I will use betting odds from www.tennisdata.co.uk and www.livesport.cz. To determine uncertainty of outcome of the tournament I will use combination of official rankings and betting odds.
Since uncertainty of outcome for the contest is only one of many factors affecting the attractivity, I will try to use such model to eliminate other effects.
2.2. Main Results of Existing Research
2.3. My Intended Contribution
2.4. Contents of The Thesis
3. Literature Review and Hypotheses
3.1. Literature on Uncertainty of Result and Competitive Balance
3.2. Connection to Sport Economics
4.1. Description of Data
4.2. Description of The Model
5.1. Rejecting / Not Rejecting Hypotheses
5.2. My Interpretation of The Results
6.1. Broader Interpretation of Results
6.2. Implications for Practice
6.3. Topics for Further Research