Quantification of competitive balance in professional team sports: implementation and empirical investigation in European football

Abstract

Competitive balance is an important concept for professional team sports and one of the key issues European football has to address in order to ensure its long-term success. The quantification of competitive balance is a complicated issue, which is mainly associated with its multi-dimensionality aspect as well as the structure of a particular sport. The aim of the present thesis is to provide a systematic approach to an enhanced quantification of competitive balance in professional team sports with particular emphasis on European football. An essential element of this thesis is the identified three-levelled structure of European football leagues offering multiple prizes. In particular, the first level refers to the competition for the championship title which is considered the most prestigious prize in any league. The second level refers to the qualifying places for European tournaments of the following season. Those tournaments, the lucrative Champions League and the recently restructured Europa League, offer reputation and, most importantly, high monetary prizes and bonuses. Therefore, over and above the championship title, teams also compete for any of the remaining pre-determined top places. Finally, the third level draws attention to the relegation places. Given that European leagues are open, teams that occupy the last league positions are relegated to lower league. Such a demotion has serious repercussions for both the financial status and the prestige of the relegated teams. Consequently, teams strive to avoid relegation and view succeeding in this objective as success in its own right. In this context, the main issue arising for the quantification analysis is the fact that existing indices measuring competitive balance have not been derived to capture this complex structure of European football. Consequently, our study initially focuses on the examination of all existing indices, the modification of some of them, and the development of special indices for both the seasonal and the between-seasons dimension of competitive balance. The design of new indices is based on an averaging approach and is inspired by the necessity to quantify the competition for each level and rate ranking positions according to their significance for fans. The approach followed, also enables for a comprehensive analysis by creating new bi-dimensional indices that capture both dimensions of competitive balance. Following that, a methodological framework is constructed for an in-depth exploration of all indices behaviour using an innovative sensitivity analysis followed by an empirical investigation. The sensitivity analysis unveils features of the indices that are not easily distinguishable and indicates their main positive and negative features in the context of the European football league structure. Based on the findings, the indices exhibit diverse behaviour, which illustrates the different aspects of competitive balance they capture. The usefulness of the new composite single-dimensional partial indices is identified while what is also implied is the optimality of the corresponding more comprehensive new bi-dimensional indices. The empirical analysis provides a powerful guidance and standardization about the practical issues of the competitive balance indices using various statistical methods. Results from the empirical research are associated with the conclusions derived from the sensitivity analysis. Using data from eight European leagues for a period of 45-50 seasons, the large number of the calculated indices (25 in total) unveils interesting facts concerning the historical behaviour of competitive balance in European football. The value of competitive balance greatly differs among the investigated European leagues. In particular, Swedish is the most competitive league followed by Norwegian, French, and German; the ranking continues with English and Italian leagues while Belgian and Greek are the least competitive ones. In general, based on the trend analysis, a worsening of competitive balance though seasons, more notably during the last decade 1999-2008, is also reported. We also found that regardless of the outcome uncertainty during the season, the stronger team finally prevails. Moreover, the ranking in the previous season determines more the success for the championship title than the success for escaping relegation. Lastly, the effectiveness of the promotion-relegation rule in promoting competitive balance and the absence of competition for the championship title are also confirmed. A reparemeterised Autoregressive Distributed Lag (ADL) pooled regression econometric model, using the Estimated Generalised Least Squares - Seemingly Unrelated Regressions (EGLS-SUR) method, has been constructed to determine both the importance of the concept of competitive balance and the relative significance of all discussed indices. Our findings support the assumption of the longstanding “Uncertainty of Outcome Hypothesis” (UOH) that, in the context of the complex structure of European football, competitive balance affects fan’s behaviour manifested by their demand for attending league games. Moreover, our assumption that the averaging approach captures aspects of competitive balance that, although they are important for fans, have so far not been taken into consideration is also supported. Both the seasonal and the between-seasons dimensions are found to be significant, although the latter is shown to have a slightly greater effect on attendance. The relative significance of levels and ranking positions greatly varies as designated by the weighting pattern offered by the optimal Special Dynamic Concentration (IKSDC) index, which captures all three levels in both dimensions. Explanations derived from the econometric analysis can facilitate policy makers in their effort to preserve the viability of European football leagues, which is threatened by the worsening values of competitive balance.