Win Maximization Research Articles

Deliberately making miskates: Behavioural consistency under win maximization and loss maximization conditions

We argue that the feedback traditionally used to indicate negative outcomes causes future detrimental performance because of the default goal of win maximization. In gaming paradigms where participants intentionally performed as well (win maximization) and as poorly (loss maximization) as possible, we showed a double dissociation where actions following wins were more consistent during win maximization, but actions following losses were more consistent during loss maximization. This broader distinction between goal-congruent and goal-incongruent feedback suggests that individuals are able to flexibly redefine their definition of ‘success’, and provide a reconsideration of the way we think about ‘losing’.

French amateur football clubs’ finance and revenue volatility: the determinants of demand shocks

ABSTRACT The article addresses financial troubles in French amateur football clubs and their origins. Previous literature has demonstrated that – in particular in French football – club bankruptcies are triggered by demand shocks. The present research intends highlighting the determinants of demand shocks on those clubs playing French amateur football top two tiers with a longitudinal analysis (2009/2010-2019/2020). Various exogenous elements that influence club demand (i.e. revenues) are taken on board, namely, macroeconomic variables, such as the variation of GDP growth rate between two football seasons, a dummy for the Covid-19 sanitary crisis, and a sport dummy for the effect of the French national team winning the 2018 male football World Cup. The latter is used to check a potential trickle-down effect on amateur elite football. None of these variables do explain demand shocks except if the heterogeneity of clubs’ economic models is taken into account. The determinants of shock demands appear to be clubs’ strategic orientations (towards win maximization vs. a stable economic organization).

Pulling starters

We theoretically and empirically study a fundamental strategic decision in baseball: when to make the “call to the bullpen” and pull th=e starting pitcher. The limited previous literature on this topic found that pulling starters tends to reduce runs allowed in the current inning. We show with a simple model that this result is consistent with win maximization, and does not necessarily imply that starters should typically be pulled sooner. We then use detailed pitch-level data from the 2008–2017 seasons to estimate the effects of pulling the starter on both runs allowed in the current inning and on win probability. We argue that whether or not the starter is pulled is plausibly “as good as random” conditional on the large set of included covariates, but acknowledge the lack of true randomization. We find that the estimated effect of pulling the starter on runs allowed in the current inning is indeed negative, but the effect on win probability is a precise zero. We examine a variety of game situations and recent events, and find only scattered and limited evidence of biases, but note that statistical power is limited for these analyses. We interpret the results to imply that, at least on average, decisions for when to pull starters were approximately Bayesian-optimal in between plate appearances due to a period of institutional learning that occurred over decades. However, starters were very rarely pulled within-plate appearances, so we cannot analyze the optimality of these decisions.

The relationship between governance structure and football club performance in Italy and England

PurposeThe purpose of this paper is to verify the theoretical assumption about a weaker role of internal governance structures (namely, board and CEO) in determining sporting and financial performances in highly concentrated club ownership environment.Design/methodology/approachUsing data from the Italian and English football clubs playing in their national top divisions, over the period 2006–2015, the authors apply agency theory, property rights theory and win maximization logic to test the absence of a significant impact of internal governance structures on financial performances and clubs’ sporting performance. Ownership structure’s variables are used as control variable.FindingsEmpirical findings document an overall poor impact of board structure and CEO features on financial performances, in comparison with the influence of ownership structure; the consolidation of win maximization logic of clubs’ owners has been demonstrated in this specific context. However, the authors found that some internal governance elements have also an impact on performance even if their contribute is limited: board size results negatively associated to club profitability, board independence and CEO tenure are positively related to sporting performance; in addition, CEO tenure also increases profitability.Originality/valueThe originality of the paper lies on the contribution arising from this empirical research, since a scarcity of empirical studies analyzing the correlation between internal governance and performance in European football sector is noticed.

Indirect Evolution and Aggregate-Taking Behavior in a Football League: Utility Maximization, Profit Maximization, and Success

An evolutionary model of European football was applied to analyze a two-stage indirect evolution game in which teams choose their utility function in the first stage, and their optimal talent investments in the second stage. Given the second-stage optimal aggregate-taking strategy (ATS) of talent investment, it was shown that teams may choose a mix of profit or win maximization as their objective, where the former is of considerably higher relevance with linear weights for profits, and is more successful in the utility function. With linear weights for profit and win maximization, maximizing profits is the only evolutionarily stable strategy (ESS) of teams. The results change if quadratic weights for profits and wins are employed. With increasing talent productivity, win maximization dominates in the static and in the dynamic versions of the model. As a consequence, it is an open question whether the commercialization of football (and other sports) leagues will lead to more profit or win maximization.

Revisiting Romer: Digging Deeper Into Influences on NFL Managerial Decisions

Using Romer’s framework as the starting point, we examine the decisions by National Football League (NFL) coaches to “go for it” on fourth down with an expanded sample drawn from 12 years (2002-2013) of NFL play-by-play data. Our expanded results generally confirm Romer’s finding of divergence from expected point maximization or win maximization. However, unlike Romer, by estimating forecast errors for points and wins and related risk premia along with logistic regression estimates of the influences on fourth down decisions, we find strong indications that risk aversion rather than incorrect information processing likely accounts for a substantial part of the divergence.

Wladimir Andreff (Ed.), Disequilibrium Sports Economics: Competitive Imbalance and Budget Constraints

Abstract. The economics of professional team sport leagues has been built on three main pillars in the US literature: economic equilibrium for the product market and labour market for talent; profit maximisation; and competitive balance between teams (sporting equilibrium). The European literature has brought a fourth pillar: win maximisation with a hard budget constraint (break-even accounting rule). These four pillars have remained little questioned until recently. This emerging literature is one of the motivations for launching a book dealing with disequilibrium. Another is the editor’s conviction that the reality in team sport leagues does not fit with general equilibrium solutions. The first chapter introduces the previous elements and more generally the book while the seven following chapters develop a specific aspect related to disequilibrium: an attempt at modelling; a dynamic non-equilibrium simulation; the metrics of competitive imbalance; gender imbalance on the sports programme market; and the last three chapters on soft budget constraints with three different focuses (comparison between European and US leagues; governance and agency problem; regulation regarding the new UEFA club licensing and Financial Fair Play). As a whole, the book provides an original and realistic view that can and perhaps even must shape the future of sports economics. Keywords. Disequilibrium Sports Economics; Competitive Imbalance; Budget Constraints. JEL. Z20, L83, D50, L50, P20.

Transfer spending in the English premier league: the haves and the have nots

Transfer spending among English Premier League clubs has increased drastically since the inception of the league, often funded by extremely wealthy owners who began purchasing majority stakes in clubs. Using data from the Deloitte Annual Review of Football Finance, we allow for different tiers of football clubs representing the haves and the have nots as well as a comparison between the first and second decades of the Premier League. Our finding that heightened spending has improved on-field performance only at the expense of hurting profitability is in line with win maximisation surmounting profit maximisation in today's Premier League.

Handbook on the economics of professional football

Contents: Introduction John Goddard and Peter Sloane PART 1 THE PRODUCT MARKET 1. Club Objectives P. Sloane 2. League Structure, Promotion and Relegation J. Goddard 3. Measurement of Competitive Balance and Uncertainty of Outcome D. Owen 4. Spectator Demand and Attendances in English League Football B. Buraimo 5. The Collection and Distribution of Media Rights in a Win Maximisation League S. Kesenne 6. Football Finances S. Morrow 7. Insolvency in English Football S. Szymanski 8. Sponsorship and Football S. Bridgewater 9. Econometric modelling of Match Results and Scores I. McHale and Rose Baker PART 2 THE LABOUR MARKET 10. Team Performance : Production Efficiency in Football F. Carmichael and D. Thomas 11. Management Ability, Strategy, Tactics and Team Performance C. Pestana Barros, E. Couto and A. Samagaio 12. Achieving Transactional Efficiency in Professional Team Sports The Theory and Practice of Player Valuation W. Gerrard 13. The Footballers' Labour Market after the Bosman Ruling B. Frick and R. Simmons 14. International Migration of Professional Footballers R. Poli 15. Labour Market Discrimination B. Reilly 16. The Football Manager J. Goddard PART 3 COUNTRY STUDIES 17. English Professional Football P.Downward 18. French Professional Football: How Much Different? W.Andreff 19. The Decline of Professional Football in Italy T. Boeri and B. Severgnini 20. Professional Soccer in the Netherlands R. Koning 21. Major League Soccer in the USA T Jewell 22. Professional Football in Japan W. Manzenreiter and J. Horne PART 4 POLICY ISSUES 23. Football and Betting D. Forrest 24. Refereeing and Infringement of the Rules P. Dawson 25. Detecting Corruption in Football J. Reade Index

Gate-Sharing and Talent Distribution in the English Football League

Using a database of the movements of more than 2,000 professional footballers in the top two divisions of the English Football League between 1969 and 1995, this article examines the impact on talent distribution via the movement of players after abolition of gate revenue sharing in 1983. We compare the results with the predictions of the Walrasian and Nash theoretical models presented in the sports economics literature. Our key finding is that the termination of gate revenue sharing brought about increased rates of transfers of quality players towards top division teams. We also find that there is an increased probability that better quality players will be transferred within divisions to bigger teams. These results go against one of the main theoretical predictions of the sports economics literature – that gate sharing will have no effect on competitive balance. Instead, they offer support for models based on win maximisation rather than profit maximisation.

Fan welfare maximization as a club objective in a professional sports league

Motivated by aspects of European soccer club governance (members' clubs supporters' trusts), a first formal analysis of fan welfare maximization as a club objective in a sports league is provided, with comparisons to objectives studied previously (profit and win maximization). Positive comparisons focus on team qualities, ticket prices, attendances and the impact of capacity crowds; empirically observed ticket black markets and inelastic pricing are consistent only with fan welfare maximization. Normatively, social welfare (aggregate league surplus) is well-served by a league of fan welfare maximizers, or sometimes win maximizers, but not profit maximizers; leagues should not normally make profits.

Probabilistic voting equilibria under nonlinear candidate payoffs

The ‘mean voter theorem’ implies that candidates should choose identical policy positions in a two-candidate race if voting is probabilistic. This result is in fact an artifact of the assumption that the candidates maximize expected vote share or probability of win, which is not true for many real-world elections. In this paper I analyze a probabilistic voting model in which the candidates have preferences other than the maximization of the expected number of votes or the probability of win maximization. I derive the comparative statics for two voters and one-dimensional policy space. Each voter cares about both the policy platform and the identity of the candidate. It is shown that an increase in the value of exactly one vote causes each candidate to choose a position closer to that of its partisan voter. Numeric computation of equilibria show that these results can be generalized to three or more voters. The results imply that the nonlinearity and non-symmetry of payoffs can affect the policy positions of the candidates.

International Sports League Comparisons

Comparisons between European and North American sports leagues have occurred over the years. In this paper, we attempt to bring these comparisons down to the essential elements – what has come to be called Rottenberg’s (1956) invariance principle and theoretical insights into attempts to alter competitive balance using revenue sharing, talent drafts, and payroll caps. We also examine player reserve systems (the reserve clause in North American leagues and transfer restrictions in European leagues) and differences in objective functions (North American leagues are treated under profit maximization while European leagues are treated under utility maximization and win maximization). The focus is on model predictions compared to actual outcomes, and any differences between North America and Europe.

Goal! Profit Maximization Versus Win Maximization in Soccer

In this paper we estimate the best responses of soccer clubs to the choices of other clubs in Spanish and English leagues over the period 1994–2004. We find that choices are more closely approximated by win maximization than by profit maximization in both leagues. We examine club characteristics that might explain variations in choices between Spanish clubs.

The Win Maximization Model Reconsidered

In this article, the author reconsiders the so-called win maximization model, taking into account a number of criticisms that have been raised in the literature. One of the main issues is the application of the more relevant Cournot-Nash equilibrium, rather than the Walrasian fixed-supply model, to the European football industry with its flexible talent supply in an open international player market. At the same time, the hypothesis of a simple market clearing salary level has been replaced with the theory of efficiency wages to determine the salary level. Some important consequences of the application of the efficiency wage theory have been investigated.

THE ECONOMICS OF ACHIEVING COMPETITIVE BALANCE IN THE AUSTRALIAN FOOTBALL LEAGUE, 1897–2004

This paper summarises some key aspects of a theoretical and empirical analysis of whether various labour market devices and revenue‐sharing rules used in the Victorian Football League/Australian Football League (VFL/AFL) since its inception in 1897 have increased competitive balance by reducing the inequality in the distribution of player talent between clubs. The history of labour market intervention and revenue sharing in the VFL/AFL is discussed, with six different periods between 1897 and 2004 identified for analysis. Fort and Quirk's (1995) model of US professional team sports leagues is used to analyse the effectiveness of the various devices that have been used in the VFL/AFL, but only after adapting the model to allow for VFL/AFL clubs being win maximisers (subject to a budget constraint) rather than profit maximisers. The various devices used by the VFL/AFL are assessed in terms of their likely impact on competitive balance, with some significantly different theoretical predictions than under profit maximisation. It is found that free agency results in a less equal distribution of player talent under win maximisation, whilst both gate sharing and increases in shared league‐revenue tend to equalise playing strengths (which is not the case under profit maximisation). Moreover, the invariance principle, that the effect of a player draft will be undermined by the sale (and/or trade) of player talent, is found not necessarily to hold under win maximisation and can be reduced or eliminated with a team salary cap. Whether the trade of players and draft choices can undermine a player draft is also considered. The conclusion reached is that a player draft, a team salary cap, and revenue sharing is the combination most likely to succeed in achieving higher levels of competitive balance. The evidence of competitive balance in the VFL/AFL is consistent with these predictions.