We identify the factors that determine the duration of club survival in the English Premier League (EPL), an open sports league based on promotion and relegation. Using survival analysis models for data from 25 seasons since the inception of the EPL in 1992-93, our results show four main predictors of club survival: club annual revenue, composition of foreign players, manager experience, and number of re-entries into the league. We find evidence of a liability of newness, the proposition that firm age is directly association with firm survival in a given industry, with over half of all promoted clubs being relegated within three years.
Jeffrey Chang, Luc Borrowman and Lionel Frost
Lionel Frost, Luc Borrowman, Vinod Mishra and Abdel K. Halabi
We test for a relationship between the distribution of winning percentages (i.e. competitive balance) and average home attendance in the English Football League and Scottish Football League from their foundation to the start of the Second World War. While the English League was more competitively balanced, with success distributed across multiple cities, for most clubs spectator demand was unresponsive to winning percentages and uncertainty of match outcomes. We extend the analysis by considering whether on-field success predicts increases in stadium capacity, which would allow further increases in attendance, revenue and investment in playing talent.
Lionel Frost, Margaret Lightbody, Abdel K. Halabi, Amanda J. Carter and Luc Borrowman
Shared use of grounds allowed Australian cricket and football to subsidize each other, but cartel arrangements that determined the use of stadiums and the distribution of benefits and costs between sports may have been less than optimal. Estimation of deadweight losses from the use of stadiums is not possible in the absence of a counterfactual specifying the level of demand if the behaviour of cartel members had been coordinated more effectively. Archival, financial and attendance report data can be used to estimate increases in actual demand under alternative scenarios. In Melbourne and Adelaide, the controlling bodies of cricket and football uncured significant losses in welfare from joint use of their cities’ major stadium, due to the importance they attached to non-monetary aspects of utility.