Sports Econometrics

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BOSTON COLLEGE
Department of Economics
EC 370.01: Sports Econometrics (Spring 2014)
Campion 204: T Th (3 – 4:15)
Christopher Maxwell
[email protected]
http://www.cmaxxsports.com
Maloney Hall, 337
Hrs: TBD and by appt.
x2-8058
TA: Tyler Atkinson ([email protected])
Course Description: This applied economics course explores various aspects of the economics
of sports and sports leagues, with a major focus on empirical analysis. The course is data-driven
and built around a series of empirical exercises. Those exercises address a wide variety of sportrelated topics, perhaps including:
• the business and economics of professional team sports,
• the importance of population in driving competitive imbalance,
• the efficacy of leagues’ competitive balance initiatives,
• the relationship between performance and player compensation,
• the drivers of home field advantage in sports,
• measuring parity in sports leagues,
• assessing the NCAA’s RPI (Ratings Percentage Index),
• forecasting team performance,
• understanding the drivers of ticket prices,
• the efficiency of wagering markets,
• peer effects in team performance,
• and so forth.
This is not a sports history or trivia class.
Prerequisites: Intermediate Microeconomics (EC201 or EC203) and Econometrics (EC228
and/or EC327). Students are expected to know how to run simple econometric models (OLS),
and to be comfortable with interpreting regression results.
This course will make extensive use of both Excel and Stata:
You should have worked with Stata in your Econometrics course. At the start of the semester,
we will review how to access and run Stata through BC’s apps server. You may prefer to use a
different statistical package, such as SPSS or SAS, to do your empirical work. That’s fine, as the
languages are fairly interchangeable.
This course also makes extensive use of Excel. You should not take this course if you do not
have strong Excel skills. To brush up on your Excel skills, you might look at the materials
assembled by the ITS department:
http://www.bc.edu/offices/its/tandc/training/course_materials.html .
Boston College
EC 370: Sports Econometrics
Texts:
Rodney Fort, Sports Economics, Prentice Hall (2nd or 3rd edition).
I will place a copy of this text on reserve at the O’Neill Library.
Tobias Moskowitz and Jon Wertheim, Scorecasting: The Hidden Influences Behind How
Sports Are Played and Games Are Won, Three Rivers Press (paperback), 2012.
BlackboardVista: Everything distributed in class will eventually be posted on the course’s
BlackboardVista site. In addition you’ll find a large amount of data and additional material
posted there. Let me know if you have trouble accessing that material.
Accommodations: If you are a student with a documented disability seeking reasonable
accommodations in this course, please contact Kathy Duggan (x2-8093; [email protected]) at
the Connors Family Learning Center regarding learning disabilities and ADHD, or Paulette
Durrett, (x2-3470; [email protected]) in the Disability Services Office regarding all other
types of disabilities, including temporary disabilities. Advance notice and appropriate
documentation are required for accommodations.
Academic Integrity: You will be held to Boston College’s standards of academic integrity. If
you have any questions as to what that means, please go to
http://www.bc.edu/offices/stserv/academic/integrity.html.
Course Structure: The course is built around the Fort text and a set of about a half dozen
empirical exercises, which count towards 45% of your course grade. The exercises typically
involve extensive empirical analysis, often using very large datasets. You should not leave that
work to the last moment.
Grading Breakdown:
1.
2.
3.
4.
Six Exercises (45%; 5 i 7% + 10% )
Final Exam (35%)
Research Paper (15%)
Tuesday Topics/Participation (5%)
Exercises: Exercises count towards 45% of your course grade (Ex #1, the Sports League
Challenge, runs for most of the semester and counts towards 10% of your course grade; the five
other exercises are worth 7% each). If we do not get through as many exercises as anticipated,
the course grade weights may be changed. Final grades on exercises are curved.
These will often (but not always) be team assignments (usually with two students per team)
lasting about two weeks. I will assign the teams, which will change from exercise to exercise.
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Boston College
EC 370: Sports Econometrics
The exercises will likely be the following, though topics may change as the semester develops
(the listed dates are approximate):
1.
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6.
The Sports League Challenge (1/21 - semester)
The Pythagorean Theorem in MLB and Elsewhere (1/28 - 2/11)
Efficiency of NFL Wagering Markets (2/11 - 2/25)
The RPI (Ratings Performance Index) & the NCAA (2/25 - 3/25)
Home Field Advantage in MLB (3/25 - 4/10)
Peer Effects in the NBA (4/10 - 5/1)
Exercise quizzes: For team exercises, there will be a short quiz after each exercise to make sure
that all team members actively participated in the assignment. Those quizzes will count towards
half of your exercise score.
In many cases, there are faster and slower ways to complete the exercises. Let me know if
progress is painfully slow, and I’ll be happy to make suggestions to help speed things up. No
late work accepted.
Final Exam: The closed book/notes Final Exam, which is worth 35% of your course grade, is at
9 AM on Tuesday, May 6th. The exam will cover the material discussed in class over the course
of the semester. Grades on the Final Exam will be curved. I will hold a review session for the
exam on Monday, May 5th.
Research Paper: The research paper is an empirical project and counts towards 15% of your
course grade. This project will kick off after Spring Break. This is a team assignment (I will
assign teams, which will likely have two members).
There are two phases to this assignment:
1) Replication of a published empirical analysis, and
2) Your Turn! to improve upon that analysis.
In the first phase, you will review and replicate a published empirical analysis of your choosing
(the only restriction is that the published paper must be related to the material in this course).1 In
the second phase, you will improve on that analysis in some way (by adding more data, changing
the specification of the model, changing the estimation technique, and so forth):
Replication (deliverable due April 8th )
1. The published results: The published empirical results of interest (including the actual
results to be replicated)
2. Your replication: Your replication of those published results (present your results and
compare them to the originals).
Your turn! Make it better! (deliverable due April 29th and presented in class that day):
3. How you made it better: Your improvement on the published model/analysis.
1
If you have any questions about relevance, just ask. The published paper that you are replicating must be
published in an academic journal such as the Journal of Sports Economics or the Journal of Quantitative Analysis in
Sports. If you have a particular paper in mind and are wondering whether it meets this criterion, just ask.
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Boston College
EC 370: Sports Econometrics
Papers should be concise and to the point; shorter is always better - please do not make them
longer than necessary. I will say more about the format of the deliverables when teams are
assigned. Empirical work is slow going. Be sure to leave yourself enough time to complete the
assignment to your satisfaction.
Tuesday Topics: These will typically take place at the start of class every Tuesday (if we need
more slots, we’ll add some Thursday presentations). We’ll devote the first 10 minutes or so of
class time to a discussion of a current relevant issue. Given the class size, the discussion will be
led by a team of three students (team assignments will be distributed once the class list is
finalized). The team leading the discussion may want to prepare a brief set of talking points to
guide and focus the discussion. Presentations should include some of your own analysis of the
topic. To provide a sense of how this might work, I’ll do the first presentation on Tues, Jan 21st .
Presentations will be graded, and along with participation, count towards 5% of your course
grade.
Notes: I will also be distributing notes covering material discussed in class. At the moment, I
anticipate the following set of notes:
1.
2.
3.
4.
5.
Team Financials (Revenues, Costs, Profits and Franchise Value)
Simple Linear Regression (SLR) Analysis Review (e.g. Tix Prices and Winning)
Multiple Linear Regression (MLR) Analysis Review (e.g. Tix Prices cont'd)
The Average Fan Model: Revs, Costs, Profits and Winning (e.g. MLB)
Maximum Likelihood Estimation and Binary Dependent Variables (e.g. Racetrack
Betting)
6. Performance/Ratings Models (e.g. College Football)
7. Win Expectancy Models (e.g. NBA & NFL)
8. Measuring Inequality - Competitive Balance Metrics (e.g. MLB v. NHL v. NFL v. NBA)
9. The Efficacy of Competitive Balance Initiatives: A Theoretical Framework
10. MRP and Player Compensation (e.g. MLB and NBA)
Proposed Calendar: The schedule will likely evolve as we work through the semester, but
here’s a sense of the calendar as I see it at the start of the semester (Notes and Exercises will be
distributed at least one class prior to class discussion; Fort readings should be completed prior to
class discussion).
1. 1/14: Introduction
2. 1/16: Fort 1, 2 (Getting Started; Demand & Revenues); Distribute notes on team financials
3. 1/21: Fort 2 cont'd & Fort 4 (Revs, Costs, Profits and Winning); Distribute Ex #1 (Sports
League Challenge (SLC))
4. 1/23: Finish Fort 2 & 4; Kick off SLC; Distribute notes on SLR review
5. 1/28: SLR review; Distribute Ex #2 (Pythagorean Theorem)
6. 1/30: Discuss Ex #2; Finish SLR Review; Distribute notes on MLR review
7. 2/4: MLR review; Distribute notes on the Average Fan Model
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Boston College
EC 370: Sports Econometrics
8. 2/6: Finish MLR review; Avg Fan Model; Distribute notes on Maximum Likelihood
Estimation (MLE) and binary dependent variables
9. 2/11: Ex #2 Due; MLE; Distribute Ex #3 (Efficiency of NFL Wagering Markets)
10. 2/13: Discuss Ex #3; MLE cont'd
11. 2/18: Finish MLE
12. 2/20: Fort 3 (Sports Broadcasting) (we’ll skip this if we are behind schedule)
13. 2/25: Ex #3 due; Distribute Ex #4 (Ratings Performance Index); Distribute notes on ratings
models
Spring Break
14. 3/11: Discuss Ex #4; Ratings models
15. 3/13: Finish ratings models
16. 3/18: Fort 5 & 6 (Sports Market Outcomes); Distribute notes on inequality metrics and
competitive balance
17. 3/20: Continue Fort 5 & 6; Inequality/CompBalance
18. 3/25: Ex #4 due; Distribute Ex #5 (Home Field Advantage); Distribute notes on win
expectancy models
19. 3/27: Discuss Ex #5; Win expectancy; Fort 6 cont’d; Distribute notes on competitive balance
initiatives
20. 4/1: Finish Fort 6 cont’d and CompBalance initiatives; Ex #1 should be concluding around
this time
21. 4/3: Fort 7 & 8 (Value of Sports Talent; History of Player Pay); Distribute notes on
Pay/Performance/MRP
22. 4/8: Research Paper Deliverable #1 (Replications) due; Fort 7/8 cont'd;
Pay/Performance/MRP
23. 4/10: Ex #5 due; Fort 7/8 & Pay/Performance/MRP cont'd; Distribute Ex # 6 (Peer Effects)
24. 4/15: Discuss Ex 6; Finish Fort 7/8 & Pay/Performance/MRP
Easter Break
25. 4/22: Catchup; Possibly Fort 10 (Stadiums and Subsidies)
26. 4/24: More catchup; Possibly Fort 13 (NCAA)
27. 4/29: Research Paper Deliverable #2 (Your Turn!) due; Paper presentations
28. 5/1: Ex #6 due; Course Wrapup
29. 5/6: Final Exam (9 AM)
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Boston College
EC 370: Sports Econometrics
Additional Resources
Websites: to name a few …
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Rodney Fort: https://sites.google.com/site/rodswebpages/codes
John Vrooman: http://www.vanderbilt.edu/econ/faculty/Vrooman/sports.htm
Journal of Sports Economics (JSE): http://jse.sagepub.com/
Journal of Quantitative Analysis in Sports (JQAS): http://www.degruyter.com/view/j/jqas
Multi-author blog: www.thesportseconomist.com
Sports Business Daily: http://www.sportsbusinessdaily.com/Daily.aspx (expensive but
informative; two week trial subscription; student rates (still expensive))
Sports Business Journal: http://www.sportsbusinessdaily.com/Journal.aspx (I believe the
library has acquired a subscription to this journal)
SportsBiz: http://thesportsbizblog.blogspot.com/
Sports Law: http://sports-law.blogspot.com/
National Sports Law Institute (Marquette): http://law.marquette.edu/national-sports-lawinstitute/welcome
The “Wages of Wins” Journal: http://dberri.wordpress.com/
and http://www.cmaxxsports.com/misc/misc.html (you’ll find useful webpages devoted to
the NBA, the NFL, MLB, and the NCAA, as well as a webpage linked to many of the Forbes
franchise valuation webpages… with more to come over the course of the semester)
Some Books:
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Fair Ball – A Fan’s Case for Baseball, Bob Costas, Broadway Books, 2001.
Sports Economics, Roger Blair, Cambridge University Press, 2011.
The Economics of Sports, 4th ed., Michael Leeds and Peter von Allmen, Prentice Hall,
2010.
The Economic Theory of Professional Team Sports: An Analytical Treatment, Stefan
Kesenne, Edward Elgar Publishing, 2007.
Playbooks and Checkbooks: An Introduction to the Economics of Modern Sports,
Stefan Szymanski, Princeton U. Press, 2009.
The Oxford Handbook of Sports Economics: Volume 1: The Economics of Sports, Leo
H. Kahane and Stephen Shmanske (eds.), Oxford University Press, 2012.
The Oxford Handbook of Sports Economics: Volume 2: Economics Through Sports,
Stephen Shmanske and Leo H. Kahane (eds.), Oxford University Press, 2012.
Pay Dirt: The Economics of Professional Team Sports, James Quirk and Rodney Fort,
Princeton U. Press, 1997.
Sports, Jobs and Taxes: the Economic Impact of Sports Teams and Stadiums, Roger
Noll and Andrew Zimbalist, The Brookings Institution, 1997.
International Handbook on the Economics of Mega Sporting Events (International
Library of Critical Writings in Economics series), Wolfgang Maennig and Andrew
Zimbalist (eds.), Edward Elgar Publishing, 2012
The Game of Life: College Sports and Educational Values, William Bowen and James
Shulman, Princeton U. Press, 2002.
Reclaiming the Game: College Sports and Educational Values, William Bowen and Sarah
Levin, Princeton U. Press, 2005.
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