The Economist- 6 February 2015  The eloquent captain of the all-conquering Tottenham Hotspur side of 1961, famously remarked that “the great fallacy is that the game is first and last about winning. It is nothing of the kind. The game is about glory.” He was probably wrong: at least when it comes to the boardroom, the game is first and last about money.

Luckily, winning often goes hand in hand with more revenue, which aligns the incentives of executives, fans and players. During the 2014 Champions League, for example, UEFA, the governing body for football in Europe, doled out €905m ($1 billion) to competing clubs. Real Madrid, the winners, received €57m, while Manchester City, who were felled at the first knockout round, received €35m. 

But this is not always the case. Abbey Stadium, home to Cambridge United, is a world away from the Estádio da Luz, the 65,000-capacity ground in Lisbon that hosted the Champions League final. Cambridge’s stadium holds just 9,600 spectators—around half of them on standing-only terraces. Yet on January 23rd it was host to the mighty Manchester United in an FA Cup game. The FA Cup, football’s oldest knockout competition, is open to most teams that play in the top eight tiers of the English system, from star-studded Premier League sides to tiny clubs that compete in non-professional regional leagues. This year, 736 clubs entered.

This often throws up some wonderful, incongruous encounters, as teams manned by postmen and butchers find themselves up against sporting superstars. But it can also lead to perverse incentives. The match between Cambridge, who are in the fourth tier of English football, and Manchester United ended in a hard-fought, scoreless draw. This meant a replay (due to kick off very shortly, as this post is being written) was arranged at Old Trafford in Manchester. Most people accepted that Cambridge’s best chance of winning had slipped away. Premier League sides do not much like travelling to the creaky stadiums of lower-league opponents, where basic facilities and fervent fans, keen to inspire the team to a once-in-a-lifetime win, can level the playing field. Back on their own patch, however, big clubs tend to find dispatching the minnows a formality.

So why did Richard Money, Cambridge’s manager, describe the 0-0 draw as being like buying a lottery ticket and winning? As the home side is drawn at random in FA Cup ties, gate receipts are, unusually, split 50-50 between the two teams. For Cambridge, therefore, a game at one of the most famous stadiums in football will be worth over £1m ($1.5m), including television rights. These are riches indeed to such a modest club. As the Guardian put it: “A gym at the training ground, a facility for the youth academy—commodities taken for granted elsewhere—will be the legacy spawned by a Premier League side’s profligacy.”

Hence the perverse incentive not to win. No one is suggesting that Cambridge were not trying their best at Abbey Stadium. Indeed, given the gulf in class, it is debatable whether the side had the capability to decide to play for a draw. But, whether it was acted upon or not, it was in the club’s best interest not to score a winning goal.

Such perverse incentives in sport are fortunately rare, says Robert Simmons, an economics professor at Lancaster University Management School. (Or at least those that don’t involve criminality are; there are countless illicit opportunities, such as interested parties betting on their side losing.) In sport, winning is nearly always the best outcome for a team. Where exceptions have been spotted the loophole is usually closed. In the World Cup, for example, it was once the case that teams might calculate they were better off coming second in a group than winning it. Because games were not played concurrently, they sometimes already knew what result in the final game would guarantee which opponent in the next round. Losing could mean an easier path. This possibility was mitigated when the organisers decided that all the final group games should kick off at the same time.

However, in the United States, the redistributive systems leagues have implemented to help weaker teams compete often do create rewards for losing. This problem is particularly grave in basketball, a sport in which a single superstar can turn a laggard into a contender and a middling squad into a champion. When new players enter the National Basketball Association (NBA), they are assigned to teams in an annual draft, in which the clubs with the fewest wins the previous season get to pick first. Although the league does assign the first three selections by lottery, in order to prevent teams from intentionally losing (a strategy known as “tanking”), the worst teams have much better odds of securing those coveted picks. As a result, NBA clubs frequently do seek to lose as many games as possible, in the hopes of securing a high draft pick for the following season—the Philadelphia 76ers, who won just 23% of their games last year and have outdone themselves with a 20% rate this season, are a prime example. Sometimes, their management teams even admit it. The league is now considering various proposals to discourage the practice.

For the FA Cup conundrum, economists might suggest two ways to end the temptation not to win. The first would be to put all the money generated into a central pot, and hand it out to teams based solely on how far they reach in the competition. Alas, as with many economists’ suggestions, this has the drawback of being wonderful in theory but unworkable in the real world. Given that wealthy clubs earn more from gate and television receipts and hold most of the power in the game, they would be sure to veto such an egalitarian approach. A proposal that would be slightly easier to implement would be to stop scheduling replays after a draw. This would appeal to the big clubs, which already complain that their squads get stretched by having to play too many matches across too many competitions. And it could mean more Davids overturning the odds and slaying a Goliath. In that, there would be glory indeed. {jcomments on}

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