Economic Theory explained by football – Part 8 – The Theory of Value

In the eighth of the Football-themed Economic articles, one of the world’s greatest mysteries is unravelled – The Theory of Value.

Former Morecambe, Stockport County and Grimsby Town striker Phil Jevons may not appear to be much of a deep thinker but the Jevons family are famous for defining one of the more interesting economic theories – that of utility and satisfaction.  His distance ancestor, William Jevons was a bit of a brain box, creating a piano that played itself based on logic and an early computer that could analyse the truthfulness of an argument.  Forward thinking indeed for the late 19th century.

Jevon’s theory was simple.  Too much football makes you bored.  Remember when live football on TV was restricted to the odd Home International and the FA Cup Final.  Match of the Day and The Big Match gave us a couple of highlights every weekend and that was it.  And we lapped it up.  Cup Final day was an eight hour footballing extravaganza that the whole family watched.

8710863386_841af277e1_bWhen England played Norway in a pointless early season friendly in September the official attendance was 40,181.  Official means that the FA included all those lucky people who bought Club Wembley seats some time ago…bought yes, attended the game? Maybe not, so the attendance was probably significantly lower than this.  Yes, but what about those watching on ITV I hear you say?  4.5 million people switched on at some point during the game – nearly half of that who enjoyed the delights of The Great British Bake Off on BBC at the same time.  Why?  Well, perhaps because of the theory that Jevons articulated.

Jevons said that the more that we consume of a product, the smaller the increase in satisfaction we receive from it.  With that statement he created the law of diminishing marginal utility.  Whilst we all want our team to be winning week after week, we would actually gain less and less enjoyment from each win.  Interestingly enough, according to Jevons, demand for the product should actually decrease and that will in turn reduce the price.  Think of going out after the game and having a few beers.  At some point they stop being enjoyable and actually start doing you harm as the hangover kicks in.

In footballing terms we can see both sides of the coin.  Teams who win week after week are actually more in demand.  Crowds go up, fan satisfaction increases and in the true economic sense, a club could actually charge more for the product and the fans would continue to a point where the price for “satisfaction” becomes unsustainable.  But if we start to lose, then we get less and less enjoyment out of each game and eventually even the most ardent fan gives up.  The moral here according to Jevons, spurned another famous saying – “You win some, you lose some” – that’s what keeps us football fans interested.

And that, ladies and gentlemen, is The Theory of Value in a nutshell.

Economic Theory explained by Football – Part 7 – The Veblen Effect

In the seventh of his deep-thinking articles, our in house Economist Stuart Fuller demonstrates why lowering ticket prices is a bad thing.

Hands up who wants a Rolls-Royce?  Ok, apart from Cynical Dave and Deaks who can’t drive.  We would all love to own one, right?  But it is just a dream for when we win the lottery, or England enjoys Sahara-like conditions and the solar panels on the roof of the Main Stand pay us a fortune.  But what if they reduced the price by 90%?  Would you still want one then if every Tom, Dick and Deaks could afford one?  Second thoughts eh?  That is the Veblen effect for you.

15791879632_0be24a2e8b_kThorstein Veblen* came up with this theory back in 1899.  Sheffield United had just won the FA Cup and paraded the trophy at Bramall Lane.  Veblen was unhappy that only a few thousand fans were in the ground, singing a version of Annie’s Song that was so cruelly credited to John Denver nearly eighty years later.  He hated the fact that it was an “Exclusive” club, with ticket prices kept high to keep out the riff-raff.  “Let them eat Eccles Cake” he famously said, referring them to becoming Sheffield Wednesday fans.

Veblen’s theory was relatively simple.  He noted that some types of luxury goods, such as high-end wines, designer handbags, luxury cars and tickets to see United were prestige items, or as he liked to call them, Veblen goods.  He noted that in decreasing their prices, people’s preference for buying them also diminished because they are no longer perceived as exclusive or high-status products. Similarly, a price increase may increase that high status and perception of exclusivity, thereby making the goods even more preferable.  So he argued that Sheffield United should actually increase their ticket prices to drive up attendances.

Even a Veblen good is subject to the dictum that demand moves conversely to price, although the response of demand to price is not consistent at all points on the demand curve meaning that it is not simply good enough for a football club to slash its prices as people will not see any value at all in what is now on offer (See our previous article on Pay What You Want Theory).

It seems someone in the Premier League found Veblen’s original work in a drawer when moving desks at Premier League HQ a few years ago and passed the idea across to the Premier league clubs who immediate put their ticket prices up thinking the fans will flock through the gates.  They were wrong, Veblen was wrong and yes, we all want a Rolls-Royce for the price of a Lada.

And that, ladies and gentlemen, is Veblen Theory in a nutshell.

*Whilst Veblen came up with the theory, it is unclear whether he really was a Sheffield United fan.

Economic Theory explained by Football – Part 6 – The Bandwagon effect

In the sixth of my deep-thinking articles motivated by wasted years in Economics lectures, I try to explain why football fans are the most fickle people in the world.

“I was there when we were relegated against Middlesborough at The Bridge.”  It’s amazing how many Chelsea fans I meet who, when I claim were “Johhny-cum-lately’s” wheel out the fact they were there when The Blues were relegated for the last time back in 1988.  Of course, back then stadiums could hold hundreds of thousands of fans.  These fans will have you believe they have been die-hard blues forever and a day.  However, we all know that they simply jumped on the bandwagon about 3 minutes after Roman Abramovich arrived in SW6.

8113550145_fca2b7e62e_zBut there is actually an economic theory that explains this action.  The bandwagon effect is a phenomenon whereby the rate of uptake of beliefs, ideas, fads and trends increases the more that they have already been adopted by others. In other words, the bandwagon effect is characterized by the probability of individual adoption increasing with respect to the proportion who have already done so.  As more people come to believe in something, others also “hop on the bandwagon” regardless of the underlying evidence.  The tendency to follow the actions or beliefs of others can occur because individuals directly prefer to conform, or because individuals derive information from others.  Big words indeed from Mr Solomon Asch there who derived the theory from his conformity experiments back in the 1950’s after watching his beloved Portsmouth win a second consecutive Football League Division One title.

Whilst the Pompey Chimes rang out around Fratton Park, Sol wondered where all these fans had come from.  A few seasons earlier they had been giving away free tickets to the Royal Navy to fill up the ground and now that they were the best team in England it was standing room only, quite literally.  He concluded that when individuals, or fans in this case, make rational choices based on the information they receive from others, in this case fellow fans down the Dog and Duck or in the “pink ‘un”, information cascades can quickly form in which people decide to ignore their personal information signals and follow the behaviour of others – i.e whilst yesterday they were a Southampton fan, today they support Portsmouth because people like the winning feeling.

A year later when Tottenham Hotspur won the league all of those die-hard Pompey fans disappeared from where they had come from.  Why?  Well Asch had the answer in his original theory.  He said that the fact information “cascades” explains why their behaviour is fragile—these “fans” understand that they are swayed on very limited information. As a result, fads form easily but are also easily dislodged.  That explains why you never see a Blackburn Rovers fan anymore and probably why you wont find many Whitehawk ones…apart from Terry Boyle that is.

And that, ladies and gentlemen, is The Brandwagon Effect in a nutshell.

On the twelfth day of TBIR Christmas – The best things about football in 2014

So here it is – our final award for 2014, despite the fact we are now six days into 2015.  But football is the gift that keeps giving so here is my last offering for this year.  My three favourite moments from my footballing year.

3rd Place – New York Cosmos
Back in August on a regular trip to New York I got the opportunity to tick not one, but two things off my lifetime wish list.  An opportunity to see the famous New York Cosmos was obviously the main agenda item here (complete coincidence that they were playing in the very week I was over), having grown up reading about the mythical team from the 1970/80’s in the NASL with Pele, Beckenbauer and of course Barrow’s finest, Keith Eddy.  Now back in the second tier of US football, the good times could be coming back, especially after announcing the signing of Raul.  But this wasn’t a night to remember.  A dull 0-0 draw played in a school’s athletics stadium but it was still “the Cosmos”.  And the second thing?  Getting to ride on one of those yellow American School buses I’d seen so often in films.  Oh, and I took a pretty good picture.

2nd Place – Lewes v Dulwich Hamlet and Maidstone United
2014 hasn’t been the best year for The Mighty Rooks but for five glorious days back in March we were the best team in the world.  Well, perhaps in the Ryman Premier League anyway, as the top two came to The Dripping Pan and were both dispatched goal less and point less.  Luck?  Nope – I’m putting it down to the fact we (OK, I) scouted them both on a number of occasions.  Being taught how to scout is like being tutored in how to drink a fine wine.  Once learnt, you will never watch a game of football in the same way, unable to make remarks incomprehensible to the people around you such as “look at how the number 9 leads with his left arm” or “the keeper won’t come if it’s 6 yards out”…And I bloody love it.  The warm, satisfaction you get after the team has put in place tactics based on your knowledge and won!  That’s why those two games are so special…we wont talk about Grays or Wealdstone away though.

1st Place – The World Cup 
14268867827_784aff2d77_kFor four years I moan about our elite players, their attitude and generally the beautiful game being corrupted by billions of pounds.  Then, every two years a major tournament comes along and everything is right with the world. I came very close to being in Brazil.  Very close in an all-expenses paid trip to Sao Paolo to write about it, sort of way, but passed up the opportunity and Rookery Mike went instead. We haven’t spoken since.  Due to my travelling schedule I spent nearly the whole of the tournament in various corners of the world.  Germany’s demolition of Portugal in their opening game of the tournament was shared with a couple of hundred German fans in a bar in Singapore at 1am then being featured on local TV.  Watching Australia and then England make their early exits from the World Cup at 5am in the morning in a Melbourne casino, with an endless supply of Coopers Ale or watching the Brazilian demolition in a bar in Eindhoven with a German Hen party.  The actual games weren’t bad too.

Our highlights of 2014 can be viewed here, all in one handy little spot.

So see you all next year – one year older, one year wiser, one year damages by poor performances by our respective sides on the pitch.

On the eleventh day of TBIR Christmas – The best website

The days of us sitting in front of the TV, furiously pressing “next page” on our remotes as we tried to follow our games on Ceefax are unfortunately long-gone.  But that was then and this is now.  We all get our kicks these days online.  Apparently, football result web pages are the most viewed on the Internet, more than those strange red tube things.

So here are our most used websites of 2014, those that have helped us navigate across the world as well as staying up to date.  Alas, the news that Swiss Ramble has fired up the Financial Rambler engine again in the last week of 2014 means he has missed the cut this year, but sure as Allardyce will hoof the ball long to Andy Carroll, he will be back in contention in 12 months time.

3rd Place – 500 Reasons to Love Football
When we are bored at work, or simply want cheering up then we head over to 500 RTLF.  We may be biased, being one of the authors of this ground-breaking site which, like that cathedral in Barcelona, still remains unfinished on 492 different reasons.  But we love it, and so should you – there’s something for all the family here.  Who knows, one day there could be a film…

2nd Place – Soccerway
Got a work trip coming up to Singapore?  Well, obviously you want to know if there is a game on whilst you are there…or is that just my mentality? No, of course not.  Nobody wants to really see the Singapore Flyer, the Night Safari or sip a Singapore Sling in the Long Bar at Raffles, but everyone wants to go and watch Albirext Niigata.  That does require some planning, but thankfully those top chaps over at Soccerway have taken all the hard work out of that for you.  Every (and we mean every) country in the world, every league in the world is features, showing up to date fixtures, league tables and even a little map as to where the grounds are.  Any Football Tourist worth their salt knows that Soccerway is the essential bookmark on your smartphone when you go travelling.

1st Place – Football Web Pages
CaptureWhilst we may laugh at those characters who straddle up next to you, transistor radio pressed to their ear, randomly shouting out scores no one one in particular, deep down we want to ask them how Shepshed Dynamo are getting on but we are too embarrassed to ask.  But one website spares our blushes.  Not only does it deliver the latest scores from the Premier League right the way down to the Ryman League South but it also gives us the facts and stats that would shut any anorak up.  Want to know which team in the Evostik South have the best current form?  How about the lowest attendance in the Vanerama Conference? Or even who Albion Rovers are playing next (Spalding United, Wrexham v Grimsby Town and Annan Athletic as you asked).  You could spend hours on the website, planning your whole season…or is that just me?  Top work chaps – please keep it up!

So one day to go in our TBIR 12 Days of Christmas…stay tuned same time, same place tomorrow to find out what the final gift is.

On the tenth day of TBIR Christmas – Our wish list for 2015

On one of my regular, heavily delayed trips to work thanks to South Eastern Trains we thought about our forthcoming trips and where we could end up.  Every year we should set ourselves stretching personal goals, and what better way than starting to plan our trips for 2015.  New stadiums, old stadiums.  New cities, old cities.  Heck even some old stadiums in old cities if the mood takes us.  But the three below are the ones that we are looking forward to the most, those that really get the pulses racing….

So without further ado, let me introduce you to our 2015 bucket list. Come along, enjoy the ride.

3rd Place – Toumbas Stadium, Salonika
ΠΟΔΟΣΦΑΙΡΟ ΚΥΠΕΛΛΟ ΕΛΛΑΔΟΣ ΠΑΟΚ ΟΛΥΜΠΙΑΚΟΣ“Stu, we are going to see Panthessalonikeios Athlitikós Ómilos Konstantinoupoliton in April”, Danny tells me.  My answer of course, is if you can say it, I’ll pay for it.  And so in April we will be heading off the Salonika, Greece’s 2nd city to watch the chaps from PAOK.  In terms of hostile atmosphere it is up there with the most riotous in the world.  Flares, fire, fans, football.  Apparently beer isn’t allowed, but with the entrance to Hades right next to you, it’s probably best to be sober.

2nd Place – The National Stadium, Singapore
national-stadim-Singapore“Stu, can you head over to Singapore again in February.  I know it’s the third time in a year but I’m sure you can find something to amuse yourself outside of work”.  They had me on Singapore.  Last year when I was in the perfectly manicured city the final touches were being made to the 55,000 all seater national stadium.  Today, it is open.  And boy, does it look good.  The largest domed structure in the world, with specific automatic seating arrangements for football, rugby, cricket and athletics, public transport on the door steps and beer pumped to every seat…well may be.  Basically, it looks like the best thing since Philleas Fogg’s Singapore Sunset.

1st Place – The New San Mamés, Bilbao
imagesThere was very little wrong about a EFW in Bilbao.  Outstanding food, brilliant beer, outrageous architecture and a football ground that oozed atmosphere and history.  So how can you improve on that?  Well, how about building one of the most state of the art and modern stadiums in the world slap-bang next to the old one?  The new stadium fully opened in September 2013 and looks an absolute peach, sitting on the banks of the river with just over 53,000 seats.  Sexy isn’t a word you can use often to describe a football stadium, but this is one such occasion.  The question isn’t when can we go but how often.

Tomorrow – Day eleven of this riotous joyride through 2014 with the best football website.

On the ninth day of TBIR Christmas – The best Non-League Tales

Professional football is as dull as dishwater if you are familiar with the Non-League game. We don’t just have player injured with a calf strain, we have players missing after falling asleep in a bin on a stag do in Marbella and missing their flight home.  What about when the game has to be delayed because there are no more balls available? Weekly occurrences in the grass-roots game.  So here are three stories from this year that made us chuckle.

3rd Place – Hands up who wants to go in goal?
gattsOn the 27th December, Peacehaven & Telscombe faced a bit of a dilemma.  Their regular keeper, Tony di Bernando had decided to head to Canada for his Christmas holidays, and without any junior sides, they went into the game against high-flying Maidstone United without a keeper.  Step forward midfielder, and former Sussex County cricketer, Joe Gatting (nephew of Mike) to go between the sticks.  Not only did free-scoring Maidstone only beat Gatting once but then in the last-minute when The Magpies were awarded a penalty, Joe stepped up as the regular penalty taker to slam the ball home without any fuss.

2nd Place – Oops…
stream_imgGuernsey are at a slight disadvantage when it comes to playing away, having to rely on the elements more than any other team when they need to fly to the main land.  There have been a few times when flights have been cancelled or severely delayed due to the weather but back in October their game at Carshalton Athletic had to be cancelled after the Green Lions turned up for the wrong flight.

It hasn’t been the best of seasons so far away from the island as the team struggle to get all of their players available due to work commitments to travel.  Cue heavy defeats at Merstham (8-0) and Hythe Town (6-0) but they never got the chance to take the field in Surrey after a misunderstanding made by secretary Mark Le Tissier saw them turn up at the airport for a 8.30am flight, some 90 minutes after their actual booking had left the tarmac.  Oops.

1st Place – The team of the season so far?
In the 2014/15 season, which English team had the longest unbeaten run?  Of course it’s Chelsea! Wrong…look a bit further down the league.  Past Crewe and Hartlepool at the foot of League Ones and Two respectively.  Down past the Vanarama and even underneath the Ryman Premier League to the South Division.  Here among the likes of Three Bridges, South Park and of course, Walton Casuals is Burgess Hill Town.  They finished 2014 in third place in the league – nothing so special about that really, but they still haven’t lost a league game.  In fact, in all competitions, Dartford are the only team to have beaten the Hillians.  Still in the League Cup, the County Cup and of course, The FA Trophy after a stunning win away at Aldershot Town, three leagues above.  Their talisman, Greg Luer signed off his time at the club in the last game of 2014 away at Worthing with a hatrick before he heads for a dream move to Hull City.

Tomorrow – Day ten and we look forward to where we want to go in 2015