The Economics of Cricket: An Interesting Research Area?

I arrived 3 hours early at the finals of the ICC World Twenty20  to avoid the rush and grab decent seats. Although the Women’s Final was going on (and it was suitably interesting), my mind had time to wander, and I began thinking how great it must be to work for the ICC, FIA, FIFA or a mega sports body like it – the buzz, being there amidst the action, staging thrilling sporting events. But I am no cricketer – exams took precedence in school, and after my last Under-15 match at Anandashathralya Grounds, I have never held a leather ball. So yesterday it got me thinking – the only way an economist would be of any relevance to a national or international sports community would be through research. A Swiss colleague on my Economics Masters degree course in the UK was a football fanatic and his dream was to work at FIFA in Zurich. While we both used time series econometrics techniques of Cointegration and Vector Error Correction Modelling (VECM), one of our Master’s dissertations was clearly more exciting than the other. While mine explored the nexus between education and growth in India, his explored the link between price payed by football clubs for new players and the club’s performance in the English Premier League. Our economics faculty even had professors who’ve specialized in the study of sports economics, sports management and sports finance.

For a country where cricket often takes precedence over much else, and it’s all-permeating effect on society, there hasn’t been much analysis done about cricket’s socio-economic impact in Sri Lanka. But then again, very little has been done on big cricket tournaments (like the World Cup, T20 Word Cup, and India’s IPL) in general, unlike say football or the Olympics. I think there is ample scope for it, and it just needs a closer look at what kind of data is available and what relationships would be interesting to look at.

  • What are the micro impacts of a large tournament like the World T20 on stadium locales, like Maligawatte (or Colombo as a whole)?
  • What are the spillover benefits of big cricket tournaments on the national economy (especially when they are staged in several cities like the World T20)?
  • With last year’s World Cup being held across several cities in South Asia, what were the differential impacts on each of the host-country economies?
  • Are big cricketing events a burden on national cricket bodies or do they provide a revenue boost which in turn translates into better investment in domestic/provincial cricket?
  • What is the relationship between auction price of players in the IPL and team performance?
  • How does team ownership in the IPL influence team performance?
  • What is the economic benefit of sports tourism for host countries?
  • Is there a link between tournament host city/country (as well as, maybe, teams involved) and the price paid for broadcast rights?
  • Do host city/country governments lose valuable tax revenue in trying to maximise the spillovers or externalities of cricket tournaments or is all the funding generated by the event itself?

All very interesting questions. Some easier to analyse and answer than others.

One of the first major studies on the economics of major sporting events was by Burnes et al. (1986) looking at the Adelaide F1 Grand Prix of 1985. Literature that looks at the benefits of big sporting events like Forumla 1 or the Olympics comes up with mixed findings – there doesn’t seem to unequivocal evidence showing that it is a burden on host cities or that it had a resounding positive impact. Moreover, sports events are now seen as an integral part of tourism strategies, and therefore unambiguously judging the success/benefit of the event – by looking at profits or losses alone – may not be possible. Cities staging major sports events have a unique opportunity to market themselves globally. Rising fees for broadcast rights (if auctioned off credibly and cleverly) provide valuable revenue to local cricket authorities.

Overall, this has got me looking at some seminal research on the topic of sports economics, and for anyone who is interested, I would highly recommend the following journals and books:

Many of them are from Journals, and you would need registered access to download them. But your local library or your university/academic institution’s information resource centre would be able to help.

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