IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0217151.html
   My bibliography  Save this article

Risk equivalence as an alternative to balancing mean value when trading draft selections and players in major sporting leagues

Author

Listed:
  • Geoffrey N Tuck
  • Shane A Richards

Abstract

In sports leagues that use an annual draft to assign eligible players to clubs, having a value associated with a draft selection can allow clubs to anticipate future growth of players and, if a trading period exists, assist negotiations when exchanging draft selections and players. Typically, mean draft values often decline in either an exponential or geometric manner with increasing draft selection number. Aggregate mean values have been used to compare trade packages. However, clubs may also want to ensure that a trade does not increase the probability of obtaining poor players in the draft. This paper therefore considers equivalence of risk as an alternative trading strategy for club list managers. Here, risk is defined as the probability of the aggregate value of the received draft selections being below a minimum acceptable level. For risk equivalence, a premium over and above mean market value may need to be provided when trading to secure higher draft selections.

Suggested Citation

  • Geoffrey N Tuck & Shane A Richards, 2019. "Risk equivalence as an alternative to balancing mean value when trading draft selections and players in major sporting leagues," PLOS ONE, Public Library of Science, vol. 14(5), pages 1-15, May.
    • Handle: RePEc:plo:pone00:0217151
    DOI: 10.1371/journal.pone.0217151
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0217151
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0217151&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0217151?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Geoffrey N. Tuck, 2015. "From father to son: A review and demographic analysis of the Australian Football League's Father–Son rule," Sport Management Review, Taylor & Francis Journals, vol. 18(4), pages 596-608, October.
    2. Wladimir Andreff & Stefan Szymanski, 2006. "Handbook on the Economics of Sport," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270122, HAL.
    3. Wallace Hendricks & Lawrence DeBrock & Roger Koenker, 2003. "Uncertainty, Hiring, and Subsequent Performance: The NFL Draft," Journal of Labor Economics, University of Chicago Press, vol. 21(4), pages 857-886, October.
    4. Schuckers Michael, 2011. "An Alternative to the NFL Draft Pick Value Chart Based upon Player Performance," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 7(2), pages 1-14, May.
    5. Sargent, Jonathan & Bedford, Anthony, 2010. "Improving Australian Football League player performance forecasts using optimized nonlinear smoothing," International Journal of Forecasting, Elsevier, vol. 26(3), pages 489-497, July.
    6. Boulier, Bryan L. & Stekler, H.O. & Coburn, Jason & Rankins, Timothy, 2010. "Evaluating National Football League draft choices: The passing game," International Journal of Forecasting, Elsevier, vol. 26(3), pages 589-605, July.
    7. Zhiqiang Zhang, 2013. "Finance – Fundamental Problems and Solutions," SpringerBriefs in Business, Springer, edition 127, number 978-3-642-30512-2, September.
    8. Geoffrey N Tuck & Athol R Whitten, 2013. "Lead Us Not into Tanktation: A Simulation Modelling Approach to Gain Insights into Incentives for Sporting Teams to Tank," PLOS ONE, Public Library of Science, vol. 8(11), pages 1-10, November.
    9. Wladimir Andreff & Stefan Szymanski (ed.), 2006. "Handbook on the Economics of Sport," Books, Edward Elgar Publishing, number 3274, March.
    10. Zhiqiang Zhang, 2013. "Certainty Equivalent, Risk Premium and Asset Pricing," SpringerBriefs in Business, in: Finance – Fundamental Problems and Solutions, edition 127, chapter 0, pages 51-69, Springer.
    11. Wladimir Andreff, 2015. "Disequilibrium Sports Economics: Competitive Imbalance and Budget Constraints," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01305633, HAL.
    12. Borland, Jeff & Lee, Leng & Macdonald, Robert D., 2011. "Escalation effects and the player draft in the AFL," Labour Economics, Elsevier, vol. 18(3), pages 371-380, June.
    13. W J Hurley & A Pavlov & W Andrews, 2012. "A valuation model for NFL and NHL draft positions," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(7), pages 890-898, July.
    14. Tuck, Geoffrey N., 2015. "From father to son: A review and demographic analysis of the Australian Football League's Father–Son rule," Sport Management Review, Elsevier, vol. 18(4), pages 596-608.
    15. Kendall Weir & Stephen Wu, 2014. "Criminal Records and the Labor Market for Professional Athletes," Journal of Sports Economics, , vol. 15(6), pages 617-635, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jemuel Chandrakumaran, 2021. "The AFL Pick Trading Market as a Coasian Utopia," Journal of Sports Economics, , vol. 22(1), pages 75-84, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wladimir Andreff, 2017. "Complexity Triggered by Economic Globalisation— The Issue of On-Line Betting-Related Match Fixing," Post-Print hal-03207049, HAL.
    2. R Simmons & D Berri, 2007. "Does it pay to specialize? The story from the Gridiron," Working Papers 591134, Lancaster University Management School, Economics Department.
    3. Wladimir Andreff, 2017. "Complexity Triggered by Economic Globalisation— The Issue of On-Line Betting-Related Match Fixing," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03207049, HAL.
    4. Rappai Gábor & Fűrész Diána Ivett, 2018. "Handling heteroskedasticity in labour demand functions of athletes," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 4(2), pages 47-56, November.
    5. Geoffrey N Tuck & Athol R Whitten, 2013. "Lead Us Not into Tanktation: A Simulation Modelling Approach to Gain Insights into Incentives for Sporting Teams to Tank," PLOS ONE, Public Library of Science, vol. 8(11), pages 1-10, November.
    6. Wladimir Andreff, 2014. "Building Blocks for a Disequilibrium Model of a European Team Sports League," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00971782, HAL.
    7. Wladimir Andreff, 2014. "Building Blocks for a Disequilibrium Model of a European Team Sports League," Post-Print halshs-00971782, HAL.
    8. Rob Simmons & David Berri, 2009. "Gains from Specialization and Free Agency: The Story from the Gridiron," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(1), pages 81-98, February.
    9. Lenten, Liam J.A. & Geerling, Wayne & Kónya, László, 2012. "A hedonic model of player wage determination from the Indian Premier League auction: Further evidence," Sport Management Review, Elsevier, vol. 15(1), pages 60-71.
    10. repec:lan:wpaper:3964 is not listed on IDEAS
    11. Pamela Wicker & Christoph Breuer, 2015. "How the Economic and Financial Situation of the Community Affects Sport Clubs’ Resources: Evidence from Multi-Level Models," IJFS, MDPI, vol. 3(1), pages 1-18, February.
    12. Berno Buechel & Eike Emrich & Stefanie Pohlkamp, 2016. "Nobody’s Innocent," Journal of Sports Economics, , vol. 17(8), pages 767-789, December.
    13. G. Pantuso & L. M. Hvattum, 2021. "Maximizing performance with an eye on the finances: a chance-constrained model for football transfer market decisions," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 29(2), pages 583-611, July.
    14. Dorian Owen, 2014. "Measurement of competitive balance and uncertainty of outcome," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 3, pages 41-59, Edward Elgar Publishing.
    15. Liam J A Lenten & Wayne Geerling & László Kónya, 2010. "A Hedonic Model of Player Wage Determination from the Indian Premier League Auction#," Working Papers 2010.04, School of Economics, La Trobe University.
    16. Theodorakis, Nicholas D. & Alexandris, Kostas & Tsigilis, Nikolaos & Karvounis, Serafim, 2013. "Predicting spectators’ behavioural intentions in professional football: The role of satisfaction and service quality," Sport Management Review, Elsevier, vol. 16(1), pages 85-96.
    17. Ausloos, Marcel, 2020. "Rank–size law, financial inequality indices and gain concentrations by cyclist teams. The case of a multiple stage bicycle race, like Tour de France," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 540(C).
    18. Evelyn Korn & Volker Robeck, 2013. "The role of sports physicians in doping: a note on incentives," MAGKS Papers on Economics 201317, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    19. Benítez Rochel, José J. & Lacomba Arias, Beatriz, 2012. "Los avances en la valoración económica del deporte en Europa/Advances in Economic Valuation of Sport in Europe," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 30, pages 637-654, Agosto.
    20. Jean-François Bourg & Jean-Jacques Gouguet, 2010. "The Political Economy of Professional Sport," Books, Edward Elgar Publishing, number 13177, March.
    21. repec:ebl:ecbull:eb-14-00811 is not listed on IDEAS
    22. repec:lan:wpaper:3965 is not listed on IDEAS
    23. Wladimir Andreff, 2011. "Some comparative economics of the organization of sports: Competition and regulation in north American vs. European professional team sports leagues," Post-Print halshs-00677436, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0217151. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.