Academic journal article The Economic and Labour Relations Review : ELRR

Gambling with Public Money: An Economic Analysis of National Sports Team Funding

Academic journal article The Economic and Labour Relations Review : ELRR

Gambling with Public Money: An Economic Analysis of National Sports Team Funding

Article excerpt

Introduction

If a little Etruscan luck had rubbed off on Sej anus, if someone out of the blue had struck down the Emperor's careless old age, this same rabble would now be proclaiming Sejanus Augustus. But these days, we've no vote to sell, so their motto is 'Couldn't care less'. Time was when their plebiscite elected Generals, Heads of State, commanders of legions: but now they've pulled in their horns. Only two things really concern them: bread and the Games.

--Juvenal, Satire X, lines 77 to 81 (emphasis added)

In a famous satirical disparagement of his countrymen, the Roman poet Juvenal lamented that the populace had largely given up their public duties of political involvement. Their attention to the political process had essentially been 'bought-off' by the politicians of the day, who provided their constituents with the favours of food and common entertainment. Whether in the form of free wheat, or the shows of games and circuses, those seeking to maintain political power through populism found it profitable to supply public distractions in place of public policy. Juvenal's ancient Roman example of entertainment to divert political interest serves to illustrate how long and widespread is the practice of using such inducements and distractions to maintain political office.

Modern social scientists have largely come to terms with such political strategies, and there has emerged an enormous literature, across both economics and political science, which explains the tendency of elected officials to favour various interests groups to maintain political support. However, there is less attention paid to one modern form of the games: government subsidies of sport. Indeed, to borrow Juvenal's terminology one final time, while political economy has devoted much effort to understanding how the state manipulates the distribution of the 'bread', there has been far less attention directed toward government exploitation of the 'games'.

A lack of attention to the use of sports for political purposes is remarkable, given the frequency with which it seems to occur; many political figures have drawn on national sporting performance for political benefit. Mussolini is said to have influenced the refereeing at the 1934 soccer World Cup in an attempt to ensure an Italian victory. In Spain, Franco poured resources into the premier team Real Madrid, thus ensuring it continued to dominate any team from Barcelona, which was a stronghold of Catalan rebellion. One can also note the Nazi regime's interest in sport and the 1936 Berlin Olympics, and the Soviet and Eastern German efforts to achieve sporting performance superior to the West. Another historical example is Nelson Mandela's use of rugby in his effort to unite South Africa after apartheid, which has recently been depicted in the film Invictus.

Not all examples of this government tendency to use sport for political ends are historical: the extended funding wars leading up to the 2012 Olympic Games in London provide a recent example of ambitious levels of government funding to aid national sport performance. They have even led to The Economist (2006) pronouncing this episode as a 'new arms race'. (2)

The aim of this article is to offer some basic economic arguments about why politicians often devote significant amounts of public money toward improved performance of national sports teams. We will argue below, building on the sports economics literature that focuses on domestic sports funding, that politicians might be trying to harness the 'reflective glow' of victorious national athletes for their own benefit. While our analysis throughout the article is relatively simple, we would argue that the suggestions implicit in this analysis do indeed fit with some of the policy decisions of recent Australian, British, and Canadian governments, and offer a basic first step in thinking about this interesting, but complex, issue. …

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