The sports economy.
I’m sure if you were interested you could dig up some giant number worked out by a consulting or market research firm quantifying the size of the global (or regional or national) sports market – with varying degrees of inclusiveness (professional sports, sporting goods, etc.) as to what qualifies. (If you google ‘size of global sports market’ you get 7 million plus entries…the first entry quantifies what appears to be the global market in just sporting equipment at $235 million per annum…) Anyhow the point is (one that I have highlighted previously) that sports is a very real and very significant industry sector in most if not all developed economies (and is growing very quickly elsewhere, especially in Asia.)
Promoting or discussing sports markets is not per se the core theme of this blog but is definitely a secondary thread, especially insofar as with the extraordinary development of traded activity on sites such as Betfair, it (sports) is a fantastic example of how combining information, communication and market technologies can transform any industry into a more transparent, tradeable and hedgeable proposition. So when I stumbled accross The Sports Economist blog (via a new blog entitled All Growth is Sexy), I thought is was worthwhile to bring to your attention: the economic issues it discusses are exactly those that would have relevance for actors in the sports markets in terms of risk management (on exchanges such as Betfair) and provide excellent context for my commentary on market mechanisms as applied to sports. Of course the crowning irony is that much of the focus on The Sports Economist is on US sports and due to the archaic legal and regulatory environment in the US, these are the actors least able to access relevant risk management tools. A not insignificant irony as it is clearly the world’s (economically) biggest sports market. And indeed perhaps if US legislators were exposed to more analysis like that found at the Sports Economist they would perhaps take a more rational and less emotional approach to sports trading (and by extension, trading or risk management of other ‘non-traditional’ risks.) So on the off chance that some of these leaders might stumble accross the Park Paradigm, I’ve added the Sports Economist to my blogroll…
I also stumbled accross the AllSportsMarket recently. They bill themselves as follows:
AllSportsMarket is an online financial exchange crafted after the same professional trading platform used by the gurus of Wall Street. You buy and sell issues in AllSportsMarket sports teams, players, and events with real money. Just like the real markets, you are competing against other players for real cash! You earn money from the rise and fall of prices along with dividend payouts!
Basically it appears to be an online real-money fantasy sports league. As someone who has never participated in such a game, I’m ill placed to say whether or not their product (markets and trading platform) is well-thought out, but thought it was another interesting manifestation of how economic risk in sporting markets might be traded and managed. (However I must say if I were a potential customer I wouldn’t be very reassured by the lack of information about the corporate identity and location of the service. I assume this is deliberate and reflects a fear of US prosecution despite the blunt assertion in the FAQ section that it is not a sportsbook and that it is not gambling but a “skill-based Player-vs-Player Game.” Raises the point again, that for anyone (government) worried about potential impropriety surrounding such a market, wouldn’t it be better to legalize, regulate and monitor?)
