As we start a new year, it is always fun to see how things change as we enter the new year. One thing that will change for most people is their taxes. And one of those tax changes that will impact sports is that “donations” that are required to buy tickets are no longer tax deductible. (you can listen to a marketplace story here)
I have always had a hard time calling anything required to purchase a product a donation, thus I am not surprised by the change and think it was both appropriate and likely. However, the interesting question is how will college athletic departments be impacted by this change? Do we think the “donors” will absorb the difference, or will athletic departments have to cut their budgets by the difference? I have a feeling the pre-ticket cost (formally called the donation) will likely have to be cut.
However, in the podcast they say that the big time sports (Football and Basketball) will not see an impact, but the small Olympic sports (like swimming) will. What? I must be missing something, I have been involved with swimming for a long time; are there any schools that make you donate to get tickets to these events? I cannot think of any and if there are, they are few-and-far-between. Having said that, I do not think there is much room for an impact on those sports. I expect the impact to be the big sports, where the big “donations” gave a big tax break. Without the big tax break, the willingness to pay will be falling.
As we prepare for another four-team tournament, I am happy to say my sister-in-law is excited that her team made the playoff – after the fierce debate on a conference champion vs. a one-loss team. But why is the tournament only four teams to begin with?
In the past the NCAA has claimed a tournament does not make sense for many reasons, their main reasons are: (1 – when) the timing of the games does not work because the season is already too long, (2 – where) there is nowhere to play the games and these could cause too much travel for each team, (3 – attendance) attendance will be bad during the early rounds, and (4 – student-athlete) these are student-athletes that need to be in school. Although they claim these reasons all explain why there is no college football tournament, their arguments hold little merit. Moreover, the structure currently in place, with the multitude of bowl games and BCS ranking system, is already designed to run a tournament to crown a national champion.
Using the current structure allows for a 24 team tournament by only expanding the season one more week, the national title game will be one week later in January. However, I also propose getting rid of the conference championship games for two reasons: 1. They will not have to be a conference champion to make the playoffs. And 2. This eliminates a game during the semester, replacing it with a game that would fall over the traditional winter break at most schools (so although it goes one more week into January, we lose a game in Nov/Dec, which would have occurred during the semester).
With 24 teams, the current BCS ranking system can be used (it currently ranks the top 25 teams). The top 8 teams have a bye the first week, while teams ranked 9-24 play during the first week. The eight winners are then matched to the top eight ranked teams in the second week. The third week matches the eight remaining teams in the quarterfinals, week four is the semi-finals, and the final game would be played in week five.
The current bowl season went from December 16 to January 8. 24 days. The current structure is three and a half weeks, which would be expanded to five weeks. Starting a few days earlier, The only game to occur later is the national championship game, which would occur on a Saturday, rather than a Monday night (because there is no useful reason to have the National Title game on a Monday). The season would be expanded by five days, not enough of an expansion to warrant a ‘no tournament’ statement.
The current bowl structure has 41 scheduled bowl games. The tournament requires 23 games (8, 8, 4, 2, 1). Given the number of bowl games presently played, the current bowls can be used for the different rounds of the tournament. Regional preferences will be given to the higher ranking teams, assisting with the travel problems (and with the attendance). The tournament games are played Thursday through Saturday, while the non-tournament bowl games (and any expansion in the number of bowls) are played during the week.
The argument that people will not want to attend, or watch on TV, a game with two ranked opponents with national title implications simply makes no sense. These types of games have historically been highly attended. We see them highly attended during the season and it is beyond me to assume that the fans will not travel to games that are of this caliber and have these types of title implications.
These are student-athletes, where education comes first (right NCAA? Although this is not a debate for now). Students are already able to make it to a December 16th bowl game, so these games will be no different. The remainder of the tournament occurs when most schools have a winter break, thus there is no interference with the athletes’ studies.
(Besides, if you are sending student-athletes to China during the semester, you have already set a precedence. Of which this is at least designed to occur over break.)
The one argument the BCS does not make, but should, is the performance level. The three tournament games are scheduled to take place on Jan 1st and 8th. This is 30 days after their conference championship games (and 37 days after Alabama played their last game). Given layoffs that long, the timing of the athletes is often “off”. This tournament structure allows for higher quality games, where teams have been playing more consistently over this, once vacant, period. Arguably the overall quality of the game will increase.
All-in-all the structure for college football tournament already exists and should be used. The only loss would be to the teams that currently are given the opportunity to participate in a bowl game that would not be in the tournament. However, increasing the number of bowl games played will continue to allow this opportunity to schools outside the top 24.
Mark D’Antoni and the Houston Rockets are pushing the envelope on the three-ball, once again. They shot 40 per game last year and “destroyed the record for most three point attempts by 23%.” A loose target for this year is 50%. The reason? If you are good at shooting the three-ball and expected points are higher than with a two point shot, expected points scored will increase by moving “would-be” two point shots outside the three point line. This is a form of basketball arbitrage explored 25+ years ago in papers by Robert Clement and Robert McCormick, and Kevin Grier and Robert Tollison. D’Antoni is channelling his inner Tollison with this: “The league will keep changing until the expected points and all the different actions on the floor converge into a similar number,” Morey said. “I do not think we’re there yet.”
From a good story for opening night in the NBA by Ben Cohen in the WSJ.
P.S. KPC channelled Bob Tollison over the weekend: “I told y’all so, again!.
EZ Angus and Bob Tollison, “Arbitrage in a Basketball Economy,” Kyklos, V. 43(4), 1990
Bobby McCormick and Robert Clement, “Intrafirm Profit Opportunities and Managerial Slack: Evidence from Professional Basketball,” In Advances in the Economics of Sports, ed. G. W. Scully, Greenwich CT., JAI Press.
American soccer fans are not the only ones who should be bemoaning the US’ elimination from the 2018 World Cup at the hands of Trinidad and Tobago last night. Russia, the host of next summer’s tournament, stands to pay a heavy price as well.
Hosting the 2018 World Cup will cost Russia in excess of $10 billion most of which is being covered by the federal government. The country is banking on an influx of tourists during the event to cover at least a portion of these costs. While the net number of new tourists arriving in a country during the World Cup is commonly exaggerated by the event boosters, the increase in tourists is still often substantial. In South Africa in 2006, the number of overseas visitors increased by roughly 200,000 while Brazil experienced an increase in over 1 million international arrivals during the 2014 World Cup, thanks in part to the strong performance of neighboring Argentina.
While the United States is not known as a particularly soccer-mad nation, in both South Africa and Brazil, Americans were one of the largest cohorts of fans. In South Africa, American tourism increased by 23,000 during the World Cup, behind only the UK and neighboring Botswana and Lesotho. In the Brazil, an impressive 98,000 additional people arrived from the United States during the World Cup trailing only Argentina. Honduras, the country likely to be taking the US’ place in Russia, sent at most an additional 5,000 tourists to Brazil during their appearance in the tournament in 2014. Panama, the other beneficiary of the USA’s collapse, sent only 2,000 fans to the Brazil.
Based on data from these previous World Cups, it is not unreasonable to conclude that the number of tourists arriving in Russia for the 2018 World Cup is likely to be somewhere between 20,000 and 90,000 lower with the United States’ spot in the tournament being filled by Panama or Honduras.
The South African government reported that the average World Cup visitor spent roughly $1,600 in the country during their 2006 trip. Applying this figure would result in direct losses ranging from $32 million to $144 million to the Russian economy. Most estimates of costs associated with a trip to Russia during the 2018 World Cup are significantly above the $1,600 figure resulting in net losses that could be two or three times these numbers.
All in all, Trinidad and Tobago’s Soca Warriors have accomplished something that the Trump Administration has been reluctant to do. They have imposed a very real and very costly sanction on Russia, albeit one that is even more costly, emotionally at least, for US Soccer fans.
First off, Congrats to Richard Thaler for winning the Nobel Prize in Economics!
Another piece of useful research that is having an impact on sports: Robbie Butler, at The Economics of Sport, recently posted on “ABBA and The Penalty Kick”. This post focuses on a 2010 paper by Jose Apesteguia and Ignacio Palacios-Huerta which was published in the American Economic Review. In this study, Apesteguia and Palacios-Huerta use shoot-out data to analyze the odds of winning depending on if you went first or second.
As he points out:
In order to overcome this problem, UEFA have implemented the “ABBA” system. This has nothing to do with the Swedish Eurovision winners but instead alters the sequence of kicks.
The Football Association (FA) implemented this rule change at the 2017 Charity Shield. The governing body stated that if the game were to finish level after 90 minutes, a penalty shootout would follow that would be similar in structure to the tie-break in tennis.
Operationalised this meant “Team A” would take the first kick, followed by “Team B” taking the second and third penalty kicks. “Team A” would then return taking the next two penalties, and the sequence would repeat itself until a winner was found. Hence the “ABBA” sequence.
It is great to see sports economics research being applied to the leagues and I look forward to seeing if this change causes differences in outcomes as would be expected by the Apesteguia and Palacios-Huerta research.
Most revolutions have a downside (see October 1917). So too with baseball. The use of data analytics in baseball has changed the game in important ways — where fielders are positioned, how batters swing (to avoid ground balls), and how pitchers pitch. The result is more strikeouts, more home runs, and more mid-inning pitcher changes. 8.4 pitchers are used today in an average game, up from 5.8 30 years ago. That’s a big change. The pace of the game has slowed as a result, with an average of 5 minutes and 47 seconds between balls put in play. These statistics are presented in a fascinating article, well worth a read, by Brian Costs and Jared Diamond in today’s WSJ: The Downside of Baseball’s Data Revolution–Long Games, Less Action. Last night’s wild card game between the Twins and Yankees was a case in point. The game featured 11 pitchers (6 for the Twins, 5 for the Yankees, and took 3 hours and 51 minutes to come to a conclusion, ending after midnight. No wonder that young viewers are such a small share of the tv audience. Let the counter-revolution begin!
Inside Higher Ed ran an article titled “Beyond ‘Bad Apples‘.” In the article John V. Lombardi, who is currently a Professor of History and Associate Director Libraries at the University of Massachusetts Amherst, commented in the article:
Lombardi, who led the LSU system, the University of Florida and the University of Massachusetts at Amherst (and their powerhouse teams) during his decades as a university president, equates the alleged behavior of the basketball coaches implicated in the FBI inquiry to the lawbreaking employees at Wells Fargo, who “think they’re promoting the interests of the institution or the company but really they’re not.”
It is wholly unsurprising that bad behavior is spilling out of a system with “so much money, ego, visibility and celebrity floating around,” Lombardi said — leaving “no question that we have to fix the systemic problem.”
My understanding is that he is implying that these bad actors think they are doing something beneficial for college sports, but they are not. However, I don’t think any of them are claiming they are doing something beneficial for college sports – they are just doing something beneficial for their team (assuming they will not get caught).
And as an interesting extension of this quote: I thought Wells Fargo got in trouble for bosses making their employees create false accounts through the incentive structure they created and office place culture. Is that correct? If that is a true statement, I find his statement, especially quoting a former leader of multiple educational institutions, even more intriguing. Is he implying that it is not the actors that are the problems, but rather the people telling the actors to do these things?
My oldest son played American Legion baseball this summer. It was our first experience with it and I was pleasantly surprised by the quality of play overall. From my limited and certainly non-random observations, American Legion baseball quality seems to exceed that of the varsity games I have observed.
The most impressive team I watched was the team from Creighton Prep from Nebraska, the runner-up in this year’s American Legion World Series. Unfortunately, for my son’s team, Creighton Prep was the first opponent in this summer’s Gopher Classic.
Pretty much every school baseball squad I’ve seen takes “ins and outs” before each game. Typically, a coach hits ground balls to infielders who then throw to one of the bases (ins) while another coach hits fly balls to the outfielders who then throw the ball to a base or a cutoff man (outs).
Creighton Prep’s ins and outs were the most impressive I’ve seen. From what I recall, one coach hit balls to the right side of the infield from the third base line while another coach hit balls to the left side of the infield from the first base line. Yet another coach stood near home plate and hit to the outfielders. Balls were criss crossing all over the place and the players fielded seemingly each ball flawlessly.
According to the Washington Post, American Legion baseball might be going the way of other sports.
For years, there has been just one option for high school baseball players looking to play in a decent summer league. They suited up for their local American Legion post, which played 40-some games in two months under the June and July sun.
Posts divvy up the local high schools to draw the best players and even accept returning college freshmen younger than 19. They pitch high schoolers on high-quality, team-oriented local baseball.
But “travel” or “showcase” baseball teams have steadily chewed away at the grasp the American Legion, the nation’s oldest veterans’ organization, held on summer ball. The Legion has lost 25 percent of its teams nationwide over the last 10 seasons, with some states losing close to 80 percent.
This year (2017), Minnesota boasted the most American Legion teams (357), Nebraska the second-most (295), and Pennsylvania the third-most (282). California, on the other hand, has fewer American Legion teams (51) than North Dakota (67), Montana (65), and South Dakota (82). Texas (10), Florida (22), and Georgia (8) have fewer teams than Wyoming (38).
The article has a map of the US with each state colored with respect to the percent change in Legion baseball teams since 2008. There is a block of states in the north which experienced no decline or growth: Idaho, Montana, Wyoming, South Dakota, and Minnesota. New Mexico also experienced no decline or growth. The northeast also had a handful of states with no decline or growth (New Hampshire, Connecticut, Maryland, and West Virginia). Washington DC also shares this quality.
But in California, Texas, and Florida, populous states where year-round baseball can be played in many locales, there has been more than a 70% decline.
States like Florida, California, New Jersey and Oklahoma have lost nearly 80 percent of their teams since 2008, according to participation data.
New Jersey had 336 teams in 2008. This season, it had 51. Puerto Rico’s program shut down completely in 2012.
The article notes what is probably the most important reason: Legion ball, in general, wasn’t providing a service many players (and their parents) wanted.
Those “travel” or “showcase” teams, though, offer more face time before college and pro scouts, better competition and a more individual-focused game, where players can spend more time working on personal skills than sacrifice bunting, organizers say.
The competition faced by American Legion baseball will force it to respond.
Today is opening day at Santa Anita Park. Located at the foot of the San Gabriel Mountains, the “Great Race Place” is one of the most beautiful sporting venues in the world. But the view looking forward is not so rosy.
Reporter John Cherwa presents some of the issues facing Santa Anita and American horse racing in today’s Los Angeles Times. A “fix-it man,” Tim Ritvo, has been dispatched from the Florida headquarters of The Stronach Group, owners of several horse racing venues including Santa Anita. Ritvo is quoted as saying “the problems are bigger than I thought,” and he clearly recognizes that the larger problem is industry-wide. According to the American Racing Manual, the number of races run in the U.S. has fallen to 41,277 from its 1989 peak of 74,701, a decline of 44%. The industry decline has been concentrated among smaller racetracks and slower horses, as alternative forms of gambling proliferated and diminished local demand for cheap racing. Making matters worse, field size per race has fallen even faster than the number of races, from 9 runners per race in the 1950-1990 period to about 7.5 today. Smaller field sizes make betting the races less attractive, generating lower betting handle and contributing to horse racing’s downward spiral.
Ritvo’s charge is to keep the industry’s slide from engulfing Santa Anita. Tracks with top level racing and well-defined seasons — — Del Mar and Saratoga in the summer, Keeneland in the spring and fall — have been able to maintain their luster and their business despite horse racing’s headwinds. But at Santa Anita, racing has been reduced from five days to four days per week, and Ritvo has introduced the possibility of concentrating the races even further, to three days per week. Since racing is a time-intensive leisure activity, losing a Thursday card and replacing it with fuller fields of additional races run Friday through Sunday makes economic sense, at least at some level. Thursday racing would not be a great loss to most stakeholders in racing, especially if a better product results from running when fans will be more attentive to the sport.
But Ritvo brought up one issue that has always puzzled this economist. The norm in the U.S. is for tracks to provide stalls to horsemen for the horses that train over the racecourse. There is not an explicit monetary cost to horsemen for the stalls; rather, the quid pro quo is that the track expects horses stabled on the premises to compete in the races there. Incentive conflicts arise, however, when horses stabled at one track have better racing opportunities elsewhere. Tracks respond to this with rules which limit the ability of horses to ship in and out in pursuit of optimal racing opportunities. The is counterproductive from an industry perspective and contributes to lower field size and betting handle. The incentive conflict doesn’t exist in British racing, where the horses are generally stabled at home and entered to race wherever they please, with no racecourse holding sway over that decision.
Ritvo is concerned that horses that train at Santa Anita often don’t race there. This will be the case for the two favorites for the Breeders’ Cup Classic, Arrogate and Gunrunner, who are preparing at Santa Anita for the race that will be held at Del Mar in November. Horses entered in graded stakes races are generally exempt from restrictions on shipping out to race, sensibly so. But this case nicely illustrates the problem of a track bearing the costs of stabling for horses that don’t race often, if at all, during the afternoons. The two mares who are favorites for the Breeders’ Cup Distaff also exemplify an industry-wide problem: Forever Unbridled and Stellar Wind both plan to train up to Distaff without a prep race, having run only twice and three times respectively this season. That’s a problem for racing too: can you imagine a world in which soccer fans got to watch Lionel Messi play just a few times each year? No other sport hides its stars as much as American horse racing.
The problem of stabling horses for training that rarely race seems easy to address however. As pointed out earlier, the problem is absent in places where horses are stabled in the home training facilities of their trainer. It would be a non-issue here if American racetracks charged a fee that accounted for the costs of stabling. Horsemen pay for the costs of shipping, feed, vet care etc., so why not make stabling costs explicit as well? This would be a significant step towards minimizing the incentive conflict. Moreover, the stabling fees could be funneled directly back into the prize money offered on raceday. Pricing the resource properly, and adding to the incentive to race at the track seems such a simple solution to this problem. It’s Econ 101. But horse racing as an industry repeatedly exhibits a strong aversion to simple economic principles. Perhaps that’s another reason contributing to its steady decline on the sporting scene.
Like most other fans of college sports, particularly the money sports of football and mens’ basketball, I have grown accustomed to the sporadic scandals that seemingly pop up every year. For instance
- Assistant coach so-and-so gave impermissible benefits to such-and-such player.
- Already happened. The guilty party got a slap on the wrist. Move along.
- A booster of program X gave internships to several prominent athletes but had them do no work.
- Already happened. That national championship Program X won, yeah, we’ll pretend it never happened. Oh, and you, Program X, you lose a scholarship. Move along.
- Several football players at a major university got free shoes from a store in the mall. That is an impermissible benefit.
- Already happened. Slap on the wrist, effectively. Fans started calling the university Free Shoes U. Move along.
But when one of my students told me about the latest scandal in major college basketball involving the arrests of coaches by the FBI, my first thought was “Whoa. The FBI arrested coaches. This isn’t a slap on the wrist by any means. This is serious.”
Michael McCann, writing at Sports Illustrated, has an excellent take on some of the legal angles in this current corruption case, and he speculates on what the various parties involved might do as the case winds through the legal system. But as for the genesis of this scandal, and most every other scandal that comes to mind, Mike hits the nail on the head: it didn’t have to happen.
If the NCAA had adopted a system where players were compensated for their labor and compensated for the use of their name, image and likeness, perhaps all or some of these “under the table” payments would not have occurred. We’ll never know. But some will ask.
Therein lies the problem. Football and mens’ basketball generate mountains of cash that run entire athletic departments (i.e. support the livelihoods of numerous people), but the athletes are effectively not compensated anywhere near the amount generated by their programs. Yes, they get grants in aid (scholarships) which are incredibly valuable to some players. But they can have no value whatsoever to some players, particularly those with a future in an elite pro sport league.
In college basketball, one 5-star recruit can be the difference between a run in the NCAA tournament and not making the tournament at all. Talk about a valuable resource.
Elite athletic talent is a scarce resource and it must be rationed. It’s not a question of “does it need to be rationed?”, it’s a question of how. If it’s not rationed through a simple and efficient price system (i.e. by paying players some kind of salary more or less in line with their worth to their respective school – paying them “over the table”, as it were), then some other rationing system must be used. One of the alternatives is payment “under the table”: i.e. corruption.