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“The City That Said No to Baseball”

2014 September 30
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by Skip Sauer

In 1998, the Brewers left their old stadium in Chandler, Arizona, for Maryvale Baseball Park in Phoenix. Was that a blow to the economic development of Chandler? Not exactly, as Richard Williamson describes in an informative article published in The Bond Buyer.  The city appears to be thriving.  It “is in great fiscal health”, it’s “high-tech city hall has won architectural awards and anchors a revitalized historic downtown,” and population has increased 30%, to 240,00 (see slide 10) since the Brewers departed after “relatively contentious” negotiations.  Chandler’s bond rating has increased from AA- to AAA , moving in the opposite direction of sports-intensive Glendale (from AA to BBB-plus).

According to the article, the Brewers are have started discussions with Peoria — to the northwest of Glendale — about developing a new facility there.  The folks in Peoria, already the Cactus League home of the Mariners and Padres, might do well to look at the example set by their neighbors in Chandler.

This is a rare news story where the opportunity cost of stadium investment is vividly illustrated.  Thanks to Adam Pope for sending it.

“Why Wrigley is Suddenly So Empty”

2014 September 3
by Phil Miller

From the Wall Street Journal (HT Mark Stratton):

On a Wednesday night in late July, the Chicago Cubs played the San Diego Padres at Wrigley Field in front of an announced crowd of 30,718. Er, make that in front of 30,718 sold seats. The number of people in those seats was considerably smaller—about 19,000 by one published estimate.

The evening was unusually chilly for midsummer, and the Cubs and Padres were (and are) both well out of the playoff race, but the lagging attendance fits a pattern for the Cubs of late—one that stands in contrast to the surging crowds of the previous three decades, when the team was often equally bad and the weather similarly unpredictable. Since 2009, ticket sales are down almost 6,500 a game. Where have all the Cub fans gone?

It’s because of a change of owners and the subsequent change in objectives.  With the Tribune, the party atmosphere and Wrigley Field were marketed heavily and the company was able to create brand loyalty.

The success of Tribune (which owned Chicago magazine, where I was editor until 2011) reflected a series of smart marketing moves. Among them: The company turned Cubs games into programming fodder for superstation WGN, which introduced the team to a vast national audience. Tribune hired as announcer Harry Caray, a graceless blowhard who nonetheless aroused an enormous fan following. Under savvy marketing chief John McDonough, the club celebrated the glories of lovely but age-worn Wrigley and cycled through a variety of promotions designed to put people in the seats (Beanie Baby days!).

To declare yourself a Cubs fan was to place yourself in a vibrant community—people with the heart to embrace a loser. In the current language of marketing, the Chicago Cubs became a brand with soul, an entity that represented a portfolio of sympathetic qualities, including loyalty, perseverance, humility and tradition.

The new owners, the Ricketts family, has made building a consistent contending team from the minors up, and that has meant gutting the major league roster for minor league talent.  They have been sacrificing current quality for future quality.  The Cubs have definitely been very bad of late, and with the third highest average ticket price of $44.16 according to the article, you have two big ingredients for empty seats.

In the spirit of full disclosure, I am a Cubs fan and have been so since the ripe old age of 19 in 1984 when the Cubs finally made it to the playoffs for the first time since 1945.  There have been some good years and some awful ones.

The past few season have been brutal to watch, but I still try to follow as many games as I possibly can.  But I like where this club is headed.  Starlin Castro and Anthony Rizzo, current injuries not withstanding, look to be solid players for several more years.  Plus the young kids who have been brought up, Jorge Soler, Arismendy Alcantara, the strikeout-prone-but-still-exciting-to-watch Javy Baez, and the surprising Kyle Hendricks give a this Cubs fan a reason to hope.

The Cleveland Browns’ Strategy: Write This Down

2014 August 12
by Skip Sauer

Interesting story in today’s WSJ (ungated). The subtitle is “Why Cleveland Prefers Pen and Paper to Technology; ‘To Write Is to Learn’.” The idea is that active learning trumps passive attempts to absorb information being delivered to you. This resonates with me, as I can remember when I first posted lecture notes on the web. To my surprise, student performance in my Money & Banking course actually dropped. Part of the Browns’ approach is shaped by Coach Dave Mike Pettine’s experience (his father was a high school teacher), and part by academic findings. One recent paper mentioned in the article, “The Pen Is Mightier Than the Keyboard” seems worth checking out.

Written on a keyboard

Judge Wilken’s Decision in the O’Bannon Case…

2014 August 8
by Skip Sauer

in favor of the claim of the plaintiff, Ed O’Bannon. Her determination is that NCAA rules (again) are in violation of antitrust law. Here is the conclusion from her 99 page decision:

CONCLUSION
College sports generate a tremendous amount of interest, as well as revenue and controversy. Interested parties have strong
and conflicting opinions about the best policies to apply in regulating these sports. Before the Court in this case is only
whether the NCAA violates antitrust law by agreeing with its member schools to restrain their ability to compensate Division I
men’s basketball and FBS football players any more than the current association rules allow. For the reasons set forth above,
the Court finds that this restraint does violate antitrust law.

To the extent other criticisms have been leveled against the NCAA and college policies and practices, those are not raised and
cannot be remedied based on the antitrust causes of action in this lawsuit. It is likely that the challenged restraints, as well as other perceived inequities in college athletics and higher education generally, could be better addressed as a policy matter by reforms other than those available as a remedy for the antitrust violation found here. Such reforms and remedies could be undertaken by the NCAA, its member schools and conferences, or Congress. Be that as it may, the Court will enter an injunction, in a separate order, to cure the specific violations found in this case.

The clerk shall enter judgment in favor of the Plaintiff class. Plaintiffs shall recover their costs from the NCAA. The
parties shall not file any post-trial motions based on arguments that have already been made.

IT IS SO ORDERED.
Dated: August 8, 2014 CLAUDIA WILKEN
United States District Judge

This will take some time to digest. Judge Wilken does not pretend that she has the last word on this, but it appears at first reading to be a clear-eyed, monumental decision. Read it, and see where you come down on the issue.

Call for Papers for Missouri Valley Economics Association

2014 July 17
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by Phil Miller

Michael Davis of Missouri University of Science and Technology and I are arranging North American Association of Sports Economists (NAASE) – affiliated sports economics sessions at the Missouri Valley Economic Association (MVEA) conference in St. Louis this October from the 23rd through the 25th.  For those unfamiliar with the MVEA, the relaxed atmosphere and late submission deadline make it a good opportunity for everyone, including graduate and undergraduate students, to present at.

In addition, papers presented at the MVEA conference can be submitted to the MVEA’s journal, The Journal of Economics, MVEA for $25, half off the normal submission fee.

If you have a sports economics paper you would like to present in St. Louis please email Michael a title and full contact information including affiliation, email address, mailing address, phone number, and fax number.  The deadline for submissions is August 12th.  Michael’s email address is davismc@mst.edu .  Here is the NAASE website and here is the MVEA’s website.

Brazil and tourism during the 2014 World Cup

2014 July 17
by Victor Matheson

According to a statement by Aloisio Mercadante, Brazilian president Dilma Rousseff’s chief of staff, “We lost the trophy, but Brazil won the World Cup. He said that according to figures released this week by Brazil’s federal government, the World Cup was a triumph for the country’s transportation and tourism industries.

As reported by CNN, “according to government figures, 1 million foreign tourists visited Brazil during the month-long event, far exceeding its pre-Cup projection of 600,000 visitors coming to the country from abroad. About 3 million Brazilians traveled around the country during the event, just short of the expected 3.1 million.”

If this is true, this would be unprecedented increase in tourism due to a mega-event. Brazil only welcomed 342,000 foreign visitors in total in June of 2012, so an increase up to 1,000,000 would be huge if the data holds up. By comparison, South Africa experienced about a 200,000 increase in international visitors during the 2010 World Cup, Germany experienced an increase of 700,000 overnight stays in 2006, and no effects on tourism could be identified for France in 2008. For the Summer Olympics in Beijing and London, overall travel to Beijing and the UK actually fell during the month of the games compared to the previous year.

While Brazil has been quick to announce their good news, the country has been much less forthcoming with the actual source data. Annual tourism data for Brazil is only available in a form that allows decent comparisons to past periods up to 2012. At this time the World Cup data is only available in limited press releases. Based on the limited data released by the Brazilian government, the event looks like a huge success. Time (and data) will tell whether these initial positive findings hold up.

The Worst Economic Impact Estimate Ever? (Well, maybe not…)

2014 July 15
by Victor Matheson

UPDATE:  Maybe the title should be changed to “worst reporting about economic impact ever”. Bloomberg reported yesterday that Ed FitzGerald, the Cuyahoga County Executive, said that LeBron’s return would boost the Cleveland economy by $500 million. FitzGerald appears to have said nothing of the sort. According to the Cleveland Plain Dealer, with LeBron on the team, FitzGerald’s office stated that the total economic impact of the Cavs on the region might reach as high as $500 million, but James returning is most likely to increase the total economic impact on the region by only around $50 million. I would say that is still high due to the issues I detail in the original article below, but a $50 million claim doesn’t even come close to “worst ever” status.

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Bloomberg reported yesterday that Ed Fitzgerald, Cuyahoga County Executive and Ohio gubernatorial candidate, announced that LeBron James’ return to Cleveland will provide an economic boost of $500 million to the local economy.  I would guess that the true number will  be roughly 95-98% less than Mr. FitzGerald’s claim Bloomberg’s absurd reporting, so I am going to go ahead and call this the worst economic impact estimate ever. (UPDATE:  Again, Mr. FitzGerald actually claimed a much lower marginal impact which, while probably high, isn’t all-time worst material.)

Even before getting into the more serious economic problems with the study, let’s look at the raw data itself. With a metropolitan area population of 2.1 million, a $500 million impact on the area would mean that every single man, woman and child the region will be engaging in an average of $240 in Caviliers related spending every year for the rest of James’ career. Possible, but unlikely.

More specifically, in 2009-10, LeBron’s last year in Cleveland, the Cavs sold 20,562 tickets per game at an average price of $55.95 for a total regular season gate sales of $47.2 million. Last season, attendance was down to 17,329 and ticket prices were only $43.31 for a total gate of $30.6 million. LeBron’s return will certainly bring team gate revenues back to at least $50 million, but an increase in $20 million still leaves $480 million of Fitzgerald’s claim Bloomberg’s reporting yet to be explained. John Carroll University professor LeRoy Brooks claims that ticket prices are much higher than face value when James is in town based on ticket resale data, but resale data is not a random sample of ticket prices and only represents a small fraction of tickets purchased. Just because one guy scalps a courtside seat for $3,000 doesn’t mean that the typical ticket buyer is paying prices like this.

In fact, the Cavs’ entire team revenue including all sources was only $159 million in James’ last year and $145 million last year. Even the Knicks, the highest earners in the league, generated only $287 million last year. And James’ Miami Heat only generated $188 million in revenue last year. Unless LeBron James can somehow generate 2 1/2 times as much revenue in Cleveland as he did in Miami, we will have to look for other places to find that $500 million.

Bars and restaurants near the arena should benefit, but attendance will only be up about 20% next year. And even if people are willing to pay a lot more to see the Cavs if James is playing, they aren’t willing to pay a lot more to eat before the game. So what about hotels? Well, don’t count on lots of out of town visitors coming in to watch LeBron since tickets will be impossible to get. I am not aware of any data that suggests teams with big stars have more non-local fans at games than any other teams.

Of course, these are really just small issues. The bigger problem with FitzGerald’s claim is that it falls prey to one of the most serious fallacies in economic impact analysis:  the failure to account for the substitution effect. Any money spent by local residents at Cavs games is money not spent elsewhere in the local economy. The extra 150,000 fans that will be going to watch LeBron next year are 150,000 less people going out to nightclubs, restaurants, and theaters. The higher ticket prices that fans will be paying leaves less disposable income to spend on Indians or Browns games, or movie tickets, or bowling, or free-style skydiving, or whatever it is that Clevelanders would do, and have been doing, without being able to watch LeBron win games. Similarly, every kid in Cleveland will be getting a LeBron jersey for Christmas or Hanukkah this winter but this doesn’t mean they will be getting more presents, just different presents. The jersey manufacturers’ gains are equally matched by losses for the makers of ugly sweaters.

It is a great time to be a sports fan in Cleveland, and there is no doubt that LeBron will make many Clevelanders happy. He is just unlikely to make many of them, other than Cav’s owner Dan Gilbert, rich. And FitzGerald Bloomberg reporter Mark Niquette does a great disservice to the community that he governs writes for by inaccurately throwing around reporting numbers that have absolutely no basis in reality.

I think I am still comfortable calling this the worst economic impact estimate ever, but  Now that this is no longer the worst economic impact report ever, I am inviting any of my colleagues to nominate other candidates for this ignominy.

The Strike Zone as a Probability Density Function

2014 July 8
by Phil Miller

The strike zone in baseball is supposed to be the area above the plate and between the batter’s armpits and knees.  Seems simple enough, but  John Palmer suggests that it is more complicated than that.

Several days go, while watching some very erratic home-plate umpiring, I posted a short item to Facebook quoting myself, “The strike zone is a probability density function.” I had originally made the statement during a play-by-play radio broadcast of a London Tigers baseball game over 20 years ago. The Tigers were a AA minor league team. The radio station manager asked me not to do that again and not to try to explain it on air.

This is an interesting way to think about the strike zone.  What John is implying is that the probability of a strike being called within the strike zone is determined by where it is in the strike zone.  In particular, John suggests that the closer the pitch is to the center of the zone, the more likely it will be called a strike.  He links to this post at FiveThirtyEightSports written by Etan Green that supports John’s claim.  The following graph from the article illustrates John’s belief about the strike zone.

zone_mesh

Over at Facebook, King Banaian commented

(T)here is not just one strike zone. The dimensions are not just spatial but umpire specific. So even your three dimensional depiction of the PDF isn’t quite right, and I question whether summing up along the umpire dimension gives us anything really meaningful about the strike zone.”

The strike zone may also be situation-dependent.  For example, an umpire may slightly expand his strike zone if he realizes that he called an earlier ptch a ball when he should have called a strike.

Lastly, in watching my sons play baseball over the years, there is definitely a difference in strike zones between youth baseball and pro baseball.  In youth ball, the strike zone tends to move around more.  In the pros, the strike zone seems more consistent to my untrained eye.

Superb World Cup ‘Selection Bias’ Example

2014 July 4
by Liam Lenten

For all those economics professors and tutors out there who struggle to explain the crucial concept of ‘selection bias’, a nice illustration can be found in FIFA World Cup finals records. With students (at least those who do not loathe sport) currently in soccer-crazy mode, they may be more motivated to understand this concept through the following trivia question:

Q: In World Cup (finals) history, which team has the highest goal-scoring ratio (goals scored divided by games played)?

Scroll below for the answer, which may be surprising to many, except the amateur World Cup historians among you.

Most people would instinctively say Brazil; however, they appear second on this list at 2.16 per game (218 from 101 games, inclusive of the second-round of the 2014 edition). Germany follows at a very-close third with 2.15 (221 from 103).

The record-holders are…wait for it…Hungary! Yes, those ‘Mighty Magyars’ top the list and (get this) by a comfortable margin, too – indeed a chasm – their 87 goals in 32 games comes in at an astonishing 2.72 goals per game.

If you don’t believe me (and you’re more than entitled not to), check the figures here. Hungary has never won the World Cup, but have twice reached the final: in 1938, when they lost to Italy; and again in 1954, with legends Puskás and Kocsis (et al.) in their ‘Golden Team’, which came into that World Cup undefeated in more than 4 years, only to squander a two-goal lead (which they had after only 8′) to (the then-West) Germany, who incidentally they had annihilated in the first round by the incredible scoreline of 8-3.

OK, so what is the selection bias here? Well, look at the chart below (from statista), which displays average goals per game by World Cup. The flags I added at the top of the bars denote the World Cup finals that Hungary both entered and qualified for.

goals by world cup

From this, it is easy to see that scoring outcomes were lower from 1962 compared to earlier, with a further decline (albeit slight) since then. Hungary is but one of a number of national football teams that were among the best handful in the World for considerable periods at any time since the inaugural World Cup in 1930 (according to retrospective Elo ratings, they were ranked number one as late as 1965). However, of all national teams in this category, Hungary is the one that played the highest proportion of its matches in higher-scoring World Cups.

For all you Magyars out there lamenting your boys’ extended absence from the big stage (28 years now and counting), rest assured that (since it’s unlikely that Brazil and Germany will ever get anywhere near 2.72) the only way to guarantee holding this highly-prestigious record in perpetuity is to continue to NOT qualify for the finals – proof that there is indeed success in failure!

Please note: all future TSE contributions from Liam Lenten will also be cross-posted on his new personal blog, see: http://liamlenten.wordpress.com/

Introduction to Neymar

2014 May 31
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by Skip Sauer

This week’s WSJ Magazine has an entertaining story by Jason Gay on “Neymar da Silva Santos Júnior, the 22-year-old prince of Brazilian soccer.” He’ll be bigger than Beckham if Brazil win the forthcoming World Cup (current odds: 3-1).

Gay’s story is full of good lines. My favorite is on the scale of the stage for Neymar and company: “The last World Cup final, in 2010 between Spain and the Netherlands, was watched by an estimated 700 million people, which makes the Super Bowl seem like open-mike night at a coffee shop.” On Neymar’s fame, Gay relays Roger Bennett’s observation that Neymar’s jaw-dropping skill set made him into “‘a footballer for the YouTube age’ … Bennett believes that his worldwide reputation grew principally through short video clips, perfect for dissemination on social media.” That’s an interesting point. Here’s a startling fact: Nike signed Neymar at the age of 15 (he’s now 22). They were on to him early.

One thing you won’t find much of in Gay’s story is a discussion of Neymar’s stats, but these are easily found at ESPNFC. This year he’s been scoring at a rate of one goal every two games, with two assists every five, all while undergoing the transition into an established Barcelona team. His strike rate for Brazil has been a degree or two higher. Gay’s story paints a picture of an athlete who won’t shrink from the spotlight of the World Cup. He’s clearly capable of the spectacular, so I expect we’ll see a “Nike moment” or two in the next month of games.