The Sports Economist

When readings Skip's post on the CFL this afternoon, I noticed this article listed as being one of the most popular over at the Toronto Globe and Mail. It describes the pricing of tickets to Buffalo Bills games being played in Toronto in the next few years:

Tickets for the Buffalo Bills' eight-game series in Toronto will average $183 per seat — more than triple the cost for the team's home games at Ralph Wilson Stadium this season.

The ticket prices, ranging from $55 to $295, were released Wednesday by the Toronto-based group hosting the series, which will have the Bills play five annual regular-season and three preseason games at the 54,000-seat Rogers Centre through 2012.

The prices are in Canadian money, which is currently near par with the U.S. dollar, and do not include a large bulk of VIP sideline and hospitality suite seats, which will raise the average even higher.

Despite the hefty price, organizers anticipate the games selling out after 180,000 ticket requests were registered on a Web site last month. About 30,000 tickets per game will be distributed in two weeks by lottery to Internet registrants as well as a limited number of Bills and CFL Toronto Argonauts season-ticket holders.

Compare those prices to the prices of Toronto Argonauts games. Single game tickets are not for sale yet for the 2008 season, but choice seats in their 3-game package go for $189 total and season tickets range from $300-$700 for a 9 game home season plus a few other other goodies.

Which brings me to one of Skip's thoughts about why government subsidies have been hard to come by for CFL teams:

It is possible that the CFL makes so little money and has such a small impact that the relocation threat is not operative. There is in fact relatively little demand for football stadiums, public or privately financed.

It's anecdotal, I realize, but there seems to be high demand for NFL football in Toronto. That may simply be due to the novelty of NFL football being played in Toronto. Or perhaps it's due to the value of the NFL brand name, a value the CFL may not have in it's country.

Labels: cfl, demand for football, NFL Buffalo Bills

Five CFL teams – the Montreal Alouettes, Winnipeg Blue Bombers, Hamilton Tiger-Cats, Saskatchewan Roughriders and the ownership of a conditional Ottawa franchise – are aggressively pushing plans to build new stadiums or drastically alter and refurbish old ones.

Factor in the anticipated makeover of Vancouver's B.C. Place Stadium, which could add a retractable roof to the facility, and a potential redesign of Toronto's BMO Field to accommodate the Argonauts, and the CFL could be looking at well over a half-billion dollars invested in stadium infrastructure during the next five years.

Many would suggest it's long overdue.

Labels: cfl, nhl, stadium subsidies

In the end, according to interviews with people in the room, the decision to proceed or not probably came down to the Big East and Big 12.

The Big Ten and Pac-10, thanks to an economically advantageous relationship with the Rose Bowl until at least 2014, were going to oppose just about anything put on the table. The smaller conferences and Notre Dame were likely to support whatever the majority did as long as their access and revenue weren’t cut. The ACC was in favor of the SEC’s proposal.

That left two swing votes, the Big East and Big 12, who had they pushed for further discussion could have weakened the Big Ten and Pac-10’s silly obstruction talk – “they’ll have to pry a playoff system out of my cold dead hands,” the Ohio State president barked last year.

Best I can tell, after years of discussions with the people in power by me and my colleague Josh Peter, is that while there isn’t a single reason, the oft-cited “protection of the regular season” is a critical one.

Labels: NCAA; college sports; football

The purists keep telling me that soccer will never make it here until we adopt
promotion and relegation. I think they're dead wrong. I think it's much more
likely that the rest of the world, this damned, abominably commercial world,
will be forced to recognize the merits of the American franchise system.

Labels: horse racing, scandals, soccer

CLEVELAND--The Greater Cleveland Sports Commission has been named "2007 Sports Commission of the Year" by the National Association of Sports Commissions.

The award was chosen by a national panel of Sports Commission executives and was presented at the 2008 NASC Sports Event Symposium held in Omaha.

Labels: labor markets, MLB, NASCAR, NBA

Whether to support the Games themselves or merely the city's official bid, the latter carrying a price tag of $50 million to $100 million, one hears that "only private money" is underwriting those activities; no tax dollars will be spent. "Private" implicitly refers to donations from corporations and wealthy citizens. However, in jargon that students learn on the first day of Economics 101, virtually all expenditures or allocations have an opportunity cost, whether it be for a firm or family.

If Boeing, Sears, Motorola or McDonald's gives $1 million to help finance our Olympic bid, that is $1 million that does not get returned to stockholders as dividends or plowed back into the company for new projects and production. In addition, that is $1 million that does not, then, support an exhibition at the Field Museum, a new gallery at the Art Institute, or an after-school youth program.

When I sit down each December to write out checks to local, national and international charities and other non-profit organizations, I am implicitly choosing how to allocate, say, $2,000 among various groups and activities. The slice that goes to WTTW Ch. 11 doesn't go to the Chicago Coalition for the Homeless or the American Cancer Society—or to the University of Chicago. It's still just $1 million or $2,000 no matter how a corporation, a wealthy benefactor or I cut it.

There is no free lunch in this world and no free Olympic Games either.

Labels: Allan Sanderson, Olympics, opportunity cost

Blame all this on Max Starks.

Starks started on the offensive line in the Super Bowl for the Pittsburgh Steelers three Januarys ago. But he couldn't hold onto his starting position, losing the right tackle spot to Willie Colon last training camp.

Starks wound up starting only four games for the Steelers in 2007. He became a disposable player, right?

Starks became a free agent this off-season, but the Steelers slapped a transition tag on him to prevent him from leaving. They were willing to guarantee him $6.8 million in 2008 to have him ride their bench again.

That displayed the value of offensive linemen in today's NFL – and the 2008 draft drove that point home.

Michigan's Jake Long became the first offensive tackle selected No. 1 overall in a draft since 1997 when the Miami Dolphins gave him that honor Saturday.

Seven more offensive tackles were selected in the next 25 picks – and Atlanta, Carolina and Kansas City traded up to get theirs. That's eight offensive tackles in the first round.

When the Prime Minister addressed a schools sports conference in Telford in February, the 2012 Olympics awarded to London were supposed to be the nation's feel-good centrepiece for nine major international sporting tournaments, starting with the the 2009 World Twenty20 and the 2010 Ryder Cup in south Wales.

Mr Brown had good reason to be cheerful. The next Ryder Cup was in the bag, obviously, as were the London Olympics, the 2014 Commonwealth Games in Glasgow, the 2014 Ryder Cup at Gleneagles, and the 2019 Cricket World Cup. But now, thanks to a fastidious and, no doubt, smug desk Johnny at the Inland Revenue responsible for pointing out the devil in the detail of the Income and Corporation Taxes Act of 1988, four of the events yet to be allocated - the 2013 rugby league World Cup, the 2015 rugby union World Cup, Euro 2016, and the 2018 football World Cup - are all in jeopardy.

And here is why. When Thierry Henry steps on to the Old Trafford turf on Tuesday night for the second leg of Barcelona's Champions League semi-final against Manchester United, it will cost the Barça star more than he bargained for. The Revenue's little squeeze, unearthed by said clever-clogs tax mandarin, means Henry, like all visiting international athletes and entertainers who are handsomely rewarded by major sponsors, will have to declare his endorsements and pay a slice of the income from his high-profile global sponsor, Gillette, to the Revenue. No other country in the world applies such a charge - and that seemingly inconsequential quirk is discouraging international sports governing bodies such as Uefa, Fifa, the International Cricket Council and the International Rugby Board from favourably considering staging their events in this country.

If their admittedly pampered practitioners baulk at coming to the UK because of the tax, their event is diminished. The easy alternative, of course, is to take it somewhere else. And, as we have seen with the Champions League, that is already happening.

When the Treasury were made aware of this issue, through a legal challenge in May 2006 by Andre Agassi, they predictably dug their heels in - despite the American tennis player's reasonable assertion that he did not live in this country and that the payments went not directly to him but to a service company, which is common practice.

Agassi brought the action after receiving a demand for £27,500 on his endorsement earnings in the UK during the 1998-99 tax year. The Law Lords ruled that Nike and Head, his sponsors, benefited from his presence at Wimbledon - and so did he. Which is hard to argue with - if you don't take account of the knock-on effect the ruling has. And that is not the brief of civil servants. These are bottom-line merchants and, in the case of the Revenue, that is only about money.

It was a crucial victory for the keepers of the national purse. Had they lost they faced paying out millions to superstar athletes and entertainers stretching back over 18 years. Indeed, when HM Revenue and Customs won the case, they decided to turn the screw even further.

Initially, they calculated the tax as a percentage of 365 working days in a year. They then concluded that, as nobody works every day of the year, they would reduce that total significantly to take into account holidays and time off for injury - so their cut went up accordingly. What started as an isolated case has mushroomed into a serious problem for sport and the government.

'Two major international sports stars, a golfer and a tennis player, are considering not coming here for some tournaments this summer,' a well placed source tells me. 'They will compete at Wimbledon and The Open, obviously, but bypass smaller events. This has already happened and one big golf event last year attracted a poor field because of this tax.'

Henry shares the Gillette spotlight with two obvious suspects in this regard: Tiger Woods and Roger Federer. There is little chance of Woods not playing in The Open, or Federer boycotting Wimbledon. But, for various reasons, they will not be lighting up our summer anywhere else.

Already, Federer opts out of Queen's in favour of the grass of the Halle tournament in Germany. And Woods plays only in those tournaments where his presence is adequately compensated - adequate being $3million. The richest sportsman in the world earns about £1m a week, whether he is swinging a club or not, so he is unlikely to look favourably on handing over any of that to the British taxman.