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Quick Notes & Links

2010 June 15
by Skip Sauer

The NHL is thumping its chest over an excellent season for business.  Says Commissioner Gary Bettman, “”By whatever method of measurement you want to use — be it ratings, revenues, page views, video starts, sponsor activations or simply the quality of play – the game, the players, the fans, our clubs and our partners teamed up to make 2009-10 a season to remember.”  Here at TSE, we do tend to focus on things like ratings, revenues, and, uh…,  attendance as measures of league health, which is not mentioned in the article.  Checking ESPN’s data (as yet not quite complete), average attendance dropped 2.3% from 2009, from 17,476 to 17,067 per game in the regular season.  That’s still up from an average of 16,550  per game in the pre-strike year of 2004, which further substantiates the work of Dave Berri and Martin Schmidt, who showed that strikes have little if any long term impact on fan interest in a sports league.

In Houston, the Astrodrome sits vacant while citizens of Harris County decide what to do with the property.  Here are some interesting financial facts in the situation:

Harris County pays about $4 million annually just to maintain and insure it. The debt totals about $40 million on a project that cost $31.6 million to build.

On Monday, the Harris County Sports and Convention Corp. revealed multiple suggestions for the building’s future. They ranged from demolition, which voters would have to approve at about $88 million, to a total refurbishing as part of a $1.35 billion makeover of Reliant Park costing the public $900 million.

I never thought I’d regard $88 million in demolition expense as a bargain, but compared to $900 million in “refurbishing” costs, it just might be.  There’s much more of interest in the story, including notes on how the outdated Astrodome was a trend-setter on a number of margins during its heyday.

Finally, the University of Texas’ decision to stick with its partners in the Big 12-2 is discussed by Andy Staples at  SI.com.  What this implies about the future of realignment is not quite clear, but it does suggest that there are limits to the value of  geographic expansion by college conferences.  Staples quotes extensively from a five page white paper written by Big 12 Commissioner Dan Beebe, which was obtained under the freedom of information act from the University of Colorado.  Here’s one of the more telling lines from that paper:  ”Clear identification of the highest level of intercollegiate athletics reduced to a smaller grouping of schools (e.g., four 16-member conferences) could cause eventual tax consequences and tremendous pressure to pay those student-athletes responsible in programs driving the most revenue…”

3 Responses
  1. James permalink
    June 15, 2010

    I find the tax issue laughable. From a PR perspective you’ll get congressmen to push literally anything (you hear about the movie futures they were set to approve today? Middle of a crisis whose roots were entirely built around derivatives and they are spending their time introducing new, way shadier ones), but the legal argument behind is is garbage.

  2. Dan permalink
    June 15, 2010

    Re: The Astrodome, why not do what they did with the Pontiac Superdome and put it up for sale? If the politicians had to pay the 4 million upkeep out of their own pockets the Astrodome would be long gone.

  3. Brad H. permalink
    June 15, 2010

    I think that the tax implications in that white paper refer to the possibility that university athletic departments might be subject to the Unrelated Business Income Tax (UBIT) which could easily be done by statute. The legal argument behind this idea is far from “garbage,” as a recent report by the Congressional Budget Office makes clear…

    http://www.cbo.gov/ftpdocs/100xx/doc10055/MainText.4.1.shtml

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