Wednesday, March 31, 2004

Changing the walk rule 

JC at Sabernomics considers the implications of adopting Bill James' suggestion to change the walk rule. JC is surely correct that productivity differences between hitters will increase. He might also be right in that long term adjustments will not be fan-friendly. I still support experimenting with the rule change in spring training. Perhaps an independent minor league will consider adopting it.

More on the Jets' stadium deal 

Bill Sjostrom has an interesting observation on the queue for Jets tickets, and some useful links on the stadium subsidy issue.

NCAA to ban media guides 

According to a story in the Chicago Tribune (registration), the ACC and Big 10 are pushing a proposal to ban media guides, at least in the printed form. The reason? Competition in recruiting has transformed the media guide from information source into a costly vessel of glorification.
When Bob Brooks started covering Big Ten football in the 1940s, media guides did not exist.

"You'd be given a roster," Brooks recalled. "And maybe a background of the head coach."

As the years went by, an entirely different problem emerged. Football media guides grew like sewer rats, some swelling to 500-plus pages as schools beefed up their books to impress recruits.

"From the press standpoint, those things are terrible," said Brooks, who talks Iowa football on KMRY-AM in Cedar Rapids. "What I did for years was go through them and rip out all the fluff."

......Most NFL guides weigh a fraction of what college guides do. Although they're often more than 300 pages, they can be half the size of the 8½-by-11-inch college guides and typically contain thin paper, rather than the shiny and glossy pages.

"Why they have not done something about this in the past is unbelievable," Brooks said. "Michigan wanted to have the biggest guide. Then Michigan State did. Now we're up to the Webster Fully Unabridged Dictionary."
The modern media guide is a form of rent dissipation, that stems from the rule which prohibits schools from paying players. Schools thus compete on non-monetary margins - lush locker rooms and player lounges, recruiting parties (we've seen recently where that has led), tutoring services, athletic dorms - to get an edge on recruits. Rules are then subsequently passed in a futile attempt to reduce these costs. The recruiting rule book has gotten so big and complicated that athletic departments need a lawyer on staff to interpret it!

The current record holder for the media guide is Notre Dame, checking in at 788 pages. No surprise there. Notre Dame has plenty of rent to dissipate.

Tuesday, March 30, 2004

The Economist on statistical analysis and sport 

The Economist magazine has a story on statistical analysis in sports. Most of the article will be familiar to people who have been following this trend. The story pays appropriate respect to our intellectual godfather, Bill James, and mentions the contributions of economists David (4th down) Romer and Steve (down the middle) Levitt.

I'm an advocate of the proposition that economics sheds light on sport, and that sports shed light on economics. It's a two way street, and the article shares that view:
Shrewd observers seek understanding not through received wisdom but from the statistics that accrue over weeks and seasons. Analysing those statistics allows one better to determine which players are better than others or what the best strategy might be against a certain team. ....

And the cross-pollination between sport and social science works both ways. In September 2002, a group of economists at the University of Chicago wrote a paper in the American Economic Review arguing that in taking penalty kicks in football, strikers would do better to aim at the centre of the goal, as goalkeepers invariably dive one way or the other in a desperate blocking attempt. Steven Levitt and his colleagues had an added motivation for their subject: game theory, their discipline, often lacks real-world examples, and in sport they saw a rich set of unbiased, real-world data with which they could validate their theoretical constructions. They saw, in other words, the opposite of what those grizzled scouts and coaches see: a field of data rather than a field of dreams.
Thanks to Mark at Rational Explications for the tip.

I'm a starter! 

"Batting seventh, second baseman, The Sports Economist," .... at Only Baseball Matters. I guess I'm the counterexample to the title of that fine blog on the SF Giants. Time to step up to the plate and knock in some runs!

Some facts on regulation, refining, & gasoline prices 

No new refinery has been built in the U.S. since 1976. Although expansion of existing refineries increased capacity through 2002, capacity is unchanged since. Demand for gasoline continues to rise, but regulatory mandates have forced investments in "clean fuel expenditure" and inhibit investment in new capacity, according to this story in the Houston Chronicle. "The U.S. refining industry could spend as much as $20 billion on meeting all types of regulations this decade, predicts Bob Slaughter, president of the National Petrochemical and Refiners Association. Depending upon size, this could be enough to build a half dozen refineries."

Given the shortfall in refining capacity, the U.S. has resorted in recent years to increased imports of refined gasoline. But this source is also being checked by regulation.
The United States needs 1 million barrels per day of gasoline imports during the summer just to keep the cars and trucks rolling .... Over the course of a year, imports amount to about 10 percent.

But even that source of supply has its environmental problems. Regulations that went into effect on Jan. 1 are keeping the equivalent of 150,000 barrels per day out of the country. Gasoline imports for the year to date are down about 6 percent, the equivalent of about 50,000 barrels per day.

Much of the 150,000 barrels has been coming from suppliers such as Russia, Turkey and South America, where refineries aren't set up to produce the lower-sulfur fuel that is now required.
My sense is that conditions in the gasoline market will get much worse before they'll get better. And the culprit is environmental regulation. Consumer anger at gasoline prices is usually focused on "greedy oil companies." How will consumers respond when they realize that environmental regulations are responsible for high prices?

To be sure, there are many factors at work in the gasoline market. Crude prices are up. Energy demand in China is growing inexorably. OPEC production decisions are paramount. But if more severe environmental regulations in the U.S. play an important role, U.S. gasoline prices should have risen relative to prices in the rest of the world. That's testable, and my hunch is its correct. The Knowledge Problem has a series of posts for those interested in more information on this topic.

Monday, March 29, 2004

The NIT's antitrust suit vs. the NCAA 

The NIT has charged that the NCAA violated antitrust law when it threatened to sanction teams who declined an invitation to the NCAA tournament in favor of the NIT. Jeffrey Kessler, an attorney representing the NIT, states his case in the NY Times.
In 1950, for example, City College of New York played in and won both tournaments.

In 1962, Loyola, Mississippi State, Dayton, the University of Houston and St. John's all chose to participate in the N.I.T. rather than accept invitations to the N.C.A.A. tournament. In 1970, Marquette, one of the best teams in the nation that year, chose to go to the N.I.T. over the N.C.A.A. tournament, which provoked an outcry by the powers that ran the N.C.A.A. tournament. .....

[I]n the early 1980's, [the NCAA] took decisive action.

The N.C.A.A. changed its rules so that all schools invited to its tournament would be required to boycott the N.I.T. under the pain of N.C.A.A. penalties, and combined that rule with a major expansion of the N.C.A.A. tournament field to 64 teams from 32. The result is that each year the N.I.T., or any other tournament that may try to enter the market, is prevented from competing for any of the best teams in the country, and the N.C.A.A.'s monopoly power and profits are assured.
The NIT may have a very good case. I do not object to the NCAA's effective monopoly in the tournament in any way shape or form, but a boycott requirement violates antitrust law. A simple requirement that a school commit to the NCAA tournament if an invitation were accepted would have been sufficient, and lawful. The NCAA, by the way, is a serial violator of the Sherman Antitrust Act, so this is nothing new. But the NIT is woefully slow in suing over something that occurred twenty years ago.

Pivotal Moment 

Xavier gave Duke a strong challenge yesterday, matching Duke's intensity but not quite their athleticism. The game's pivotal moment was Anthony Myles' little push on Sheldon Williams, fouling out Xavier's best player with twelve minutes remaining. George Vecsey suggests the Gremlins were at work again:
Anthony Myles looked to see his replacement scampering up to the scorer's table, but Coach Thad Matta had summoned the sub a moment too late to get him into the game...... Just don't foul.

Six ticks of the clock later, the great deus ex machina of sport struck again. The same practical joker who allowed Christian Laettner to catch an unobstructed pass and turn and shoot against Kentucky a decade ago was back. The same prankster who used to favor Notre Dame and the Boston Celtics back in the old days was pulling the strings once again.

The same mischief-maker who flicked Derek Jeter's fly ball into a home run, the same sadist who made some poor boob in Wrigley Field stick out his hands and deflect a foul fly, was in midseason form.

Before Myles could get out of the game for a rest, he made contact with Duke's Shelden Williams under the Blue Devils' basket. This was not some blatant collision that made the Georgia Dome shake, but rather two large and determined athletes grappling for the same little corner of this crazy universe.

One tweet of the whistle and Myles was out of the game for good, with 16 points and 10 rebounds, with 12 momentous minutes and 27 significant seconds left in the game.

Sunday, March 28, 2004

Okla State-St. Joe's 

Nice article on a great game, by John Feisntein, dean of college basketball writers.

Friday, March 26, 2004

On Adu, and youth 

Freddy Adu, the 14 year old soccer phenom, will make his MLS debut for DC United on April 3rd. The match will be televised on ABC at 4pm ET. Adu finished school last Friday and traveled to Charleston, SC to play his first game with United in the Carolina Challenge Cup. He scored within 11 minutes. This could be fun to watch, and United's TV schedule indicates that he'll be on a lot. Adu is the highest paid player in MLS history, and is surely worth every penny of his salary.

Ring a bell? This brings to mind Michael McCann's research which I recently referenced. McCann's analysis shows that, contrary to popular opinion, high school players drafted by the NBA are quite successful. Nbadraft.net has an interview with McCann. When asked why he wrote the article, McCann said:
I initially came up with the idea right before the 2001 NBA Draft. At the time, I had read a number of newspaper stories criticizing the ability of high school players like Kwame Brown, Tyson Chandler, and Eddy Curry to participate in the Draft, and how their participation was somehow harmful to both them individually and to the NBA. These stories would often say something to the effect of, "for every Kobe Bryant, there are two or three Korleone Youngs" and how history showed that high school players tended to fail in the NBA. I was honestly struck by the fact that no one seemed willing or interested to challenge this assertion, and I was curious to see if it was indeed correct. After conducting preliminary research, I soon realized that this assertion was woefully wrong, and, in all likelihood, had only become accepted as fact because it was repeated and repeated until it became recognized as such.

Question: Critics of your theory claim that a player like Korleone Young is a prime example of why a ban on high school players makes sense. How do you respond?

Michael McCann: You're right - many people regard Korleone Young as a "failure" because he was a second round pick in 1998 and only played one season in the NBA. Well, first off, bear in mind that at age 19, he earned $289,750 to play in the NBA. Had he never earned another dollar playing basketball, he could have returned to college at age 20 with plenty of money in the bank - and certainly more money than any 20 year old that I knew in college.

Instead, however, Young has continued to play basketball professionally over the past five years, earning between $50,000 and $100,000 per year to live abroad and play two or three basketball games a week for eight months of the year.
Not bad for "a failure." Let them play!

A stadium whopper 

The Jets want to move back to New York, and have their eyes on a site that connects to the Javitz Center, on the banks of the Hudson in Midtown Manhattan. Interesting location. The Jets are offering to pay $800 million towards a $1.4 billion cost. The figures come from this story, which does not make clear just what property rights the Jets obtain for their millions. The stadium proposal includes $600 million in public funding which, if solely for the purpose of the stadium, would set a record of its own.

Suppose there is no land ownership transferred (this appears to be the case), merely a lease tied to the stadium, and nothing more. If so, this implies that the Jets' $800 million expenditure is a measure of an NFL team's willingness to pay for a stadium. Public subsidies for stadiums elsewhere - where teams have spent a tiny fraction of this amount - thus appear to be wealth transfers to franchise owners. This simple notion echoes a point made at length in a recent paper by economists Marc Poitras and Larry Hadley of the University of Dayton.

How do owners get away with this? I call this the "franchise monopoly game." Monopoly leagues create artificial scarcity in the number of teams that can participate in the league. They control entry and to a great extent, location. The initial wave of public funding for sports stadiums began in the 1950s, when MLB spread teams from multiple team towns like Boston, Philadelphia, New York, and St. Louis, to new cities. Does your town want a team? Build us a stadium. If not, we'll go elsewhere. Since then, threats to relocate have been credible, and subsidies have increased dramatically. Some slides from a lecture I give on this topic are here. Russell Roberts links the political pitch on the economic impact of stadiums to Bastiat's broken window fallacy. Andrew Zimbalist, who wrote one of the seminal studies on this topic, comments on the Jets' proposal in this story. He's as puzzled as I am about the terms of the Jets' deal. This one bears watching.

Thursday, March 25, 2004

More from Bill James 

AEI's The American Enterprise has an interview with Bill James. Of course you'll just go there and read it, regardless of what I say. Here's a snip though:
TAE: You've advocated a number of changes to speed up games, such as thickening the barrels of today's whippet-thin bats, limiting time outs, limiting pitchers, etc. A couple of years ago, some suggested limiting the number of intentional walks. You might call this the Barry Bonds Rule.

JAMES: I think intentional walks should be limited, but among the things that slow down baseball games intentional walks don't rank in the top 50.

I suggest a batter should be able to decline a walk. Not only an intentional walk, but any walk. The batter's team should able to say, "No thanks, I don't want that walk." And if you walk him again, he goes to second base and anybody already on moves up two bases. The reason that should be the rule is because the walk was created to force the pitcher to throw hittable pitches to the batter. That is the walk's natural function. To allow the walk to become something the defense can use to its advantage with no response from the offense is illogical and counterproductive.

TAE: Don't TV time outs, which break the rhythm of the game, make baseball unendurable for many viewers?

JAMES: I think prolonged TV time outs are a serious mistake, because they do make the game less enjoyable. That depresses both live attendance and viewership. And it also tends to create an artificial surplus of advertising time on baseball games, which drives down the price of advertising minutes.

TAE: In his recent State of the Union speech, President Bush called for a ban on steroids in baseball.

JAMES: I was glad to see it. I think it is a serious issue. It's serious because what professional athletes do now, college athletes will be doing in five years, and high school athletes will be doing in ten years or sooner than that, and there are serious negative health consequences. We can't permit baseball to be a wedge which opens that door. So I was glad to see him pay some attention to it.
Hat tip to Tom in Houston.

Quote of the day 

From Keith Olbermann's Constitutional Amendment Prohibiting Corporate Welfare: any official of any government "who pays, suggests his government should pay, or promises a sports franchise, or ... money towards building a stadium or refurbishing an existing one, that official will be sentenced to a life of hard labor in a federal penitentiary."

From Mike Lupica's Mad as Hell, 1996, via Raymond J. Keating, "Sports Pork," Cato Institute Policy Analysis No. 339.

Teacher quality 

Virginia Postrel surveys research on teacher quality. The bottom line is that teachers' unions have compressed wages, and hence those with the most potential find jobs in other sectors.

This is consistent with what is currently happening in South Carolina. A program to introduce sizeable tax credits for any child in any school - public or private - is being attacked by the SC Education Association (the union). The program would allow any child to remain in pubic school at no extra cost, or to use the credit to subsidize tuition elsewhere. This program would not decrease demand for teachers.* Rather, it would make earnings more sensitive to teacher quality. That's what competition does naturally, and unions and state monopolies suppress. Can't have that now, can we kids?

*Indeed, the union's advertisements imply that spending on education would increase as a result of the program..

Point and scoot -- NCAA tourney edition 

Nice story about Mo Finley, the giant-killer from UAB. Finley dreamt of playing for an SEC school, but got no offers out of high school, despite averaging 25 points a game. So when his chance came, he took down Kentucky with the shot of his life. Apparently, he was prepared for it. Good on ya, Mo.

Wednesday, March 24, 2004

More on Olympic construction problems 

See George Vecsey's piece in todays NY Times.

Bottom line: the games will likely go on just fine, and that is where the focus should be anyway. But small, lower income countries don't have the infrastructure and can't build it on short notice. Fat cat fans are in for a not so luxurious experience this August.

Footnote: Havana has put in a bid for the 2012 Olympics. Memo to Fidel: how about trying free elections first?

A succinct characterization of the Microsoft problem 

Floyd Norris explains an important dimension of the antitrust issue with Microsoft:
For antitrust regulators, the heart of the problem is the changing nature of the personal computer market. Consumers do want new features, as Microsoft says, and they do want them bundled in. Any nonexpert who has ever tried to download and install a program would much rather have it done by someone else.

But Microsoft's pattern has been to wait for others to pioneer a computer application and then to put out its own program. If that program is eventually bundled as part of the operating system in all new Windows computers, the first arrival screams foul, but in the end Microsoft wins.

Netscape pioneered Internet browsers but was left in the dust. RealNetworks, which led the way in music software, could face a similar fate. It is not easy to make money off a product that consumers must install themselves when the consumers already own Microsoft's version, which comes already installed.
There is the tradeoff: simplicity vs. innovation. We want simplicity, and Microsoft delivers it, relatively cheaply. But it may deter innovation by bundling every concept into Windows and aggressively pursuing, indeed extinguishing perceived threats to its dominance.

Microsoft clearly has its eye on a future where a "Media PC" provides integrative functions to household entertainment devices -- TV's, DVR's, sound systems, and so on. Bundling Media Player into Windows is just one step in the process. There is a race to create this technology, and Microsoft has assets which make it a competitor. Antitrust should neither hobble Microsoft, nor allow Microsoft to hobble its rivals in this race. That is a tricky problem for antitrust analysis, which has enough difficulty reaching consensus for a static market, let alone projecting what the future might look like in a dynamic world.

Norris has another observation that gives one pause about the future: "the risk is that Microsoft is becoming the functional equivalent of an old-style utility, with extensive government regulation that could even extend into determining what products it sells and at what prices." That would be the end of Microsoft. Perhaps they should distribute their billions in cash to shareholders, before litigants and regulators loot the whole lot.

Boswell on Woods 

Did the Caddyshack commercial announce the introduction of a "new Tiger?" Does the new Tiger just wanna have fun? Will the drought in majors continue this year? Interesting questions to ponder, prompted by Tom Boswell's engaging column in today's Washington Post (registration). Some key bits:
Consider Tiger's reaction to shooting 74-74-73 to finish the Bay Hill Classic last week, missing a chance to become the first man to win the same tournament five years in a row. It was the first time in his life Woods had ever shot three straight over-par scores in a PGA Tour event......... What was he going to do about it? Hit balls at the range until his blisters burst? Go home to his Isleworth mansion and putt on the living room rug 'til midnight? With the so-called "fifth major" -- The Players Championship -- this week and the Masters in three weeks, what was the world's most famous athlete going to do?

"Have a beer," said Woods. And he left Arnie's joint with a grin, but without hitting one more lousy golf ball.
Boswell's story suggests that Woods has modified his mindset from a singular focus on winning major championships to one with more balance, more emphasis on enjoying life. This could foretell disaster, but then again, there is a model for the more balanced approach: Jack Nicklaus.
Nicklaus won major pro championships over a 25-year period, from 21 to 46, in large part because his whole life was satisfying -- from golf to family to business. In his prime, he played half as much as others, yet won twice as often. As Chi Chi Rodriguez quipped, "Jack is a legend in his spare time."

As he approached 30, the undisputed King of his period, Nicklaus figured out how to keep his appetite for his sport fresh while avoiding the premonition that he'd left the rest of his life under-furnished. Now, at 28, Woods is doing the same.
Perhaps a page has been turned in Tiger's life. Though maybe not, as Nicklaus has always been a role model for Tiger. Either way, I'm not betting against him. The Masters is just a couple of weeks away, and Tiger can find his game -- its in his bones. Stay tuned.

Great story by Boswell, read it all.

Tuesday, March 23, 2004

Mark Cuban on officials... and stocks 

Mark Cuban owns the Dallas Mavericks, and now, a weblog! In this post, he calls on basketball officials to tighten up their act, and call plays by the book. No late game "let 'em play" stuff, no rookie treatment, etc. I'll buy that. He throw's in his two cents on Shaq too:
Why is it that everyone says that Shaq is so hard to officiate? Just because he is big and when guys hammer him they don’t impact his shot, doesn’t make it not a foul. On the flipside, if he lowers his shoulder or powers through someone, its a foul. The big guy should probably go to the foul line and foul out three times as often as he does.
Cuban's got an opinion - make that quite a few opinions - and I'm glad he's letting us hear them directly. Bringin' the game to the people!

Now, one of Cuban's posts states that "I think the stock market is closer to a Ponzi Scheme or chain letter than it is an efficient market." My question to Mark is, if you believe this, do you suggest we avoid stocks and stick our wealth back in CDs and T-Bills? History says no. See Jeremy Siegel's book, Stocks for the Long Run for the data and a well-reasoned argument. I'll be interested in what Cuban says on this topic (he's promised a discussion in a future post), but I'm not likely to be persuaded.

Steve Levitt and seminal thoughts 

This month's Wired magazine has a short note (not yet online) on Steve Levitt, the Clark medal winning economist whose thoughtful research on offbeat topics has generated significant interest inside and outside academia.

Steve makes the following observation, not intended as advice, but one most aspiring economists should take to heart:
I have a talent for taking a big pile of data, thinking economically about it, and sometimes making conclusions come out the other end. My least productive times as an economist were when I tried to be something else. My graduate adviser once told me I needed to write more seminal papers. I spent the summer on the couch trying to think seminal thoughts. Not a single one came to me.
Moral of the story? Levitt quickly abandoned the seminal thoughts strategy and focused on questions where his skills were valuable. Do that and avoid over-reaching, and look where it can get you.

Greece in a race to finish 

Greece is in a race to finish construction for this summer's Olympic games. Fewer than half of the facilities are completed, which in itself is not surprising. But the massive project has always been accompanied by concerns that the country might not be able to pull it off. Yesterday the organizing committee announced that they will abandon plans to build a roof over the facility housing the swimming competition.

The International swimming federation, FINA, issued complaints over the decision, while American officials took it in stride: "It's just like a swimming meet in Arizona, and we've gone to plenty of those." Still, one hopes that this is not the tip of the iceberg.

Monday, March 22, 2004

On corruption in boxing & Joey Torres 

Last week I posted on Joey Torres, the convicted murderer who claims his comeback fight was fixed. Sunday's LA Times has a lengthy feature on Torres. There are several notable elements in the article. First, it explains how Eric Davis, Paul Molitor, and other stars got involved with Torres: from jail, he convinced them to contribute to charity projects he initiated. Torres knew how to hustle.

The Times article also discusses what appears to be an extensive FBI investigation into corruption in boxing, involving "thousands of professional bouts." This could get interesting. Finally, the story of Joey Torres - born Kim Joseph Torrey - itself is simply bizarre.

How gambling spreads from state to state 

There is an informative article in the New York Times today on proposals to introduce a limited (but large) number of slot machines, aka "video lottery terminals" to Maryland and Pennsylvania. In Maryland, state officials have been watching potential tax revenues drift into Delaware slot machines for years. In Pennsylvania, the governor's office sees gambling dollars flowing to "New York, New Jersey and West Virginia. Now Maryland may soon have it. It's time for us to recapture some of that revenue."

Here's a thumbnail sketch of the process at work:
1) state governments with a budget squeeze license a form of gambling and take a share of the monopoly rent
2) to overcome political opposition, gambling revenues are earmarked for politically symbolic purposes such as education
3) the process spreads through a contagion effect, where neighboring states incrementally add forms of gambling to mitigate the flow of revenue across the border

This process is centuries old in the U.S. In some periods, opponents of gambling get the upper hand, and prohibition movements succeed in driving out legal forms of gambling. Budget crunches tilt the balance in favor of legalized gambling. Some slides from a talk I gave about this process are here. For a more in depth analysis, see my article "The Political Economy of Gambling Regulation," published in Managerial and Decision Economics, 2001. Both the slides and the article discuss the ebb and flow of legalized gambling in the U.S. since colonial times. The article is available in working paper form at my university web page.

Environmental regulation, with a foul odor 

North Carolina has petitioned the EPA to force reductions in pollution from power plants in neighboring states (yep, all of 'em) by 70 to 80 per cent. And throw in Michigan, at 50 per cent, for good measure.

North Carolina has been in trouble with the EPA before, and to obtain compliance agreed to reduce pollution at its largest power plants by 70 per cent from 1998 levels. (This story, mostly about the petition, has a few facts from the earlier episode). The petition thus seeks to impose similar costs on its neighbors. My hunch is that the EPA crowd would be delighted if they could do so: "For EPA, aggressive energy conservation and green power work hand in hand. EPA is committed to green power," said Bill Laxton, director of EPA's Office of Administration and Resource Management in Research Triangle Park, N.C.

These people are putting the nation's electricity supply at risk.

Friday, March 19, 2004

Point and scoot -- vacation edition 

One for Hootie
When a good man is vilified by the press, antidotes can be quite useful. Hootie Johnson was savaged by the press last year during his war of words with Martha Burke. The press acted like grade school kids on a playground in this episode. Eric McErlain provided a correction in his hall of fame post "In defense of Hootie Johnson."

Don't you understand what a contract is? A player collects a $3m signing bonus, with $2m deferred. Both are subject to forfeit if the player is judged to have committed conduct detrimental to the team. I think I'd be a team player if I had $5m at risk. Wouldn't you? For an example of idoitic behavior, check this out.

The forfeit clause makes sense in this context as well. Players are part of a team, and teams don't perform to their potential when selfishness is the order of the day. You see it every year in the NCAA tournament when well-schooled underdogs knock off the big dogs. Good luck by the way, to Andy Reid and the Eagles. Via Greg Skidmore's Sports Law Blog.

A picture is worth a thousand words
A puzzle, "Why are pitchers hitting more batters?" from JC at Old Fishing Hat.

Back to the Sports Book
Here in Vegas, the March Madness action is fast and furious, and every game's outcome - line adjusted that is - hangs in the balance to the buzzer. Even Duke (minus 34) - Alabama State! See you Monday.

Thursday, March 18, 2004

Ahhh, vacation... 

... hence limited blogging until next week. I've stored links to some gems though, which I'll dispense in small doses over the next few days.

As NCAA tournament play starts today, it seems timely to tip off with two rounds from Craig Newmark. First, "how to effect change by pursuing one's self-interest in NCAA tournament pools." The second half, "an improved system" is here.

Note: the titles (in quotes) are made up by yours truly. The original authors have not been consulted.

Wednesday, March 17, 2004

Why we like hockey fights so much 

Simple: boxing doesn't provide them. What interest is there in something that's fixed?

Here's an AP story via ESPN about a 2002 "fight," allegedly fixed for Jose Torres, who was out of jail on bail at the time:
Torres said he had highly contagious hepatitis C, 20/400 vision and trained on cognac and colas to get ready for the fight after being assured he would win....Torres, an amateur star before he was imprisoned for killing a gas station attendant, was 5-foot-6, 199 pounds for the fight. Head Top Rank matchmaker Bruce Trampler told California officials afterward that he picked the worst opponent he could find for the 41-year-old fighter making his pro debut.

Williams may have been bad, but the flabby, heavily tattooed Torres looked even worse. The first right hand Williams threw sent Torres down face first, much to the surprise of both boxers.

Torres barely beat the count, but instead of going after a hurt fighter, Williams put his gloves in front of his face. Williams barely threw another punch the rest of the round before going down himself from a suspect left from Torres.

The enraged crowd chanted "WWF! WWF!" believing the fight was fixed when Torres won by second round knockout.
"WWF! WWF!" Can't beat that for commentary.

There is a bizarre twist to the story for baseball aficionados: ballplayers Paul Molitor and Eric Davis were in Torres' corner for the fight. Perhaps - even likely - there is a simple explanation. But first, can anyone get me in touch with Pete Rose?

Tim Howard 

Good story by Rob Hughes on Tim Howard, the US goalkeeper in his debut season with soccer giant Manchester United. Man Utd's defense has crumbled in front of him, and the goals have started to pour in. Good luck to Tim**, as these are tough times to be at Man Utd. Resilience has been a hallmark of them under Alex Ferguson, but we shall see if he can restore order to what is clearly a shaky side, and perhaps a shaky organization at the moment.

** Not too much luck though, as I'm an Arsenal man, and beating Man Utd is Arsenal's #1 priority these days ;)

Alan Barra on the NHL & fighting 

Barra is always thoughtful and often entertaining, so take a look. Barra argues a decent case, but as an economist I'm puzzled. If fighting can be policed out of the game, and fans would find it more attractive, why doesn't the NHL do it? Barra's argument implies that the NHL is willingly turning up its nose at higher revenues.

Great moments in regulation - II 

This one is playing out before our very eyes. From the redoubtable Tom Hazlett, in Slate:
Satellite radio broadcasting was first authorized in 1997, when two licenses were issued to the companies now known as XM and Sirius. Their applications had taken seven years for the Federal Communications Commission to approve, mainly because the National Association of Broadcasters charged that the new service threatened "traditional American values of community cohesion and local identity." (It also threatened revenues. But at the time, the FCC found that traditional radio stations drew 80 percent of their income from local advertising, which suggested that national competition would not be too damaging to existing stations.) The irony, of course, was that just as lobbyists for traditional broadcasters were making arguments about the integrity of regional identity, local stations were airing more and more national programming, and companies like Infinity and Clear Channel were launching their ambitious industry consolidation. But the NAB pressure worked both to delay satellite rivals and to get the FCC to craft license rules that seemed to ensure that satellite service would air only national shows.

.......The notion that traditional broadcasters deliver idiosyncratic menus closely tailored to local audiences is a quaint one. Nationally syndicated content has become the order of the radio day, and satellite programming is, if anything, less cookie-cutter than its earth-bound analogs. That this debate has been framed along such outmoded lines illustrates how increasingly strained the concept of "local" has become. Regulators lacking spatial skills are charting geographic divides when they should be mapping communities of interest. Satellite radio caters to niche preferences in music or politics by connecting dispersed audiences. The opera buff in Tuscaloosa, left for deaf by "local" radio, connects with her community when tuning to satellite radio's 100 channels. To characterize satellite programs as uniform because they are nationally distributed is absurd. To then mandate that uniformity is worse.
Makes one wonder if we'd be better off if the FCC were put out of business. Read the whole thing.

Serena's been playing... 

... but not tennis. The Williams sisters' celebrity may take a chunk out of their trophy case this year, but I imagine their bank accounts are doing just fine. Still, I'd bet against them until they show they're back in the groove. Staying at the top is all about work, and what you are working on. Exhibit #1: Michael Jordan.

Great stuff from Bill James 

(no surprise there) at MLB.com. He recounts how his affinity for baseball statistics kept him from becoming an economics professor, and how difficult it was for the truths he uncovered to gain acceptance.
"When you first discover something like this (that lefty pitchers are harder to steal on than righties) and you print it, you first think, or at least I did, that the whole world is going to be aware of this now and that people will stop saying that left-handed pitchers are easier to run on than right-handers," said James.

"You quickly discover that nobody is paying that much attention, and that you can demonstrate that proposition A is clearly false and people will continue to assert proposition A for the next 100 years anyway. So repeating that experience a few hundred times, by the early 1980s, I had come to think of that as just the way the world was and perhaps was not the first person to realize that you actually do change opinions, it just takes a long time."
Well, I did make professor status, and I share James' bemusement at how my work sits ignored on library shelves. While I'm sure that my research will never change the world in the way James' has, you never know!

James also says this, when asked about what statistics he uses to evaluate players:
"Well, I think the more critical question is what do you look at second. I think the things I look at first are the same things everybody else does. Won-loss record and ERA for a pitcher and home runs, RBIs and batting average for a batter," said James. "Those are the first things you see and the first things you look at. The real question is what do you look at second."

"The second thing I look at for pitchers is strikeout-to-walk ratios," said James. "It's the most individual of the things a pitcher does."
I think its time I introduced some of you to fellow economist Gerald Scully, who discovered the importance of the strikeout-to-walk ratio in a 1974 paper published in the American Economic Review. This is one of the great papers in economics of the past 30 years. Scully used bivariate regressions (it was early days in computing) to measure player productivity. He found that the strikeout-to-walk ratio was the best pitching metric for predicting wins, and hence used it without any fuss. The object of the exercise was to estimate the difference between player pay and player value under the reserve clause system. He found that pay was about 1/8 of value. What was great about the paper was that it predicted what would happen when out of the blue, two years later, the arbitrator's decision in the Messersmith-McNally case opened the floodgates to free agency. Salaries of free agents quickly rose 700%, implying that Gerald Scully's estimates were in the ballpark.

It is rare to see an economics paper with such a startling proposition as Scully's - players are underpaid by that much? - confirmed so quickly and conclusively.

For those with university library access, Scully's paper can be found here. Hat tip to Daniel Drezner.

Tuesday, March 16, 2004

Case dismissed 

In a "me too" suit, old timers sued MLB for pension benefits to which they were not entitled, but that their successors achieved in the 1980 collective bargaining agreement. The suit was thrown out of court yesterday. MLB lawyer Howard Ganz said the case was an example of "no good deed goes unpunished," and I agree. Doug Pappas has some well chosen words for the plaintiffs and their legal theory.

Another high school system to eliminate sports? 

This may be the start of a trend. Last month I discussed the decision to cut sports programs in Winthrop, Massachusetts. Last week, the board of California's West Contra Costa school district, facing a $20m shortfall, voted to eliminate its sports programs. Also given the axe were librarians, music teachers, and counselors. Private donors led by the Oakland A's may provide a temporary fix, but the budget problems are a long run issue.

Arguably, resources are being wasted in public schools. Thus, a solution based on private funding with no change in accountability seems unlikely.

Monday, March 15, 2004

Johnny Ramone, ... 

... Republican. I had no idea. One just assumes that rockers (like Duke professors) are Democrats, but I do respect folks who think for themselves and aren't shy about it.

Apparently, he likes to mix it up on occasion with his friends:
Not that Mr. Ramone's friends must pass an ideological litmus test. He still holds ideological hopes for the relentlessly liberal Mr. Vedder. When the Pearl Jam singer impaled a mask of Mr. Bush and slammed it to the stage at a Denver concert on the heels of the Iraq invasion last April, Johnny Ramone let him know that he thought it was a stupid move.

"I got serious with him and told him that he was alienating people," Johnny says. "And I got him to see the point."
In defense of Mr. Vedder, his friendship with Mr. Ramone suggests he doesn't put much stock in litmus tests either. Via Southern Appeal.

What the nobels think 

The Economist has formed a panel of nine "leading economic thinkers" whose task is to prioritize the major problems facing the world. Among other eminent scholars, the panel includes Nobel prize winners Robert Fogel, James Heckman, Douglass North, and Vernon Smith. One could conceivably rank disease vs. malnutrition vs. armed conflict based on the cost of lost lives and livelihoods, but surely these fellows will go beyond that.

They report back in May. Should be interesting, and might sell a few magazines.

Sunday, March 14, 2004

An ACC upset 

The Maryland Terrapins are just the 8th tournament champion in 51 years from outside the state of North Carolina. Duke, NC State, UNC, and Wake would be a formidable quartet even if they were forced to play more than an hour or so from their campuses in the tournament, which rarely happens. Congratulations to the Terrapins!

Only one other "out-of-state" team also ousted 3 North Carolina-based schools to win: the '84 Terps led by coach Lefty Driesell and tournament MVP Len Bias. Here's the complete list of out-of-state champs, and the teams they beat on the way.

2004 MD -- (Wake, NCSt, Duke)
1993 GT -- (Duke, Clemson, UNC)
1990 GT -- (NCSt, Duke, UVa)
1985 GT -- (UVa, Duke, UNC)
1984 MD -- (NCSt, Wake, Duke)
1976 UVa - (NCSt, MD, UNC)***
1971 SC -- (MD, NCSt, UNC)
1958 MD -- (UVa, Duke, UNC)

***The 1st tournament played outside of North Carolina, in Landover, MD.

If Charleston or Richmond were to build a quality facility, I'd like to see the tournament moved out of North Carolina for a decade or so. Greenville or Orlando might do the trick with the facilities they have in place.

Non-NC schools have done better on the seven occasions the tournament was held elsewhere (4 times in Atlanta, 3 in Landover), winning twice. By my arithmetic, that doubles their chances -- .29 vs. .14. Time for a change?

Data from Charlie Board's ACC Stats Archive.

Update: here are the future sites.
2004 Greensboro, NC
2005 Washington, DC
2006 Greensboro
2007 Tampa, Fla.
2008 Charlotte, NC
2009 Atlanta
2010 Greensboro

Alternate years in NC beat every year, I suppose. The frequency will likely diminish further when BC, Miami, and VT get to vote, which is probably one reason why Coach K et al. complain about conference expansion.

Some astonishing facts from Europe 

These come from Niall Ferguson's Bradley Lecture at the American Enterprise Institute earlier this month:
Today, Germany accounts for around a quarter, a little under a quarter, of the combined gross domestic product of the entire European Union. It accounts for just over a fifth, 22 percent, of its population. It accounts for 16 percent of the seats in the European Parliament, and around about 11 percent of votes on the Council of Ministers, though that process of voting is, of course, under a process of reform. (In fact, if the draft treaty isn't enacted after enlargement, Germany's share of votes in the Council of Ministers will fall to 8 percent.) But if you look at net contributions to the European budget in the years 1995 to 2001, Germany contributed 67 percent.

So the Germans get between 8 and 11 percent of the decisive votes in the Council of Ministers, that is, the key decision making body of the European Union, but they contribute two-thirds towards the combined budget.
These figures are incredible, and probably unsustainable. Ferguson continues:
Now, that's all very well, ladies and gentlemen, if Germany is the fastest growing economy in Europe. But as I've already pointed out to you, it is today the slowest growing economy in Europe. It is, in fact, the sick man of Europe. And although the German economy is very large, it is far from clear why, when it has not grown at all in the past six quarters, that economy should continue to subsidize the economies of the smaller, poorer countries of Southern and now also Central Europe.

My estimation, ladies and gentlemen, is that the train is still running, but there ain't no gravy anymore. And as that reality gradually dawns, the process of European integration, which I believe has depended from its very inception on German gravy, is bound to come to a halt.
While I don't agree that integration will halt, Ferguson is probably right that integration is unlikely to remain on these terms. As he points out earlier in the talk, the economic gains from integration are surely the primary driving force. German subsidies have been part of the price paid for achieving these gains. The political challenge remains immense, but so are the economic benefits from integration, which are widely shared. Via Crooked Timber.

The ACC's greatest game 

This is the 30th anniversary of the ACC's "greatest game:" NC State 103-Maryland 100, for the ACC championship.

Duke is a heavy favorite (9 points) over the Terps in today's final. Like all teams from outside the Tar Heel state, Maryland has had trouble winning the tournament. But you never know. Gary Williams is a great coach, and his team will make it a battle.

Great moments in regulation 

"In the 1930s the docks in Hamburg employed 100,000 people. Now the number is barely 1200, though it is still the 2nd busiest port in Europe, after Rotterdam, with a volume of trade equal to the whole of Austria’s. Until just a couple of weeks before, I could have witnessed the interesting sight of freighters unloading grain from their aft holds and re-depositing it in their forward holds, as a way of extracting additional funds from the ever beneficent EEC. With its flair for grandiose screw-ups, the EEC for years paid special subsidies to shippers for grain that was produced in one part of the Common Market and re-exported from another, so shippers taking a consignment from, say France, to Russia, discovered that they could make a fortune by stopping off at Hamburg en route, and pointlessly unloading the cargo, and reloading it. This little ruse enriched the shippers by a mere $75m before the bureaucrats of the EEC realized that that money could be much better spent on something else - themselves say - and put a stop to the practice."

From Bill Bryson, neither here nor there: travels in europe, pp. 96-7.

Saturday, March 13, 2004

NY Times on ACC Tourney: "how quaint" 

When you write for the leading newspaper in the country, you ought to know what you are talking about. William C. Rhoden fails to meet this standard in today's NY Times.

Rhoden makes two false statements in the article. He claims that the ACC "was formed primarily as a basketball conference." Not so. The ACC was formed at the instigation of Clemson and Maryland, who were chafing at the Southern Conference's ban on participation in bowl games. Football concerns created the ACC. Rhoden also serves up the following whopper: that the ACC roster "remained unchanged until 1971, when South Carolina bolted for the Southeastern Conference." South Carolina left the ACC for independent status, and suffered in the wilderness for twenty years before the SEC threw them a lifeline.

It may be that the ACC's "quaint tradition," a term used twice in the story, is at risk from the football-motivated expansion of the past year. But what is quaint about the ACC tournament? Its ruthless nature in the early days bothered every ACC coach save NC State's Everett Case. They wanted to can it from the start, and didn't warm to it for years. It still bugs North Carolina's Roy Williams, even though a loss doesn't end your season the way it once did. Nothing was quaint about the epic NC State-Maryland final of 1974, essentially that year's national championship game. Nor Greg Buckner's dunk at the buzzer to give Clemson the rarest of a rare road victory over the Tar Heels in 1996. Nor the incredible 2001 semi-final between Duke and Maryland (precursor to their NCAA final four matchup), yet another buzzer game in which the victor moved on and the loser went home. There is nothing quaint about the ACC tournament or its tradition. Rhoden doesn't know what he's talking about.

Back to the game: Georgia Tech and Duke are tied at 26 apiece. Go Jackets!

Tournament play: it's a knockout 

Conference tournaments are underway in college basketball, and the big dance is on the horizon next week. It is the most exciting time of the year in basketball, and it all stems from the knockout nature of the sport: one and done, the season on the line. I've loved the tournament format ever since playing sports as a kid.

We don’t have enough knockout competitions in American sport -- too much emphasis is placed on league play, where equal weight across a long season penalizes young teams and teams with untimely injuries. Knockout competitions provide teams with additional opportunities to win a prize where it counts - on the field of play. College basketball comes closest among major sports to providing these opportunities. In addition to March Madness, we also have the almost relevant holiday "classics," and the "pre-season" NIT to create interest. These are good for both players and consumers. The value consumers place on knockout competition is reflected in part by the NCAA tournament's media contract, worth $6 billion over 11 years.

Even so, there is one wrinkle missing. Playoffs and tournaments in the U.S. are all seeded from the start. Although this format increases the likelihood of compelling match-ups late in the tournament, supposedly "when it counts," it departs from the principle that all teams have an equal chance, ex ante. It stacks the competition excessively in favor of the better teams, or at least those perceived to be better.

Random draws generate a different form of excitement. Last week's draw in England's FA Cup - the granddaddy of knockout competitions - offers an example. One semi-final pairs England's top two clubs over the last decade, Arsenal and Manchester United. The other semi will be an all-lower division affair, pairing Sunderland with the winner of the Milwall-Tranmere replay. A lower division team is thus guaranteed a spot on the big stage in the Cup Final. Had the draw been seeded as in US competitions, Arsenal and Man Utd would be slated to meet in the final. That they meet in the semis takes little away from the magnitude of the match, and sets up the final for some David v. Goliath intrigue. The last giant-killing in an FA Cup Final took place in 1988, when lower division Wimbledon upset League champions Liverpool.

A giant-killing is a memorable occasion. The NCAA delivers these from time to time in the middle rounds of the tournament. But seeding makes the first round a formality for the giants, and takes its toll on the Davids at each subsequent stage. A random draw would create the occasional death match between giants in the early rounds. It would also increase the likelihood of a dramatic upset finale, like Villanova's "perfect storm" victory over Georgetown in 1985. As it stands, seeding sets up yet another final between basketball giants. A random draw in the NCAA tourney might add just the spice to enhance a special and underutilized form of play, the knockout competition.

Friday, March 12, 2004

Health subsidies 

The inaugural post on this blog was on the proposed veggie voucher in Britain. Truck and Barter recently uncovered a Swiss proposal for a fat tax. Where will it end?

Note that the Amish have the diet thing figured out. They eat the good stuff, and stay lean because they are physically active. The Amish evidence implies that McDonalds should be absolved of blame for our bulging waistlines. Instead, point the finger at labor saving technology and slow adaptation of eating habits to diminished physical activity. Economists Darius Lakdawalla and Tomas Philipson examine this hypothesis in depth. They find that differences in food prices and technological diffusion explain a large fraction of the variation in weight gain across different populations.

Greek tailgating 

If you are interested in the origins of sport or the role of sport in society, here's a must-read story by John Noble Wilford in today's NY Times. Wilford interviews several scholars who have forthcoming books on sport in ancient Greece. Among them, Ancient Greek Athletics by Stephen G. Miller, Professor of Classical Archaeology at Berkeley. There are numerous interesting observations in Wilford's story. I will quote just one tidbit, which suggests that the modern tailgate party is a pale imitation of the real thing:
Dr. Miller reconstructs the scene at one of the Panhellenic games in 300 B.C., the heyday of Greek organized athletics. For days before the first races, crowds feasted on the meat of oxen roasted on altar fires, sacrifices overseen by a priest and accompanied by a flutist, a libation pourer and libation dancers. People pitched hundreds of tents across fields and thick smoke from campfires filled the air.
A friend from Stanford visited Clemson last fall for the Florida State game. He was in thrall of the "pagan ritual" on display before the game and after. But as always, we have much to learn from the masters of the art form, the ancient Greeks.

Your congress, to the rescue 

Barely a month after Janet Jackson's half time exposure, the House passed HR 3717, by a 391-22 margin. The bill raises the ceiling on fines for indecency from $27,500 to $500,000 to holders of broadcast licenses.

Now, who are the 22 gallant guardians of liberty who opposed increasing the regulatory power of the state? Well, back up a minute. The roll call vote lists 21 Democrats in opposition, and many of them
were angry on Wednesday that they had been denied an opportunity to offer an amendment to limit [media] consolidation.

"What are we doing about the concentration of power in the media?" Representative Henry A. Waxman, Democrat of California, asked on the floor.
I can count only two opponents of excessive regulation among the nays. The one Republican, Ron Paul, is a libertarian outcast in the party. Democrat Gary L. Ackerman of Queens is quoted in the NY Times as saying its a matter of choice: "They can change the station. They can turn it off."

The irony is, the fine applies only to those the FCC has the power to regulate: over-the-air broadcasters. When was the last time you watched NBC through rabbit ears? Ninety per cent of US households now subscribe to cable or satellite service!

Oh by the way, you can throw in the executive branch too: "This legislation," the White House said in a statement, "will make broadcast television and radio more suitable for family viewing."

The whole matter is a complete and utter farce.

Thursday, March 11, 2004

Reporting on the reports on the steroid hearings 

Every story I've seen on the steroid hearings - with the exception of MSNBC TV's Keith Olberman - was utterly void of content. The reporters simply did the congressmens' bidding, offering up juicy sound bites for the masses. Olberman didn't fall for it though: "Congress got its yearly visit from the commissioner of baseball .... if Bud goes there any more often, he's going to get his own Congressional District .... blah blah blah ... blah blah blah." You da man, Keith!

Update: Doug Pappas tells it straight, as usual, and has links to Selig's and Fehr's prepared testimony. Selig put the blame on the union, as expected, but from what I can tell he wasn't a jerk about it.

On the Bertuzzi incident 

Yesterday I was struggling to differentiate Bertuzzi's assault on Moore from the everyday violence that takes place in the NFL. Bertuzzi will probably find himself in a courtroom soon. Why not a head-hunting NFL safety?

The key difference is that intent to injure in the Bertuzzi incident can be demonstrated. This can't be proven for a safety's blindside hit on a wide receiver, hence there is no legal case. So in football, it's up to the league to handle the problem. The NFL has taken significant steps in recent years to reduce the likelihood of serious injury to its players. Serious fines (see Darren Woodson) and suspensions are issued for what were once viewed as clean hits. This policy has generated controversy, but in my view it hasn't "wussified" the game one iota. If the policy has affected behavior, and it surely has, it's made the game safer. Good move by the NFL.

Football is inherently violent, but the NFL has less of an outlaw problem than the NHL. In the Toronto Star, Damien Cox argues that the NHL's problem stems from a sick culture:
The mad cycle of NHL violence goes round `n' round largely because the industry is so devoid of true leaders willing to separate themselves from the pack mentality that defines the politically correct line on so many issues......It's all part of a sick, age-old hockey mentality. A running back in football can cut through a hole and get drilled by a middle linebacker, and then shake off the blow and retreat to his huddle.

He doesn't demand that a player on his own team cross to the other huddle and challenge that linebacker to a fight.

In hockey, however, every clean hit is an insult to be avenged.

Every issue, to those who believe in this culture, is best resolved with fists.
Cultures are tough things to change. If I were commissioner Bettman, I'd pick up the phone and call the NFL. There might be lessons to be learned there.

Update: ESPN's report on the suspension indicates that the NHL is going about this the right way. 1) The suspension is lengthy - for the rest of the season & playoffs. 2) Bettman's decision on Bertuzzi's status for next season will be evaluated at a future date. This keeps the issue in the minds of players during the offseason, ensuring that it won't be quickly forgotten. 3) The organization was fined $250,000, sending a signal that the issue goes beyond a single individual. 4) Both teams had been warned earlier about retaliation. The NHL was watching, didn't like what it saw, and acted swiftly. But there is more work to be done. Thanks to the Sports Law Blog for the pointer.

One last thing on Martha Stewart 

Professor Bainbridge, who has a bunch of good stuff on this case, muses: "I honestly don't see how [Sam Waksal] could have thought the SEC would miss a little thing like a CEO selling millions of shares in his own company a few days before a major announcement about its major product, but greed and stupidity are a dangerous combination." I dislike using the stupidity explanation for things that are hard to understand, but in this case, I don't see an alternative.

Wednesday, March 10, 2004

Quote of the day 

"She said, 'Isn't it nice to have brokers who tell you these things'." -- Maria Pasternak, during the Martha Stewart trial. This is circumstantial, but it supports my hypothesis on the organizing principle of Bacanovic's business.

Q: What does Fannie Mae have in common with Enron? 

A: Billions of $ in hidden losses, says FT.com:
A Financial Times analysis of Fannie's accounts suggests it may have incurred losses on its derivatives trading of $24bn between 2000 and third-quarter 2003. ........."They have used the derivative accounting rules for cash flow hedges to defer some losses that they have taken," said John Barnett, senior analyst at the Center for Financial Research & Analysis, an independent research firm. "They may not be as well-capitalised as they appear to be for regulatory purposes."
Fannie Mae is dismissing criticism from FRB chair Greenspan, CEA chair Mankiw, Treasury Secretary Snow, & Congress. See the other stories linked in the FT article. This could get interesting.

This one's going to court 

Hockey fights are "part of the game" they say. How about this one?
police [are] investigating a sucker punch and a face-first slam by the Canucks All-Star forward Todd Bertuzzi that left the Colorado Avalanche's Steve Moore hospitalized with a broken neck, a concussion and deep facial cuts.

In the third period of Colorado's 9-2 victory at Vancouver on Monday, Bertuzzi struck Moore from behind, punched him in the side of the head, then drove his head into the ice. After the 6-foot-3, 245-pound Bertuzzi landed on top of him, Moore lay in a pool of blood for several minutes. He was removed on a stretcher, and Bertuzzi was assessed a match penalty for attempt to injure. Moore, 25, a rookie center, remains hospitalized in Vancouver and will miss the rest of the season....
There is a history here, and Vancouver has a problem:
Moore was at the center of a controversy a month ago after delivering a questionable blow to Vancouver's captain, Markus Naslund, who led the league in scoring at the time. No penalty was called, but Naslund, who was struck in the head, missed three games with a concussion. At the time, Bertuzzi called Moore a punk and said he was glad the teams had two games remaining.

Vancouver's Brad May said of Moore after that game: "There's definitely a bounty on his head. Clean hit or not, that's our best player and you respond. It's going to be fun when we get him." May later said his comments were tongue-in-cheek.
Nice crawfishin' Brad, but the case for the prosecution won't let it go: "How much was the bounty, Mr. May, five grand? "

When an athlete deliberately sets out to injure an opponent, he's taking dead aim at his livelihood. That should be driven out of the game. We're not Romans in the Colliseum anymore.

Update: I don't follow hockey much, but Offwing, who does, has much more here & here.

Here come the politicians 

Sports plus scandal equals opportunity:
Senate Commerce Committee Chairman John McCain, R-Ariz., scheduled a hearing Wednesday to grill Selig and Fehr about why baseball does not have a more comprehensive drug testing plan, like those of the NFL and other pro leagues.
What took them so long?

I smell Union-bashing in the works, and will be on Selig-watch. It will be interesting to see what strategy he pursues. Here's an opportunity for him to mend some fences, but the pols will be on the attack. Stay tuned!

Roger Maris, 61* 

If haven't seen it, or you went by the Sports Law Blog or Baseball Musings yesterday but didn't follow their link to Alan Barra's article on Roger Maris' asterisk, here's another chance. My favorite bit, as befits my sense of humor:
Scarcely anyone noticed Frick's statement. Ironically, the opposite happened: The title of his book simply confirmed the asterisk in most people's minds. It's possible the asterisk idea would have died a natural death if not for Commissioner Vincent, who announced in 1991 that he was behind the "single-record thesis" and ordered baseball's committee on statistical accuracy to remove the asterisk from Maris's record. And so, one commissioner of baseball came out in favor of removing an imaginary asterisk supposedly put there by a previous commissioner, who had no authority to place it in an official record that in any case didn't exist.
It's really must reading for anyone with an appreciation of baseball, history, or the origins of myth. Great story.

Tuesday, March 09, 2004

Economic freedom and the draft 

The Clarett v. NFL case challenging draft restrictions has brought more than its share of untutored commentary. But lo, I've encountered a writer who actually considers evidence on such matters! Steve Wilstein's article on MSNBC discusses research by visiting scholar Michael McCann of Harvard Law School, which examines the fate of high school ballplayers who enter the NBA draft.
McCann studied the 29 high school players who declared for the NBA draft and signed with agents between 1975 and 2003. Among those, nine would be considered superstars (one of the NBA’s best 15 players during their careers) or stars (the best or second-best player on his team).

Those include Darryl Dawkins, Kevin Garnett, Kobe Bryant, Jermaine O’Neal, Tracy McGrady, Rashard Lewis, Tyson Chandler, Amare Stoudemire and LeBron James.

Of the 29, only three — Taj McDavid, Ellis Richardson, Tony Key — were busts as ballplayers, unable to sustain a living from the game.

The rest were either serviceable players regularly contributing to an NBA team, fringe players earning a very good living but getting few minutes, minor leaguers playing in the United States or abroad, or still unproven young players hampered by injuries.
Of particular interest is the following observation:
McCann said, “over 80 percent of drafted high school players became or will become multimillionaires by the age of 21” and “maximized their earning potential by gaining the ability to become unrestricted free agents ... by the tender age of 22.”

At that age, the players who stayed in college for four years become bound by the nearly nonnegotiable rookie salary scale for three to five years.

“Most players who skip college may earn as much as $100 million more over the course of their careers than if they had done the ’smart thing’ and earned a college diploma.”
It appears that the opportunity cost of playing for free at State U is quite large for some people. What would you advise them to do?

These results just in 

Arnold Palmer did not "cheat" on the 12th hole of the 1958 Masters, and Ken Venturi never said he did. But he recounts the story in his new book, and a little controversy never hurt book sales.

Pollard's Vision, the one-eyed three year old on the Derby trail, finished 3rd in the Louisiana Derby on Saturday.

Mitch Albom, in the hecklers' corner 

Mitch Albom goes off on Davis Love in a truly wacko piece in the Detroit Free Press. Love pitched a fit two Sundays ago when, mano a mano in match play with Tiger Woods, a heckler targeted him with some choice words at inappropriate times. He demanded that the offender be ejected from the course, lest it ruin his concentration. Albom points out that heckling is routine at ballparks, courts, and rinks, and argues that golf should be no different.

That Albom completely lost the plot in making his argument is suggested by this comparison
In hockey, careers are much shorter than in golf. In hockey, most players earn less in a year than Tiger Woods earns in a week.
That's a neat comparison: the median hockey player versus the best golfer on the planet. Not only that, but he's probably wrong on both counts! And then this:
Love, like a lot of golf purists, insists that his critics "don't understand the game."

Wrong. They understand the game. This may be a shock, but the game isn't that complex. And hitting a golf ball requires no more or less concentration that hitting a curveball, or making a winning jumper, or catching a 60-yard bomb in the end zone.

Davis simply is used to one thing, deferential silence, and he doesn't want it changed. Well. That's OK. If golf wants to scale back its popularity, not sell as many tickets, not take as much TV money, maybe it can control its crowds.
Why stop there Mitch? Why not allow soccer hooligans inside the ropes? Golf would rock! Fans that pay $1000 a year in advance for the mere right to enter a lottery for US Open tickets would pay twice as much. Yea, right. Making the fans a part of the competition is the least interesting component of "spectator sport." I'm glad golf keeps that stuff out of the game, and have been for a long time.

Maybe Mitch is trying to shake the sensitive image created by writing books like The Five People You Meet in Heaven, but that's being charitable. He has a good bit more in common with Davis Love than he realizes.

Tennis, anyone?

Monday, March 08, 2004

Ouch! 

Alan Dershowitz (WSJ, $) on Martha Stewart's defense attorneys:
...virtually every action for which Ms. Stewart was convicted took place after she had consulted with highly experienced and expensive lawyers. As legal ethics expert Stephen Gillers wrote before the trial in The American Lawyer, "defendants ordinarily retain lawyers after they commit their alleged crimes. In contrast, all the crimes charged against Stewart were allegedly committed while she was receiving the advice of excellent defense lawyers at Wachtell, Lipton, Rosen & Katz -- one of the nation's best law firms. Three times, in fact, the indictment's chronology refers gratuitously to Stewart's lawyers [though not by name]."

The job of these lawyers was to keep their client out of any further legal difficulties. In doing this job, no lawyer should ever accept a client's initial account, especially if it is not corroborated by hard evidence. As Mr. Gillers correctly observed, every lawyer knows that "many clients lie even when they have nothing to hide." Even if the lawyer believes his client is being truthful, he should not allow the client to relate an uncorroborated account to law enforcement officials, unless the lawyer is absolutely certain that the account will not be subject to challenge by the government.
Perhaps another mistake to add to the list.

Time for madness? 

There's been far too much already. One can understand the elation of Washington's students as their Huskies knocked off unbeaten, #1 Stanford last Saturday after years of woeful results. But rushing the court is now commonplace, and dangerous. An Arizona high school player suffered a broken jaw and a stroke when mobbed by his "celebrating" fellow students. Not a nice way to treat your hero.

Fortunately, college basketball is entering the tournament phase, so home crowds packed with maniac students won't return until next year. Greg at the Sports Law Blog thinks like I do on this one, and argues that schools had better take action before they get smacked with a lawsuit.

I'm glad we've seen the last cheering section full of pogo sticks for the year. That stuff grates me just like the Besiktas whistles (see the bottom of my European racism post). I'll take the sport without the madness, please.

So that's why Al Sharpton is running 

"Mr. Sharpton, who retained the William Morris talent agency two weeks ago, said he wanted to be the host of his own cable news and radio programs, and his talent representatives said they were pursuing talks with all conceivable outlets."

Now, is there an explanation for Dennis Kucinch?

Sunday, March 07, 2004

A pleasant note on soccer fans 

I posted on Europe's problem with racism in sport a few days ago. Here's evidence why you don't take such reports as evidence that all fans of European football are mugs, thugs, and racists. In the midst of a 5-1 drubbing in yesterday's F.A. Cup quarterfinal match against Arsenal, Portsmouth fans were an illustration of true class, showing both their own spirit and their appreciation for the skill on display by Arsenal:
'Can we play you every week?' inquired the Portsmouth fans cheerfully at 5-0 down. Now either that is inspired irony, or the fantastically loyal Pompey fans had it in them to appreciate that with Arsenal in town they were able to watch football from another planet.

Something extraordinary happened here in the the 71st minute. Arsène Wenger made a triple substitution: off came the imperious Patrick Vieira, the irrepressible Thierry Henry, the impish Freddie Ljungberg and they were given a standing ovation by the Fratton Park faithful.

'Their fans were fantastic, even at 5-0 down, and with fans like that Portsmouth don't deserve to go down,' said Henry, warming to this unexpected love-in. Wenger said he had never seen anything like it.
I listened to the match on the BBC's internet broadcast. After Arsenal put the game away I paid less attention, and assumed the chants I heard in the background were coming from Arsenal supporters. But on closer inspection, it was the Portsmouth fans, loud and proud, singing non-stop for the last 25 minutes of the match. That's spirit for you, and Portsmouth's players responded, continuing to play hard and scoring in the 90th minute.

The economic view 

On steroids
Incidence this year will be way down. The media is making much of the issue because it may be their last chance. If incidence is low, the "quiet approach" agreed to in the CBA might work. Perhaps that's why Gene Orza continues to make loud noises advertising Union recalcitrance. If he were working for me though, I'd send him to PR school. And I'd tell him that most of us want our Union to be constructive on the issue, and to get on board or get off the train.

On the Stewart case
Landon Thomas Jr. has an unusual but informative piece in the New York Times, in which he attributes Bacanovic's silence on the Stewart charges as "the ultimate act of customer loyalty."
"You want to do the right thing for the client, but not break the law," said Robert J. Ostrowski, a former broker at Prudential Securities. "I remember our chief executive always saying, 'the customer's interest always comes first.' But I think that if Bacanovic had to do it again, he would let that stock go down the drain."

For Mr. Bacanovic, the call symbolized the special service he provided to his wealthy clients, who were often his friends.
Thomas doesn't come out and say it, but his article implies that Bacanovic's business was built on the principle of providing access to insiders. He had no alternative but to stonewall against the charges. Turning snitch would have ruined him.

On Stewart herself, the story is an odd sequence of mistakes. Her firm was built around her public image, and even now this image remains enormously valueable (the firm's market cap is over $500 million). Risking the foundation of her firm for a few grand in stock profits was obviously silly in retrospect. She'd have been many millions ahead if she'd taken the advice of John -index fund - Bogle rather than Peter - insider access - Bacanovic.

Mistake number two may have been her dogged defense. Would an apology and a plea bargain have allowed her to recover the value of her firm? I think so. America loves a comeback story, and rewards remorse.

Saturday, March 06, 2004

Point and scoot 

Atkins claims its first victim
"Jays Foods, the maker of Jays potato chips, Krunchers and O-Ke-Doke popcorn, filed for bankruptcy protection yesterday and said part of the blame for its downfall belonged to the popularity of low-carbohydrate diets." Sales fell from $130 to $120 million last year and are still in decline.

NFL sued on antitrust grounds.....
...again. There are two cases pending over taxpayer funded stadiums. Seems like a long shot to me, but I wish them luck. Via the Sports Law Blog.
Update: Economic analysis supports the plaintiffs. Stadium subsidies are largely driven by artificial scarcity in the number of franchises. Monopoly control over who has the right to play makes relocation threats credible. These are used to extract subsidies from politicians & their constituents.

A conversation on the steroid issue
Offwing posts an exchange with David Pinto. Worth reading. Be sure to hit the more link – there’s good stuff behind it.

One-eyed horse on the Derby trail 

Pollard’s Vision, named after Seabiscuit’s jockey Red Pollard, is entered in tomorrow’s Louisiana Derby. Nice story in the New York Times. Pollard’s Vision looks like a bit of a long shot, but he crushed a good field of horses at Gulfstream last month, so now he gets a chance to run with the big boys. The race is televised Sunday on ESPN2 at 6pm ET; past performances are here.

Friday, March 05, 2004

Steroid scandal = publicity ..... 

and publicity sells tickets. Ron Rapoport of the Chicago Sun Times gets it. And more. On union bashing and the war of words in the daily papers:
[Fehr] seems to be unconcerned.

"We don't have gag rules,'' he said the other day.

Selig, meanwhile, has told the owners not to discuss steroids anymore.

There are only two things wrong with painting Fehr as the bad guy here. One is that the union is a democracy, and if the players want to scourge themselves of this evil, they are free to vote for the harshest penalties imaginable.

The second is that for all of Selig's public protestations to the contrary, I am betting that immediate public testing is the last thing he wants........

Effective or not, baseball does have a testing procedure in effect, and a few moderate voices eventually might be heard once the current hysterical din dies down. Players will be tested this season. Those who fail must accept treatment and are subject to fines and suspensions down the line.

"This is a first step,'' Angels shortstop and player representative David Eckstein said. "Let's see how it works. If the players and the union don't think it will work, we'll make an exception.''
Has baseball suffered in the revenue department? The signs are, like Mel Gibson's movie, the controversy has focused attention on the sport, and that's good for the box office:
Here's one example of what bad trouble baseball is really in: Fox will kick off its coverage April 16 with a broadcast of the Yankees-Red Sox game at 7:05 p.m. It will be the first national prime-time broadcast of a regular-season game since Mark McGwire broke Roger Maris' home-run record in 1998. Here's another: ESPN says ad sales for its regular-season games are up 15 percent over last year.
This is just a short run boost, and baseball will have to clean up its act soon. But this fellow Rapoport is interesting. Thanks to Baseball Musings for the pointer.

Are pitchers getting the upper hand? 

Tim Kurkjian makes a nice case, and Jeff Bagwell helps make it with this observation:
"When I came up (1991), 91 (mph) is about as hard as anyone threw except for like (Rob) Dibble who threw 94. Now, almost everyone throws 94, and most of them are starting pitchers. Look at Juan Cruz (of the Cubs). He throws 97 (mph) and he can't make their rotation.''

The shame of it is, if power hitting continues to fall -- homers are down from 2.34 in 2000 to 2.1 per game last year -- all the talk will be about steroids, when it should be about pitching skill. Remember, even if 1 in 10 players were juiced, that will not have a huge impact on aggregate statistics.

More on the perfect league 

Greg at the Sports Law Blog critiqued my principles of sports league design.

He's right that relegation - the trap door - to insure all teams put forth serious effort has no chance of being adopted in American professional sports. Monopolies don't relinquish their market power unless prompted by government, and the Justice Department is not currently interested (they have been in the past though, so there is some hope). On this point however, you should note that college alliances are fluid. They reform every ten years or so when schools find better partners.

Greg puts too much faith in salary floors as a device to ensure effort. They don't work empirically, nor should they work theoretically. Salary floors are simply the result of strategies in collective bargaining. Owners give the union a floor in exchange for getting a cap. But this has not kept the football Cardinals & basketball Warriors from stinking for a decade. This should not be surprising -- salary floors are a fixed cost, and have little impact on the marginal incentive to try hard (note: it's not the players, but the organizations that lack incentive under current league rules).

Finally, Greg puts too much emphasis on the fans whose teams get the boot in an open system. That's a temporary problem; next season they can play their way back to the top. My principles place more emphasis on the people in cities who are denied the opportunity to watch a local pro team by an absolute barrier to entry, controlled by the monopoly league. Give them the opportunity, I say.

Point and scoot 

Junk mail
One phone call can stop the flood of credit card offers into your maibox. Some regulations really do improve welfare.

Men among women
NCAA women's hoops coaches use men as practice partners. Makes sense, but questions lurk. At UConn, the practice geeks are celebrities, but what about Western Kentucky? Fascinating story.

Thursday, March 04, 2004

Lessig on Eldred v. Ashcroft 

For anyone interested in the copyright issues discussed in "Bloomsday and the Girl Scouts have something in common," there is a must-read article in the current issue of Legal Affairs by the lead lawyer in the Eldred case.

Lawrence Lessig believes he failed the country by losing the case, but I believe it was the justices who failed us. Lessig's account is compelling, and tragic. Via Brad DeLong, whose views are not far from mine on this one.

Union boss on steroids: open mouth, insert foot 

Gene Orza, chief operating officer the player's union :
"Let's assume that (steroids) are a very bad thing to take," said Orza, who was speaking on a panel at The Octagon World Congress of Sports. "I have no doubt that they are not worse than cigarettes. But I would never say that to the clubs as an individual who represents the interests of players, 'Gee, I guess by not allowing baseball to suspend and fine players for smoking cigarettes, I am not protecting their health.'

"Whether it's good or bad for you, it's a far cry to say that because it's bad for you, you should participate in a structure which allows your employer to punish you for doing something that you shouldn't be doing," Orza said. "That's not my understanding of what unions do for their employees."
Ouch! Why couldn't he just say, "I've heard players such as Tom Glavine voice concerns about the current policy. We'll be working on it, and hope to do so in a constructive manner."

I've long thought the player's union got biased coverage in the national press, but Orza's comments will only make matters worse. Strike one!

Point and scoot 

Modeling cultural differences with economics
Marginal Revolution's Alex Tabbarok has a nice discussion of a paper on cultural differences in tardiness, or its inverse, "Punctuality" by economists Kaushik Basu and Jorgen Weibull. As societies develop, it seems to me that the benefits from adopting a punctual norm increase, but these changes are not easily achieved. I recommend Alex' discussion. The paper is linked there, but it is somewhat technical and likely to be of interest only to economists.

The humor of Bill Gates
Craig Newmark has some truly funny quotes from a speech Gates gave at the University of Illinois.

Mendocino speaks on GM crops 

The California county is the first to ban genetically modified (GM) crops. They are rich enough I suppose. But I wonder if Mendocinans would vote for a ban in India or Africa, where crop yields have been significantly enhanced by GM? Scroll down to yesterday's posts for more on this issue.

Racism in European sport 

America takes plenty of flack from the European press, some of it deserved. But when I read that one in five Germans agree with a scribe who claimed that the 9/11 terrorist attacks were orchestrated by the CIA & Israel's Mossad, I feel like hurling, and not in the Irish sense.

Europe has its share of social problems. Racism in sport is one manifestation. This story from The Times was prompted by an incident last weekend, when a black player was booed whenever he touched the ball in a game played in South London. It is not an isolated case. Having followed Arsenal for some time, I've made a mental note of the racist incidents that Arsenal's black players have endured. The Times article puts a sample of them in one place:
The European torrent of abuse

RACISM remains a widespread problem across Europe. Ashley Cole and Emile Heskey were mocked with monkey noises when England played Slovakia in Bratislava in October, 2002. "Even the guys with the stretchers were giving me abuse," Cole said. Slovakia were fined by Uefa and forced to play a game behind closed doors.

In 2000, Uefa banned Sinisa Mihajlovic, the Lazio defender, for two Champions League matches for calling Patrick Vieira a "black monkey." Vieira complained of racial abuse after Arsenal's Champions League game away to Valencia last March, while Thierry Henry said that he was abused and missiles thrown at him during a match in Holland against PSV Eindhoven in 2002. Heskey was abused when Liverpool met Boavista in the Champions League in Portugal.

In April last year, when England played Turkey at Sunderland's Stadium of Light, some fans chanted: "I'd rather be a Paki than a Turk" [note: to the tune of "if you're happy and you know it clap your hands]. Uefa fined the FA £68,000 for violent and racist incidents. A survey for TheGame last August found that four out of ten British fans have witnessed racism at matches in the past two years. For the 2002-03 season the number of arrests for racist chanting increased by 57 per cent: from 47 to 74.
Shocking. The Turks' record is appalling as well. Last night I took a look at the Uefa Cup match between Besiktas, one of Turkey's better teams, and Valencia of Spain. Each time Valencia had the ball, the fans whistled like a pack of locusts. It was ear splitting. That's not sporting, and not entertainment. I quickly switched it off.

Personal trainers 

Superstar ballplayers have personal trainers, which is no surprise. But training generally takes place at the stadium, so trainers want access to the facilities to monitor their clients' training. The steroid scandal is putting an end to that. Interesting.

If you are a player, a tailor-made conditioning program supervised by your own trainer makes sense. But there is a conflict between player and team on this count. Can you imagine 25 personal trainers roaming around the Yankees' clubhouse?

Wednesday, March 03, 2004

Not in my crib! 

Doug Pappas links to a Mercury News article and offers up some juicy details on MLB franchise rights. Apparently the A's may be looking for new digs. Giants owner Peter MacGowan has just told the A's to divert their attention from potential suitor San Jose (in Santa Clara County). Doug states:
Unlike the two-team markets of New York, Chicago and Los Angeles, the Bay Area is divided between the Giants and Athletics. The Major League Constitution gives the Giants exclusive rights to San Francisco, San Mateo, Santa Cruz, Monterey and Marin Counties, as well as the right to exclude another major league club from Santa Clara County.
As in other leagues, franchise relocation requires supermajority approval by the owners (here, a 3/4 rule applies). The article notes that
Magowan said he sympathizes with Baltimore Orioles owner Peter Angelos, who is fighting the possible relocation of the Montreal Expos to northern Virginia or Washington, D.C., calling the latter possibility ``a direct assault on the Orioles.''
Can you count two votes against relocating the Expos?

The NFL lost (in a dubious 1984 court decision) the fight to keep Al Davis from moving the Raiders to LA. My guess is that territorial restrictions and supermajority control over franchise relocation would pass muster in today's antitrust climate, but you never know.

Cooking the books 

OBM links to a NY Daily News story on Selig's attempt to peek into the Yankee's books, particularly the relationship with the club and its YES network subsidiary.

Selig's concern is that the Yanks are parking club money over at YES. Of course they are! This is a variant of a tax dodge, driven by revenue sharing. You want to keep "your own" money out of the pool of revenue that's shared with everyone else. So you book as little revenue as possible on the club side of the company, and shift it to the media side. How? The club's payment from the media side for broadcasting rights is pegged well below market value. Having a media company is a good place to hide some cash.

If Selig goes after the Yankees, he'd better hire an army of accountants. Every team with the opportunity parks media revenue because the incentive is huge. Tricky problem.

Let them eat crops then 

Bill Sjostrom refers to a story in the Guardian on genetically modified crops, "How science can help the world's poor." This is an important issue; check it out.

Last fall we were treated to a seminar by David Zilberman of UC Berkeley on the subject. GM substantially increases crop yields through increased resistance to pests, improved drought tolerance, etc., and can be designed to fit the conditions in say, Bangalore. They help not just Monsanto but the poor all over the globe. Let's hope that the luddites campaigning against GM crops can be persuaded by information and reason to stop.

Principles of league structure 

Aka the Sports Economist's Manifesto

If you could start from scratch, what sort of league would you design? Here's my list of seven core principles.

[1] The league must be organized such that any team could win a championship, not every year, but at some point over the long run. This perception must exist, and be well founded.

[2] People & towns who want to compete (hello Cleveland, hello LA) should have the opportunity to compete.
Update: by fielding a team, not by paying a king's ransom to current owners.

[3] Ambition and success should not be heavily taxed.

[4] Sloth and indifference must be penalized.

[5] Insuring that the first principle is met requires significant revenue sharing in a league with teams of widely differing profit potential (see the NFL). But extensive revenue sharing promotes sloth and indifference to winning (see the NFL, again), so it must be tempered.

[6] Addressing the problem of sloth and indifference is not difficult. It is a simple matter of fashioning the proper penalty. Teams that fail to perform up to standard -- say the bottom two or three teams in the league -- must be relegated to a lower division. This may seem harsh, but it is necessary to provide sufficient incentive to punish teams that would otherwise plan to simply collect the rents from being a member of the club (see Michael Lewis' rant in the current SI).

[7] The right way to determine who gets to compete is well approximated by the structure adopted by the PGA Tour. Players (teams) who perform well -- even well below average! -- stay in the top division. All others must compete to play in the top division. Success elsewhere, like in the Nationwide Tour in golf, is sufficient to climb the ladder into the top division. This can be achieved in league sports. Indeed it is the norm in the world's most popular sport (soccer).

Summary: Limited revenue sharing to promote balance, a trap door between divisions to ensure every firm tries hard, and promotion of the ambitious teams and towns. Not a monopoly, but a meritocracy.

You've made it this far? Ok then, please wheel me off to the looney bin.

Update: Comments have now been enabled (d'oh!), but Sports Law Blog and Always Right have posted critiques at their sites.

Tuesday, March 02, 2004

On youth, the draft, and quality of play 

Yesterday's economic view suggested that the NFL's position on the "tragic consequences" of drafting 20 year old players made no economic sense. Over on the law side of the sports world, Greg Skidmore takes another run at the issue. Greg concedes on tragic consequences, and turns to the larger issue (I'm paraphrasing here) of what set of rules maximizes the value of the league to consumers. This is a good place to take the argument, but he offers up the wrong reason.

Greg argues that allowing underclassmen to enter the draft will be bad for football, and points to a perceived decline in the quality of play in the NBA.
There are a number of people, myself included, that think the quality of play in the NBA has been degraded substantially in the past 15-20 years. Is this because of the influx of players with little or no college experience?

This seems to be a chicken and egg problem. It seems that the trend in the NBA today is for an individualized, one-on-one approach, with less emphasis on teamwork, passing, etc. So many times, a guy will bring the ball up the court, pass to the star, who takes his man one-on-one off the dribble while everyone else stands around and watches. The focus in the NBA is on the "star," the player(s) on each team who has free reign to throw up as many shots as he wants.
In my view, this has nothing to do with youth in the league. Let me toss in two points (T me up!) on the decline, if you want to call it that, in basketball. Ages ago, David Stern and the NBA made a conscious decision to market the league by focusing the action on its stars. The prohibition of the zone defense was instrumental here, and led to clearout plays with 8 men standing on one side of the court, with one on one action on the other. It worked marvelously for a decade. Second, the decline is equally visible in college basketball. The game in both college and the NBA is more physical than it was twenty years ago. The interpretation of the rules, for example, allows for more aggressive defense. From this perspective, it is no mystery why scoring is down. At times, the physical nature of modern basketball is a thing of beauty, and we get to observe the spectacular. But the physical, athletic nature of the game has displaced elements of teamwork and skill that we also value.

My view is that deliberate tweaking of the rules, coupled with the development of more physical players like we have seen in all sports, is responsible for changes in the nature of play in basketball over the years. The "youth movement" has nothing to do with it. Spencer Haywood, you're off the hook.

P.S. Greg's take on what adding the 5th BCS bowl implies is insightful. Recommended.

Marvin Miller on the drug issue 

Only Baseball Matters points to a gem: Alan Barra's 2002 interview with Marvin Miller on the drug issue. Miller is as thoughtful and feisty as ever. In the current climate, his defense of player rights is sure to rub some the wrong way, but as always his position rests on solid ground. The interview is must-reading to put the entire issue in historical context. Here's a sample:
Barra If I'm not mistaken, the Players Association and Major League Baseball spent a lot of time trying to work out a drug policy some time in the mid-'80s. What happened?
Miller Well, we did work out a drug policy in 1984, or at least I thought we had one worked out. Peter Ueberroth, the commissioner of baseball at the time, obviously changed his mind after the fact. We agreed on a neutral panel of three doctors who were experts on the subjects of drugs and drug testing, and agreed on a policy of revolving examination.........And then, one day in 1985 Ueberroth astonished both Don Fehr [who succeeded Miller as head of the players union] and myself by going on television during a national telecast and announced that he was voiding the existing drug program because it didn't have mandatory testing. Don Fehr told him, in essence, to go to hell. Ueberroth was so arrogant he didn't seem to understand that he was undermining any possibility of instigating a drug program by tossing out the window what we had achieved through collective bargaining. Incredibly, in 1986, he tried again. Without even bothering to consult the union, he sent a letter to every major league player urging them to submit to voluntary drug tests.
Miller and OBM defend the players' position more vigorously than I would. But when Miller talks, I listen. It's a shame Ueberroth wasn't listening 20 years ago.

Monday, March 01, 2004

Gophers... I hate gophers 

A little humor for you: the Tiger Woods in Caddyshack commercial is here.

It is a riot. Had me laughing out loud during the WGC match play championship yesterday, won by guess who. Via Offwing. We're all pimping for American Express here, but its fun.

Update: There's actually an economic lesson in the commercial - gains from trade. As Tiger says to the gopher expert at the end of the ordeal, "that was easy!"

The economic view 

Two quick notes for a Monday morning

Greg at the sports-law blog suggests that, since the NBA and the NFL don't invest in player training, they should be allowed to bar young players from the draft. While this keeps their costs down and stacks the NCAA with marketable talent at a near-zero price, it seems a rich reward to dole out to free riders. The NFL's appeal of the Clarett ruling seeks to negate the opportunity for Clarett and Mike Williams to enter this year's draft, citing "tragic consequences." Ahem. You draft Clarett, pay him a few million, and then put his tender talent at undue risk if he's not yet ready? Please court, help me from myself! Clarett aside, Mike Williams is definitely ready for prime time. He's a man among boys in college football.

On to baseball's steroid conflagration. In every contract negotiation since the Messersmith-McNally case, the owners have attempted to recover some of the rents lost from the demise of their treasured reserve clause. They gleefully watched as somehow, the lockouts and strikes that accompanied these negotiations were blamed on "greedy players." With just a smidgen of foresight, an enlightened baseball management might have come to the table saying, "boys, we don't want to take your money this time. We accept the status quo there. But we both have a problem. Lets join the rest of the world and push doping out of the game with a credible testing policy." Didn't happen. Here's hoping both sides ignore the nonsense coming from the mouths of Baker, Kent, and Sheffield, and listen to what John Smoltz has to say.