Friday, July 30, 2004
While Saskatchewan is on the mind, here's to the greatest intellect I've ever known, a Saskatchewan man, and a superb economist, the late Donald F. Gordon. Although he had a great sense of humor, I doubt Don would ever be foolish enough to buy the shares. Cheers, Don.
Karen Steinhauser, a former prosecutor and visiting professor at the University of Denver law school, said she doesn't believe compensation funds have ever been an incentive for somebody to lie to obtain services.I'm no Bryant apologist, but there is a chance, which should be taken seriously, that Ms. Steinhauser is wrong.
Thursday, July 29, 2004
"Ferguson is forced to fly in big guns"United drew 0-0 with Bayern on Sunday, and lost 2-1 to Celtic last night in Philadelphia. Van Nistelrooy, Saha, Scholes, and Silvestre will fly in to make cameo appearances in the next matches, but that won't change the perception of the soccer.
The club's board have been surprised by the response of fans and sponsors after United fielded a team of mainly youth and reserve players against Bayern Munich in Chicago last Sunday and have asked Ferguson to call up the four internationals. Some sections of the 58,121 crowd at Soldier Field booed and there was stinging criticism in the Chicago newspapers.
...The Chicago Sun-Times said of Sunday's match: "This was awful." The newspaper added that fans had paid up to $150 for a ticket, yet the match was "more about pageantry and financial profitability for the participants than it was about quality soccer".
The lack of famous names jarred with the promotional activity surrounding United's tour. In Chicago's flagship Nike store - the company has a £302 million kit deal with the club - posters advertising the United merchandise featured Van Nistelrooy, Scholes, Silvestre, Ryan Giggs, Howard and Ole Gunnar Solskjaer who were all missing, the last through injury, from Sunday's match.
Top clubs throughout Europe are resting their best players after the international tournaments this summer. Pre-season friendlies there are much like pre-season NFL games here: limited action from the stars, and generally one big snooze-fest. It's the right policy for Man Utd's players and prospects for the forthcoming season. But parading the banner under the ChampionsWorld Tour with a reserve squad doesn't do much for your reputation with US fans, not at $150 a ticket at least.
250 men’s collegiate athletic programs have been cut since the last Olympiad in Sydney. Olympic sports like track, wrestling, swimming and gymnastics are nearing extinction on campus. As 12 of the 14 members of a presidential commission agreed, this is happening because Title IX is being enforced as a quota.Jim links to this story on a task force formed by the NCAA and the USOC to look in to the problem. The comments of Myles Brand do not augur well for a remedy. Title IX is off limits, and schools should recognize that Olympic sports are "valuable to the institution." Ergo, President Brand? Surely schools weigh the value to their institution of all the sports they consider participating in. Does he want schools to run even bigger deficits at the athletic department in order to expand non-revenue sports?
Simply put, this is one of the most important stories in sports and the national media continues to pretend there’s nothing amiss.
One proposed policy change did catch my eye. There is a rule imposing "a 7-year 'dead' period that prevents teams moving into Division I from competing for national championships." This rule denies skilled recruits the opportunity to compete at a school which has recently adopted a sport, so the best will go somewhere else. The rule obviously makes it more costly to build a competitive program in a market where recruiting is paramount. Indeed, that may have been its original intent. Scrapping it should be an easy call, but with the NCAA, nothing ever seems easy.
Wednesday, July 28, 2004
Pearlstein's story suggests that this policy has quickened the transformation of state enterprises into functioning private firms.
It's easy to see why Steve Forbes calls this an "investor's paradise." The new business-friendly government has pushed through a flat 19 percent tax that applies to corporate and personal income and sales, with dividends and capital gains largely excluded. ...In an earlier dispatch from Wroclaw, Poland, Pearlstein compares New Europe with the old:
Here in Bratislava, much of the restructuring is driven by corporate raiders such as the Penta Group, which has imported sophisticated Wall Street tactics to an economy rife with inefficiency and ripe with arbitrage opportunities.
While there is considerable debate about whether these "sharks" get inside help from friendly politicians, there's no doubting their ingenuity in taking control of public companies, or the ruthlessness with which they fire managers, spin off subsidiaries, lay off workers and sell what remains.
At Penta's sleek new offices, a staff of 160 controls companies with a combined payroll of 10,000. They have outfoxed U.S. Steel, partnered with Credit Suisse First Boston, mapped strategy with the Boston Consulting Group, and followed every deal done by Kohlberg Kravis Roberts and the Carlyle Group. According to one of the five founders, Jozef Oravkin, Penta has turned a $20,000 stake into a company worth $350 million.
"We are hated by many in this city, even though we are cleaning things up," Oravkin said.
Nevertheless, there seems little instinct to slow the pace of reform.
Although they may not understand or even trust global markets, 50 years of experience tells them they like government management even less. It is that embrace of frontier capitalism that makes Schroeder and the German business establishment so nervous.
A curtain has descended across Europe. On one side are hope, optimism, freedom and prospects for a better life. On the other side, fear, pessimism, suffocating government regulations and a sense that the best times are in the past.The competition between these neighboring states will be interesting to follow in the next decade or so. Will this competition move Old Europe's policies towards more protection or more liberalization? For their sake, let's hope it's the latter.
This is not the same "iron curtain" famously described by Winston Churchill at the outset of the struggle against communism. But it is a psychological barrier demarking the part of Europe that is embracing global capitalism, and the one that wishes desperately that it would go away. This time, however, it is the East that is likely to prevail. The energy and sense of possibility are almost palpable here in this thousand-year-old city once attacked by the Tartars and Napoleon, and ruled at various times by the Germans, Austrians, Czechs and Hungarians. Although unemployment remains in double digits and household incomes in Poland remain far below those to the west, Wroclaw has the feel today of a hip and charming European city.
Money and companies are pouring in -- not just the prestige nameplates like Bombardier, Siemens, Whirlpool, Toyota and Volvo, but also the network of suppliers that inevitably follows them. At first, most of the new jobs were of the semi-skilled variety. Now they have been followed by design and engineering work that aims to tap into the largest concentration of university students in Eastern Europe.
When a student graduates from high school, his GPA is locked in place and can be improved only by taking classes at the school from which he graduated, which is often not possible. However, by not graduating, a student can repeat the 12th grade at any school and can still improve his GPA by retaking classes at any school.The math is pretty simple. Suppose you are destined for a D or C in English. Take an F, lose 1 or 2 grade points, and fail to graduate. This gives you the opportunity to go to a "prep school" and recapture those points and more in the forthcoming year. Given the sliding scale for the SAT, the required SAT score for admission drops as you add to your GPA.
Athletes who fail to meet eligibility standards after graduating from high school typically attend a community college for two years and then transfer to a four-year college, often losing two years of playing eligibility. They also can enroll in a post-graduate prep school program and re-take the SAT in hopes of raising their score. But by failing to graduate, an athlete can try to improve his grades and his test score, making it easier to play at a four-year school a year later without a loss of playing eligibility. The one-year delay also can provide an athlete another year to mature physically.
This scheme only works for athletes who are just short of the standard and thus not eligible for admission under NCAA rules. But even though the number of students affected is small, the incentive is perverse and harms their education.
The NCAA..... what a trip.
Friday, July 23, 2004
Meanwhile, Marcos Breton, a columnist at the Sacramento Bee, is none too pleased with the city council. He deserves some credit - pointing out that the "we may be leaving card" of the Kings was likely to be played, a day before the council's decision. And there it is, right at the top of today's story on the vote:
Facing the prospect that the Sacramento Kings could leave the city if a new arena is not built, the City Council signaled early this morning they will ask voters to weigh in on the issue in a March special election.I wonder how that lawsuit in Cincinnatti - where Hamilton County is suing the NFL for playing exactly this game - will turn out. Good luck to them. It's not much of a stretch to cast the owners of our pro sports teams as bandits robbing the public purse. They've taken in billions in the past decade.
Many council members felt there were too few specifics known at this time -- including site, costs and funding plan - to put a vote on the November ballot. But they said quick action was necessary.
"The Kings are a civic asset and I’m not ready to risk losing them," said City Councilwoman Sandy Sheedy.
Sheedy said she and Councilman Steve Cohn spoke this week to NBA Commissioner David Stern. They were told that if the city did not approve a ballot question or move forward with the issue, they could lose the Kings.
Thursday, July 22, 2004
Update (for those who know me): Caught the big kahuna! We chased him (tarpon, 100 lb +) over just about every sand bar at Cape Romain, but managed to bring him alongside the boat and get a good look before turning him loose.
Tuesday, July 20, 2004
In New York, the Regional Plan Association has taken a stand against the Jets' $1.3 billion stadium/convention center project. They argue that "access to the waterfront is too important to the future of the city and the Far West Side to construct such an immense barrier in a prime location." The association also differs with the city administration on the desirability of landing the Olympics for New York in 2012. The Deputy Mayor claims the stadium project is "critical" for development, and that winning the bid for the Olympics is "absolutely essential." Relative to the administration's bombast, the RPA's claim is quite reasonable: "17 days in 2012 should not drive the planning for a crucial part of the city for the next 50 years."
The Sacramento Business Journal has a lengthy description of the plan to build a downtown sports and entertainment complex. The planners are "thinking big." The arena investment is designed to stimulate the local economy by giving downtown Sacramento a facelift. The tab is projected to come in at $590 to $750 million. The method of paying for it is focused on businesses that stand to gain from the investment. Nevertheless, a 1% to 4% surcharge on food and drink purchased outside the proposed "entertainment district," is sure to raise controversy. The arena itself has a price tag in the $350 million range. $200 million or so could be spent on the purchase of existing hotels, stores, and buildings, demolition, and replacement of existing parking. Sounds like major cosmetic surgery to me. A decision to put the project on the November ballot is to be made on Thursday.
Pittsburgh is slated to host the All-Star game in 2006, according to this report in the Post-Gazzette. The article's title: "All-Star Game a boost for city's image, but economic impact limited" suggests that the reporters have done their homework. They cite Victor Matheson's research on the impact of MLB's all-star games from 1973-1997. Matheson found that "actual job growth lagged behind projected growth" and that "quarterly tax collections dropped in each case." That any boost from the game is minimal should not be a tremendous surprise. A large percentage of seats at the All-Star game are occupied by season ticket holders - i.e. local residents. The money they spend on $200 tickets to the All-Star game does not get spent at the movie theater or hardware store.
Image is important to the local pols. Houston officials are basking in the glow of the perceived change in their city's image after this year's Super Bowl and All-Star game. But changing these perceptions took significant public and private investment - $4.5 billion according to this report. Cash-strapped Pittsburgh might find it more difficult to spruce up the city.
[Pittsburgh] Mayor Tom Murphy's office had no estimates yesterday on extra government costs for an All-Star weekend, such as security, traffic enforcement or even a general beautification of the city.As I've mentioned before, Pittsburgh's poor financial condition is directly related to its generous subsidies for stadium construction on behalf of the Pirates and Steelers. Yet local officials in Pittsburgh are throwing around terms like "tremendous bucks" and "the sky's the limit" when referring to the All-Star game's economic impact. At least they've been given fair warning.
Paying for any extra, large-scale capital improvements such as street repair will be near impossible: With Pittsburgh's credit rating at junk bond status, it probably cannot borrow any money until January 2006, according to its Act 47 recovery plan.
Monday, July 19, 2004
You may not have heard about Jeff Julian, who died of complications from ALS - Lou Gehrig's disease - last Thursday. Bob Gillespie tells Jeff's story in The State, and tells it well. Like Jonathan, Jeff played golf at Clemson (1979-81), but wasn't quite good enough to compete in the tournaments. He kept trying though, and eventually made his way to the big show. You may recall some of the moments described in the story. Golf can be brutal at times, but it can also be beautiful and inspiring. Gillespie's article reminds us of that.
Jeff founded Driving 4 Life with Bruce Edwards, Tom Watson's caddy, and Watson himself. Edwards' life was claimed by the same disease on the first day of the Masters earlier this year. Driving 4 Life raises funds for research to fight ALS. Here's hoping that a bounce or two goes their way in the next few years.
Saturday, July 17, 2004
Friday, July 16, 2004
Game day sales at King Street Bar & Oven this season are about half of what they were last year, said Anderson, who bought the restaurant with Christy Schatz last summer. Instead of serving crowds hours before a home game, they're lucky if the restaurant fills up an hour before the first pitch. Because of the decline in sales, Anderson cut his staff from two bartenders and three waitresses to one bartender and one waitress on game days.Note: that fans aren't spending as much on the Mariners and complementary goods does not mean that they've stopped spending entirely. If that were true, one could detect a cyclical impact on the overall economy in smaller cities (like Seattle), as the record of their teams goes up and down over the years. To my knowledge, no study has ever documented such an impact. Brad Humphries did find a small Super Bowl effect for successful football teams, but the emphasis should be on "small," and that finding stands in contrast to most of the evidence produced by academic studies (including Brad's).
Armstrong's odds at Betfair have tumbled: from 0.7-1 (59% probability of winning) on Wednesday morning to 0.3-1 (76%) now. Only a disaster would seem able to block Armstrong winning his 6th straight Tour.
The commissioner, whose term expires Dec. 31, 2006, indicated he will continue past that date. "That's something the future will decide," he said.The late Doug Pappas would not be pleased. Nor surprised, either.
Thursday, July 15, 2004
Poulter sits at even par after 18 holes, just behind 7-1 favorites Woods (-1) and Els (-2). As I stated after following Poulter for 18 holes at the Masters (he was paired with my former student Jonathan Byrd), the boy's got game.
First, Eric Rasmussen provides a very useful addition to the minimum wage discussion triggered by Steve Landsburg's column in Slate. I side with Rasmussen in dissenting from Landsburg's claim that it's "almost impossible to maintain the old argument that minimum wages are bad for minimum-wage workers." Card and Krueger's research did not change the minds of all labor economists on this issue. It prompted a spirited debate, as suggested by the papers in the July 1995 Symposium of the Industrial and Labor Relations Review. Finis Welch - no midget in the world of labor economics - offers a very sharp criticism of the Card and Krueger paper in that Symposium.
Second, he points to Arnold Kling's column at Tech Central Station. Kling provides a compelling, "just the facts ma'am" account of economic progress in the nation, and particularly among the poor. If you are not aware of these facts, you should be. Here's a taste:
Item Percent Lacking: 1970 Percent Lacking Now
Telephone 13.00% 2.40%
Complete plumbing 6.90% 0.60%
Refrigerator 17% 0.10%
Stove 13% 0.30%
Color television 66.00% 1.10%
Vehicle 20.40% 10.30%
Economic progress has been very good to America's poor. See Kling's column for more facts and insightful commentary, but let me add this small point. I would venture to say that increases in the minimum wage have done nothing to contribute to these figures. They merely put sand in the gears of a dynamic economy which, despite the meddling, creates these riches.
And by the way, like Professor Bainbridge, I was once the owner of a pitiful - by today's standards - Ford Pinto. Life is good, even for those who once drove Pintos.
Most will recall Smith and Carlos on the medal stand, fists raised in black gloves, heads bowed, during the playing of our national anthem. "[A]n act of love. Tough love, but love" for the country, says Carlos today. A photo of the scene was apparently voted by European editors "the most significant dramatic photo of the 20th century." I buy that. I remember the spanking, even though I was a mere kid at the time. But today's journalists appear to be more interested in checking out the latest corporate press release.
[N]ow, it is 2004. Though widely publicized to the hundreds of journalists here covering the trials, the Smith-Carlos event drew only five reporters, none from television. For the Nike outfit unveiling, the room overflowed with 150 reporters and 10 TV cameras."Show me the money" might be an apt characterization of today's reporters. A more positive view of the story is that America has made significant racial progress in the last 36 years. The advance has been slow, not swift, but steady nevertheless. Anger and shame have been recast by the protagonist as love. Incremental progress sustained over 36 years amounts to enormous change.
Ever since Roman Abramovich emerged from nowhere to buy Chelsea there have been many stories of such Russian activity around football clubs.The club have also bought back 1/2 million shares and cancelled them in the past six months. This has the effect of increasing the primary shareholder's control, giving them more leverage in a potential takeover deal.
However, there have been some strange goings-on around Tottenham shares. ...
Having hit a low of 17p in the last year the price went up to nearly 30p this week.
The old London Derby may morph into a battle of Russian oligarchs. As Franklin Foer would say, correctly I might add, "that's globalization for you."
Most businesses surveyed in the article suggest quite modest indirect effects - statements which cast doubt on the economic development pitch perennially made for stadium subsidies. One firm however, is clearly in line for a windfall. The Sunshine Network signed a long term, exclusive contract with the Heat in March. Their advertising revenue will soar, but the payment to the Heat was negotiated without the Shaq effect in mind. How does the Network feel? "We're giddy about Shaq." As are Miami basketball fans, I'm sure.
The trade changes the NBA landscape, which I find quite interesting. Next year's title is up for grabs.
Wednesday, July 14, 2004
A medal that was minted but never awarded -- if there was a tie, for example -- might be had for as little as $1,500, but a rare medal from the first modern Olympics in 1896 can go for upward of $20,000. Medals with documentation showing they belonged to famous winners sometimes go for more.I'm curious though as to how the medals that were "minted but never awarded" make it to the market.
Tuesday, July 13, 2004
"I called [the Cavs] and told them what was out there and the situation that was presented to me in Utah," Boozer said. "They told me 'You can't do this, you gave me your word.' I told them that I didn't give them my word. The only organization I gave my word to was Utah. I called [Utah GM] Kevin O'Connor and I told him that I accepted their offer and that's the only word I gave during this process. I plan to sign the offer sheet tomorrow."The bottom line is that the Cavs had nothing to gain by not exercising their option on Boozer, unless doing so enabled them to sign him to a long term deal. Boozer's argument is essentially this: the Cavs were so dumb that they threw away their rights to the best young power forward in this summer's free agent market. An option worth $10 million in economic rent. Ohhhkay, Carlos.
...The Cavs, apparently, have not given up. According to league sources, the team offered Boozer on Monday a one-year deal for $5 million. If Boozer accepts the offer, he would become a restricted free agent next season. Boozer doesn't believe the Cavs' sincerity.
"Why would they try to sign me?" Boozer said. "They've tried to demoralize me as a human being. They tried to depict me as a kind of guy that bamboozled people. They've lied and painted a picture that we had an illegal deal. They tried to say we had an oral agreement before July 1, and that didn't happen."
Earlier in the story Boozer is quoted as saying "I never shook hands with the idea that I was going to sign." That's an interesting qualifier. Regardless, it appears that he gave Cavalier management the idea that he was going to sign, whatever was going on in his mind. Boozer's current offensive merely adds to the case for the prosecution. He should shut up before he digs himself in any deeper.
Now, my analysis could be wrong, particularly as I've never waded through the entire NBA collective bargaining agreement. If so, I would appreciate any corrections by those more knowledgeable than me.
Boozer then went and negotiated a six year, $68 million contract with the Utah Jazz, valuing him roughly at about $11m per season. Cavalier management would appear to have made a $10 million mistake by not exercising their option. Why would they do something that stupid? Apparently, because Boozer and his agent requested the move, on the understanding that he would accept a deal in the neighborhood of $41 million over six years, the maximum the Cavs could offer under league rules. But the rules outlaw an explicit contract at this stage, so the deal could not be closed.
That Jazz contract suggests that the Cavs were not stupid in agreeing to Boozer's request - assuming that they were dealing with an honest, and not duplicitous player. Had the intended deal gone through, Boozer would have his financial security, and the Cavs would have obtained a long term bargain (at 60% of the sticker price) by giving up their rights to a short term windfall (paying $695,000 for a $10 million player for one season). Everyone is a winner.
Instead, Boozer has poisoned the well of trust in the NBA. Trust is essential in repeated bargaining, particularly when technicalities eliminate the ability to write explicit contracts as in this case. SFX Sports Group, who represented Boozer, have terminated their relationship after they "could not convince Boozer to live up to his promise of re-signing with Cleveland." The particular agent involved, Rob Pelinka, may also be on his way out of SFX, who apparently understand that their reputation is worth more than the $2.7 million commission on the Utah contract. Ian Thomsen at SI.com has the story.
Monday, July 12, 2004
Unfortunately, exclusive arrangements by country have been made, and the two sites will apparently block access from outside their own country. Does anyone know a way around that constraint? Via Wired News.
Sunday, July 11, 2004
This is a sensible way to pay for a road system - those who use it pay for it. Toll payments would be offset by reductions in taxes on the car itself - a fixed charge unrelated to use of the roads, and fuel - related to fuel consumption but not to the costs of road construction, maintenance, and congestion, all of which are higher in urban areas.
The costs of installing the system are considerable, but the estimated decrease in congestion delays of 44% in and around London would go a long way towards repaying it. The Guardian has the story.
Update: In the comments section, John Top states "I find it hard to believe the the government would offset the money raised by congestion charges by returning it to the taxpayers. They'll find a way like they always do to use it for their own largesse." Unfortunately, he's right. As Sean Hackbarth notes at the American Mind, we are "still stuck with a (3%) "luxury" tax on telephone calls that origniated in during the Spanish-American War and was revived to pay for WWI." I'm for more efficient taxation, provided that new taxes are revenue neutral, i.e. offset by decreases in less efficient taxes. As Hackbarth's post makes clear, this is not an easy trick to pull off.
Saturday, July 10, 2004
A note in the sports page reveals that over 150,000 bottles of champagne are consumed over the five days of racing. The queen and the stuffy Ascot officials aren't likely to publicize stats on the teams of Foster's beer distributors, who wear giant backpack kegs and move about the Pavilion looking like Ghostbusters, shooting streams of Australian export into decidedly less snobbish mouths.Interesting innovation. I wonder if we'll see it spread to the States.
Thursday, July 08, 2004
The massive antitrust case launched against Microsoft on May 18 1998 ended last week with a whimper. A federal appeals court has endorsed a settlement reached between the software company and the US Department of Justice. Six years of legal dispute, including a government victory on some important charges, have ended. Microsoft, yet in one piece, continues to dominate market share with Internet Explorer (having vanquished its browser rival, Netscape), with its Windows PC operating system (even as Linux continues to generate buzz and Apple refuses to die) and with its now standard office software programs Word (word processing), Excel (spread sheets) and Power Point (3 million MBAs can?t be wrong). Robert Bork, representing anti-Microsoft interests challenging the settlement in court, was disgusted with the result: "It appears on first reading that Microsoft has been cleared to continue its campaign of predation"In short, competition for the field, not just within it, is good for consumers. RTWT.
So this is where Google comes in. Despite the fact that Microsoft and Yahoo are both moving aggressively to attack this space, Google?s search engine has performed brilliantly. Without the leverage of incumbency, the outsider has offered consumers value. Consumers have flocked to the innovative application; Wall Street now rushes to fund expansion. While in the cross-hairs of Microsoft's "campaign of predation", Google has developed a business plan that will soon be capitalised at something like $25 billion.
Make no mistake: Google strives to dominate. It aims to offer technology so compelling that rivals do not just lose market share, they lose the market. The incentive to seize and occupy a position of monopoly is what drove Microsoft frantically to develop highly functional browserware, distributdistributing it to millions of Windows users free of charge so as to fend off the tempestuous Netscape. It is what fuelled Google's invention of a superior search engine, and it is what now drives it to offer a spectacularly more generous e-mail service. This is the productive violence of creative destruction, and its awesome power is only faintly hinted at by inbox notices announcing memory windfalls of 12,400 per cent.
As of yesterday, the 30-year-old software engineer from Salt Lake City had won a total of $788,960, beating the previous record-holder, Tom Walsh, by a margin of over $600,000. Granted, this unprecedented victory streak was also made possible by this season's change in Jeopardy! rules—the term limits have been lifted, as it were, so that the run of a winning contestants may continue indefinitely, instead of being stopped after five consecutive games.Jenning's streak is at 26 now, so the previous rule obviously had a big impact on the best contestants. The new rule has got people watching - however fortutious or planned was Jennings' arrival - which is the point of the show. Stevens continues:
Watching Ken Jennings play is like witnessing any great athlete in top form: He's the Michael Jordan of trivia, the Seabiscuit of geekdom. ... At the end of last night's show, Tom, Ken's nearest challenger, had only $400 left, and his written response to the Final Jeopardy question was a limp, indecipherable squiggle. (To be fair, Ken didn't know this one either. But he still had $22,000 left to bet.) Jenny, a tiny, bespectacled woman with a voice like Lisa Simpson's, had pulled off some impressive turnarounds early in the game, but she was no longer even on the board; her balance had gone to zero, forcing her to sit out the final round. Poor Tom had a sad-sack demeanor that was hard to warm up to, but watching Li'l Lisa kick Ken's ass would have provided a feminist thrill.Stevens is a playa-hata! She's bad, too, if one can compliment a writer like that.
Wednesday, July 07, 2004
In a laboratory experiment run with M.I.T.'s [Thomas] Malone, Intel used a market to make a coordination decision: which factories should produce computer chips and when. In the experiment, a centralized, strategic plan was replaced with a market in which salesmen and a plant manager traded futures contracts representing chips. The result was nearly 100% efficiency in allocating manufacturing capacity. That experiment echoed another, real-life market triumph. In 1998 oil giant BP set out to reduce company-wide greenhouse emissions 10%. Instead of issuing plant-by-plant dictums, the company let plant managers trade permits to produce emissions. Managers who could quickly get their plants into compliance and reduce emissions even further could sell their permits to other plants. BP hit its reduction target -- nine years early.There is an emerging literature on this topic. Of course, Hayek made this point long ago, as I discuss in several of my papers on sports betting. James Surowiecki's "The Wisdom of Crowds" (discussed at the previous link), is an engaging book-length treatment of Hayek's theme. A forthcoming paper in the Journal of Economic Perspectives by Justin Wolfers and Eric Zitzewitz provides a nice introduction to "prediction markets." George Mason's Robin Hanson has been working on these markets in every sense for years, and has many original thoughts on the issue of predicting the future. Hat tip: Tyler Cowen.
Real's managers studied how Disney had marketed the film, The Lion King. Their key insight was that selling tickets to the movie was not the main source of revenue; the big money lay in spin-offs and merchandise. Buying a team full of galacticos (superstars) was meant to make Real the leading brand in world football, creating new revenue, from sponsorship to shirt sales. The goal was to overtake Manchester United, Mr Beckham's former employer, which became the richest club in world soccer thanks not least to pioneering the idea of turning its team into a media brand. (United recently hired a former Disney executive, Andy Anson, as its commercial director.)It's also worth noting that Beckham's 35m Euro transfer fee cuts rather deeply into the marketing revenue, not to mention his superstar wages.
Real's strategy has largely worked. ...Real's commercial revenues now exceed ticket sales and revenue from broadcasting. HBS reports that "marketing revenue was expected to rise from €39m in 2000-01 to €83m in 2003-04."
Yet there may be a small flaw in Real's strategy. Footballers—unlike the cartoon characters of "Lion King"—are human beings, with all the frailty which that implies. For the first time in years, in 2004 Real failed to win any major trophies. And in the current European football championship, the brand value of many of its stars has taken a dive.
Competition among sportsmen is quite different, thankfully, than competition among actors and cartoon characters. I hope it stays that way, despite the efforts of the Real Madrids of the world.
Tuesday, July 06, 2004
At 1xInc.com, they claim "No central server! That means no bookie, and no Wire Act violation."
Hmm, if the Feds can't get to them, that would break up the legal logjam on internet betting. What will Eliot Spitzer do? There's no loot, and little publicity at this point, so I'd wager he sits on the sidelines.
Betbug, 1xInc's P2P betting service, links wagering offers in the manner of Kazaa. Betbug claims it will be operational this month. At the moment, most features appear to be "currently under construction." The race is on!
All this makes for very engaging reading, but it won't get anyone in the United States any more excited about soccer. Since we already have ice hockey, a ferociously repetitive low-scoring game where nothing ever happens, and since hooliganism is not something we need to import to these shores, I suspect most readers will come away from this book relieved that professional soccer, like French pop music, German stand-up comedy and Indian movies, is something profoundly annoying that mercifully stays overseas where it can't do any damage to our fragile republic. Perhaps inadvertently, Foer has written a paean to a sport he loves that will provide even more ammunition to those who loathe it.There's an excerpt from the first chapter there too, about Serbian hooligans at Red Star Belgrade. No insights in either about the economic commentary discussed by Daniel Gross. I'm still including Foer's book in my next purchase.
Update: Rob Wilson's review at MatchNight is much more balanced and descriptive. Recommended.
[T]he NFL's 32 teams — with a combined value exceeding $20 billion — split most of the revenue. Including the eight-year, $17.6 billion television package that expires after the 2005 season, the NFL and its franchises generate about $5 billion in annual revenue and share roughly two-thirds of that amount equally.Well, the Panthers are surely in the bottom quartile, and by giving Kraft's Patriots a good run in the Super Bowl, they proved yet again that everyone can compete. Isn't Kraft's complaint odd, given his team has won two Super Bowls in three years? Perhaps he has a soft spot in his heart for the Cincinnati Bengals...
It's the unshared revenue at issue.
With changing economics driven largely by stadium deals (and luxury boxes), the difference in annual revenue for the richest teams, such as the Redskins, and lower-revenue teams, such as the Colts, is more than $100 million, according to some NFL executives.
That could explain why Washington, lured to the Redskins in March with a six-year, $24 million contract, is one of the linebackers Polian wishes he could have kept. The other, Mike Peterson, went to the Jacksonville Jaguars last year with a $20 million deal.
"We can't keep as many people as some teams can," Polian says, grumbling. "The issue is cash. If you have cash that your stadium is generating every year, you can commit that to bonuses to retain or get players in the free agent market. That's the name of the game."
In a league that prides itself on competitive balance, just the perception of a wide revenue gap strikes at the heart of a philosophy that has long been a pillar for success.
"There's concern that the disparity between the first quartile and the fourth quartile is getting too great," New England Patriots owner Robert Kraft says. "How do we equalize it? The main issue is allowing everybody to compete."
In my opinion (and its only that), existing NFL rules mandate too much competitive balance. Dynasties can be good too, as long as they are not permanent. I'll bet Jerry Jones and Dan Snyder are doing their homework, because their fellow "partners" may have their sights on the Cowboys' and Redskins' local revenue streams. Last time I checked, the Cowboys and Redskins, for all of their unshared revenues, had not been doing very well on the field. This spat is about money, not competition on the field.
Monday, July 05, 2004
Nevertheless, given the reaction to his call, he deserves his due in this space.
Meier deserves better, particularly from the English press, who have a horrible record. If the English tabloids were based in America, imagine the hue and cry from Europe in response to their jingoistic escapades! Still, given the "push" statements and physical gestures by Meier at the end of the 90 minutes, I wonder whether he blew the whisle on account of his perception or his imagination.
'It was horrible. English people are not like that'
"I am completely shocked at the reaction, But I stand by my decision. It was a clear foul (John Terry on Ricardo, the Portuguese goalkeeper) and not a point of discussion."
Meier has refereed in England many times, both in internationals and Champions League matches. "I love English football," he said. "It is fantastic, the intensity is like nowhere in the world, but this is a black point in my life, seriously, I really do not understand it. I refereed the England v Romania game in Euro 2000 and gave the penalty against England; there was no discussion about this. I have always believed in the English approach to football, positive but fair. There were over 30,000 English supporters in the stadium for the Portugal game, I did not receive one threat or hear of any trouble after the game, and I wonder, who are these people?"
His frustration poured out as he continued; "How do you deal with such attacks? I know UEFA will hold an inquiry but how can they protect a referee in these circumstances? I was badly criticised by the Romanian press after some decisions I made during a game between Denmark and Romania. They called me a bandit. OK, I didn't like it, but no one came to my house or threatened to kill me.
"Look", he said reasonably, "I understand the disappointment and a referee's mistake is sometimes the easiest way to explain a defeat. This I accept, but right or wrong, this is not a normal reaction".
Meier, 45, has officiated in two World Cups, two European Championships and a Champions League final. At the end of this year he retires.
``In my opinion it was a fantastic Euro, the tournament for the little teams," he said, "and I think the referees have been excellent. I enjoyed the three games I refereed and I enjoyed being there. I didn't mind who won, you always need a bit of luck. You know it was so close that game, Portugal v England," here his voice faltered again, "I wanted a good memory from the tournament, but that's football, I suppose."
"I hope it stops now," he said, "and we can get on with our lives. You know it was horrible, but I never would have expected something like this from England, and I really don't believe this is typical. English people aren't like that."
Russians make a big splash in LondonYeltsin? Thought he was permanently pickled. What the heck is Putin doing? Seriously though, read the article. There's more evidence, albeit somewhat circumstantial, that Russian wealth is finding a home in Britain.
17-year-old Maria Sharapova isn't the only Russian seizing the limelight in London these days. Russian oil tycoon Leonard Blavatnik has just been confirmed as the new owner of a sumptuous $74 million house next to the late Princess Diana's Kensington Palace, joining a rapidly-growing list of rich and famous Russians who are turning London into 'Moscow on the Thames.'
Suddenly, it seems, Russians are everywhere in Britain, London especially, as the nation becomes a magnet for the newly rich and super-rich who are looking for a safe haven for their money and the opportunity to buy into the essence of Western class and respectability.
They are competing against each other for the most expensive houses in the country. One billionaire has bought Chelsea Football Club and some of the world's most expensive soccer talent, and others are basing themselves in London to buy and sell businesses in global oil, gas and metals. Russian businessmen (almost all men) and their families are putting their children into some of Britain's most expensive private schools and spending huge sums at fashion houses, on art, and in restaurants. So much Russian is heard on London streets that Hampton Court Palace -- 16th Century home of King Henry VIII -- is about to add a Russian language version to its walk-around electronic guide.
Of course, some aren't really Russians at all. Wimbledon blonde sensation Sharapova, for instance, has lived in Florida since she was seven and sounds more like the classically-giggly American teenager than a refugee from Chernobyl (which she was). And Blavatnik is a U.S. citizen who arrived in New York as a penniless Russian émigré in 1978.
Still, Sharapova did play under a Russian flag and she did get a congratulatory phone call from former Russian President Boris Yeltsin.
Sunday, July 04, 2004
Crank up the celebrations for the third time in 10 days. As Kathimerini states, it's a "fairy tale ending to dream run." That's about right. Greece can worry about Olympic construction after it recovers from a national hangover.
Saturday, July 03, 2004
By all accounts, she was not a child of privilege in post-Communist Russia. Her family fled an area threatened by the nuclear-reactor disaster at Chernobyl.
Somehow, she made it to the beautiful tennis people in the American Sun Belt, just as the Williamses eventually did.
With talent, ingenuity and a little luck, hard roads from anywhere can lead to fame and fortune. Basketball players come to the N.B.A. from the most remote places, and most of them have more in common than people think with the black American stars who occasionally wonder what the foreign invasion is all about.
It's about hunger, and hope, and all those cliches born of truth...
Salon's King Kaufman:
If I'm Coach K., I've already taken the Lakers job.I hope so, then Clemson might start winning some games! Back to KK's script:
As you might have noticed, I'm not Coach K. ... But looking just at the basketball side of things, he's gotta go. NCAA basketball, and particularly ACC basketball, is headed downhill on a rail.
The talent drain is changing college basketball. For most fans, it doesn't matter much. They root for the uniform. They're loyal to the alma mater or the local squad and it doesn't make much difference if the level of play is a small step below the pros or three big steps. In fact, the siphoning off of elite players probably improves parity, since no longer having NBA-bound guys for more than a year or two brings the top programs back to the pack. That's actually an overall good, as far as it goes.Yep. I hear the whining clear across the Carolina border.
But for a guy like Krzyzewski, it means he's the king of a shriveling empire. The Blue Devils will still play for 35 packed houses a year, but day in and day out, Coach K. is increasingly working with a B team.
Not only that but the ACC, where basketball has long ruled the roost, is transforming itself into a football conference, chasing the riches of a conference title game and the Bowl Championship Series. On Thursday, the day the Coach K. rumor broke -- coincidence? -- Virginia Tech and Miami officially joined the conference. Boston College is set to come aboard next year. Those schools play basketball, but they aren't really in the basketball business.We can beat them! And Coach K leaving on account of it would put the cherry on top of the sundae.
I think Coach K. is smart enough to gain the respect and handle the temperament of most NBA stars and owners. And NBA coaches don't have to recruit, don't have to worry about the NCAA's byzantine rules or whether players are passing their classes or at least cheating their way through them in plausibly deniable ways, don't have to worry about whether the talented new player they've just signed will get a better offer and just not show up.Econ 101: where is K's value the highest? LA, notwithstanding that he apparently has skills in "plausibly deniable ways."
Who wouldn't want to trade an old set of headaches for a shiny new set? And with nothing left to prove in college basketball, why wouldn't Krzyzewski want to challenge himself anew? It's not as though, basketball-wise, he's a typical control-freak, call every play college coach. His teams play up-tempo ball and man-to-man defense. That's been known to work in the NBA.
Duke athletic director Joe Alleva told both Krzyzewski and reporters that he hopes Coach K. stays at Duke. "He's an educator," Alleva said.Where their value is the highest, if I may be so bold. Be right, KK!
Then it makes sense he'd want to be around college-age kids with a lot of basketball talent. Last time I looked, those kids were in the NBA.
Friday, July 02, 2004
A quip from Fark
Bad news: David Beckham will probably take it.
Now, I'm sure regular readers will not need this explained.
How long will it take for Mr. Know-It-All Ken Jennings to become a loser?I haven't watched Jeopardy in years either. The interest in watching "Ken the Merciless" on Jeopardy! has a parallel in sports competition. In the old days of barnstorming in baseball, fans bought tickets in droves to see the Cincinnati Reds. They were unbeatable. But once other teams became competitive, it took structured competition in the form of a league to sustain interest.
That's what millions of Americans who have been tuning into the quiz show Jeopardy! are waiting to see.
On Thursday night, Jennings' 22-day total reached $737,760, and he may be the only Jeopardy champ people know by name.
...Fort Myers resident Rob Gillespie, 32, said he hasn't watched Jeopardy! in years, but he knew of Jennings' triumphs.
"I was watching (ESPN's) SportsCenter last night and they did the "Top 10 Plays of the Day" and he was No. 2," Gillespie said.
On an ESPN Web site poll, more people said Jennings' streak is a greater achievement than the 82 consecutive saves by Los Angeles Dodgers pitcher Eric Gagne.
...Only Jennings, the studio audience and fellow contestants know when his streak will end. The Jeopardy! episodes featuring him were taped in February, and Jennings is back home in Utah.
The BBC's Richard Galpin, in Athens, said the celebrations were wild, with tens of thousands of people going "completely berserk and mad".Making the final is an incredible achievement for Greece. It must have been quite a scene in Athens.
He said that in the early hours of the morning, police joined the celebrations by using their van's loudspeakers to broadcast the excited commentary from the "silver goal" across the city.
There is a sense of revamped national pride which will allow them to look forward to the Olympics rather than the great concern and anxiety of recent months, he said.
What happened to the players' strike threat? There is no news of that today, nor was there any sign of a problem on the pitch. They executed a brilliant if dour defensive plan, and kept the ball when given the opportunity. They ran like mad and somehow outlasted the Czechs, as they finally began to trouble their opponents' goal in extra time. Rob Hughes has a negative, but informed account of the Greek's "Teutonic" tactics. Update: In How have Greece done It?, Mike Adamson and Rob Smyth describe the reasons behind Greece's remarkable success, without letting their personal distaste for defensive tactics color the piece. Recommended.
What to make of this spirited performance, coming on the heels of a strike threat? One would have thought that conflict within the camp would disrupt preparations and wear away team unity. But playing for your team - and they've played as a cohesive unit throughout the tournament - and country is sufficient motivation I suppose, even when you are at odds with bureaucrats at the Football Association.
Sunday it's Portugal vs. Greece. Given the Greek's style, close marking will choke the match of flair and skill, but they - including their raucous fans - should make it interesting nonetheless. Can they win the whole thing against a skilled Portugese side that has finally come good? The market at Betfair rates them at odds of about 5-2, so it's not inconceivable. But two things are certain. Greece will make life difficult for Portugal, and they have proved the doubters wrong repeatedly thus far.
Thursday, July 01, 2004
The National Football League, which frowns on player involvement in the promotion of gambling, is reviewing Steelers running back Jerome Bettis' link to a proposed horse racing track and slot machine operation in Hays.Bettis has earned millions on the basis of merit in the NFL. But political pressure to make sure that minorities get their share of the loot from slots is mere window dressing when it comes to tackling the economic problems faced by minorities. This episode is an echo from Thomas Sowell's recent book, Affirmative Action Around the World: An Empirical Study.
Bettis, along with developer Charles J. Betters, met with several members of the state Legislature Tuesday to discuss plans to include minorities in his project.
Betters' $500 million Pittsburgh Palisades Park would include a horse racing track, slots casino, townhouses, retail development, and a hotel.
Jamal Dokes, who is Bettis' business manager, said that the Steelers running back does have a relationship with Betters but wouldn't say whether it was a financial arrangement.
...State Rep. LeAnna Washington, D-Philadelphia, said Betters and Bettis met for 30 minutes at the state Capitol Tuesday with her and two other leaders of the Black Legislative Caucus -- state Sens. Vincent Hughes and Anthony Williams, both Philadelphia Democrats.
Washington said Bettis described himself as "a part owner'' of Betters' project. Bettis also described himself as "a partner in the deal," she said.
As for the NFL, Bettis' employer, the Rooney family, owns two racetracks. If Bettis gets involved with Pennsylvania slots, it would be hypocritical for the NFL to try and stop him.
In 1986, Foer writes, then-Congressman Jack Kemp opposed an anodyne congressional resolution to support U.S. efforts to play host to the 1994 World Cup: 'a distinction should be made that football is democratic, capitalism, whereas soccer is a European socialist [sport],' the former quarterback said.Well stated. I'd like to see baseball's barons make the case that their system is the one that is best for American fans (and not just assert it as Kemp did). Fat chance!
But Kemp got it exactly backward. For when you look at the business of professional sports in both Europe and the United States, American sports are virtually all socialistic while the European soccer leagues more closely resemble the entrepreneurial capitalism we Americans fetishize.
...The Austrian-born economist Joseph Schumpeter—a tennis player, not a soccer fan—developed the concept of creative destruction, the touchstone of American-style capitalism. Schumpeter famously likened the elites of a society to a hotel, one in which rooms are always occupied but by an ever-changing roster of guests. The hotel concept almost precisely describes the soccer leagues of Europe. Every year, the worst-performing teams—three in England, four in Italy—check out. Relegated, they must play the following year in the next-lower division. Meanwhile, ambitious upstarts who have succeeded at lower levels check in. They are promoted.
...By contrast, the American professional leagues are like a Marriott Residence Inn—once you're allowed to check in, you never have to leave. There's no great punishment for consistently propping up the standings year after year. Yes, the market value of losing teams often suffers in comparison to those of winning teams. But once you're a member of the cartel, there's a floor under the price. The Montreal Expos, despite decades of gross mismanagement, these days by Major League Baseball itself, were valued at $113 million last year, according to Forbes.
Thanks to Aleksandar Tomic for the tip.
One gets a bellyful of half-witted earnestness pretty quick, so it's refreshing to come across this critical but humorous article by James Gill.
In a letter to Gov. Kathleen Blanco, Tom Benson says he is ready to begin negotiations on a "permanent solution" that would keep his Saints in town.Heh. Louisiana politics is a first rate spectator sport.
This is great news, because, as experience has shown, a permanent solution for the Saints can last as much as two years longer than a temporary fix.
The solution Blanco inherited from her predecessor Mike Foster was three parts hocus pocus and one part wishful thinking. Thus, with the state short $7 million on the installment due this year under a subsidy deal reached less than three years ago, the Legislature tapped the state Department of Economic Development with an airy promise that the Superdome Commission would pay the money back in eight years.
Most of the Legislature will have been term-limited back to honest work by that time, but leaving intractable problems for posterity is a favorite trick in Louisiana government. That is precisely what Foster and his self-styled boy wonder Stephen Perry did when making the spurious guarantee that Benson now wants Blanco to honor.
You can hardly blame Benson for insisting that the state honor its commitment to give him $186 million over 10 years and either build him the new stadium he craves or at least splurge many millions on a Superdome upgrade. Benson does not think it is right to renege on a contract unless he is the one doing the reneging.
The Greece national team were on the brink of chaos last night as their players threatened to strike over a wages dispute that has cast a long shadow over their semi-final against the Czech Republic. As Greece prepares for its greatest achievement in almost 80 years of international football, the financial collapse of top club side AEK Athens has further unsettled Otto Rehhagel's players.This saga is so strange it must be true! Let's hope it doesn't presage a bout of brinkmanship before the Olympics.
...The rift centres on a €100,000 bonus that has been promised to each player for reaching the semi-finals. The players are now demanding that they should be paid €300,000 each from the €10.3 million pot of prize money that has been given by UEFA to the federation.
...the former Werder Bremen manager will also have to take into consideration the spectacular collapse of AEK Athens who have five players in his squad. Perhaps more staggering is that Rehhagel's striker Demis Nikolaidis, who plays for Atletico Madrid, is AEK Athens' majority shareholder.
The club's national team players - Michalis Kapsis, Costas Katsouranis, Vassilis Lakis, Vassilis Tsartas and Zagorakis - all face the termination of their contracts and their club could be relegated to amateur status. The club owes almost €100 million to creditors and the Greek government has rejected a proposal to write off 95 per cent of AEK Athens's debts.
The Greeks' problems were not confined to money after Rehhagel clashed with journalists over allegations that he has alienated his players.
In Wednesday's semi-final, Portugal looked sharp in their 2-1 victory over Holland. A Portugal-Czech Republic final on Sunday should be a treat to watch.