Monday, February 28, 2005

Canadian malaise 

The impact of the NHL lockout on the Candaian economy can hardly be good, but how bad is it?
Anecdotal evidence across Canada suggests the malaise is deep and will not quickly disappear. In Montreal, Ziggy Eichenbaum says business in his bar near the stadium is down 25 per cent; Labatt, the big Canadian brewers, have cut 20 per cent of their white-collar workforce.
Now, all surely agree that malaise is a very bad thing. Perhaps a temporary beer subsidy is required to save the Canadian economy!

More anecdotes and speculation from this interesting story in the Guardian.

Friday, February 25, 2005

Economics and shoe contracts 

Ted and co. at the excellent Women's Hoops Blog have been following the story of the shoes and the coaches in Connecticut. The governor is calling for more scrutiny of shoe contracts - worth hundreds of thousands of dollars per year to coaches Jim Calhoun and Geno Auriema - by the state ethics commission.

Ted's post on the subject gets the basic economics right.
Suppose that fair market salary for Geno is $1 million. And suppose that Nike is willing to pay $500,000 in order to have UConn players wear its shoes. Imagine two scenarios.

(1) UConn pays Geno $1 million, and it also contracts directly with Nike to get the $500,000.

(2) UConn pays Geno $500,000, and it also grants him the right to contract with Nike and reap the $500,000 value of that contract.

In the second arrangement, even though Geno contracts directly with Nike, UConn still essentially receives the benefit. So there is no economic difference between the two arrangements.
If Geno is worth $1m, the school can pay him the $1m directly, and retain the rights to collect shoe money, or it can pay him less, and let him have the rights to shoe money.

The economic question then boils down to whether the the transfer of shoe money rights has an impact on any real decisions. This seems remote. Both the school and the coach are interested in winning games, and are unlikely to sacrifice wins for inferior shoes. The school suffers only if the coach diminishes the value of the program or the university through his choice of shoe company, which seems unlikely.

The issue may be purely political, as Ted suggests. The ethics board is in a lather because Auriema and Calhoun did not disclose to them the dollar value of the contracts. Presumably the school knows this, and indeed may have had a hand in negotiating them. My hunch is that the problem will be solved, at least initially, by simply disclosing the contracts' value to the State. The end result is likely to be option (1) in Ted's list, which is common practice at many schools.

Thursday, February 24, 2005

Permanent or Transitory Demand Shocks from Labor Disputes 

As I mentioned in a previous post, strikes are weapons wielded by unions that are designed to impose costs on firms and lockouts are weapons yielded by firms designed to impost costs on unions. In theory, when times are good and demand is high, the strike imposes high costs on the firm. When times are bad, the lockout can impost high costs on the union because alternative sources of income are not as readily found during such times, all else equal.

The March 2004 issue of the American Economic Review had an article by Martin Schmidt (Portland State) and David Berri (Cal State Bakersfield) (it's a recent paper, so you either have to visit your local college library or you have to buy the paper) that examined the impact of labor strikes on the demand for sports in the NHL, NFL, and Major League Baseball. In the paper, Schmidt and Berri cite papers that show that strikes do impose costs on firms. For example, they cite a 1991 Industrial and Labor Relations Review paper by Richard De Fusco and Scott Fuess (which I have not read) that finds that, in the airline industry, strikes tend to redistribute wealth from shareholders of struck firms to shareholders of firms that are not having a labor dispute. What about sports? How do fans react when a labor dispute ensues?

Here is the conclusion to their article:
Our analysis offers historic evidence that suggests the consumers' threat has not been credible. In general, none of the events we examined had a permanent impact upon attendance in these sports. In fact, in almost all instances attendance immediately rebounded in the year following the labor conflict. This explains why strikes and lockouts are happening with increasing frequency in professional sports. If the levels of attendance in the postconflict era are equivalent to the preconflict time period, only short-run costs are imposed upon the conflict partcipants. Given the millions at stake in each dispute, our analysis would indicate that labor conflicts that disrupt the regular season of these sports are likely to occur again in the future.
If this is the belief of the NHL, this helps explain why they are taking a hard stance.

Well, if nobody watches hockey.... 

What about curling? Actually, more people would watch it if they could! It turns out that the Canadian Curling Association negotiated a new contract for televising the men's and women's championships for the next four years, and thousands of viewers are up in arms about the arrangement [yours truly included].

CBC stations across the country have been flooded with complaints about how the public broadcaster is covering the Scott Tournament of Hearts. On the main
network, coverage is limited to a daytime window featuring one draw, and a
late-night repeat of the evening draw.

To see the other matches, viewers need to subscribe to CBC's pay digital television channel, Country Canada, or to the sports network The Score.

To make matters worse, nobody telecasts the morning draws (games). And to make matters even worse, there is no indication that anyone will be telecasting the 4-way tie-break playoffs that begin tomorrow (Friday) morning. The relationship between the Canadian Curling Association and the CBC truly does seem to be an Unholy Alliance.

I know CBC is trying to do this to promote its new digital network (the way Fox did when it won its first contract with the NFL). The difference is that Fox had good shows to promote. Prior to this week, the CBC digital network averaged 500 viewers/day during the day and 900 viewers/day at prime time.

I hereby issue the following challenge to the CBC. Come to my classes and videotape the lectures using only one camera and with no editing. Put them on a separate channel, and I can still outdraw whatever else you're showing on CBC's Country Canada.

Wednesday, February 23, 2005

Ouch! 

This observation, which I assume is true, startled me:
Television ratings for last year's Stanley Cup finals were lower than that of this year's Westminster Dog Show.
Why are we even talking about the NHL then?***

The rest of the piece is more of the same on the NHL's woes; go there if you want another dose.

*** Note to sensitive puckheads: I say that, being the one Clemson resident that thoroughly enjoyed watching the Lightning triumph over that beastly crew from Calgary.

Competing on the road 

Clemson won an ACC game last night (!), beating Maryland 97-93. Most coverage of the game, including the local story in the Washington Post, naturally focuses on the performance of Maryland. The folks at the ACC Hoops Blog and The Duke Basketball Report write from a similar perspective, puzzled by the "baffling" up- and-down nature of the Terrapins. But I see a different, more interesting story unfolding from last night's game.

Something is stirring in the wreck of a program that is Clemson basketball. What's the evidence? Here: this is the second ACC road victory for Clemson this season. Arghh, you say, what is so special about two road wins? Well, I've spent an embarrassingly large share of my life thinking about the mystery of the "home court advantage." My weak mind has concluded that it's a multi-faceted phenomenon, which is itself a weak conclusion. But one facet of the phenomenon stands out to me: the nature of teams that can win on the road.

Some teams crack on the road - they lose the belief that they can win, and they fail to execute. In basketball this is particularly evident. A club that cracks loses its identity as a team, and falls apart into an uncoordinated group of individuals. I've seen this plenty of times watching Clemson basketball over the years. The inability of past Clemson teams to win on the road in the ACC suggests to me that there are two things common to teams that crack: poor chemistry and bad coaching.

At Clemson, I've watched Cliff Ellis, Rick Barnes, Larry Shyatt, and now Oliver Purnell coach the Tigers. None of the three coaches prior to Purnell - save Ellis' championship club with Dale Davis and Elden Campbell - took solid teams on the road. At a barbecue one time I had the opportunity to ask Larry Shyatt - a nice guy but not a good head coach - about the problem of winning games on the road in college basketball. Larry's answer - and we chatted for some time about this, so it wasn't rushed - essentially restated the question: "gosh, it's really really tough," something like that. He didn't have a clue, and it showed in the blowout losses that came on the road.

Purnell is different. Apart from the drubbing at Chapel Hill last Saturday - where everybody is getting clobbered - the Tigers have been in every game on the road this season. They led at Duke with ten minutes left in the opener. They lost on the last shot at Virginia Tech, a loss thought risible before it dawned on the cynics that the Hokies could play. Buzzer-beaters then failed to drop at Virginia and Miami. Something had changed: being in road games in the last minute is not the history of Clemson basketball. Nevertheless, Purnell's young Tigers (three freshmen started last night's game) had trouble closing the deal. Until last night.

This quote from The State newspaper suggests that preparation, i.e. coaching, had something to do with it:
[Purnell] laid out a very clear plan and outlined every possible scenario that could have happened in this game ... When we were in this situation tonight, you could tell the players were saying, 'We know what to do.' They followed the script 100 percent.
This is the first time the Tigers have won two ACC road games since 1997-98. It's no accident. Show me a team that can win on the road, and you are showing me a well-coached team. Last night's performance convinced me that Purnell will win at Clemson.

Addendum: I should have stated explicitly that my hypothesis has to do with the ability of lesser teams, or underdogs, to win away from home. The Dukes and Carolinas of the world routinely do well on the road with superior talent and coaching (with the exception of the Doherty disaster, which helps make the case).

Tuesday, February 22, 2005

Reggie Roby has Passed 

From Collegesports.com:
Reggie Roby, an all-American punter at the University of Iowa and a 16-year veteran of the National Football League, passed away Tuesday at his home in Nashville, TN. Roby was found unconscious and without a pulse at his home by his wife, Melissa. He was later pronounced dead at Saint Thomas Emergency Department.

The MTV-ing of ESPN 

Although a bit dated, a piece from Slate.com entitled, "When Did ESPN Stop Doing Sports?," fit my February sports mood. In the author's words,

Like another cable giant, MTV, ESPN seems to have forgotten its original mandate. Remember when you could tune in to ESPN and actually have a good chance of seeing sports? Sure it might be bowling, or rodeo, or Australian-rules football, but at least it was action, competition, well-trained athletes giving their all for the sport they love ... ESPN is far more interested in showing you people talking about sports rather than the sports themselves. The network has become the Worldwide Leader in Hot Air.

The analogy to MTV's (de)evolution had been on my mind for several months. Since this article ran in 2002, the one-time sports network has only added to the trend with endless re-runs of the likes of "World Series of Poker 200x" and "Tilt" as well as bombastic sports reporters yelling at each other like junior high boys. With two days of great Champions League matchups, ESPN will carry one game -- Manchester United v. AC Milan -- Wednesday afternoon.

In terms of simple static economics, the presumption is that such changes reflect profit maximizing behavior by network executives. While, no doubt, Disney is trying to maximize profits, in a dynamic marketplace with limited information, there is no guarantee that a particular decision is, in fact, profit maximizing over the long haul. TV executives, like all managers, make mistakes.

As one sports fan, I know that they are losing my TV-time. More and more, I'm tuning out ESPN and tuning in Fox Soccer Channel, the Golf Channel, OLN, Fox Regional Channels, and other outlets for actual competition. As a sports economist, I recognize that a sample size of one is mere anecdote. George Stigler (I think) once said, "Anecdote ain't science." Still, it causes me to wonder what the long-run effects of ESPN's strategy will be for their viewership.


Sunday, February 20, 2005

League-Union News in Other Sports 

The NBA's collective bargaining agreement expires at the end of June. David Stern (NBA commissioner) and the union head, Billy Hunter, are making concilliatory gestures towards one another in their negotitations. Here are some of the issues (from the Minneapolis Star-Tribune):

The current seven-year agreement is set to expire July 1. The two sides have a number of issues to resolve. The league would like to shorten the maximum length of guaranteed contracts, which is currently seven years. They want to curb pay raises and make the National Basketball Developmental League a true minor league. There has also been talk of setting a minimum age of 20 to play in the league.

The players, meanwhile, want to end the escrow and luxury tax currently in place for teams that spend over the soft salary cap.

The good news? The two sides will begin meeting in earnest soon; they could meet five times in the coming week.
The NFL's collective bargaining agreement doesn't end until 2008, but the sides are already talking. Here are some of the issues (from the Minneapolis Star-Tribune):

The goal is to have an agreement by the end of the 2006 season. Otherwise, under the current deal, the 2007 season will be played without a salary cap, with no guarantee of reinstating one after that season. That could wreak havoc on the future of a league whose strength is creating an even playing field for all 32 teams, regardless of market size.

An agreement could hinge on the owners accepting a drastic change in how revenue is defined. Currently, the league shares its "Designated Gross Revenues" (DGR) with the players. DGR does not include money from sources that aren't shared among teams, such as luxury suites.

Upshaw said the union now wants to share in "Total Football Revenue" (TFR), which would include money from all revenue streams.

Surprisingly, the owners haven't slammed the door on the idea, according to Upshaw. The top eight revenue-producing teams are balking, he said, but haven't taken a hard stance.

At the Super Bowl, NFL Commissioner Paul Tagliabue said, "We have a long way to go in getting a consensus among the owners."

If the union is successful in getting a share of the TFR, you can bet the league will want something in return. And look for low-revenue "have-nots" such as the Vikings to ask the high-revenue "haves" for subsidies since their TFR obviously isn't as great.

Saturday, February 19, 2005

They're Back 

The NHL and the NHLPA have agreed to talk again today. I guess it ain't over until the Zamboni sings.

Friday, February 18, 2005

Hockey: We Had to Bomb the Village to Save It 

People from my generation will remember the subtitle of this posting as a quote from LBJ or General Westmoreland or somebody during the Vietnam era. We hooted with derision when it came out. And as James Taranto (last article at this link) points out, that is vaguely analogous to what has happened in the NHL.[h/t to JC]:

Hockey, for crying out loud, is another Vietnam!

I've been asked by several commenters to my last piece on my own blog why I was so rough on NHL Commissioner, Gary Bettman. I have had to think long and hard about this, because I probably shot that last post off too quickly. I have finally realized several things about the lockout [I'm a slow learner, which is why I'm an academic instead of out there competing in the real world]:
  1. As Chris Bruce posted to the Econ-Law e-mail list, it seems clear the players underestimated either the losses of the owners or the strength of their convictions, probably the former. I can't say as I blame the players much here; owners in other sports have been known to overstate their alleged losses dramatically. But if, as Tom Luongo says in his superb piece on the lockout, the NHLPA refused to look at the books, it is time for the players to get a new leader. It is probably time, anyway, as I note later.
  2. I, personally, do not enjoy the game of chicken. I do not like watching it played, either. I don't know why I hold the owners more responsible than the players for playing it so publicly, but to my ear the tone of Bettman's releases was more of "We're gonna get you" than was Goodenow's.
  3. Too many people blaming the players do so out of jealousy: "They're making millions to play a game; they should just sign a deal and play," is the type of thing I've heard too often, and it is irritating, especially considering the wealth of the owners, too, and considering the incomes of other entertainers.
  4. As I have posted before, I don't much like hockey anymore. I hold the owners in general and Bettman in particular responsible for this. So does Brian Goff. So does Michael Farber at Sports Illustrated. Eric McErlain at the superb Off-Wing Opinion says some pretty similar things.
  5. In his defence, Bettman was quite possibly correct that the deal offered on Tuesday was the best offer the players will ever get. [digression: there are still some stories circulating that some owners and some players are trying to resurrect a deal and will meet on Saturday; other sources think it unlikely that a deal will be reached.] Tony Chapman of Capital C, which places a lot of sports advertising said on Sportsnet Thursday night that with this season canceled and the next one in doubt, advertising with the NHL has plummeted dramatically. His estimate is that even if the NHL begins play on time next season, the total revenues for the league will be no more than 2/3 of the revenues in the 2003-04 season. The implication is that the expected marginal revenue product of playing ability will be very low, compared with the players' expectations.
  6. The result of the previous point is that a LOT of money has been left on the table, not just from this year's playoffs, but from next season and into the future as well. When negotiators fail to take that money off the table, there is good reason to expect they haven't done their jobs. Also see this piece by Phil Miller, co-blogger here at The Sports Economist.

Note: this piece has been cross-posted at The Eclectic Econoclast.

Vikings Stadium Issue 

I posted this over at Market Power but it has much relevance for The Sports Economist.

From today's St. Paul Pioneer Press:

Anoka County is ready to raise sales taxes to pay for a proposed Vikings stadium — without asking permission from voters.

That's akin to taxation without representation, say stadium opponents.

"They aren't asking us to pay for it. They are making us pay for it, and there's a big difference," said Burt Hanson of Anoka, a 65-year-old retiree who is involved in an anti-tax group that opposes the stadium-funding plan.

But there's nothing illegal — or even especially unusual — about such taxes in Minnesota. As many other cities and counties have done, Anoka County could indeed approve a 0.75 percent sales-tax increase to fund its share of a Vikings stadium without a referendum, as long as the state Legislature gives its OK.

Of course there's the requisite "economic impact" statement:

If the Vikings end up moving to a proposed $700 million stadium in Blaine, Novak said, voters will ultimately be pleased. That's because officials forecast that an envisioned $1.5 billion multi-use complex would create about 6,000 new jobs and $20 million a year in additional property taxes.
If this is such a good thing, why aren't the communities of Shakopee, Savage, Woodbury, and St. Paul battling Blaine for the rights to host the Vikes?

Bargaining Power 

Relative bargaining power is a negotiator's willingness and ability to accept a dispute. In actual negotiations, one negotiator never knows how much bargaining power his opponent has, but the opponent's actions may reveal some information about how much relative power he thinks he has.

Turn to the NHL. Strikes are weapons used by unions to impose costs on their employers. The strikes impose costs on the workers too, but if the strike causes the employer to at least partially give ground while the union holds firm, the strike reveals some of the relative bargaining power of the employer. Lockouts are weapons used by employers to impose costs on their union workers (and on the employers as well). Like strikes, lockouts can cause the unions to reveal its relative bargaining power.

The NHL lockout has, at least in terms of the revelation of union relative bargaining power, been very successful so far. The union caved in, agreeing to a salary cap that its leaders said they would never accept. This tells us a lot of the relative willingness of the union to fight. Nicholas Costonika of the Detroit Free Press has this to say:
In canceling the season, the owners have shown that, at the end of the day, like it or not, this is their league. They can burn it down to build it back up again if they want -- and they're willing.

Hockey is the players' livelihood. Hockey used to be the owners' livelihood, when it was a family business, but it's a hobby for businessmen these days.

Look at the Detroit area's three NHL owners: Tampa Bay's Bill Davidson made his fortune in glass, the Red Wings' Mike Ilitch made his in pizza, Carolina's Peter Karmanos made his in computers. They can live without the game.

One of the determinants of relative bargaining power is the overall business climate. Over the past couple of years, the overall business climate for the teams, especially the "small market" teams, has been poor - my co-blogger, John Palmer, posts here that it is of the teams' own doing. Brian Goff notes here that some owners aren't happy with the cancelling of the season either. But, the teams have held firm so far and the union has caved - the teams have been more willing and able to accept the costs imposed by the lockout than the players have. Any final agreement is going to be tilted more towards what the teams' currently want - maybe much, much more.

Wednesday, February 16, 2005

Hockey & Cartels 

So the season is canceled. It does appear that the Bettman-ownership stance was a hard cap or bust. Their supposed soft cap number was so low and inflexible as to be a non-proposal.

AP sports writer Jim Litke provides an excellent history of the last twelve years -- the Bettman era. In a nutshell, Bettman's plan was to expand the sport into new TV markets, supplying the league with a big cash payoff. As Litke observes, it looked like it might just work

New arenas were going up, the Nagano Olympics offered worldwide exposure and multimillion-dollar expansion fees were lining the owners' pockets. It was easy to get swept up in the notion that once the NHL blanketed the U.S. map from coast to coast and locked up a big TV deal, enough money would flow in to cover up all the mistakes.

In the end, the TV deal fizzled along with Bettman's grand vision.

Aside from a fan's perspective, this is where things get interesting from in terms of the economics of cartels. Cartels are often unstable alliances because of intra-cartel differences in cost and revenue functions. The TV revenue bust creates a do-or-die situation for many of the struggling owners. The push for a hard cap was almost certainly a Bettman alliance with these owners. He brought them into the league. So far, in what strikes me as a surprising degree of solidarity, he has been able to keep the owners from the more financially viable clubs on board. The intoxicating aroma of "cost certainty" may have dulled their senses for the short term. I wonder how long they will remain in the Bettman camp. The Carolina owner already offered a soft criticism:

``We might be better off to stop chasing growth and revenue and play just high-quality hockey and let its popularity take care of itself ...We don't have to have compounded annual growth.''
The trouble is that because of Bettman's past dealings, there are weak franchises in the league that will detract from this more restricted vision. In basic economic terms, there are still huge inter-team differences in revenue. Over the next months or years, it will be interesting to see how well Bettman is able to keep the lid on these internal conflicts among owners.

Tuesday, February 15, 2005

Will There Be Hockey?
My Bet Is Yes 

Given that the owners have taken "linkage" of salary caps to revenues out of their offers, and given that players have accepted a salary cap, there is now plenty of wiggle room for both the owners and the players.

I expect they will make a deal. But of course by the time I get this posted, who knows what might have happened. Here's a link to the news on TSN.

...[S]ources on the NHLPA side are suggesting the union will only negotiate
off the $52 million figure if the NHL presents a detailed, meaningful revenue
sharing plan.

On the NHL side of the equation, sources are suggesting the
league isn't prepared to go much higher than the $40 million cap figure.

So it's a matter of trying to bridge a $12 million (per team) gap with the clock
running towards the league's scheduled 1 p.m. (EST) announcement to cancel the
season.


And keep in mind, the owners haven't lost all that much so far. If they can salvage the play-offs, all 87 rounds or whatever, they stand to earn the bulk of their revenues for the season anyway. The only difference will be that qualifying for the playoffs will be more like a round-robin tournament.

UPDATE: Well that was certainly an interesting FOAD letter Betteman sent this evening. Its tone, if not its content, makes me revise my priors downward.

A sociologist's take on stadium finance 

A piece in the Dallas Morning News introduced me to Rick Eckstein, an Associate Professor of Sociology at Villanova. Eckstein has written a book called Public Dollars, Private Stadiums. It appears that the stadium finance issue is one that economists and sociologists can agree upon - pardon the obligatory dose of an economist's cyncicism - at least when it comes to the conclusion that professional sports leagues are engaged in serial robbery of the public purse.

Eckstein visited the Dallas Metroplex over the weekend, and had this to say about Arlington's contract to build a new stadium for the Cowboys. "You know, there's 'Fool me once; fool me twice' ... This is 'Fool me 30 or 40 times.'"

The DMN piece discusses Eckstein's thoughts on why the sports bandits succeed time and again at selling their proposal to a gullible public. I agree with him that voters are easily swayed by "the happy ads showing dads and their sons taking in a game, or the glowing appeals to community pride."

On a more critical note, I am not sure what sociology adds to the academic case against stadium subsidies. His vita has a number of papers on the topic, including "New Sports Stadiums, Community Self-Esteem, and Community Collective Conscience." No proper economist would be caught parading an argument under such a banner. Nevertheless, I'm going to check the papers out. And if the shapers of public opinion find arguments from sociology more persuasive than the distortions of "economic development" boosters, then I'm in Eckstein's corner.

Monday, February 14, 2005

The Vikes' New Owner (pending approval!) 

Reggie Fowler has agreed to buy the Minnesota Vikings from Red McCombs. Here's a story from the Arizona Republic on Fowler.

Sunday, February 13, 2005

Negotiations over the Vikings 

Negotitations over the Minnesota Vikings are reaching a head. At this point, Arizona businessman Reggie Fowler has exclusive negotiating rights with Red McCombs, the current Vikings owner. But Mankato's local boy and Minnesota State University graduate, Glen Taylor, is waiting in the wings. Fowler's group, according to this St. Paul Pioneer Press article, may end up paying around $635 million for the franchise if they indeed get it. A sticking point with Fowler's group will be Fowler's net worth and his liabilities. He is reportedly worth "only" $400 million, possibly not enough to buy an NFL franchise (there goes my dream of being the next Dan Snyder!). But here's a really interesting quote regarding another sticking point from the Pioneer Press article:

Some people speculate that Fowler's trio of New Jersey real estate partners are so well-heeled that the group might not need public funding for a new stadium on 700 acres in Blaine and instead would try to develop the area on their own.

However, other NFL owners might frown on such an idea because it could set an awkward precedent for stadium building. Because Taylor would want public approval for a stadium, NFL owners might favor a bid for the Vikings by him, among other reasons because it might be in their best interests.


Yuck! We sure wouldn't want to send a signal that team owners could make do with private funding. Heaven forbid.

Should negotiations with Fowler fall through, then Taylor becomes the main focus. The amount Taylor would pay depends on the ability of the Vikings to get a new stadium. Here's some information from a Minneapolis Star-Tribune article about the negotiations:

Taylor's bid for the team was linked to the funding and opening of a new stadium for the Vikings, most likely in Anoka County.

It factored in the value of the franchise in the Dome and the certain increased value of the team if and when it gets into a new stadium.

Part of Taylor's payment to McCombs would come on the day a new stadium would open or the end of the Metrodome's lease in 2011, whichever comes first.

...

When reached in Mankato Saturday, Taylor confirmed that "about 10 days ago," he submitted a series of options to McCombs.

Taylor said, knowing that McCombs was seeking $600 million, "we gave him several different proposals that would make it to 600," Taylor said.

In one, Taylor proposed that he put down $400 million upfront and then $200 million when a new stadium has opened.


Would McCombs be willing to sell the team at $400 (or some other amount) for sure and leave the balance to Taylor's skill at playing politics? Glen Taylor would be more effective than Fowler's group at getting a new stadium built with public money since Taylor is "one of us" and because he's a former Minnesota state senator. Being "one of us" has been important everywhere I've lived (Iowa, Nebraska, Missouri, and Minnesota), but it seems to be a little more important up here. What will end up happeing? Stay tuned, sports fans.

Roger Noll: the NHL's Business Model Doesn't Work 

With the imminent demise of the NHL for at least one season, and maybe more, members of the mainstream media [MSM] are finally realizing that a proposed salary cap will not solve the problems of the NHL. This is from TSN.ca [thanks to Adam for the pointer]:
Roger Noll, an economics professor at Stanford University who studies
sports business issues, questions if some small-market and Sun Belt franchises
will survive longterm. Within 10 years, he envisions a North American super
league stripped of perhaps a dozen current franchises, which would fold or
become minor-league clubs.

"The notion that the NHL can solve its problems with a salary cap is
ludicrous," Noll said. "It will increase profits for the best teams, but it
doesn't make the small-market teams viable. The disparity of revenues across the
league is greater than in any other sport and there's no salary solution to that
problem. Some teams have 25 times (the local TV revenue) of other teams. The
only solution is to get rid of the small-market teams or subsidize them.

"Even if salaries were zero dollars per year, I question if some
small-market teams would have enough revenue to cover costs....

Noll said the NHL's business model doesn't work because it was designed in
the mid-1990s around increasing national TV rights and licencing fees. Instead,
the league's latest network TV deal with NBC guarantees no money.

"They're basically giving away their games," Noll said. "The NHL hasn't
built a sufficient market outside of the northeast quadrant of the United States
and southeast Canada. They're stuck with expansion franchises that aren't viable
and there is no solution to it. It's just crazy. You can't operate a league the
way they're currently operating."

There are some who disagree with Noll (not me, though) -- check out the entire article.

Thursday, February 10, 2005

What is the Marginal Physical Product of Steroids? 

Until 1994, the slugging percentage in MLB averaged well under 400. There were some years in which the SLG for the league as a whole went above 400, but those years were rare.

From 1994 - 2003, the slugging average was often above 420 and was always above 400. I haven't performed a Chow Test on the time series of data to see if the jump was statistically significant; it sure looks significant though. Quite possibly not all the increase was due to the use of steroids by the batters. After all, players have gotten bigger and stronger through better conditioning; expansion probably played a role, too. And don't forget that the baseballs were allegedly wound tighter sometime in the late 1980s or early 1990s [and an earlier rise in the league SLG was likely due to the advent of the designated hitter rule].

But now, with recent revelations about Barry Bonds' alleged steroid use, with the new MLB drug-testing policy, and most recently Jose Canseco's tell-all book, it looks as if the use of steroids will probably drop off some over the next few years. The questions raised in this economist's mind are:

  1. How much will steroid use decline?
  2. What will be the impact of the decline in steroid use on power-hitting in MLB?

Let's see what happens over the next few years if, indeed, MLB makes sure players don't use steroids in the future. Will MLB slugging averages revert to around 400? If so, does that mean the marginal physical product of steroids was that it would, on average, add between 5% and 10% to a player's slugging average? Or has the effect of steroids been distributed unevenly among the players, with some receiving a much bigger SLG lift than others?

This latter possibility makes sense. If labour is typically more productive when it has more capital to work with, surely steroids should also be more productive when they have certain genetic characteristics to work with. [As an example, steroids would not raise my SLG at all.]

The art of ticket pricing 

Daniel Snyder and the Redskins are in the news again, this time for introducing a new pricing strategy under the guise of "The Touchdown Club."
Washington Redskins fans who wish to vault over the 75,000 names on the waiting list for season tickets to obtain prime seats at FedEx Field for the 2005 season can pay $7,500 to join the team's new Touchdown Club, the Redskins announced yesterday.

... The Touchdown Club follows the lower-priced TailGate Club, which the Redskins started last season.

...The TailGate Club includes a one-time initiation fee of $1,295, plus a $490 season pass for all 10 Redskins home games. In addition to lower-level seats, which are scattered throughout the lower bowl, TailGate Club members have access to a cordoned-off pavilion area just outside the stadium, where food is provided and fans can listen to music and watch wide-screen television.
Although the food and music have value, these are mere sweeteners which obfuscate the primary intent of the scheme: to extract value from fans on the waiting list who have the money, and can't wait to get their season tickets to the Redskins.

Both the Touchdown Club and the Tailgate Club are what economists call two-part tariffs, a classic pricing scheme which increases a firm's profit over and above what they can make with simple single ticket price. Combined with the wait-list problem, the fixed charge in the two-part tariff can also be viewed as a price discrimination tool, which ensures that those on the waiting list with the highest valuation of Redskins tickets get the goods - and that the Redskins extract that value for themselves.

Wednesday, February 09, 2005

Soccer transfers 

The dog-eat dog world of European soccer's transfer market is depicted in this piece by Rob Hughes. Hughes' article is prompted by the alleged meeting between Chelsea's management and Arsenal left back Ashley Cole at a West London hotel, but offers a much richer perspective than the typical piece. Hat tip to the boys at The Daily Fix.

Tuesday, February 08, 2005

One Carry -- One Yard 

A week before the Super Bowl, The Dallas Morning News’ Tim Cowlishaw identified McNabb’s running as the possible wild card in Philadelphia’s hand – a card that McNabb did not use. In fact, McNabb has been moving away from using his feet for a couple of years.

NFL “conventional wisdom” touts a QB’s passing ability as the key to his success. The praise heaped on QBs by TV analysts because “he’s looking down the field rather than looking to take off” contains a kernel of truth. Bypassing an open 40-yard pass to rush for 6 yards is a poor tradeoff. More generally, though, it is the gain and loss tied to the specific run-pass decision that matters. This calculus differs by QB, by game situation, and by opponent. Given that the Patriots used a 2-deep zone with man-to-man underneath coverage frequently, the running payoff was likely high. Such coverages aim to take away the shorter passing routes, but provide QBs with running chances because the defenders often turn their backs to the ball.

McNabb as a pocket-only QB makes about as much sense as having Randy Moss run 10-yard square-ins all afternoon. The other Eagles runners gained only 45 yards on 16 carries. McNabb ran (only) 41 times in the season for a 5.4 per carry average. He has averaged as much as 7 yards per carry before he bulked up.

The running QB topic sometimes flows with racial undercurrents, which is unfortunate. Yes, McNabb, Steve McNair, and Michael Vick are recent examples of QBs using their legs to great effect. In times past, Roger Staubach did the same, running about 50 times several seasons, while averaging 6 yards per carry. In the 1980s and 90s, Steve Young carried up to 76 times with a 6 to 7 yard average. The potential for injury also raises concerns. Anecdotally, standing in the pocket and getting whacked from all angles may be a more common cause of QB injury than running, especially given that the QB can avoid contact by sliding.

Monday, February 07, 2005

Where Does the Revenue Sharing Money Go? 

This Milwaukee Journal Star article had some interesting statements from the owners of the Pittsburgh Pirates and the San Diego Padres. I posted here about some of the comments regarding offseason personnel moves and the soon-to-come labor negotiations here. One thing likely to be included in the negotiations will be revenue sharing since some owners don't think there are enough revenues being shared. In any case, shared revenue does not always equate with higher payroll:

The Pirates received more than $13 million in revenue sharing and the Brewers nearly $20 million, but not all of that money went toward big-league payrolls. Some money was used to fund the farm systems and draft picks, and some went to retiring debt.
There's a stipulation in the 2002-2006 CBA that says that shared revenue is supposed to go to improving the on-field performance of the big league team (page 106 under part (a) of "(5) Other Undertakings"). Any team that does not use its revenues received from sharing in this way has to answer to the commissioner. I'd be interested in knowing what proportion, on average, of the shared revenues went to things other than the big-league payroll.

Of course there are many ways to improve the big league team. A team could spend the shared revenue on current payroll or it could invest it in the farm system, and at least some (many? all?) teams are putting the shared revenue towards minor league investments. This suggests, at first blush, that an investment of a sum of money in the minor leagues provides a higher return than the investment of the same sum of money in the major league club.

Why? Off the cuff, one reason for this may be because minor league talent is cheaper, even though it is less-developed and riskier than major league talent. In addition, for players that make it to the majors, their salaries will often be below the value of their marginal contribution to their teams (because of the reserve system in place for young players). Free agents and arbitration-eligibles, on the other hand, have salaries much closer to the value of their marginal contribution to their teams, leaving relatively smaller return to capture.

One question: how does retiring debt improve on-field performance?

Winter of Discontent 

I ran across this article in the Milwaukee Journal Sentinel. In it, the Pittsburgh Pirates owner and the San Diego Padres owners take shots at the spending of clubs during the offseason.

Pittsburgh owner Kevin McClatchy and San Diego's John Moores both spoke out about the remaining huge gap between the "haves" and "have-nots," despite gains made in the current labor agreement in revenue sharing as well as a luxury tax on the highest payrolls.

"Some clubs have been unbelievably irresponsible," Moores told the San Diego Times-Union. "This is no way to run a railroad."

Moores is concerned that small-market teams will be forced to increase ticket prices continually to try to boost revenue in an effort to keep up with big-market clubs.

"My father would not have been able to afford anything more than sitting on the grass at (San Diego's) Petco Park," said Moores. "The fan is a real concern."

I posted here about why high salaries don't drive high ticket prices. Here are a couple more quotes regarding the next round of labor negotiations that will be occurring soon:

"We're going to have to get a system in place in baseball with some constraints (on player salaries)," said McClatchy, who stopped short of calling for a salary cap - something the union has gone to war against in the past.

"Some of the contracts that have been handed out this winter to free agents have been ridiculous."

...

Some folks construed the comments by Moores and McClatchy as firing shots across the union's bow, in essence warning that they will take a tougher stance in the '06 negotiations. Selig said he disagreed with that interpretation.

"I don't think so," said Selig. "I've talked to all of them. I understand their frustrations. But one thing I don't worry about anymore is discord (among owners).

They may not have been "firing shots across the union's bow" (or they may have been), but might they have been firing shots across Selig's bow?

Saturday, February 05, 2005

Door to the Hall opens for Fritz Pollard 

Fritz Pollard has been elected to the NFL's Hall of Fame. Pollard was one of the best players of his era in both College and the Pros, only to have segregation force him out of the NFL and onto the Brown Bombers in Harlem, a team that took on any side that dared to cross the color line.

I found out about Pollard last year through a fabulous article by Daniel Coyle in SI, and posted on it here. Here is more on Pollard from William C. Rhoden in the New York Times, arguing that a Hall without Pollard is unworthy of the name. He's right, and bravo to the senior committee for rectifying, in the only way they can, the NFL's historical error.

Dan Marino will get today's headlines, but readers with a longer view should remember that Pollard was the Marino of his day, and more.

The NFL Network? 

From USA Today:
The NFL's negotiations with ABC have not gone smoothly. The network has lost about $150 million a year on its current Monday Night Football deal, under which it pays an average of $550 million a year. That is why the network has kept its offer for a new contract in the $400 million-a-year range. The NFL is unlikely to accept an offer so far below the current rights fee.

The NFL has renewed three of its TV contracts, all for substantial increases and with fees totaling $11.5 billion. CBS increased its rights fee 25% to an average of $622.5 million a year for the Sunday afternoon AFC package; Fox raised its Sunday afternoon NFC deal 30% to $712.5 million a year. The NFL Sunday Ticket package with DirecTV, owned by Fox parent News Corp., soared 75% to $700 million a year.

So there is only one entity bidding for the rights to Monday Night Football and Sunday Night Football. None of the other networks wants to compete for the rights, so what is the NFL to do? It threatens to create a new network to not only air the games but to compete every day with ESPN. From the Columbia (Mo) Daily Tribune:
Commissioner Paul Tagliabue sent a veiled warning to ABC/ESPN yesterday that the league might get involved in creating a new sports TV network.

While the NFL already has extended agreements with Fox and CBS for its Sunday afternoon TV rights, negotiations on the prime-time packages with ABC and ESPN have stalled.

"We’re giving very serious consideration to being part of the launch of another major sports network on cable and satellite television," Tagliabue said during his annual state of the NFL address at the Super Bowl.

A league source, speaking on condition of anonymity, said Fox is interested in the prime-time games for the new sports network, which would compete with ESPN. The league wants to add Thursday night and Saturday night games, although not for the entire season.

The NFL can't have games on many Saturday nights according to federal law because they would compete with college games. In any case, the NFL is unhappy with how negotiations are going, noone else is competing against the Disney folk, so they have made an attempt at creating competition.

"Clubs v Uefa set to kick off" 

The BBC queries sports lawyer Mike Townley on the legality of Uefa's home-grown rule:
"Where sport constitutes an economic activity, it is subject to laws in much the same way as banking or insurance services are.

"Professional clubs operate on a profit-or-loss basis and many are publicly quoted companies.

"As such, they are treated no differently to banking services, which could not restrict the number of Italian workers they had in their marketing department, for instance."
Sounds right to me. More discussion, quite good, is here.

Friday, February 04, 2005

Logan Young's conviction 

Alabama booster Logan Young was found guilty on federal charges of conspiracy, bribery, and money laundering (!) charges in the Albert Means-Lynn Lang case. I am not sure where the money laundering charge comes in, except as a back door for applying the RICO statute. With full knowledge that the combination of RICO enforcement and the NCAA rulebook is potentially brutal, I tentatively conclude that there is a beneficial impact of this decision on big-time college athletics.

Here is my perspective. As an economist, and a person who believes people have an inherent right to be paid what they are worth, I am in favor of paying college football players. I also have no doubt that I am in the minority on this issue. Most fans don't want college athletes to choose their schools on the basis of cash considerations, and NCAA rules cater (quite happily) to this demand.

The NCAA's restriction on cash offers forces player inducement to devolve into third-order implicit payment schemes. These schemes, however, are ones the NCAA can live with - mark this photo of the Texas Longhorns' locker room as exhibit #1. Additional restrictions on non-cash payments help preserve a significant portion of the rent generated by unpaid players, and keep it from being fully dissipated.

But step back in time for a moment, and consider the evolution of pay for play in college football. In the post-war era, cash payments were commonplace, and widely noted. For example, a 1949 article in Sport magazine alleged that Choo Choo Justice went to North Carolina because their bid topped that of 50 rivals, and that Justice's "income at Carolina was slightly under that of a top player in the NFL." In the days of the SMU death penalty - and for many years before - bidders at SEC and SWC schools allegedly gave shoe-boxes full of cash to get players to sign for them.

Over time, stepped up NCAA enforcement made cash payments to players riskier. These risks were further increased as the growing media spotlight revealed the propensity of some players to employ blackmail should hush money not be paid - mark the Eric Ramsey case as exhibit #2. But the value of attracting top talent to campus also increased during this period, thus increasing a schools' incentive to cheat. I suspect that more effective NCAA enforcement has offset the increased incentive to cheat in the past fifteen years or so.

However, one effect of stepped-up enforcement was to merely push cash payments further down the chain, to people in the network that could be trusted more than Eric Ramsey. By and large, these were high school coaches such as Memphis' Lang, who would use their influence to steer students one way or another. Some payments in this network are likely direct, as alleged in the Means case, but my hunch is that a far greater proportion are indirect.

The Means case will not put an end to this back-channel method of influence, but the verdict significantly raises the cost of using cash payments to deliver players to schools. Do this, and you are a "racketeer" in violation of Federal law. This is great news for the NCAA, at least on the surface, and that's what they care about most. It will sharply reduce the use of large cash payments designed to influence which school a player attends. The money will continue to work its way through the system for this purpose, but through indirect channels -- channels that the NCAA can live with, if not outright endorse.

Fans don't want money to be a large part of determining which school players sign for in college athletics. The NCAA is not naive however, and knows full well that money will be influential one way or another. But the NCAA prefers that money's impact be indirect, and not readily observed by the fans. Thus, the conviction of Logan Young plays right into their hands. It was a great day in court for the NCAA.

Uefa adopts quota rule 

The home-grown quota rule has been adopted by Uefa for European competitions such as the Champions League and the Uefa Cup. The rule will be phased in, ultimately requiring that 8 players in a 25 man squad be from the home country, with four of those developed by the organization itself. England's Premier League, which has been built on imported talent, is understandably opposed to the rule, and will attempt to block it being imposed on national competitions, as desired by Uefa. Two of the top three clubs in England (Chelsea and Arsenal) would not be in compliance if the rule were in force today.

Uefa are certain to face a legal challenge that the rule violates the free flow of labor within the EU. On this point, a Uefa spokesman said: "We also think the proposal is legal, because it is a sporting rule, not a restriction, to develop and promote young players." I certainly don't buy the distinction between a "sporting rule" and a restriction - the categories are not mutually exclusive when the rule affects the composition of players on a team.

The first-order effect of the rule is to increase demand for marginal home-grown players (those on the second team) in countries like England where they are scarce relative to the talent that can be imported. There will be some effect on the best home-grown players, but mostly on allocation and not price. Like Arsenal, Real Madrid would struggle to comply with its current squad; hence Beckham of Real Madrid might trade places with Reyes of Arsenal. Such swaps would be caused by the rule, but I see little benefit from them.

Youth training will be impacted as well, and of course that is the intent. But as pointed out in this story, if the players change countries early enough, say by moving to London at age 18, they will count as home-grown by the time they are 21. Expect the best youth to change countries at an earlier age then. Although Uefa's rule change has nothing to do with Man Utd chasing after the nine-year old Juan Carlos Chera, it would allow the young Brazilian to qualify as a home-grown Englishman should United sign him and train him in England. What a farce!

Wednesday, February 02, 2005

Untying the Tied Good 

The NFL's Washington Redskins have announced they will now accept any Mastercard to pay for tickets to their games, as Eric McErlain quotes from the Washington Post (registration required) at Off-Wing Opinion.
An official with the credit card company said it had asked the Redskins to drop the requirement [that they use only a Redskin affinity Mastercard] and to allow Redskins fans to use any MasterCard when they buy their seats, and that the team had agreed. MasterCard generally does not allow merchants to accept only one type of its co-branded or affinity cards over others, the official said.
Eric offers an alternative explanation for the change:
Looks like the public pressure was effective, and perhaps MasterCard realized that many of their current customers might choose to pay by cash or check, rather than obtaining yet another MasterCard -- thereby taking some cash out of their pockets.
I expect both explanations had something to do with the change, but I wonder which is strongest. My guess is that Mastercard leaned on them; it sure seems that way in the Washington Post article:
Some officials in the credit card industry had noted that the Redskins' requirement that fans use only the Redskins Extra Points Card was highly unusual. Visa International, in addition to MasterCard, does not allow merchants to restrict their acceptance of one type of card over another.
So much for my careful attempts to explain their behaviour using the economic theory of tie-ins.

The NHL -- One More Kick at the Can? 

The owners made an offer to the NHLPA today (Wednesday) that included profit-sharing and pretty near forensic accounting to guarantee the profit-sharing. The union has rejected the offer.

"The League today presented a written proposal with minor variations of concepts that were presented orally by the NHL last Thursday", Saskin said in a statement released after the meeting. "We told the League last week and again today that their multi-layered salary cap proposals were not the basis for an agreement."
The union asked that they meet again tomorrow (Thursday).

Update: The owners have agreed to meet with the players tomorrow (Thursday). Both Gary Bettman and Bob Goodenow will be present. The above link has continuous updates on the events.

This has to be one of the slowest, most painful, iterative processes I've ever followed (aside from the breakup of my first marriage).

Blue Jays Player Payroll Budget Increased 

The Toronto Blue Jays indicated today that they believe they have not been hiring enough units of playing ability in the marketplace over the past few years, an argument that G.M. J.P. Ricciardi had been making, sometimes none-too-subtly, for at least two years. They have announced that the budget for player salaries will be $210 million over three years. My contacts with the club tell me they do not expect to divide it equally over the three years, but will probably spend less this year and more in the next two years.
"We have the resources now to go out and do some things that we would like
to do," said GM J.P. Ricciardi. "We're going to take it and look at all the
avenues available to us going forward."

Ted Rogers, owner of the Blue Jays, and Paul Godfrey, president, are smart guys. They have also announced that they will be renaming the SkyDome "Rogers Centre", replacing the Astroturf with FieldTurf, and replacing the out-dated jumbotron. I'm assured there will be many other changes to the venue to make it more fan-friendly [I tried to convince them that really loud rock music between innings is driving fans away, but their response was, "To be honest, we're not targeting your demographic" (60+ year-olds who like Vivaldi)].

The point is that they will be trying to improve both the winning percentage of the team, an important shift variable for demand curves, and the quality of the experience at the venue at the same time. And this is a very good strategy -- if it works.

What Are All the NHL Players Planning to Do? 

Here is a list of recent signings by NHL players to play in other leagues.

The International Ice Hockey Federation says 370 NHLers have signed deals
in Europe since the beginning of the season, although some have come home.

...Meanwhile, Rangers goaltender Dan Blackburn has joined the ECHL's Victoria
Salmon Kings. He could play as early as Wednesday when Victoria hosts Fresno.

In the UHL, the Motor City Mechanics officially introduced a couple of star
signings Tuesday - Detroit Red Wings defencemen Chris Chelios and Derian
Hatcher. [Thanks to BF for the pointer]

I would guess that today is do-or-die day, and if the league and players don't show strong signs of reaching some sort of tentative agreement, it will be next to impossible to salvage even a mini-season. Let's see how ready the players are to fight the idea of a salary cap if they face the prospect of yet another year with no salary. Let's see how ready the teams in the lucrative markets are to face the prospect of yet another year with no revenue. And let's see how ready financial creditors are to face the prospect of yet another year with no payments on their loans.

But regarless of whether progress is made on the labour front, as Brian Goff posted, and I indicated earlier, a salary cap isn't going to save the NHL. The league has to do something to fix the game if they want demand for tickets and tv contracts to increase, especially in markets that are currently pretty weak.

Tuesday, February 01, 2005

Where Does the Money Go? 

Most studies that examine the relationship between sports franchises and the economies of their host cities show no significant relationship. It's argued that consumer spending on (or related to) a pro sports franchise simply substitutes for other spending that would have occurred anyway.

Some studies suggest that the existence of a sports team may actually lower wages and employment in host cities, suggesting a small but negative multiplier effect associated with pro sports. A rationale for this negative multiplier is that relative to the businesses that would have received the spending that is replaced, the most of the owners of resources that produce professional sports contests in a home city do not make their permanent residences there (heck, half of the participants in any game usually don't represent the city they are playing in). As a result, more money leaves the home city than if people went, say, shopping instead.

Here is a nice article on Johan Santana, the Cy Young-winning pitcher of the Minnesota Twins. Its focus is on Santana and his offseason in his native Venezuela. But there is a passage in the article more in line with this post. He has filed for arbitration this year and will earn at least $3,400,000 more than he earned last year. What will he do with some of the money?
And now Santana wants to do a lot for them (people in his hometown of Tovar, Venezuela). The fame if not fortune -- Santana, who made $1.6 million last season, is taking the Twins to salary arbitration seeking a raise -- the Cy Young has brought Santana has provided him the platform he says he needs to make his dream of a sports complex in Tovar a reality.
I admire Santana for wanting to improve the quality of life in his hometown. But still, is this the sort of thing that US cities should (indirectly) subsidize?

The NHL's Cap-Envy 

For the two hundred people outside of Toronto and Detroit who care, I thought I would add my two cents to the blogging about the NHL lockout. The NHL owners envy the NFL-style hard salary cap and the “cost certainty” it promises. They salivate over it like my dog does for popcorn. The throw around the phrase “cost certainty” the way teenagers use “its like.” The personal animosity between Bettman and Goodenow along with all the other noise surrounding the talks strikes me as irrelevant. My guess is that the owners squeeze out a salary cap bargain, or else, attempt to get an “impasse” in bargaining declared and start over without the union’s participation.

Whether that kind of brinksmanship works, the owners envy the wrong thing. The engine pulling the NFL money train is not “cost certainty” but the attributes of its product. People like and understand football. Since the late 1950s, the complimentarity between TV and the NFL has only grown stronger with time. The once-a-week, weekend-based schedule fits Americans’ schedules.

The NHL product suffers by comparison. Only a small population understands and follows it. Hockey -- especially the small-rink, clutch-and-hold, two-line offside pass, dump-and-chase North American variant -- does not mesh well with TV. Some of those points were also true of NASCAR in the 1980s, but unlike NASCAR and the NFL, the NHL teams play events practically every other night. Also, the NHL, unlike NASCAR, appears unwilling to make or even experiment with significant changes that make the product more appealing to a wider audience, that is, if you don’t count the TV-enhanced puck.

On the other hand, the NHL has not consolidated their strengths – solid live attendance in the traditional hockey centers and a few other locations. Instead, they expanded willy-nilly, sucking franchise fees up left and right, now to complain about financial losses in those cities. They also seem to desire a bigger TV contract, for obvious reasons, but without joint efforts to make TV-oriented changes. Ironically, their inflexible stance on the hard cap and lost season may be a backdoor way of moving the league back toward a more consolidated, live-gate oriented approach. Only time will tell.