Saturday, December 31, 2005

Trojan antidote 

Looking forward to the National Title game, but already tired of the hype? If so, you should enjoy Jonathan Chait's piece at Slate, "Trojan Farce." I sure did.

Chait's wrath is cast upon the boys at ESPN (naturally), who have been comparing the '05 Trojans to the great champions of old, even though they still have one game to play against a formidable Texas team. And they're getting it all wrong, from Chait's point of view:
For instance, the ESPN crew discussed a hypothetical game between USC and the 1997 Michigan Wolverines. That Michigan team had a spotty offense, but its defense was phenomenal, allowing less than nine points a game. The Wolverines had probably the best pass defense in college history, with 23 interceptions and just five touchdown passes allowed. It had Charles Woodson, who bucked history by winning the Heisman Trophy as a defensive player, along with three other future NFL cornerbacks. They held what was then the highest-scoring team in the history of the Pac 10 to 16 points.

What did ESPN's Kirk Herbstreit predict as the final score? 34-17, Trojans. ESPN's Mark May? USC, 49-14. Will the reader please note that mediocre defenses like Arizona State and Notre Dame held USC well below 49 points this year?

My favorite, though, was the matchup with the 1991 Washington Huskies. That team outscored its opponents by a staggering average margin of 42-9. Herbstreit's conclusion? "There's no way that that defense could stop SC." May: "It wouldn't even be close."
Chait has much more, and a track record in sniffing out this stuff (see the notes at the bottom). I'm with him on every point, although I find one ESPN pundit's observation believable: that Bush and Leinart (while spectacular) are the beneficiaries of a superb offensive line. The Longhorn defense will neutralize that to some degree. So I expect a dogfight, and will take Texas and the 7.5 points.

Friday, December 30, 2005

Ranking the bowl teams 

The UPI and AP Polls have had their run. Now it's time for the "Nielsen Poll," Sam Walker's compilation of the top tv draws during bowl season. The WSJ "On Sports" reporter averaged the Nielsen rating for each bowl, and calculated the deviation of each team from the bowl's average. Each school's rank is based on its average deviation from the typical Nielsen ratings of the bowls they played in over a 10+ year period.

Looking at the rankings from a conference standpoint, the Pac 10 is the big winner, bagging three of the top four spots. Only three ACC teams crack the top 25, with Clemson edging Florida State and a surprisingly weak Miami. With Notre Dame at 7th and Oregon in the top spot, one suspects that a bit of straightforward statistical modeling would shuffle the pack quite a bit.

Sam has an interesting take on the tv numbers, which he notes are increasingly relevant when bowls choose teams. Here is the "Nielsen Poll" itself.

The call on the field stands ... 

.. about two out of three times. And play is stopped for a booth review just over once per game. That's a quick summary of the data from the first year of instant replay in college football.

That looks like a favorable return to me, and opinion among the people that count suggests that the experiment will continue.

Although correcting obvious and potentially significant errors is important, I think the greatest benefit comes from the direct monitoring of referee performance that replay provides. This observation from David Parry, the NCAA's coordinator of officials, is right on the mark:
"I think it has made the officials do a better job. They concentrate a little more. I know some have said their goal is not to have a replay today, and if we do, then let's have the call upheld."
It's more than just concentration though - surely the officials are better prepared as well. Wednesday's Alamo Bowl Game between Michigan and Nebraska provides an example. The television announcers, reporters, and Michigan coach Lloyd Carr have heaped criticism upon the referees for a poor performance. The widespread view is that the officials from the Sun Belt Conference were unaccustomed to the speed, athleticism, and pressure in a game between two powerhouse teams.

I don't think that had much, if anything to do with it. Obviously, the best officials, by and large, work in the best conferences. And instant replay has made the officiating in most conferences better than ever. But the Sun Belt (along with the WAC) has not yet adopted instant replay, and their officials have thus not yet adapted to the new system of incentives. The gap in competence between the Sun Belt officials and their major conference brethren has widened due to instant replay, and was exposed by the events in Wednesday's game.

: Clemson fans stand with their hands in the air during a booth review after a spectacular touchdown catch by Aaron Kelly against Florida State. Few believed it was a catch before viewing the replay on the scoreboard monitor, when the hands went up and stayed there. Ultimately even the referees agreed.

Wednesday, December 28, 2005

The Growth Rate of NCAA Coaches Compensation 

I subscribe to the Daily Dose at (a compilation by Howard Bloom of sports business articles). On 12/24/05, an interesting tidbit on NCAA basketball coaches' compensation appeared there.

When Tom Davis began at Boston College in 1977, he made $12,500 (probably not much here in the way of speaking and apparel contracts). In his last year at Iowa (1999), after a 12 year stint, he made $420,000 (probably inclucing all of the usual extras). By my calculation, after inflating the $12,500 to $34,365 in 1999 dollars, that's a real annual growth rate of 12%. By way of comparison, my compensation has grown at about 3% real annually from 1984 to 2005. And we all know the old rule of thumb about 3% real annual growth in the economy at large.

Another tidibit: Tom Delaney states that Dean Smith made about $33,000 in 1968 (when Delaney was a player there; how he knows Smith's compensation isn't clearly stated). The current compensation of top coaches, as Smith would undoubtedly be, is in the $2 million range. Inflating to 2005, Smith's $33,000 becomes $102,866. This yields an annual real growth rate of "only" 8%. Again, this is over twice the typical growth rate in the economy.

Two things seem interesting here to me. First, these are clear indications of the rate of growth in revenues in college sports (via MRP theory) and the rate of growth in importance of the other values that college coaches bring to their sports programs and universities. Second, since players cannot be paid, these amounts also are indicative of fairly sizable rents accruing to coaches. I've argued elsewhere how across-the-board taxes on the rent portion could probably fund at least gender equity.

Nice work if you can get it.

Tuesday, December 27, 2005

MLB's new killer app 

Baseball has always been different than the other professional sports because local TV revenues are so large. They're large because they can provide a great deal of content to broadcasters -- 162 games in MLB versus 16 professional football games. But now we learn that one broadcasting stream that has equal revenue distribution in baseball is internet broadcasting.
The most successful, and most valuable, franchise in baseball in the last few years isn't the New York Yankees or their rivals, the Boston Red Sox.

It's Major League Baseball Advanced Media, which is worth more than those two deep pocket teams combined -- an estimated $2 billion to $2.5 billion, according to investments banks that looked into a possible initial public offering for the business a year ago.

And because of the success of and other parts of MLBAM, the advantage that the Yankees, Red Sox and other rich teams have over the have-nots could shrink, eventually.

It probably won't happen in five or 10 years, but in 20 years, MLBAM could make the sport the share-the-wealth socialist paradise that has been long entrenched in the National Football League.
Revenue has grown from $5 million in 2000 to $265 million today and generated positive cash flow of $55 million in 2004. And it draws traffic year-round.

I'm a user of the MLB.TV streaming video, paying $29 for a full year of games last year. I only watched my own team, the Red Sox, until September but found myself watching many other games as pennant races heated up. Undoubtedly the bigger market teams are the biggest draws to online content, but as the article states, "once there's an agreement to split money evenly, it's tougher for the big market teams to back out."

Saturday, December 24, 2005

A new twist in stadium finance 

Fund the facility with revenues from a monopoly casino license. That's the stunt that the Pittsburgh Penguins are trying to pull off, at least. Another case of one distortion (a closed entry league) begetting another...

Friday, December 23, 2005

Mayors Gone Wild 

When I picked up my copy of the Chicago Tribune this morning, I had to check to see if it was April Fools Day. There on the front page, above the fold, was an article about Chicago Mayor Richard Daley's plan to build a new $1 billion dollar domed stadium in Chicago. Among other things, Daley covets a second NFL team for Chicago, the 2016 Olympic Games, the Final Four, the Super Bowl, and a partridge in a pear tree. According to Daley's logic, a shiny new 80,000 seat domed stadium, perhaps built near the University of Illinois-Chicago Campus, will help to shower the Windy City with all these events.

For those with short attention spans, Soldier Field, home of the NFL's Chicago Bears, underwent a $365 million dollar publicly financed renovation in 2002. But someone forgot to enlarge Soldier Field and build a roof during the renovation. Its 61,500 seat capacity is second smallest in the NFL, and too small to host the opening and closing ceremonies at the Olympics.

Daley's plan appears to have a few minor flaws. First, the expansion is news to the NFL, which currently has zero franchises in mega media market Los Angeles and the itinerant Saints franchise to deal with. Second, the plan appears to also be news to the Bears, who might have a vested interest in maintaining a monopoly in the Chicago market. Note to hizzonor: next time check the NFL expansion regs before making plans to acquire a new football franchise.

Of course, part of the justification for this new stadium is - wait for it - a fountain of economic benefits flowing from the proposed facility. According to one of the mayor's aids, among the expected economic benefits flowing from the new stadium would be "thousands of new jobs and new infrastructure." Unfortunately, there is not one shred of evidence that sports facilities generate tangible net economic benefits like more jobs.

KC will try again 

Last year, voters in five counties across Missouri and Kansas rejected a funding proposal to renovate stadiums for the Chiefs and Royals. Only Jackson County approved a quarter-cent sales tax to fund the renovations.

This time the voting and the tax will be limited to Jackson County, with the rate set at three-eighth's. The tax will fund $425m of improvements, with the teams putting up $100m plus cost over-runs. The $100m from the teams is more than in the last go-round, and cost-over-runs are typically non-trivial. So the teams are ratcheting up their exposure a bit, which is normal; this is how the game is played. Will this be enough to sway the voters? We'll find out if the referendum goes ahead as planned on April 4.

These facts and more can be found in this story. But don't miss Joe Posnanski's informed and funny take, which includes details like how much will be spent on a "Hall of Fame and Team Store" for the Chiefs -- $40m.

Wednesday, December 21, 2005

Putting a Price on Pitching 

That's the title of a WSJ Econoblog (it's free) by J.C. Bradbury of Sabernomics and yours truly on the economics of baseball. We focus on the current free agent market, but the discussion is wide-ranging. It was great fun working with J.C. and Tim Annett of the Wall Street Journal. I hope you enjoy it.

Colorado, Bowl Games, and the Deadweight Loss of Gifts 

(Cross-posted at Market Power)

Economists, the scrooges that we sometimes seem to be, are well-aware of the Deadweight Loss of Christmas: the gifts people buy provide less value to the recipient than what the giver spent on the gift. Because of this, I often recommend giving cash as a present. But in the spirit of amateurism, the NCAA forbids the giving of cash to athletes in its sanctioned sports. But at times, gifts can be given:

The University of Colorado is buying 103 iPods for its football players to the tune of about $36,050, a week after a state audit criticized athletic department spending.

CU will spend up to $350 apiece on the music players, rewards for student athletes for making it to the Dec. 27 Champs Sports Bowl in Orlando, Fla., according to a request for bids the university filed Monday.

It's nothing new for universities to buy gifts for football players after a successful season. In the past, CU players have received portable CD players, electronic organizers, DVD players and Walkmans.

"They always get the kids some nice gifts for bowl games," CU assistant athletic director Dave Plati said. "Whatever is the latest in technology."

The practice is widespread and is "legal" within the sphere of the NCAA:

Bowl-game gifts are fine with the NCAA as long as they don't exceed $350 an athlete and do not include cash or gift certificates, said NCAA spokeswoman Jennifer Kearns. Players typically get gifts from bowl sponsors as well. Those gifts can't exceed $500, Kearns said.

Bowl-game gifts throughout the Big 12 Conference range from warm-up suits to rings, watches and electronic equipment, conference spokesman Bob Burda said.

... Bowl-game gifts are fine with the NCAA as long as they don't exceed $350 an athlete and do not include cash or gift certificates, said NCAA spokeswoman Jennifer Kearns.

Players typically get gifts from bowl sponsors as well. Those gifts can't exceed $500, Kearns said.

For players who already have iPod's or who don't want iPod's, there's always Ebay or some other secondary market where they can get their hands on that good ol' medium of exchange/unit of mesurement/store of value - net of any transactions costs. Heck, why not just give them the cash and let them decide what they want to buy? Oh yeah - to protect that romantic notion of amateurism.

Monday, December 19, 2005

Stat of the day 

The number of Brazilians playing professional football in Europe: 800. Sounds like an export industry to me.

(From Rob Hughes's account of Sao Paulo's 1-0 victory over Liverpool in the FIFA Club World Championship - an afterthought as far as the European clubs are concerned).

Selling the Braves 

Interesting tidbit: Hall of Famer Hank Greenberg's son Steve is a managing director of the investment bank Allen & Co. Steve is fielding offers for the Atlanta Braves, and indicates there are plenty of interested bidders at this stage. He mentions these reasons why an MLB franchise looks pretty good at this time:
"No. 1, record attendance two years running. No. 2, a big uptick in national televison [revenue] in the recently signed ESPN deal, a 50 percent increase over the prior deal. No. 3, the most vibrant Internet property in sports. No. 4, labor peace for the longest period of time that baseball has known. And No. 5, changes in the economic system . . . which just make for healthier teams."
I'll buy that, with one caveat. If the new system - greater revenue sharing, luxury tax - and enhanced league revenue is making teams healthier, lets not hear excuses from the likes of the Royals and Tigers about economics keeping them from putting a viable team on the field.

Saturday, December 17, 2005

Coates on the DC Stadium 

Dennis Coates has a short piece on the DC stadium in Reason Online, which I recommend that you read. Here's the punch line:
What looks on the surface like a contribution to defray the cost of building a stadium basically amounts to the league giving a $20 million loan to the city.

In addition, MLB has refused to agree to let the Nationals keep Robert F. Kennedy Stadium as their home field two years from now, even though doing so would be cheaper by about $60 million. In other words, in the best case scenario, Mayor Williams basically agreed to hand over more than $500 million of money from a tax that soaks many D.C. businesses to a multi-million dollar operation that refuses to make the sort of cost-conscious concessions they would make if they were footing the bill themselves.

Friday, December 16, 2005

US Treasury to MLB: Don't Play Cuba 

The World Baseball Classic has generated a little hot stove talk at home, and will turn at least a few heads abroad when it is played in March. But not in Cuba, if the US government has its way:
[T]he United States Treasury Department told Major League Baseball on Tuesday that Cuba would not be permitted to play in the inaugural World Baseball Classic next year.

...Molly Millerwise, a spokeswoman for the Treasury Department, would not confirm or deny its action against Cuba, but she repeated that the embargo "prohibits entering into contracts in which Cuba or Cuban nationals have an interest."

Even if baseball officials funneled the money toward humanitarian causes instead of to Cuba, the Treasury Department could determine that Cubans would benefit from being in the tournament and could ban the nation's involvement.

Millerwise said in an e-mail message that any "activities or contracts that could result in financial flows" to Fidel Castro and his regime "would effectively work against the objective of the sanctions and be inconsistent with current U.S. foreign policy towards Cuba."
Trade sanctions are awful policy instruments. Is it not clear that isolating rogue regimes like Cuba and North Korea simply perpetuates them? The policy starves the people, not the rogue.

The story in the NY Times discusses both the current situation and the hurdles Peter Angelos had to clear several years ago so his Orioles could play a home-and-home with the Cuban team. He'll try again, but with Bud Selig being silent on the issue, one wonders what's up at MLB headquarters.

I've slammed Angelos before, but I'm on his team on this one.

Update: As noted by JJ in the comments, there is a useful followup story by Ronald Blum, the AP baseball writer, on the fallout of a ban on Olympic politics. One can sense how the ban emerged from this: "Rep. Lincoln Diaz-Balart, a Florida Republican, said he had spoken with the Treasury Department urging that the permit be denied." Ugh. Diaz-Balart may just be grandstanding, but regardless, his comments look foolish throughout the piece. By comparison, the observations of sports notables (Dick Pound of the IOC, Bob Contigula of US Soccer, and Sepp Blatter of FIFA) appear classy and thoughtful. Weird - I thought congress was the province of eloquence and enlightenment, and sport the habitat of brutes and hooligans.

More: As noted in this article in today's NY Times, Cuban players participate regularly in the US during the Olympics, and most recently in soccer, when they played in Seattle and Boston in the Concacaf Gold Cup. The nominal reason for banning Cuba from the WBC is that they could earn income from the event.

Oh. As if teams competing in Internationally sanctioned tournaments like the World Cup don't get checks. Riiight. I suppose this is just another example where special interests drive a policy which, absent the politics, is objectively insane.

Tuesday, December 13, 2005

Defense & Championships 

This quote comes from Tom Coughlin in a recent NY Times article (registration required):

I'm a believer that defense wins championships, ... And I'm a believer that you have to be able to have great defense, and you've got to be able to run the ball and stop the run."
I have heard the "defense wins championships" mantra probably more than any piece of sports "wisdom." The rush defense is a common corollary. With the NFL playoffs approaching, the "defense wins" gong will only ring louder. The NY Times writer adds some backup,

Rush defense is a strong barometer of championship potential. More than three-quarters of Super Bowl teams had a top-10 rush defense, according to the Elias Sports Bureau. Nine of the past 14 participants were in the top five ...
So far this season, teams with a top-10 run-stuffing defense have 7-5 records or better.

On closer inspection, the "evidence" provided might come closer to supporting a proposition stating that being better than average rush defense often goes along with winning.

Over the years, I heard "defense wins championships" so much that in From the Ballfield to the Boardroom, I decided to collect a bit of evidence in a section about separating fact from folklore. The data covered 1970-2000 and lends some bit of credence to the mantra for the decade of the 1970s, where the AFC dominated and the median AFC champ ranked first in defense. Since the 1970s, a more accurate statement is: "Teams with solid offenses and solid defenses win championships." Such a statement seems self-evident but does offer a counterpoint to the deafening cliche about defense.

Over 1970-2000, only 10 of 31 Super Bowl winners had higher ranked defenses than offenses. Only 22 of 62 AFC and NFC champions had higher ranked defenses than offenses. Since 1970, of the top ten teams allowing the fewest points as a percent of that year's median, only 3 won or even made the Super Bowl ('75 Steelers, '85 Bears, '00 Ravens). Four of the top ten did not even make the conference championship game. On the other side of the coin, 6 of the top 10 offenses in terms of points relative to median points in a year won the Super Bowl, 7 made the Super Bowl, and all but one made the conference championship.

Since 1980, only the Ravens could really be described as winning the championship with great defense and mediocre offense. The 1985 Bears, while great on defense, also led the league on offense. Some might offer a rebuttal based on great defenses helping to make offenses more productive, but the same holds true for offenses helping defenses.

Sunday, December 11, 2005

A New Twist in Cardinal Nation 

Sports team owners wanting public funding for a new stadium often make the case that a new stadium will help them generate revenue sources. These new revenue sources, it is reasoned (or, more accurately, pitched) will help the team remain competitive. The hands, outstretched, catch what is offered from the public cookie jar.

Bernie (The Big Man) Miklasz of the St. Louis Post Dispatch says that in this winter of discontent for the St. Louis Cardinals, its owners are making the opposite claim:
I say this because I had no idea the new Busch stadium would create such financial hardship for team chairman Bill DeWitt and his partners. Actually, for years the media and fans were told the opposite: that the owners needed a new ballpark to increase revenue and payroll. And the new ballpark will open in 2006, so this should be a happy time, yes?

Well, one of DeWitt's associates called me last week to talk on background and he politely made the point that the team can't increase payroll for 2006 for a simple reason: The owners have reached into their own pockets to pick up much of the cost for building the new ballpark, and resources are limited.
This offseason, the Cardinals have decided to hold the line on payroll and failed to resign Matt Morris, Mark Grudzielanek, Reggie Sanders, and haven't addressed Larry Walker's retirement (and subsequent hole in right field). That has Bernie reminiscing about the good old days:
Jocketty might be confused these days. Because in 2004 DeWitt said: "The new stadium will provide us with increased revenues and the ability to have a higher payroll. We should be in a more competitive position."

Wasn't the OLD Busch Stadium a money pit, and a drain on the owners' finances? Oddly enough, while competing at the old Busch from 1996-2005, these owners consistently raised payroll.

But now that the new Busch is just about here - complete with higher ticket prices, more premium seats, and all the revenue-enhancing amenities - the payroll is staying the same.
This raises the old question of whether new capital in baseball (a stadium) enhances fans' willingness to pay for players. Suppose that fans spend an additional $50 million to watch their team perform in a new stadium. How much of that $50 million was spent so fans could experience the amenities and atmosphere of the new stadium and how much was spent on the players?

It's not like the Cardinals are going to imitate their cross-state rivals, although Royals and Cubs fans would thoroughly enjoy such ineptitude. After all, the Cards still have the reigning MVP and CY Young winner on their roster. But what kind of signal does this send to fans of teams still clamoring for public money for new digs?

Thursday, December 08, 2005

Division 1 Playoff 

I was critical of the decision to hold legislative hearings on goings on regarding college football's BCS system, but now that they have occurred, let's see what was said. From the Chronicle of Higher Education ($$$ req'd):
"I just don't see the danger of a playoff," said Mr. Barton, who represents a district about 150 miles northeast of Austin. "The way you talk about it, it's like somebody's going to get cancer or something."

The witnesses, who included Robert C. Khayat, chancellor of the University of Mississippi, and John Junker, president of the Fiesta Bowl, said that a multigame playoff -- like that used by the National Football League -- would rob teams of a chance to compete in less-prestigious bowls, make it harder for athletes to keep up with their studies, and minimize the importance of individual games.
One could argue that under the current structure, the Rose Bowl and the Motor City Bowl (or the Bourbon Bowl) are still "bowls" although there's certainly a pecking order. But if, for example, the bowls that currently make up the BCS system (Sugar, Rose, Orange, and Fiesta) were to become the playoff games, the relative status of the all the current bowl games would be altered. In other words, changing the set of bowl games from "all bowls" to two sets, "bowls" and "playoffs" could possibly reduce the marginal value of the bowls more than it would enhance the marginal values of the playoff games.

Regarding a playoff's effect on studies: division 1 football is unique in that it is the only division in the NCAA (and the NAIA for that matter) that does not have a playoff system. Are players in the other divisions somehow more able to multi-task between football and their studies?

Herein lies a testable hypothesis. After controlling for various items that affect academic outcomes, for instance, are academic outcomes worse for D1 players involved in bowls lower than those for non-D1 players involved in playoffs?

Here are the current brackets for Division 1AA. Here are the brackets for D2 and here are the brackets for D3.

Wednesday, December 07, 2005

Measure up, or else 

Division I-A football teams heading to college bowls have trouble making the grade academically. The report, published by the Institute for Diversity and Ethics in Sport at the University of Central Florida, shows that 23 of the 56 teams who are in a bowl game did not meet the new Academic Progress Rate standard that the NCAA will start using next year to determine how many scholarships football programs will be able to award. 14 of the 23 are in BCS conferences, including all five Pac-10 teams (and Ohio State, Hugh, so don't go ragging on USC.)

APR isn't perfect, and the UCF study does argue for correcting a flaw in the system that penalizes schools that have a high share of students transferring. The purpose of APR is to tell student athletes where they can go to get the best academic programs, but of course they won't tell you whether the better schools academically will attract better athletes. A recent paper by Lucas and Lovaglia though suggests a way to combine student and athlete performance measurement. After all, some student-athletes will go to school for the opportunity to make the next level, the NFL. Lucas and Lovaglia combine the APR and a measure of athletic success (combining college record, fan attendance, TV appearances, and NFL success of graduates, et al.) and conclude that the top school currently is Michigan, followed by Miami. Captain Ed will be disappointed to hear that, of the schools from the BCS conferences plus Notre Dame, the Golden Domers come in 19th, one behind USC. Ohio State was tied with Rutgers and Washington State for 34th, and Minnesota was 44th of the 64 ranked teams.

There was little correlation in the data between APR and their athletic success measure; it was found that schools with both bad athletics and bad academics tended to change coaches more frequently (bad news for Phil and #60 Mizzou.) The question is whether APR will work in increasing emphasis on academics in powerhouse athletic conferences. Everyone is speaking well of it now.

"Obviously we would like to see those statistics higher," said NCAA spokesman Bob Williams. "But this is a process that the NCAA member institutions are going through to change behavior and essentially ensure the student athletes, coaches and everyone involved in collegiate athletics understands that academic achievement and academic performance is just as important as athletic p erformance."

The Coase Bowl System 

With nothing better to do, Congress will hold hearings today - webcast available! - on the BCS system of allocating teams to major bowls. In that spirit, I would like to take things further down the path of ridiculousness and discuss the system of matching teams in minor bowls.

The claim that "we got screwed" is often made when teams are unseeded or uninvited for contests and tournaments. It happens in the NCAA basketball tournament, the BCS, and the bowls. The potential is there for the World Cup as well, where a bizzare process led Mexico to be seeded over the U.S., primarily because of the U.S.'s dismal showing in France '98. (The U.S. finished ahead of Mexico in qualification for this World Cup, and beat them in the last one.) U.S. Coach Bruce Arena is taking the high road, but doesn't it seem a tad ridiculous that teams are seeded based on the performance of coaches and players - Smith, Lalas - whose careers ended long ago?

But I digress. My purpose is not to complain about Mexico, but to complain about the complainers in the bowl matching process. Now, I agree with them on one point: there is little that is "fair" about bowl invitations. For an example close to home, Clemson (at 7-4) was invited to the #4 ACC bowl in Orlando, despite having lost to both Boston College (8-3) and Georgia Tech (7-4), with both teams also having better conference records. But BC is headed to Boise, the #6 bowl, and Tech to Seattle for the Emerald Bowl, which is strictly leftovers, a bowl in desperate search for a team. Not fair.

Although BC is not complaining, Tech is. But not about Clemson! Tech's gripe is with 6-5 Virginia, who lobbied hard, and successfully, to land a berth in the Music City Bowl. That is, they "bought the game" in Nashville.
"When you have a 7-4 record, which is better than Virginia's, and when you have a 5-3 conference record, which is better than Virginia's, you shouldn't have to buy a game," Georgia Tech athletic director Dave Braine told the Atlanta Journal-Constitution. "Until the ACC does something about bowls taking schools because of the number of tickets they'll sell and fans they'll bring, we'll have this situation."
Braine's plea to "do something," like other proposals to alter the allocation of property rights, can be critiqued using the Coase theorem. Braine's idea essentially changes a "right to invite" system to a "right to play" system. Records and tie-breaking formulas would determine the order in which schools could choose bowls. Finish first, and enter the BCS. Finish second, and choose the Gator or perhaps the Peach. Finish sixth, as Clemson did, and it's welcome to Boise! Unless they swapped rights with the #4 team (which would have been BC in this instance).

This is even feasible! But it is not chosen. Conferences could opt for this but don't, for the simple reason that bowls prefer to maintain the right to choose. Holding this right increases the payout they make to the conference. While it's not clear to me how transaction costs limit the equivalence between the two allocations of property rights, my hunch is that, to repeat, bowls will pay more if they hold the right to choose. And since money talks, Braine's plea to do something is unlikely to get very far. Indeed, I'll wager that he'd vote against his own proposal.

Saturday, December 03, 2005

Soccer skills 

You must grow up with them, according to Arsenal's Arsene Wenger:

"When I started at the academy at Strasbourg, I worked mornings and afternoons with 18-year-olds who couldn't cross," Wenger said. "After a year I thought I must be useless because they still couldn't cross. We then had a meeting with all the coaches at other club academies. I said: 'Can someone tell me how can I improve my players? I work the players hard twice a day - and no change.' There was relief all around! Everyone had the same problem.

"At 18 years it is too late to improve players. We decided to go down to 16. Then 14. Now in France they go to 12. Technically, at 13 the basics are done. After that you could bring in every professor and they will not turn a guy with no technique into a good technician."

Interesting. They say that the greats - like Tiger Woods in golf - had the magic at a very early age. They grew up with a ball glued to their feet.

I'm still waiting for the first American player with crazy skills (apart from the foreign-born Adu) - perhaps we start serious training too late?

Thursday, December 01, 2005

College Athletic Finances -- The Untold Story 

The two recent posts on college finances hit upon one of my pet subjects. With Mel Borland and Bob Pulsinelli here at WKU, I conducted an in-depth investigation trying to get at the real economic costs and benefits of our athletic programs-- a surprisingly difficult and idiosyncratic job. (It reinforced Ronald Coase's point about many important facts are in the details). This appeared in Gerald Scully's Advances in the Economics of Sport. Later, I published a review and extension of efforts to assess the financial status of schools in the Journal of Sport Management (April 2000). These studies along with one by Skousen and Condie from Utah State in 1988 helped me come to a better appreciation of just how many studies and reports that rely on college athletic budgetary figures are close to meaningless. In many cases, reported revenues from athletics exclude off sizable items such as merchandise sales and sometimes even concessions and parking. Also, and even more problematic, the revenues transferred by booster clubs to cover scholarships may wind up as credited to general funds rather than athletic revenues.

Arriving at the true economic cost of tuition scholarships is critical because they represent a huge line-item in athletic budgets, especially at higher priced schools. Skip's post hones in on the key issue -- separating meaningless paper transfers from real economic costs -- easy in theory, but no so easy in practice. In practice, distinguishing them depends on institution specific situations and practices. Generally speaking, the reported "costs" overstate actual economic costs in that the tuition "costs" are valued at full, "list" price when the actual costs are less, often way less.

For example, at a public institution with excess capacity in classrooms, adding or eliminating 100 students (whether athletes or otherwise) has little impact on actual instructional expenses. Further, the entry or exit of these 100 students neither closes or open additional space for a separate 100 "paying customers" since space already exists.

Institutions with no excess capacity, more common at very selective private or elite public institutions like Cal, incur real costs. Properly valuing the amount is tricky because it depends on who is displaced by their presence. If the displaced students were representative of the student body as a whole, then the average tuition paid would be the appropriate per-unit figure, which is usually far below the top "list" price at elite institutions. If the displaced students were, themselves, scholarship recipients of some other kind, then the amount would be near zero.

Why would schools under-report revenues and over-report costs? In some places, that's just the way the accounting structures are setup. They are tradition-bound and so opaque as to mask true relationships. In other cases, my guess is that the practice evolved by design or happenstance so as to permit the big revenue producers to hide just how much of a commercial enterprise they are in. For one thing, it helps stave off calls for paying players. I recall magazine reports from the 1980s describing how Notre Dame and Michigan were "losing money" on football. Let's see, they operate wildly popular (semi) professional sports operations without having to dole out 60% of revenues to athletes --if only I could land such a money losing operation!

Revenues and costs in the PAC-10 

Today's Daily Bruin brings a very nice article by Andrew Finley on the problem of generating revenues and managing costs in the PAC-10. UCLA has managed to balance the books for all but one of the past 15 years. This year they reversed the lone deficit into a tiny surplus on revenues of about $44.5 million.

There are plenty of facts in Finley's article, and several puzzles. Read the piece for the facts (it is good). Here are the puzzles:

1. It is alleged that revenues in the PAC-10 are highly cyclical, because unlike Big-10 or SEC schools, the fans show up only when the teams are winning. But costs are not - coaches and scholarships cost about the same whether the record is 6-5 or 9-2. In a world where you spend what you earn, this implies that there be healthy surpluses in the PAC-10 in winning seasons to balance the losses in losing seasons. Is that implication confirmed in the data?

2. Cal is currently running an $8m deficit. That's huge, and is the "fourth multi-million dollar deficit in a row" at Berkeley. Cal runs 29 varsity programs, compared with 22 at UCLA, and 18 at Texas; Cal supports 923 student athletes, compared with 509 at Texas. Question: Where is this money coming from and who is on the hook for it? Prediction: in spite of the AD's protestations, Cal will soon reduce the number of sports programs.

3. Sports budgets are increasing in part due to a series of tuition increases in the double-digit range. While it is tempting to view scholarships as mere intra-firm transfers, the opportunity costs are real. If you eliminate the wrestling team and 10 scholarships, you remove the direct costs of the program, and are in position to collect tuition revenue from 10 paying students. High demand for University admission and high tuition will test athletic programs for the value they bring to the University. Does this not imply that swimming and the like are endangered sports? Are the days of the "scholarship-athlete" numbered in all but the revenue generating sports?