Monday, July 31, 2006

Economic Impact of the NCAA's Final Four 

The Final Four in Indianapolis last March was estimated to have a $40m economic impact on the city of Indianapolis (yawn).

Here's the press release associated with the study, done by Lawrence Davidson and Bruce Jaffee of the Indiana University School of Business. The interesting part is that Davidson and Jaffee only attempt to measure the direct expenditures of the estimated 44,000 visitors - they don'use a multiplier, so the estimate is described as "conservative." Fair enough.

There's one more interesting note in the press release. When the Final Four returns in 2010, the venue will shift from the RCA Dome, with a capacity of 43,800, to the new Lucas Oil Stadium "which has been designed to hold as many as 70,000 fans for the Men'’s Final Four." 70,000? Ugh - doesn't 43,800 overdo it already? I don't know about you, but I don't like watching basketball with binoculars. I tried it at the Kingdome many years ago for a Sonics game. I remember the experience vividly, because it was so awful. But at least it was cheap. I can't imagine buying such a ticket at a premium price.

The story of a sports deal 

Thirty years ago when the ABA merged with the NBA, two of the six teams were not invited to join, but the merger required unanimous approval. The owner of the Kentucky Colonels gave his assent for $3.3 million. But the owners of the St. Louis Spirit - the Silnas brothers - wanted a little something more. They got $3m, plus a share of future TV revenues of the four merging teams. In perpetuity.

In the early years, the Silnas' share amounted to $300,000 per year. And then came the flood of media money, the Magic and Michael eras, and lo, the Silnas are sitting pretty. They've turned down every buyout offer and withstood every attempt by the NBA to break the contract, collecting $168m in the process. The current haul is $15m per year.

That's the thumbnail sketch of a great story by Jonathan Abrams in today's LA Times. Link via Craig Newmark.

Sunday, July 30, 2006

What is the Marginal Revenue Product* of Barry Bonds? 

Barry Bonds becomes a free agent at the end of this season. Suppose the following:
  • There is a freely competitive bidding market for his services,
  • Bonds has no location preferences,
  • There is no winner's curse in the auction for his services.
How much do you think he could raise in the market? What is the best offer a team might make to him?

The Washington Post (reg. req'd) estimates/ guesses/ speculates/ analyzes as follows:
So, how much money have you made off Barry Bonds? If you are the San Francisco Giants' owners, perhaps the number is in the hundreds of millions of dollars. If you are the Giants' radio or television rights-holders, perhaps in the tens of millions.

... Bonds, whose home run total sits at 722 — close enough to make a run at Hank Aaron's career record of 755 next season — is in the final year of a five-year, $90 million contract...

"We have said many times that is a question we are not prepared to deal with until after the season," Magowan said. "There are too many variables here, including his health and the performance of the team."

Another variable, no doubt, is how much money Bonds can still bring in, relative to how much he would be taking out in salary. The Giants are paying Bonds $18 million this year. It is not so much a negotiation as a calculation.
Exactly! His marginal revenue product [MRP]* depends on his marginal physical product [MPP], which depends, in part, on his health; if he isn't healthy, he won't be contributing much to the revenues of the team.

But his MPP also depends on the quantity and quality of other inputs he has to work with. This situation is just like standard micro-theory textbook treatments in which the MPP of labour depends on the quantity of capital that labour has to work with.

In the case of Bonds, if his teammates are good, then his contributions have a bigger chance of helping the Giants (or whatever team he plays for) into the post-season gravy train. But if they are not so good, then Bonds' skills are not worth so much to the team.

*[I wonder if, when talking about a specific player, it might be better to say "incremental" revenue product, rather than "marginal" revenue product. In many cases, we are not talking about small changes.]

Saturday, July 29, 2006

Cubs May Scalp Own Tickets: Court Ruling 

To add to John's excellent post on ticket scalping and its following (also excellent) discussion, I link to this Chicago Sun-Times article on a ticket brokerage set up by Cubs' officials:

The Chicago Cubs did not violate state ticket-scalping laws and did nothing to deceive their fans in setting up a brokerage firm to sell some of the team's tickets, the Appellate Court ruled Friday.

The ruling supports a lower-court decision issued in 2003 and was so convincing it is likely to bring an end to a challenge started in 2002 by two longtime Cubs fans.

Of course, the final arbiters will be the fans. If they don't find value in this operation, they won't do business with it... and if they think they are somehow getting deceived, that would hurt the Tribune's Cubs operation in other places besides the brokerage. That's the discipline that comes with operating in the market place, and my guess is that Tribune officials aren't out to screw those who want to attend Cubs' games.

Friday, July 28, 2006

C. Frederick Mosteller:
Pioneer Sabremetrician? 

From the NYTimes (reg. req'd):
C. Frederick Mosteller, the founding chairman of Harvard’s statistics department and a pioneer in using statistics to analyze an array of topics as disparate as anesthesia, presidential elections and baseball, died on Sunday in Virginia. He was 89.
In addition to all his many accomplishments in the field of applied statistics,
In 1952, he published one of his best-known articles, “The World Series Competition,” in The Journal of the American Statistical Association. That work, inspired by the Boston Red Sox’s loss to the St. Louis Cardinals in 1946, was the first known academic paper looking at the statistics of baseball. Dr. Mosteller showed that the stronger team — the one with a higher winning percentage — would still often lose a series to a weaker team, simply because of chance.

“There should be no confusion here,” he wrote, “between the ‘winning team’ and the ‘better team.’ ’’
[h/t to Brian Ferguson]

NFL Pensions update 

The NFL and NFLPA appear to have been very generous toward the retired players. It was announced that $120 million would be added to the retirement fund to inprove pensions and health benefits for the retired players. A special program to assist the players who suffer from dementia and Alzheimers was named the Number 88 Plan, after John Mackey whose wife Sylvia was instrumental in getting the NFL to address the issues.

Thursday, July 27, 2006

The All American Football League 

Next spring, an 8 team football league will play a 14 game schedule at various college campuses. The teams will apparently be stocked with players from the Big 10, ACC, and SEC, players who have graduated but not been drafted.

So it is a minor league, of sorts. It will be unitized, in that both players and coaches will be employed by the league and not the teams. The founders, which include former college presidents and athletic directors from prominent institutions, apparently know all too well the salary savings generated by reducing competition for labor between teams.

The league will attempt to fill a niche in the market -- it obviously bridges the talent gap between the NCAA and NFL, and will use unexploited stadium capacity. I predict that there will be teams in football-mad Georgia and South Carolina, but in which towns? Clemson or Columbia? Atlanta or Athens? Interesting choices. Steve Weiberg has the story; and Doug Drinen discusses it at There may be more out there by now as Weiberg states an announcement is pending, but I'm on dial-up at a Cape where there are tarpon. If someone can hunt down some more information that would be great. Later!

Tuesday, July 25, 2006

Compensation issues in the NFL 

Today's Baltimore Sun had articles on two distinct compensation issues for NFL players. The first article is about signing draft picks and the practice of "slotting". The idea is that one team determines the pay for its draftee by comparing to the salaries paid to those drafted just ahead and just after that player. The issue is, apparently, more complicated if the player drafted ahead of your guy was a quarterback and you have drafted a defensive tackle, as is the case with the Baltimore Ravens. Of course, all teams cannot practice this "slotting" strategy or no draftees will ever be signed.

This whole thing strikes me as excessive concern with ex post regrets on the part of teams. The management will feel better paying a player some league wide notion of his worth when that player turns out to be a bust than they would feel if they paid what they thought the guy was worth and were wrong. Of course, delaying signing your first round draft choice this way raises the possibility of that player missing some training camp time, and ultimately being less prepared for the regular season than otherwise. Since 2001, the Ravens' first round pick has not been signed by the start of camp. Clearly the team has decided that the benefits to the team and the player of the first round pick being in camp on time are small compared to the costs of over paying for that player.

The second issue in NFL compensation concerns pensions for retired players. The retired players are asking for a larger share of current revenues. One has to feel badly for many of the old-timers who lack medical insurance and who cannot live on the pensions they recieve from the NFL, especially those who played at a time when salaries were low and players had to have off season jobs to support themselves. Many of these fellows are severely crippled from their playing days. For example, John Mackey was a tight end for ten seasons, 9 with the Baltimore Colts. He played in five Pro Bowls and was the all league tight end three times. Mackey was also a prominent leader in the NLF Player's Association in the 60's and 70's. In 2001 he was diagnosed with Frontal Temporal Dementia, a condition linked to his playing days but for which his family had no insurance.

The pension issue is entirely a player matter. The question is how today's revenues will be divided among current and former players. A sticking point is that the NFLPA represents the current players but not the retired players. It will be interesting to see how today's players respond to the needs of those that went before them.

Monday, July 24, 2006

Scalping and Price Discrimination 

All the major league sports teams are getting into scalping [Washington Post, reg. req'd].
NFL, NBA and NHL teams have partnered with Internet firms with names such as StubHub and RazorGator to reap a share of what is known as the "secondary ticket market," where ticket holders can resell their tickets, often at prices well above the price they paid for them.

The emergence of these new enterprises ends years of frustration for sports teams, which have watched as scalpers and brokers sold tickets for several times their value without teams being able to capture any of that market.
At first blush, one wonders why the teams don't just raise their ticket prices if they want to capture some of that market. But it is apparent that the demand for different events against different opponents generates different demand structures, and so single price monopoly models cannot be applied, especially not for all games throughout the entire season. In the past, scalpers have filled in the gaps, charging more than face value for popular events and charging less than face value for unpopular events.

But now the major league teams are getting into the resale business. And as this business becomes more lucrative, look for more teams to hold back a portion of tickets and "re"sell the tickets at (frequently, they would hope) much higher prices in the secondary ticket market.

A great example of price discrimination.

Sunday, July 23, 2006

Stadium fact of the day 

From an article about yesterday's Arsenal-Ajax testimonial match for Dennis Bergkamp, the first game played at Arenal's new stadium:
Sides visiting Arsenal must now face 60,000 fans, although 6,000 fewer were present against Ajax as a safety test. There were about 3,000 away fans, which will often be the case for Premiership games. A more telling figure is that there are now 150 executive boxes compared to Highbury's 48. Executive seats will reportedly provide 43 per cent of matchday income from spectators.
43 per cent of revenue from luxury boxes - that's an eye-opener of a figure.

The Yankee money machine 

Ken Belson has the feature story in the Sunday Business section of the NY Times, and gives the last word to Rod Fort:
"I don't ever see the Yankees in a rebuilding year — it flies in the face of the way they have done business for 50 years ... History suggests that after George Steinbrenner, someone else will come in and make even more money."
There's much more, as Belson examines how the Yankees are doing just that, and their plans to reap the benefits of their forthcoming new stadium in 2009.

Friday, July 21, 2006

Bergkamp, Zidane, and Fame 

Watching Dennis Bergkamp's vision, touch, and pace in the 1994 World Cup converted me from an occasional soccer watcher into a real fan. His move to Arsenal in 1995 quickly made me a Gunners' supporter. So it's a sad day for me to see his farewell testimonial game arrive on Saturday. Here is a Soccernet article honoring the "Iceman."

His farewell also has made me ponder the question of relative fame of athletes. As Zidane approached his last few games during the World Cup, the press nearly deified him. For many years he has received a huge amount of attention and adulation. A lively online debate continues regarding Zidane v. Ronaldinho -- who is better? I'm not saying that Bergkamp is better than either of them or a few other greats -- such issues are impossible to decide -- but would strongly suggest that Bergkamp deserves to be placed in the same company.

Consider Bergkamp's accomplishments: 271 lifetime goals (37 in 79 games for The Netherlands); 124 assists for Arsenal from 95-06; 3 goals and an assist in the '94 World Cup; played on semifinal teams in Euro 92, 2000, and World Cup 98; his performance in World Cup 98 (3 goals and 3 assists) was unmatched by anyone including Zidane plus it included one of the greatest goals of all time -- the perfect touch on a 60-yard ball, cutback, and outside the foot finish in the quarterfinals winner in the 89th minute against Argentina (video with great Dutch commentary; also included in this video montage); he helped guide Arsenal to two EPL-FA Cup doubles and to their unbeaten season; in two different seasons he had 15 assists. Beyond the numbers or my assessment, here is Thierry Henry's viewpoint,

I have always said that Dennis Bergkamp will remain the best partner that I have ever had. He is a dream for a striker.
In spite of all this and the fact that the numbers well surpass Zidane, Bergkamp has not received the kind of attention of Zidane or a few others. Yes, I know he and Zidane and Ronaldinho don't play the same position. Especially early in his career, Bergkamp was more an out-and-out striker. Yet, as he aged, his role as "shadow striker" became very similar to that of an attacking midfielder, playing almost the exact same role as Zidane in big build-ups. His assists+goals totals would rate up there with anyone who has ever played and surpass Zidane.

As an economist, I wonder, what explains the difference in relative attention and fame? Maybe his fear of flying that cut short his international career by at least one World Cup and hindered his Champions league contributions enters in. Stepping back from his particulars, however, I'm inclined to think that Zidane and Ronaldino being on world champion teams makes a big difference. Had Zidane's France squad and Bergkamp's Dutch squad switched outcomes in 98, and even Euro 2000, maybe the relative attention would be different. It's very similar to the views of Bill Russell and Wilt Chamberlain. Russell's championships boosted his stock immensely even though it is a team game. Still, in basketball, with 5 guys on the court at once, one player's contribution is much larger than football or soccer with 11 players. Nonetheless, there are people who would put Tom Brady in the same league (or even higher) than Dan Marino because of his team's accomplishments -- an interesting behavioral pattern.

As a side point and question to the soccer fans out there, why don't assists garner more attention in soccer? Leeds' United and US International Eddie Lewis mentioned the same point a while back. In many situations, the assisting player has done a lot more to generate the goal than the guy toe-poking the ball of the line. Other sports, such as hockey, actively rate players based on the combination of goals and assists but not soccer.

Thursday, July 20, 2006

Instant Replay, Technology, and the U.S. Open 

It was only a matter of time.

The U.S. Open will be the first Grand Slam event to review disputed calls electronically.

... The technology will be used at the 10 U.S. Open Series events leading up to the Grand Slam in August.
The costs of using digital electronic technology to review line calls quickly has been plummeting. Meanwhile the technology has been improving over time, with the result that people tend to trust the electronic version of what happened more than they trust the line judges or the chair umpire. Result: the expected benefits of using the technology outweigh the expected costs, and it gets adopted.

But why will the tournaments use the NFL challenge-type system?
Each player gets two challenges a set to review line calls. A player only loses a challenge if the call stands. Players will receive an additional challenge during a tiebreaker, but can't carry over challenges from one set to another.

The system will be used on stadium courts, showing replays on video screens.
Why bother with challenges and guesses? Why not just programme the system to beep if shot is out?

And how much longer will it be until similar technology is used to call balls and strikes in baseball?

Ultimate fighting anyone? 

There is a buzz in some quarters about ultimate fighting, specifically the UFC organization. Bill Syken reports that matches are selling out in Vegas, with promoters scrambling to provide "auxiliary viewing sights." This AP story from last week has plenty of other facts to chew on.

Josh Hendrickson alerted me to this. Josh and others argue that the public image of the sport as lawless and life-threatening lags the reality of what has become a well organized and closely monitored competition, thanks to UFC.

I've argued before (see the interview with Aaron Steelman) that the public's taste for boxing decreased due to corruption and poor organization, as much as a simple turn away from fighting as sport. Suppose that UFC is supplying the necessary organizational capital for the sport for the first time, and that I'm right about the decline in the interest of boxing. If so, that combination implies that ultimate fighting could rise from a blip on the sports radar to a real commercial entity. How far that takes it is anyone's guess, but I wouldn't mind being a shareholder in UFC right now.

Wednesday, July 19, 2006

Sonics in play 

Once a decade it seems, Seattle is on the verge of losing a sports franchise. When I was going to school, it was the Mariners that seemed destined to sail off to Tampa. Of course, that was on the heels of a fellow named Bud Selig, who took advantage of an awkward birth, moving the expansion Seattle Pilots to Milwaukee after just one season, in 1970. In the 90s it was the Seahawks who attempted to slip south to Anaheim, and now it's the Sonics who have been shopping for what every American franchise covets: the best stadium subsidy.

To get the best deal though, you need a credible threat to leave. Done: the Sonics have been sold for $350m to an outfit that announced in February that it is dedicated to bringing NBA basketball to Oklahoma City. They've given Seattle 12 months to act on an improved stadium deal.

Seattle's lament is the consequence of being a mid-sized city with three big league teams to support (four if you count the WNBA's Storm, who drew over 11,000 to Key Arena last night). This stretches the dollar of local sports fans. Moreover, even the ability of politicians to divert spending towards stadiums is limited - witness Pittsburgh, a city of similarly modest size, pushed to the cliff of bankruptcy in part due to profligate spending on its sports teams. The Sonics, with apparently the worst lease in the NBA, are calling on a city that may have reached its limit.

I don't begrudge the Oklahoma City people (population 500,000) from wanting their own NBA team. And with the New Orleans Hornets in town for a second season, their chances seem pretty good, one way or the other. But as a fellow who spent four great years in Seattle (population 560,000), the extended soap opera that comes with the tussle over sports subsidies is wearing a little thin. Veteran Seattle columnist Steve Kelley is pointing the finger at Sonics' owner Howard Shultz, but the process in play is structural, not personal. From that point of view, the next NBA season could be the last in Seattle for many years to come.

Monday, July 17, 2006

More on player equities 

We noted two weeks ago a WSJ story about a Portugese fund that invests in the rights to transfer fees in European football players. This appears to be a trend. The Times reports that two such funds are setting up shop in the U.K. Clubs apparently welcome the liquidity, although the players' association is skeptical about their impact.

Strategic Games on Stage 13 

As I admitted last year, I've become a Tour de France addict in recent years. The commentary for the last couple of days has centered on Team Phonak's decision not to chase down a 2-man breakaway, permitting the yellow jersey to slip away, at least temporarily. OLN's Bob Roll summarized his comments on the OLN website:
But being a part of a team that has never been there before might prove to be a very difficult situation for Floyd to overcome. Floyd has the legs, but I'’m not sure if the team has what it takes to defend the yellow jersey -- and understand the significance of letting any breakaway get a half and hour and what that does to the morale of the other riders in the race like Menchov, Sastre, and Evans. If in fact they see this as a sign of weakness -- like lions looking at a crippled gazelle on the plains of the Serengeti -- they are going to attack without mercy and with a fury that Floyd Landis, himself, will have to contain. Lance Armstrong -- in seven years of dominating the Tour -- never let a breakaway like that getaway with one set of mountains to go ... Tomorrow, Phonak is going to have to do tempo anyway. Oscar Pereiro is not a big threat on GC, but it sends a very bad message to the rest of the riders in the peloton. If you don't need to face this situation, why would you go ahead and incur the type of wrath that is going to come from Menchov, Evans, Sastre, etc., as the race goes into the Alps?
On the telecast the other announcers said similar things. While I generally enjoy the OLN crew, I disagree with their game theory. In effect, they think that Phonak sent a bad signal -- a signal of weakness -- likely to encourage their rivals.

Only credible threats or promises matter. The reality is that Phonak is not a strong team. Their second best rider from last year, who happened to be Oscar Pereiro, jumped ship. In the long Pyreneean stage where Landis took over the Tour lead, he rode the last couple of major climbs without a teammate. Phonak ranks low in the team results. If I can see the weakness, one can bet that the other teams and riders do. Phonak's situation differs radically from that of the powerhouse Discovery-US Postal teams of 2004 and 2005. A big push in Stage 13 to keep Landis in the jersey would not have signaled anything worthwhile.

The one comment brought forward on OLN about the decision that is more pertitent is whether Pereiro poses a real threat. If he does, then falling behind him by over a minute may have been an error. After all, he finished only one spot behind Landis in the overall standings last year. On the other hand, he had fallen almost 30 minutes behind the leaders through the first 12 stages. Whether they win or lose, my guess is that Landis and Phonak made the right call -- save your strength and forget about meaningless signaling.

Saturday, July 15, 2006

Idle time at the FCC 

From the "This Bureaucracy doesn't have anything better to do" Department: MSNBC reports that the FCC is reviewing TV footage from sporting events for indecency.
In its continuing crackdown on on-air profanity, the FCC has requested numerous tapes from broadcasters that might include vulgar remarks from unruly spectators, coaches and athletes at live sporting events, industry sources said.

Tapes requested by the commission include live broadcasts of football games and NASCAR races where the participants or the crowds let loose with an expletive. While commission officials refused to talk about its requests, one broadcast company executive said the commission had asked for 30 tapes of live sports and news programs.
Or, if they are like some local police departments, maybe the fines they levy fund their operations:
Under a new law approved by Congress and signed by President Bush, broadcasters face fines of as much as $325,000 per violation, up from a previous maximum of $32,500.
Ugh. That's enough to make me vote for the Democrats.

Notes for the record 

The LA Times has a report on Barbaro's condition, with pictures of the horse in his sling (which keeps weight off his hind legs to battle the laminitis), and walking with Dr. Richardson. Given his owner's resources and the willingness of both Barbaro and the Bolton Clinic to do the treatments, he has a chance to make it, however small. I can't imagine what the bill will ultimately be.

From Italy comes the verdict in the soccer scandal, and the bizarro quote of the day. For those in the dark on this rather important event (equivalent to suspending the Yankees from MLB for a year or more), Gabrielle Marcotti provides a list of the scandal's FAQ.

The verdict penalizes several clubs, including Italian giant Juventus, by relegating them from Italy's top soccer division (Serie A) down a peg to Serie B, and handicapping them with a points deduction next year. The penalties:
Juventus Relegated to Serie B. Must start next season with a 30-point deficit. Stripped of last two league titles

Fiorentina Relegated to Serie B with a 12-point deficit

Lazio Relegated to Serie B with seven-point deficit

Milan Begin next season in Serie A with a 15-point deficit. Docked 44 points from last season's total
Martin Penner provides the quote, from Juventus' new president Giovanni Cobolli Gigli: "I am not angry. The correct term, as a fan and as someone from Juventus, is pissed off." Ok then, Signor Gigli. Can anyone help me with the distinction?

Penner also lists the direct economic implications:
Juventus will suffer a 50 per cent drop in annual revenue from about £151 million to £75 million

TV rights for Serie B were £14 million last season. The deal is negotiated collectively, rather than individually as in Serie A, a potential bonus for smaller clubs. Juve's deal was for £66 million last season

The Juventus share price has more than halved since the scandal broke, while Lazio and Fiorentina have experienced a similar drop

AC Milan will lose up to £19 million from TV rights and in bonuses from being denied a place in the Champions League

Juventus are likely to be out of the Champions League for at least three years, losing about £30 million in television income

Some of these losses are transfers, as Chievo and Palermo have now received tickets to the Champions League. But Chievo and Palermo are not likely to go far. As Marcotti noted, the absence of Milan and Juve will make it easier for English clubs to progress through the Champions League draw, and they may thus be indirect beneficiaries of the decision.

Addendum: This story by John Hooper is particularly informative on the Italian scandal.

Thursday, July 13, 2006

Baseball numbers 

Here are two freebies from subscriber-based services.

At the WSJ, Science Journal's Sharon Begley looks at some number crunching on the Barry Bonds home run machine. The key issue is the delayed onset of declining productivity in Bonds. His sustained improvement in the AB/HR ratio (and the delayed onset of decline in HR-hitting) is the anomaly that is examined. The bottom line: "Take away Mr. Bonds's statistically suspect homers and he's behind Mr. Schmidt. Add some to reflect his many walks and he's right after Ruth." Interesting, but it doesn't get us very far.

At Sports Business News, Howard Bloom examines the new TV contract for MLB. Here's an extended clip with some historical perspective:
When you remember where MLB was with network television agreements between 1990 and 1995, a look back at where baseball was leaves one to wonder how remarkable the next seven years will be for MLB.

1990-93 -- CBS pays $1.1 billion for 1990-93 rights: $275 million/year for the World Series, LCS, All-Star Game and 12 regular-season weekend games. CBS loses more than $400 million on this contract. ESPN pays $400 million for 1990-93 cable rights to six games/week (Sunday, Wednesday and doubleheaders on Tuesdays and Fridays, plus holidays). CBS Radio pays $50 million for 1990-93 radio rights to a Game of the Week plus ASG, LCS and World Series.

1994-95 -- MLB, ABC and NBC form a joint venture called The Baseball Network. The venture, scheduled to run through 1999, is terminated by agreement after two years. Under the agreement, the networks pay no rights fees; instead, MLB receives 87.5% of the first $160 million/year in net revenues, 1/3 of the next $30 million, and 80% of revenues above $190 million/year; the networks get the rest. CBS had offered $130 million/year to renew its previous contract, and WTBS had offered $40-$45 million/year for rights to another round of playoffs. The Saturday Game of the Week is abolished; regular season telecasts are limited to regionalized night games in the final 12 weeks of the regular season, to be split between the networks. Each year one network gets the All-Star Game and LCS; the other gets the first-round playoffs and World Series. The first-round playoffs and first five games of the LCS are regionalized. MLB also signs a six-year, $255 million contract with ESPN for a Sunday night Game of the Week and Wednesday night doubleheader, and a six-year, $50.5 million contract with CBS Radio.

11 years ago CBS wanted to stay as far away from baseball as it could, and The Baseball Network was one of the biggest single business disasters in the history of the sports industries. It makes the three current national agreements (with one more to come) that much more amazing when you consider where the sport was as a national television property after the 1995 season.
It is good to be Chauncey Gardiner Bud Selig.


I was in Europe for the Preakness, an event I never miss. But I was lucky to miss this one, because I love horses, love racing, and saw Barbaro as the hero the sport has missed for so long. I can't imagine the shock of watching him break his leg in that race, and am fortunate to have been spared it.

I've held off commenting since then, knowing what every person who has owned and worked with racehorses knows in their gut: that these delicate animals just don't take to immobility at all, that it has a corrosive effect on their condition, and that the cumulative effects are ... let's just say awful to contemplate.

Despite all of the stories about how well Barbaro had been doing since his operation, Doctor Richardson has always said that his prospects for recovery were 50-50 at best. But in the past few days, after a series of additional operations and the onset of laminitis, the doc has been letting us down slow. Joe Drape reports that Barbaro's prospects are now described as "poor." The Bloodhorse has more.

He might not be with us for much longer, but he showed us the dream was still possible. Thanks, Barbaro.

Competitive Juices or Home Field? 

Bud Selig is busy patting himself on the back for Tuesday's All-Star game ending (Sports Business Daily $$$. I tried to find the original article at (the source, according to SBD, and via Google but haven't been successful):

The AL won last night’s game 3-2 in the ninth inning, and Selig said of the format awarding home field advantage in the World Series to the game’s winner, “Did you see the reaction of both teams at the end? The intensity was tremendous. That’s the thing that had been missing. And now we’ve brought it back”

Competitive juices undoubtedly had an effect players' reactions. The context of the winning hit - down to the last strike for the AL - was also important. Without the home field rule, were the players likely to have simply packed their gear and left the field as quietly as church mice? That's doubtful. My guess is the marginal effect of the home field rule was rather small in this particular game.

Having home field in the World Series has been important of late

Will it matter? In the last 20 years, 17 of the World Series champs have had home-field advantage and the last road team to win a Game 7 in the Series was - perhaps appropriately, considering the location of Tuesday's game - the 1979 Pirates.

The team with the advantage gets to play the first two games and, if necessary, the last two at home. But making it to the World Series is an uncertain event from the vantage point of players in the middle of July. Many of the players on both rosters know that their teams will not make it to the post season. For other players with a brighter ray of hope, the probability of making it to the World Series is also very small. Their teams have to make it to the playoffs and then win two series to advance. Then there's discounting (to what extent do players discount the future?).

In a "full information" non-discounting world, the value of home field advantage is huge. But in an uncertain, discount-the-future world, the expected value of home field advantage is much smaller.

Greeks vs. Germans, Python style 

Amid the usual grab-bag of anti-soccer coverage during the World Cup, I find it ironic that no one I read mentioned Monty Python's soccer skit. The one where Greek and German philosophers wander around the pitch, scratching their heads and arguing with each other while the untouched ball sits in the middle, and the commentator discussing the "action" with erudite enthusiasm.

"The Germans playing 4-2-4, Leibniz in goal, back 4 Kant, Hegel, Schopenauer, and Schelling, front-runners Schlegel, Wittgenstein, Nietzsche and Heidegger, and a midfield duo of Beckenbauer and Jaspers, Beckenbauer a bit of a surprise there." Confucius books Nietzsche for claiming the ref had no free will, Socrates scores on a cross from Archimedes in the 90th minute, and Marx (a 2nd half substitute) argues that Socrates was offside. Marx's quibble is something of a moot point, since the Germans weren't defending anyway.

Here's the video in 2 parts, each just over two minutes long (part 1, part 2). Funny stuff.

Now, if you're still serious about the post-mortem following Zidane's head butt, here's what the great one said, word by word (albeit interpreted). He did apologize to the kids, though not to Materazzi, which ensures that his statue will be erected in Marseille after all.

Wednesday, July 12, 2006

Bud Selig - The Most Socialist Baseball Commissioner? 

Given this most recent salvo, I have begun to conclude that Bud Selig has been the most socialist baseball commissioner ever:

While meeting with baseball writers Tuesday before the All-Star Game, Commissioner Bud Selig threw out a stunning proposal—banning All-Star Game pitchers from being used on the Sunday before the Midsummer Classic.

I realize it's only a proposal, but way too much attention is given to the All Star game - one game played in the middle of July - by Selig, from trying to figure out ways to "make it count" to this. It's a showcase and should not be made more important than regular season games that really count. Sure, those Sunday games are but one game for each team in a 162-game schedule, but division championships and wild card spots often come down to the wire where one game here or there can make all the difference.

Other examples of his socialist bent while running baseball:

  1. Getting uniform revenue sharing (in national politics, we call this "taxing") in the collective bargaining agreement, then getting the proportion shared increased to 34%.
  2. Taking control of each team's website which, before "nationalization", were controlled individually by the teams themselves.

Is this increased socialism the best thing for baseball in the long run? Maybe. The NFL is the most popular league in the US and it is also the most socialist with its wage controls, national television contract, and its 40% local revenue sharing. But it also has each team play once a week, making it much easier for fans of a team to follow each game's action.

Tuesday, July 11, 2006

Dr. Z. defends Zidane 

The excoriation of Zinedine Zidane for shoving his head into the chest of an admitted provocateur has been a bit much. Some writers have claimed that this cost the French the World Cup, but that is nonsense, as the French had been camped out in the Italian half for most of the game and extra time, while posing a minimal threat to score. And the 5 perfect penalties from Italy had nothing to do with the presence or absence of Zidane on the pitch. The one thing that is clear is that Zidane snapped after 110 minutes of frustration and took it out on Materazzi, who had almost certainly crossed the line of sportsmanship.

My view of the incident is thus a bit closer to that of SI's Dr. Z, a long time observer of the NFL.
Picture this. Michael Strahan is tired of offensive linemen grabbing him, strangling him, chopping at his legs, talking never-ending trash, generally messing with him in fringe illegal methods and getting away with it. So he head-butts someone.

Will he get thrown out of the game? Probably not. He'll get a flag. But put him in the context of World Cup Football and the ridiculous grand opera tragedy it has become and he would not only get thrown out but a lifetime of greatness would be ruined -- at least for now.
"Ruin" is temporary in this case, I'm sure of that. But I do wonder what Zidane will say about the incident later in the week, as promised. Will he follow the editorialists at L'Equipe, and tell the children not to do what he did? Or will he stress that the game needs to cleansed of the "fringe illegal methods" (and worse) referred to above? Tough call, mon amis.

Friday, July 07, 2006

Some Modest and Not So Modest Proposals 

The World Cup Finals are unique as far as team sports go. It draws, literally, from a worldwide pool of participants. It stages a month long spectacle of skills and drama. Yet, the competition has its downside -- particularly to me the play-acting, the refereeing, and as Skip writes today, the decline in scoring. Here are some ideas on fixing these problems:

1. The diving and exaggerating of contact has long been one of the black marks on soccer, especially at the World Cup. It's especially distasteful to the American sports palette, which likes its heroes to shrug off real hurts in the mold of Willis Reed rather than playing up fake hurts. Now even some of the greats are calling for action -- See Beckenbauer Calls for Summit to Stop Play Acting. Soccernet's Steve Wilson offers a remedy in "Their Cheating Hearts"

If we, the viewing public, can see such unambiguous examples of outright cheating played out in a loop on rolling sports news channels each day then so can the authorities. Sanctioning players that bring the game in to disrepute in this fashion - with serious, lengthy bans - through trail by video would tip the balance back in the favour of the honest professional. If the risk of being caught and punished starts to outweigh the possible reward of a penalty or the sending off of an opponent then players will be dissuaded from chancing their arms.
We may need to recruit Steve for the Sports Economist with that kind of talk. The English FA tried to put in this kind seemingly modest proposal post-match review forward only to be blocked by Sepp Blatter and the FIFAcrats who seem to have a secret love of Italian theater (See my Weird Politics). Another modest change along these lines would be to require a minimum time (say 5 minutes) off the pitch any time play must be halted for an injury that requires the trainer to come on the field. This would help stop the "I'm dying, I'm dying ... okay, I'm ready to play again" nonsense.

2. Maybe several factors have contributed to the decline in scoring -- ironically, a topic that I investigated some yesterday also. The decline may be even more pronounced in the knockout phases. The amount of physical contact permitted almost certainly grants major advantages to defensive players. Even casual observation of matches from the 1980s and prior indicates that the penalty area has become a wrestling arena compared with these earlier periods. It is very similar to watching the evolution of basketball -- at one time, bodies rarely made contact. Now, it is a virtual "Texas Cage Match." As long as you don't leave your feet as a defender, almost anything goes. This trend has continued in spite of a large number of cards being issued. The problem is that the card-issuing and foul calling takes place in the areas of the field where the scoring threat is the least. It is akin to strictly enforcing speed limits between Odessa and El Paso only to permit any kind of driving behavior in rush hour Dallas.

The penalty for fouls in the penalty area is so extreme that officials rarely call them. As a result, their application mirrors the death penalty -- akin to a lottery draw applied arbitrarily to a small number of cases that has little deterrent value. My not so modest proposal here is for differential penalty spots. The current one could be used for taking on guy down in front of an open goal or similar scoring threat. A new and more distant spot (maybe at the top of the 18 yard box) would apply for fouls in less threatening situations.

3. As for improving the consistency of refereeing, the preceding point would apply by providing officials with something more than the current all-or-nothing penalty for fouls within the box. My other not so modest proposal would be to include two more on-the-field officials. The sideline assistants would call only offsides (a tough enough job by itself). Yes, yes, I'm aware of the issues of crime v. enforcement and adding more cops doesn't, by itself, solve matters and may even create new problems (See Point #2). Still, a field of 8000 square meters poses an enormous and even impossible job for a single pair of eyes and legs. Beyond the distances involved, one person cannot position himself so as to provide the critical angles for observing certain situations accurately. The problem of getting "straight-lined" (caught trying to look through people) is rampant (See John Feinstein's conversations with referees in A Season Inside). On critical calls, such as penalty kicks, a lead official could have the final say.

Proposals 2 and 3 are just "pie in the sky." Proposal 1 is very doable. Let's hope the Beckenbauer's put enough pressure on FIFA to make change happen.

Tinkering with the World Cup 

A contentious and disconcerting World Cup has at least produced a Final worth anticipating. Italy is the tournament's best team, I think. They score brilliant goals and their defense seems impenetrable. The Zidane-French revival exhibits similar characteristics, although weakness at the back in the form of Barthez and Abidal enhance the Italian's edge. I'll be rooting for one more moment of magic from the French on Sunday, but I'm expecting the efficient Italians to prevail.

After a solid month of football, there is plenty of discussion now about tinkering with the rules of the game, with the usual "can't touch this" backlash from traditionalists. I'm with the tinkerers. Indeed, if you think for a moment, you'll realize that FIFA is among the tinkerers too.

The problem is the decline in scoring. The reasons for the decline are somewhat murky, and the remedies even less clear. But the decline is obvious in the data, particularly in the knockout stage of the tournament, which has yielded just 23 goals in 13 games. At Knowledge Problem, Mike Giberson notes that scoring throughout the tournament is running about 1/4 goal less than in 2002, and is lower than every year but 1990, the year of negative tactics.

FIFA's new ball was supposed to fool goalkeepers (and presumably the public), with it's more random flight adding incrementally to scoring. As Mike argues, that was one tinker that went wrong. The ball, rather than fooling the keepers, is screwing up the kickers. I've been watching corner kick after corner kick wondering why they've been so ineffective. Sean Ingle's observation at The Guardian explained it for me:
Generally the shooting has been poor and the crossing substandard: if the ball doesn't crash into the first defender it usually flies about 10 yards too high.
My take is that the players are having trouble managing the height of crosses. More than the normal fraction of corners have soared over everyone's head in the box, so players have been firing them low, hoping to get a lucky bounce or two.

Ingle states that "football's delicate balance between attack and defence has spun increasingly out of kilter." He suggests that FIFA consider using "sin bins," which would add a marginal policy tool to deter fouling, widening the goal a bit to combat the increased size and athleticism of goalkeepers, and stopping the clock for injuries. The cynic in me notes that there is a commercial opportuntity in the last proposed tinker, which increases the likelihood of its adoption.

Addendum: I'm pleased that FIFA did not give their young player of the World Cup award to this guy (h/t to normblog). By the rules - which include sportsmanship - German striker Lukas Podolski was indeed the better choice.

Thursday, July 06, 2006

Uniform colors, & more 

Interesting findings from a group of psychologists at Johns Hopkins:
When soccer fans gather Sunday to watch France and Italy do battle in Berlin during the World Cup finals, new research suggests the enraptured audience will be better able to follow every artful pass and blistering shot on goal because of the brilliant, crisp colors each team will wear.

Fact is, without the help of color, the human brain can't pay attention to more than three moving objects at once, concluded a team of neurological researchers reporting in the July issue of Psychological Science.

Grouping even a vast number of objects or people together by color makes all the difference, the researchers said.

"That's a new finding -- that humans can attend to more than three items if those items form a single set," said study co-researcher Justin Halberda, an assistant professor of psychological and brain sciences at Johns Hopkins University. "The set itself can then function as an individual," he added.
Further, and more fundamentally, Halberda speculates that (commercially successful) team sports pair two opponents competing at once, rather than say four, because fans' ability to observe and comprehend such a competition is greater. Interesting.

This suggests to me that paintball on ESPN will never catch on -- with hiding and stealth inherent in the sport's design, it's too confusing to follow! Thanks to Bobby McCormick for the link.

Wednesday, July 05, 2006

This is no fantasy 

In the U.S. we have fantasy leagues. In European football you can buy shares in the real thing, or close to it. Today's WSJ reports on a Portugese hedge fund that invests in the transfer rights to soccer players.
Nuno Goncalves is pulling hard for Portugal in the World Cup, but with more reason than most of his countrymen. The Lisbon-based hedge-fund manager has an investment in Ricardo Costa, a 25-year-old defender on Portugal's team.

The 33-year-old Mr. Goncalves, who runs three funds with about $14 million of investments for Football Players Funds Management Ltd., buys and sells interests in the rights to soccer players from Europe, Brazil and elsewhere. When one of his 15 players excels, and a wealthy franchise makes a bid for him, Mr. Goncalves's firm shares in the profits from the deal.
Absent transactions cost and related considerations, these entities would presumably just deepen liquidity in the football market. But I'm not sure that their influence is completely benign, since they profit only when a player changes teams. Here is how the system works:
European soccer teams rarely trade players as U.S. professional sports do. Instead, deals generally involve cash payments from one club to another for the rights to a coveted player. Wealthy teams can spend $40 million or more to acquire a star. If the player is keen to move to a new team, the player then will negotiate a new salary with the buying club and a transfer takes place.

Mr. Goncalves searches for unknowns on youth teams run by major Portuguese clubs with which his firm has forged an alliance. When they get interested in a player -- usually a teenager in Brazil or Portugal -- Mr. Goncalves's company and one of its partner clubs make a cash offer to a local, neighborhood team for the player's rights, usually for less than $1 million.

In a typical deal, Mr. Goncalves's firm, a unit of Orey Group, a Lisbon-based shipping and industrial conglomerate, contributes about 15% of the cost of buying a player's contract, with the professional team kicking in the rest. That gives Mr. Goncalves's fund a 15% stake in the player, while reducing any loss for the team if he doesn't pan out. If the player does well and a wealthier team comes calling, the fund and its partner club sell the player's rights at a higher price.
Goncalves owned a share of rights in Ronaldo, who moved from Sporting Lisbon to Manchester United three years ago. Ronaldo would have moved up the food chain regardless, but Goncalves's $6.7m share of the deal certainly didn't keep it from happening.

The firm typically has the transfer rights for a duration of three to five years. That might motivate "early" transfers, but a similar incentive applies when the rights are entirely owned by the team, as the player's contract to perform is similarly limited in duration. My guess is that the Rottenberg-Coase theorem applies to a first approximation, and the existence of the hedge fund doesn't have a big impact on the timing of player transfers. But adding an additional party surely complicates the bargaining, and may give early moves an additional push.

Tuesday, July 04, 2006

Economic (burp) impact of the WC 

From a major brewer in England, via The Guardian: "consumption of beer during the World Cup rose 70% on the same period last year."