Wednesday, August 30, 2006

For the record 

Here are two stadium stories of potential interest. The arena deal for the NBA's Kings is discussed in this Sacramento Bee story, which focuses mostly on the quarter of a million dollars the city has paid to consultants. Reader Mike Marshall notes that the new deal is now buried inside a general tax referendum, which requires only 50% + 1 vote to pass, rather than the 2/3 super-majority required for a specific tax hike. Here is the Bee's summary of the deal's details (buried at the bottom of the article):
Proposal: $1.2 billion measure funded by a Sacramento County quarter-cent sales tax.

Breakdown of funds: $470 million to $542 million for arena and parking structure; minimum of $594 million for unspecified community projects.

Arena ownership: Public joint powers authority created to build the arena would own the facility, oversee the building's design and construction, and be responsible for cost overruns.

From the Kings' owners: Lump-sum payoff of an outstanding $71 million loan; sign 30-year lease, pay $4 million annually; $20 million repair fund.

Kings' responsibilities: Maloofs would maintain the building and keep proceeds from events, parking and concessions. They would control naming rights for the new facility, which would anchor a planned sports and entertainment district in the downtown railyard.

On the Nov. 7 ballot: Requires approval by 50 percent plus one voter -- a simple majority.
If I understand the sequence and strategy right, city leaders came to believe that the original plan to finance and spend about $600 million on an arena was unlikely to pass muster with voters. So in response, they are going to spend another $600 million on "unspecified projects" and make everyone pay. This in order to cross the threshold at the voting booth. This struggle might be worth watching in the next couple of months.

Across the country in Orlando, those who control the out-dated structure that is the Citrus Bowl are trying to devise a fixer-upper plan. Now that UCF has moved its games to an on-campus facility, the Citrus Bowl's football business is limited to three college games per year. Is that worth a $250 million spruce-up? Apparently not. The question now is whether a $195 million plan will fly.

Monday, August 28, 2006

Gresham's Law of Sports Commentary 

Economists know Gresham's law as "bad money pushes out good money if forced to exchange at the same price." Some variant of this seems to work in sports commentary, and seemingly nowhere more than football. Bold assertions that sound appealing but have no basis in fact, or only a fleeting basis, possess half-lives near that of plutonium. In Saturday's Weekend Wall Street Journal, Allen Barra takes yet another swipe at some of the treasured "maxims" of football wisdom, drawing from research done by others. He lists 10 but 3 stand out because of their their long, long tradition among the coach- or player-turned-analyst set:
  • "Offense sells tickets, but defense wins championships"
  • "You need a strong running game"
  • "You have to control the ball"
I'm sure quibbles could be raised with some of the data analysis leading to their rejection. Having done some work on the one of these in my Ballfields and Boardroom, I can say with confidence that it does not hold up past the 1970s yet endures. Barra quotes a T.J. Troupe, a football historian, who offers a Stengel-esque rebuttal:

"Great defense beats great offense -- and vice versa".

Too bad that we can't get the Sean Saliburys of the world to perk up and pay attention to data rather than their own voices.

Sunday, August 27, 2006

The Game is Afoot... Interesting Already! 

A while back, I offered a"beer bet" on pre-season Top 25 College Football picks, following up on a post by Dave Berri. Six took me up on the bet, well within my beer budget at the next WEAI meetings in Seattle. My thanks to Dennis Coates, Steve Winkler, Nicholas Evans, Jason Winfree, Jon Russell, and Burt Monroe. You can get the affiliations of the participants and their rankings here (MS Excel).

Just a couple of highlights. Ohio State is first in two rankings, joined by Texas, Oklahoma, USC, Miami, and Notre Dame. Fourteen teams are common to all rankings-- Auburn, California, Florida, Georgia, Louisville, LSU, Miami, Ohio State, Oklahoma, Oregon, Texas, USC, Virginia Tech, and West Virginia. Tulsa, UCLA, Utah, and Washington State appear only once and on different lists.

In his "Wise Crowds" post below, Brian Goff cites one of his papers where he shows another reason to be interested in pre-season polls. Apparently, where a team started in the pre-season polls influenced where it ended up even after taking into account winning percentage and schedule strength. This is echoed by Russell Adams in the Wall Street Journal today, where he assesses those making pre-season picks (I gleaned this from my subscription to Sportsbusinessnews.com):

"A team ranked sixth, for example, is already closer to getting to play in an elite postseason bowl game than a team ranked 10th. Those rankings are partly determined by polling coaches, who base their decisions primarily on early hype, especially preseason predictions. In that way, perception can easily become reality -- particularly when three or more teams finish the season undefeated but only two can go on to the championship game. ...A team's preseason ranking can also have ramifications for future seasons, because, schools say, a higher ranking can boost everything from alumni donations to ticket sales -- while a lower position could do just the opposite."

I'll confer with the players on the final scoring system and we'll see who's buying when the end of the season poll results are in!

Player valuation in college football 

Cal running back Marshawn Lynch is surely the biggest reason the Golden Bears, and some others, think they can challenge Southern Cal for the Pac-10 title. He's ranked in the top ten on some Heisman lists and may be a star in the making. John Wilner in the San Jose Mercury News pegs his value to Cal at $800,000 for the year.

Wilner's piece is quite good, providing fairly thorough coverage to what is familiar territory to sports economists - the difference between the value of collegiate stars and their compensation. The debate over who captures the value produced by the Lynches and Vince Youngs, whether athletes should be given a "work-study stipend", and so on. One thing I found particularly refreshing was this statement by a Pac-10 official. Cal is scheduled to appear on television seven times this season, netting them an estimated $3.5 million to $4 million. To which Duane Lindberg, the Pacific-10 Conference assistant commissioner for communications, says: "A lot of (the TV schedule) is based on who the teams have coming back. That's more of an argument for Marshawn, when you have a running back like that." I'll say.

Wilner's valuation is too small, however. His method is clever, based on player salaries' share of NFL revenues, and the share of salaries accruing to top running backs. But Wilner marks down the share of income that would accrue to college athletes in a market system, on the grounds that college coaches get a much bigger share of revenue than their NFL counterparts. But a significant chunk of this difference stems directly from the inability to pay players, and the consequent increase in payments for what I've previously called "player proxies." As Roger Noll points out in the piece, coaches that are top recruiters collect the value of top athletes as a result. Take away the restriction and college coaching salaries would decline, boosting the percentage spent in the hypothesized competitive bidding for talent.

Regardless, Wilner's piece - on may levels - is a good one to share with students in Sports Econ classes this fall.

Wednesday, August 23, 2006

Cupcakes Anyone? 

The following is to be said like Ben Stein's character in Ferris Bueller's Day Off - the droning, monotone economics professor speaking to a class of confused, gape-mouthed students:

"When the demand for cupcakes rises, given the supply, their price... anyone? Anyone? Anyone? Their price... their price rises."

Buffalo is just the kind of opponent some of the nation’s top-ranked teams are looking for — and are paying rapidly rising prices to play this season. The Bulls will travel this coming season to play Auburn, a national title contender, and Wisconsin, a perennial Big Ten Conference power. Although Buffalo appears destined to be humiliated, the university will receive a $600,000 appearance check for each game.

Scheduling easy victories is a tradition as timeless in college football as fight songs and homecoming. But after the National Collegiate Athletic Association approved the addition of a 12th regular-season game for the coming season, the appearance fees began climbing in a bidding war for games against college football’s flotsam and jetsam.

Buffalo became such a hot commodity in the off-season that it broke contracts with West Virginia and Rutgers because Auburn and Wisconsin were offering at least double the money. Troy State of Alabama will receive $750,000 from Nebraska to play in Lincoln this season. Louisiana-Lafayette will get the same amount from Tennessee next year.

It's good to be the cupcake.

HT to reader Mark Stratton

Maryland Stadium Authority - the gift that keeps on giving 

Baltimore has Camden Yards and M and T Bank Stadium thanks to the work of the Maryland Stadium Authority. One might think that after spear-heading the drive for stadiums for the major sports franchises that call Maryland home that the Stadium Authority had met its mandate and could close its doors. Marylanders should be so lucky.

In a recent editorial, the Baltimore Examiner outlined some more of the Authority's accomplishments.

Last year, its operating expenses outpaced revenue earned from stadiums and convention centers by nearly $7 million. Its overall loss was about $31 million, before government subsidies fixed its budget hole. In 2004, its expenses outpaced its revenues by about $33 million, according to MSA annual reports. Its economic outlook: “The Authority will continue to closely monitor revenues and expenditures to the best of its ability.” Notice it did not say, “balance its budget,” or even — gasp — make money.”
Under its close monitoring regime the MSA spent more than $100,000 on outside counsel in 2005 to prepare a potential lawsuit against Major League Baseball to block the Washington Nationals from coming to the region. The hiring violated state procurement laws, according to officials at the Attorney General’s office. Due to cost, state lawyers must first approve hiring outside counsel. This was not the first time it did not follow the rules. A state audit in 2004 found that the MSA improperly awarded $66 million in construction projects, prompting the resignation of the executive director.
It loses money, violates the law, and works to protect the monopoly status of a private business.

Maryland has recieved all those good works from an agency created in 1986 with the "mission of returning a professional National Football League (NFL) team to Baltimore and ensuring that our Major League Baseball team, the Orioles, remained in Maryland." Now that's good government!

Tuesday, August 22, 2006

Wise Crowds 

Rod Fort's challenge to anyone who could outdo college football preseason polls (Not Exactly Julian Simon ...) reminded me about a Henry Manne piece appearing in the Wall Street Journal (subscription required) back in June. With my World Cup myopia, I let it slip. Manne, a major defender of efficient market ideas, assesses the contributions of behavioral methods in finance. Here's an excerpt:

Perhaps the most important behavioralist contribution to economics has been their reminder that the market-model claim of rationality often does not comport with actual human behavior. Economists frequently failed to qualify economic pronouncements as being limited in application to aggregate behavior. Too many assumed that if markets in the aggregate behave rationally, it must be because the "marginal" participant -- the trader who has the correct information about what a price should be -- was himself a perfectly rational maximizer. This better-informed and rational trader would always arbitrage away any discrepancies from efficiency that a market displayed.

But there is a vast difference between economics and psychology, and we can thank the behavioralists for forcing economics back into its correct posture of dealing with aggregate behavior. We can also thank the behavioralists for demonstrating that the marginal trader/arbitrage theory cannot explain all price formation, since we have no way, a priori, of knowing that this hypothetical individual will be rational. Nor can we any longer assume that the arbitrageur (apart from a purchaser of 100% of the securities of a given company) will have all the information necessary to set the correct price.

While some may think that Manne ceded too much ground, Gary Becker said much the same in 1973 ("A New Theory of Consumer Behavior). Most of the propositions in economics, even though theoretically worked up from an idealized individual, explain outcomes a lot better when applied to some group of 30, 50, 100 or more.

The upside of this is "wisdom of crowds" or "law of large numbers" kind of insight is that it helps buttress points like Rod made. The flip side for sports economists is that in making application of theories and principles at the individual coach, player, or manager level, we need to recognize that the rational choice approach may be as good or better than any other, but it still leaves a lot of error.

Separately, Rod's bet raises an interesting question as to whether the "wisdom of crowds" works the same with investors who have "skin in the game" as with voters who don't. The voting literature finds a lot of ideological or expressive voting behavior. This might be a subject worth investigating using sports polls. As a stab in this area, in a 1996 Applied Economics article I found that where a team started in the preseason polls influenced where it ended up ("path dependence") even after taking into account winning percentage and schedule strength.

A New Stadium Brings Tourism? 

Business owners around the St. Louis area that cater to tourists are feeling a bit of a squeeze this summer. There's a bevy of reasons being bandied about: high gas prices; the nasty weather around St. Louis; a new Cardinals stadium with fewer seats and hard-to-get tickets?
Some local attractions and hotels wonder whether a ticket squeeze at the new, smaller Busch Stadium has discouraged tourists from visiting Cardinal Nation this summer.

Certainly, steep gasoline prices, sweltering heat, severe storms and road construction have tattered St. Louis' welcome mat. But those factors can't entirely explain an 8 percent dip in summer attendance at the St. Louis Zoo, president Jeffrey Bonner said.

Last year, 29 percent of the Zoo's out-of-town visitors attended a Cardinals game; this year, the number has dived to 14 percent.

...High gasoline prices usually boost tourism in St. Louis, said Nancy Milton, a spokeswoman for the St. Louis Convention and Visitors Commission. That's because families in Iowa, Arkansas and other nearby locales decide to stick close to home for vacation rather than fill up the SUV and drive to the Grand Canyon or the nation's capital, she said.
... But don't string up Chris Carpenter just yet. Not all St. Louis attractions are slumping.

The City Museum and St. Louis Science Center are enjoying attendance bumps, though a majority of those institutions' visitors are local. Half of Cahokia Mounds' visitors hail from outside Missouri and Illinois, and its numbers have remained steady.

Sunday, August 20, 2006

Clint Dempsey and MLS player development 

Players on MLS development squads must really love playing soccer. At least, that's the implication from "Economics 101 for young MLS players", by Bob Holtzman:
These players might be considered cheapskates in some sports. But in Major League Soccer, they're more like poor college students who can't afford to pass up a freebie.

That's life as part of the Galaxy's developmental roster, where players can make as little as $11,700 per year on an non-guaranteed contract.

Developmental players for Chivas USA and the Galaxy consider their economic situation a serious challenge in the South Bay, where the cost of living is as high as anywhere in the country. Players room with teammates, clubs turn a cold shoulder to league rules to help and athletes still take handouts from relatives to keep alive their dream of being professional soccer players.

And these players have to do it in the South Bay, where so many of their peers are soaking up rays at the beach before hitting the nearby bars at night.

"Food before partying, you know?" said Galaxy defender Kyle Veris, a 23-year-old rookie earning $16,500 after being drafted in the second round. "Girls are another struggle. I have to ask Mom and Dad. I tell them I met a girl and need money to take her out."
Now, when you get good, seeing as you've been paid a pittance in the meantime, it would seem that you don't owe MLS that much. But that's not the way MLS is playing it with Clint Dempsey, who is attracting interest from England. Grant Wahl writes:
No American had a better World Cup than Dempsey, who brought much-needed pace and confidence to the right side of the U.S. midfield starting with the team's 1-1 tie against world champion Italy. Dempsey currently makes only slightly more than $80,000 a year in his deal with MLS, which runs through the end of 2007.

"Clint Dempsey is a valuable player, and we'd like to renegotiate his agreement and keep him in the league," MLS commissioner Don Garber told me last week. "Unless these clubs offer his real value and don't discount the value he has to MLS, we have no interest."
Wahl claims that MLS turned down an $1.5m offer from the EPL's Charlton Athletic for Dempsey. Perhaps that's because they expect a better offer from West Ham (see last paragraph), but that story is quite stale.

In Dempsey's case, MLS may be sending out a signal that they will be tough negotiators, and a deal may get done before the Aug. 31 transfer deadline. That's the most likely scenario, however much MLS would like to keep their hands on Dempsey.

The alternative - if Dempsey is indeed worth more than $1.5m to MLS - implies I'm missing something about the value of talent to the league. That's a big gap between the transfer price and Dempsey's $80,000 salary, and Dempsey wants to learn his trade in a top league. Moreover, that's where Dempsey belongs - he's surely more valuable in just about every dimension playing in a better league. If MLS plays hardball with the players in Dempsey's situation, they'll end up creating their own hard core union to deal with once the money starts flowing into US soccer.

Who's Number One? 

Sam Walker has devised a different way to measure the best college football program ($$$) in the land, and it does not account for wins and losses. It accounts for how players from various programs performed in the NFL last year.

To create these rankings, we copied down the official rosters for every NFL game played last season, giving each player a separate entry for each game -- about 27,000 in all. We grouped the players by college, and then gave each school points based on the role their alumni played. Starters earned more than substitutes or benchwarmers, and players involved in wins gained extra points. So under our system, Indianapolis quarterback Peyton Manning, who started every game for a team that won 14 of 16, earned 94 points for his alma mater, Tennessee -- while a decent bench player from an average team would earn about half that. We tallied each school's total points to arrive at an "alumni success score" for more than 250 schools from Notre Dame to Northern Arizona.

Walker's top 10:

  1. Florida State
  2. Florida
  3. Georgia
  4. Tennessee
  5. Ohio State
  6. Michigan
  7. Miami
  8. Auburn
  9. Louisiana State
  10. North Carolina

What can programs do to improve their players' status in the NFL? Walker suggests:

  1. Hire a coach with NFL experience
  2. Let NFL scouts come visit your program and welcome them.
  3. Bring back NFL players who played in your program for a visit.
Improving recruiting also helps, but that's partly dependent on the success of alumni in the NFL.

This reminds me of an argument I heard awhile back on who was the better coach: Tom Osborne of Nebraska or Hayden Fry of the Iowa Hawkeyes. Nebraska was a perennial powerhouse and had 3 National Championships under Osborne. Iowa has a solid program, but had no National Championships under Fry. But because assistant coaches from the Hawkeye program obtained much more success in college coaching ranks than those under Osborne, Fry was considered the better coach.

It's said that you are only as good as those you surround yourself with and it's great when your players have success in the NFL, but you have to give the greatest weight to the on-field performance of the team.

Thursday, August 17, 2006

Football rules changes 

The NCAA has instituted rules that will both shorten and lengthen college football games this year. The clock will start on changes of possession on kicks when the referee signals the ball is ready for play now, rather than waiting for the snap. The NCAA thinks this will shave five minutes off playing times. However, the organization will award each team in a football game with one instant replay challenge (with the price of a timeout used if the challenge does not lead to a referee ruling being overturned by the replay referee.)

It will be interesting to see what this does for the total length of the game. The NCAA portrays these changes as speeding up the game, but somehow I doubt it. Interesting as well will be the effect on the number and placement of commercials for broadcasted games. Will networks have commercials queued for possible challenges? What happens if they are not used?

One very annoying change (announced in Chronicle of Higher Education, subcribers link) is that rather than having the two large college divisions labeled Divisions I-A and I-AA, they will now be named Football Bowl Subdivision and Football Championship Subdivision. All sports are simply D-I outside of football, and this was a way to avoid calling the other programs in I-AA as being somehow lesser programs. But it does tweak those of us who think there should just be a football championship, period.

Universities as baseball teams 

There's no doubt that a good university system makes a positive contribution to the economy, and that a poor system limits the scope for economic development. But as Chicago's Austan Goolsbee points out in today's New York Times, one can take this observation too far. Goolsbee points to a $2.5 billion scheme to expand university-led research in Texas beyond Austin to places like San Antonio and Arlington as one example. This is likely a case where the metaphor of the university as engine of economic development has gone too far.

Goolsbee prefers the university as baseball team metaphor. Schools are out chasing the research stars, but there are only so many stars to go around.
Trying to make some town into the next Silicon Valley by attracting the best scientists is rather like trying to start a new baseball team and turn it into the New York Yankees. If dozens of sports-mad billionaire team owners can't do that, how easy would it be for the economic development office at the University of Texas, Arlington?

What is worse, it is a safe bet that as these development incentives become a primary motivation for financing higher education, the competition among universities for stars will start looking much more like today's baseball scene. Ambitious state university systems will find it easier to steal the stars of another team than to develop their own prospects. As a result, salaries will go through the roof -— just as in baseball.

And while everyone pays more, only a tiny number of cities will ever win the World Series. One will increasingly hear about how the costs of college are rising everywhere and that local economies have little to show for it.
Goolsbee also points to research which shows that the students, in addition to the research stars, are highly mobile. There are many ingredients in the economic development cocktail, and just building a better University is not enough. If a state's overall policy mix retards the ability of entrepreneurs to succeed, the stars and their students will ultimately play ball elsewhere.

Tuesday, August 15, 2006

Not Exactly Julian Simon and Paul Ehrlich... 

On August 7 Dave Berri posted, "A Simple Test for Those Ranking College Football Teams." On pre-season Division IA football rankings, he says:

"My sense is that no journalist can name every starter on every team. I could be wrong, but that is my sense. And without this information, I am not sure one can even begin to formulate a ranking that has any real meaning."

In the comments, I posted a wager. I'm going to repeat it here because it was the 9th of 11 comments and I was hoping for more than the one taker that responded (thanks, Dennis Coates). The bet is still open:

"If somebody thinks the coaches/media pre-season polls are significantly uninformed, I'd take the following bet just to see the result:

I'll take the USAToday Pre-Season Coaches Poll against your ranking projection. If you guess the final poll-ranking better than the pre-season poll placements, I'll buy you a beer when I'm at the next WEAI meetings in Seattle. If I win, you buy the beer. Must be present to win; I reserve the right to cap the number of bets (I do have a budget constraint, after all).

Scoring device: Number of correct placements plus or minus one place in the rankings; e.g., the USAToday poll puts Oklahoma 5th. If they actually come in 4, 5, or 6, one point for me. Or maybe there is a better scoring device; I'm open to suggestions.

Sound like fun? If I get a couple of takers, I'll put up a post in the main section with a pointer to an Excel file with the USAToday Poll, a completely random scramble of the teams in that poll, and your alternative ranking.

Just send your name, email, and ranking to me: rodfort@adelphia.net."

Monday, August 14, 2006

Instant Replay and Line Calls in Tennis 

Earlier, I posted about the use of computer technology in tennis to allow players to challenge line calls by officials.

We have been able to see some of the initial impact of using the new technology in The Rogers Cup, a Canadian tennis tournament.

The sports announcers have repeatedly told us that approximately 30% of all player challenges have been upheld (i.e., the line calls were incorrect). This seems like an inordinately large number of errors by line judges.
  1. I can readily imagine, as a commenter on my earlier posting noted, that because line judges are not unionized, the results from this new technology will readily be used to assess line judges' skills and abilities. It might even lead to paying some of the better ones more money, either directly or indirectly.
  2. Alternatively, with this many instances of having line-judge overcalls, I can imagine a different scenario in which the technology becomes fast enough that line judges are eliminated. I wouldn't mind seeing this form of capital-labour substitution.

Saturday, August 12, 2006

Bengal Fan Rowdiness 

Cincinnati Bengal officials have set up a system that allows fans in attendance to monitor other fans for rowdy behavior.

An Associated Press story detailed the team's plan for the upcoming season to set up a hotline number that fans can call from cell phones during games to report bad behavior, such as excessive profanity, fighting and drunkenness. Video cameras will be focused on the offending fans and security personnel will respond. Fans involved in the behavior will be warned first, then will be subject to ejection, loss of season tickets and even arrest if the behavior continues.

This seems to be an efficient way to monitor the problem. Fans experiencing a negative externality from the obscenity-laced hollering of some drunken dope, obscenities that would make George Carlin blush, now have a way to make the rowdy fan internalize that externality (I'll get your arse kicked out of here, mein betrunkener Freund, if you don't pipe down). The Bengals don't have to hire folks to police the stands, patrolling around like secret police, wondering if the behavior that bothers them bothers those in attendance. All fans have to do is decide if they've had enough and call the appropriate number... and that can be done fairly discreetly.

Moreover, because they can target certain areas of the stadium where trouble is actually occurring, this policy cuts down on the number of video cameras that the Bengals would need to have on hand.

But fan rowdiness isn't the only problem Bengals officials face. Many of the players can't seem to keep from getting thrown in the joint.

Friday, August 11, 2006

A World of Limits Even for Chelsea 

In his "Mutiny at the Bridge" Soccernet's Norman Hubbard notices a rising mood at Chelsea that I pondered last October in "The Extra Variable":
... the other issue is as old as football itself; the simple wish to play. There is a dilemma that confronts players at elite clubs; however well remunerated, sitting on the bench is a poor substitute for first-team football. Abramovich can fund the most extravagant of salaries, but not the intangibles; the memories, the sense of belonging and purpose, the thrill of making a decisive contribution. In short, the experience of being a footballer.
His point is that the goal of having a squad 2-deep with world class players at every position may not be sustainable. Already, Jarosik, (Carlton) Cole, Duff, Gudjohnson, and Crespo have opted out. Wright-Phillips may soon follow. Gallas was getting plenty of time but seemed to get his fill of something. Even Mourinho has made noises about going with a leaner "regular" squad this season. To be sure, the draw of making a lot of money playing for a team likely to be on top of the EPL and vying for Champion's League title is powerful as seen by the Shevchenko and Ballack signings, but there is a potential tradeoff that figures in over the long run -- loss of playing time.

On a different Chelsea note, Arsenal's 25 million pound price tag for Ashley Cole proved a bit much for even Roman Abramovich. The deal might still happen, but as FSC's Bobby McMahon noted, figures in that range are hard to fathom for a left back, especially when paying such a sum to a direct competitor. With very accomplished strikers like Van Nistelrooy going for 10 million, Arsenal could buy three players of world class quality if Chelsea forked over such a huge fee. As good as Cole is, his incremental impact on Chelsea would seem far below what the impact of 3 very good players for Arsenal might be.

Thursday, August 10, 2006

College sports and future earnings 

The paper "Do Former College Athletes Earn More at Work?" by Daniel Henderson, Alexandre Olbrecht, and Sol Polachek, is a featured article in the Summer 2006 issue of the Journal of Human Resources. The authors find that there are financial benefits associated with athletic participation, but they are not uniform across all athletes. The study is based on a survey of 4200 male college students in 1970-71, of whom 16% were athletes.

Here's a short summary of the findings:
Henderson and his co-authors found that a slightly higher percentage of athletes than non-athletes were in higher income brackets. Most athletes in business, the military and manual labor were better off wage-wise than non-athletes working in those fields, but not all athletes enjoyed a premium from sports participation.
One field where former athletes earn less is education. A disproportionate share end up teaching in high school, perhaps to maintain their interest in athletic competition. Former athletes earn 8% less in this occupation.

I found the following statement from Henderson interesting:
Although college jocks have a reputation of being poor students, we found that on average, former athletes were making more money than non-athletes six years after college. This may be because athletics enhance existing skills during college or because athletes learn skills on the field that they can apply in their careers.
Crank up the NCAA hype machine! But seriously, this is an article worth reading for academics interested in the field.

Wednesday, August 09, 2006

This one's a whopper 

Anyone heard of this yet? Louisville is planning to build a $450m downtown arena, whose primary purpose is to host U of L basketball games. And I thought the University of Maryland's Comcast Center, at $125m, was a bit rich.

Raymond Keating states that Louisville's Metro Council approved its $200m share of the financing on a 23-1 vote. The state of Kentucky is putting up $75m, which leaves $175m to come from ..... the University?

The governor of Kentucky has created a new entity, the Louisville Arena Authority, to develop the project. The pictures of the arena at their web page look fabulous, and for the price, they certainly should. There is also an economic impact study (power point! animated!) available there. It claims that (in effect) moving U of L basketball games from Freedom Hall to the downtown arena will generate $154m in annual economic impact, net of spending transferred by local residents.

Let's do the math. Freedom Hall seats about 19,000. The new arena is designed for 22,000. Suppose both sell out for 30 games. Let the new arena's seats be a significant improvement, so that they sell for $50 each, a $15 premium over tickets at Freedom Hall. The additional seats would thus yield $4.5m of new revenue. The seats "moved" from Freedom Hall would bring in, under these assumptions, an additional $8.55m. So the bread and butter fare at the new arena nets $13.05m in additional ticket sales ($33m if you assume that Freedom Hall is no longer usable). How one gets from there to $154m in annual economic impact takes a mighty big imagination.

Tuesday, August 08, 2006

Fan Message Boards and College Program Naughtiness 

Fan message boards, like the Tigerboard for Mizzou Tiger fans and their rivals' fans, are places where far-flunged fans can exchange information and fling barbs, insults, and rumors. Sometimes those rumors turn out to be more than just rumors. From SI.com's Stewart Mandell's blog:
At 1:30 in the morning on Jan. 30, a fan using the Internet screen name of "aggiegrant06" posted a cryptic message on the popular fan site TexAgs.com entitled "Is it legal???????" In it, he vaguely described how his girlfriend handled payroll checks at a "large dealership where we live" and "didn't recognize several of the names." He went on to say, "The checks were made out to football players of the local university, and even though they had never actually been to work there, they were receiving HUGE!!!! pay checks."

Unfortunately, aggiegrant's post was met with what can best be described as belligerent skepticism. "Dude, go away," wrote one person. "You and your thread are completely stupid," wrote another. Perturbed by the reaction, he went on to specify that "The School is OU, and the specific player is Bomar." After a few more cynical comments, the post was removed by administrators less than two hours after it originated. "We're pretty conservative when it comes to rumors that show up on the site," said Brandon Jones, owner of Texas Ags.com, who employs 20 volunteer "moderators" to monitor the site's 10,000 daily message-board posts. "Anytime you see an accusation like that show up on a bulletin board it almost seems too good to be true, so the natural reaction is this guy is making this up."
I can't blame Jones for erring on the side of caution. Being easy on rumors could well end up opening a Pandora's box, turning the message board into a "I know this dude who knows this girl whose brother's sister's mother knows this guy down the street..." board. Worse, being easy could invite lawsuits.

Even so, whistles have been blown before on these message boards. The now infamous Larry Eustachy photos partying with college students after a game in Columbia, Mo. were first published at Tigerboard.

Here is aggiegrant06's restored post.

Chess cheats 

Two players were nabbed - at least the circumstantial evidence is convincing (and interesting) - at the World Open in Philadelphia last month. One had an earpiece designed for wireless communication. The other had his winning run against top-ranked players examined, and it was found that his moves perfectly matched those from a popular computer program. When challenged, he spent most of an hour in a bathroom stall. Doing what I wonder? Whatever he did, it was enough to end his tournament run.

So we can add chess to the list of games stained by accusations of cheating. At least there's still golf ... oops, I forgot about Michelle Wie, et al.

Monday, August 07, 2006

Sports Illustrated Notes The Sports Economist 

Do you know this man?

Of course you do, this is Skip Sauer, the man most responsible for The Sports Economist - the very blog you are reading. And the picture comes with the story on The Sports Economist published in Sports Illustrated. As Bill Syken notes in “Number Crunchers”

“One of the beauties of sport is that it can be enjoyed by so many kinds of people, from little girls to grandfathers, from face-painted yahoos to deep thinkers like Skip Sauer and his cohorts. Sauer, 50, is chair of the economics department at Clemson and the brains behind The Sports Economist, a two-year-old blog. On the site Sauer and nine other professors put their decades in academe to use dissecting the sports news of the day. Think of www.thesportseconomist.com as a highbrow version of Around the Horn.”

All in all, this was a wonderful article and very nice recognition for this blog and the field of sports economics.

By the way, if the Sports Illustrated article was not enough, the field was also profiled in USA Today’s Money section on July 27. In a lengthy profile by Sue Kirchhoff entitled, “Batter up! Sports Economics Hits Field”, one can learn much about sports economics. One interesting factoid was that between 100 and 120 professors in the United States teach a sports econ course. It would be interesting to see how much that number has changed in the past ten years and project the popularity of this class into the future. Perhaps Rod Fort, author of one of the two major textbooks in the field and a contributor to The Sports Economist, could comment on that issue. At what point do we expect most colleges and universities to offer sports economics as an elective to its students?

A Simple Test for Those Ranking College Football Teams 

Who is the best team in college football? It is August and not a single game has been played. Yet the coaches have already produced a ranking of college football teams which tells us that Ohio State is the best team in the land. Texas and USC, the contenders for last year’s national championship, are ranked #2 and #3. One wonders, though, on what information these rankings are built upon.

Ohio State lost nine starters from its defense last year. Yet, despite these departures, it is believed the players who will take the field this year – many of who must not have played significantly last year -- will lead Ohio State to the National Championship.

A similar story can be told for Texas and USC. Texas finished last season without a loss, defeating the USC Trojans for the National Championship. The quarterback that appeared to play a significant role in that outcome – Vince Young -- is now playing for the Tennessee Titans. Despite the departure of this talent, Texas is considered the second best team in the country. In other words, with Young the team was the best. Without Young, though, only one team is thought to be better.

A similar story can be told for USC. USC was lead on offense by Matt Leinart and Reggie Bush. Leinart, if he ever signs, may play for the Arizona Cardinals this year. Bush is slated to star for the New Orleans Saints. With these players USC lost to Texas last year. Without these players, USC is still expected to be the third best team in the nation.

Given all this, one suspects that the pre-season rankings are, well.... suspect.

Next up is the media, who are also going to rank the teams before any games are played. Before this ranking is posted, though, I propose a simple test for those voting in the Associated Press poll.

If you are voting, please name the eleven starters on offense and defense for each of the Division I college football teams this season.

I am not asking for an evaluation of these player’s abilities. Just a name. And you have to know all of them.

Here is my reasoning. If you do not know the abilities of the players who will take the field this year, you cannot project who is going to be good or bad. And you cannot know the abilities if you do not at least know their names.

My sense is that no journalist can name every starter on every team. I could be wrong, but that is my sense. And without this information, I am not sure one can even begin to formulate a ranking that has any real meaning.

Saturday, August 05, 2006

The present and future of MLS 

MLS commissioner Don Garber met the media yesterday, in advance of the contest between the league's all-stars and Chelsea tonight in Chicago. Jamie Trecker has an excellent summary, detailing a number of positive facts, and also the conundrum facing MLS. TV coverage is growing, with more games to be shown in prime time. League expansion to 16 teams by 2010 is on track. That's all good.

The conundrum: everyone knows that the product on the field has a long way to go. Trecker mentions one policy change which addresses this problem, albeit it in a small way. MLS has departed from the "league as a unit" model by giving teams "vertical development rights" to young players that they identify and sign. Transferring those rights from the league to the teams means scouts from MLS teams will have the same incentives as scouts from teams in the rest of the world to discover talent. That's a step in the right direction.

Here's another sign of latent demand for top-drawer soccer in the U.S.: 7,000 fans showed up at Toyota Park for Chelsea's practice last night. That's almost as many as the 7,710 who showed up for last week's MLS match between the Wizards and the Revolution. Make of the 7,000 what you wish; the 7,710 figure implies that MLS has a lot of work to do.

Friday, August 04, 2006

What's In a Name? The College Football Edition 

Bye bye, D1-A and D1-AA football designations. Hello "Football Bowl Subdivision" and "Football Championship Subdivision."
The NCAA is doing a little re-labeling, eliminating the Division I-A and I-AA tags that officially separate college football's major and more modest programs.

Acknowledging frustration that the classification often brands an entire university as big-time or non-big-time, the association's Division I Board of Directors moved Thursday to rename the subdivisions. Beginning in December, they'll be known by their respective postseason formats.

What now are I-A programs — the Texases, Notre Dames and others vying for bowls — will play in the Football Bowl Subdivision. The Georgia Southerns, Montanas and others now known as I-AA will play in the NCAA Football Championship Subdivision, alluding to the 16-team playoff that settles its national title.

The word "championship" sounds much better than "bowl." Rather than merely naming the divisions after their postseason formats, could this be an attempt to marginally levitate the mid-major/directional/non big-time/minor/modest programs towards the status of the big schools in the minds of fans? What if the "Bowl Division" goes to a playoff format?

In any case, the powers that be can call the 1-AA schools whatever they like. Unless the absolute level of competition in D1-AA gets closer to that of D1-A, fan perceptions aren't likely to change, regardless of what titles NCAA officials give the divisions. Until then, a mid-major by any other name... .

Incentive Contracts:
A Form of Co-Insurance 

Last week, Ed Belfour signed a contract to play goalie with the Florida Panthers.
Belfour agreed to a one-year contract with a base salary of $750,000 (all figures U.S.). However, as a player older than 35, Belfour is eligible for individual bonuses under the new collective agreement and was granted bonuses for games played, games dressed and playoff performances that could bring the one-year total to $1.5-million.

... Keenan said once Belfour passed his medical examination by the Panthers team doctors, the contract was nailed down. Belfour had back surgery in April and the Panthers wanted to be assured he was capable of playing a full season.
This contract has been labeled an "incentive-laden" contract by some television sports talking heads. Another way to look at the contract is to see that it is just a form of co-insurance.

Belfour is assuming some of the risk that he might not be able to play the entire season. His contract is just like the co-pay clauses we have that say our insurance company pays, say, 80% of a claim and we pay the rest. In this case the Florida Panthers are the employer-insurers, and Belfour is the co-insurer.

The case of the one-eyed ref 

At the Sports Law Blog, Geoffrey Rapp discusses an interesting case - the Big 10's controversial decision to dismiss a referee, James Filson, who became blind in one eye due to injury. For dumping the one-eyed ref, the Big 10 is being sued, natch!

While some facts are in dispute, Filson apparently refereed Big 10 football games since 1992, and has been wearing a prosthetic eye since 2000. Professor Rapp notes the following interesting feature of the case:
Filson's "rating" as an official actually improved after his injury. That would seem to undercut the conference's ability to claim that Filson could not be reasonably accommodated. (How, exactly, Filson managed to improve his rating after his injury is an interesting question. Perhaps, sensitive to his potential limitations, he concentrated extra hard on making the right calls after his injury. But if extra concentration could improve his rating, what does that say about his pre-injury level of effort?).
As Rapp states, the legal ground for the Big 10 is weakened by Filson's performance improvement. Indeed, he was chosen, presumably on merit, to work an Orange Bowl during his one-eyed period.

But I would take Rapp's observation one step further. Arguably, Filson has been optimally responding to incentives all along. Thus, his performance improvement, while impaired, suggests that the incentive system used in the Big 10 produced ... [can I say this gently? no] ... a group of slacker refs. [Note to Big 10 refs: you are many first downs ahead of your ACC brethren, so please save your venom.]

Systematic review of referee performance is now commonplace in college athletics. These procedures, combined with proper incentives, should improve referee performance, as I argued earlier this week in "Refereekonomics." Arguably, they have. If so, an important but undisclosed fact in the Filson case is his performance rating relative to other referees in the Big 10, as the increased use of review procedures may have induced a league-wide increase in performance.

Thursday, August 03, 2006

He Did It Because He Had To 

As many of you probably know, the probable starting quarterback and the projected starting right guard for the Oklahoma Sooners were dismissed from the team for accepting wages in excess of what he provided in terms of work at Big Red Sports/Imports.
Based upon an investigation initiated by the University of Oklahoma and facts uncovered by the University, Head Coach Bob Stoops today announced that he has permanently dismissed two members of the Sooner football team.

The investigation by OU revealed that two football players received extra compensation above that to which they were entitled related to their employment at a private business. This is a direct violation of NCAA rules. The two accepted payment over an extended period of time in excess of time actually worked.

OU is taking the initiative by declaring them ineligible for the entire current season and by permanently dismissing the two from the team. They will not be allowed to return to the OU team at any time in the future.
This decision leaves the QB situation at OU muddled, big time. While Bomar led the Sooners to 6 wins in their last 7 games in 2005, his back-ups are imperfect subsitutes at best.

My hunch is that Bob Stoops will move Thompson back to quarterback. Given his experience under center in the program, Stoops almost has to. I remember former OU quarterbacks coach and offensive coordinator Chuck Long raving about Thompson's makeup a few years back and, quite frankly, I think Thompson could be more helpful under center than being just another good receiver. His career passing numbers aren't great (42-of-73 for 428 yards with four TDs and three INTs), but he has to be considered an option because this officially qualifies as a catastrophic situation in Norman.

Joey Halzle, the JC transfer who was listed at No. 2 on the depth chart, was dreadful in OU's spring game, going 8-for-21 with three picks. He also has no experience in the Big 12. But Halzle won't give up the position easily. Keep in mind this was the guy who had the Oaks Christian QB job when prodigy Jimmy Clausen was a freshman there. At the end of his prep career, Halzle had to share a bit of the spotlight.

His team last season, Golden West CC, was terrible, going 1-9. I chatted with a former NFL quarterback who has seen a lot of Halzle in JC ball. He thinks Halzle moves pretty well and has a good arm but needs to make decisions a lot quicker. Then again, the guy didn't have much to work with -- and that won't be the case at OU.

Another possibility is freshman Sam Bradford, a newcomer to big-time college football.

Even though Halzle has more to work with at OU, than he did in JUCO he's going to be facing Big 12-level competition. He's going to need to make quick decisions if he doesn't want to visit the turf too often. But coach Stoops didn't act so quickly, harshly, and decisively because it was the "right thing to do." He did it because he had to.

OU athletics is already in hot water with the NCAA. Earlier this year, the university dodged receiving the dreaded "lack of institutional control" tag in the handling of former basketball coach Kelvin Sampson's basketball program, even though that was the recommendation.

The university was able to avoid a severe "lack of institutional control" finding that could have resulted in a ban from postseason play. NCAA enforcement staff had recommended such a finding but the infractions committee instead found Oklahoma guilty of a lesser "failure in monitoring" finding.

The Committee on Infractions strayed from the enforcement staff's recommendation, saying "though seriously flawed, a system for monitoring the phone calls did exist."

Now comes the Bomar/Quinn fiasco. No doubt the previous escape was influenced by OU's self-imposed penalties on its basketball program. With this fiasco coming on top of the Sampson fiasco, it's quite possible OU might not escape the lack of control tag when the NCAA finishes with its certain investigation.

Referees, biased decisions, & incentives 

I have a new essay, Refereekonomics (cleverly titled by the editor, not me!), at TCS Daily which discusses economic research on referee decisions. The essay makes the point that improved incentives can affect the behavior of players and referees in a positive way, and thus improve the game.

One paper which estimates a model of referee decisions that is quite interesting but didn't quite fit the theme of the essay is Jason Abrevaya's "Reversal of Fortune." Along with Robert McCulloch, Jason shows that in the NHL, referees have a strong tendency to offset a penalty called on team A by making the next call against team B. Holding numerous relevant factors constant, the probability that the next penalty will be called on team B is 2/3. That's huge, and far from random. To me, this is telling evidence that NHL referees have considerable latitude when blowing the whistle. And given the importance of penalties to goal scoring opportunities in the NHL, referee discretion - to blow or not to blow? - can have a big impact on game outcomes.

Wednesday, August 02, 2006

Estimating the Error Term 

With all of my attention devoted to the World Cup coverage in June, I passed over an interesting piece from the weekend edition (June 24) of the Wall Street Journal (subscription required), "Baseball Confronts the Luck Factor." A variety of reseachers are looking at the data. Essentially, its an ultra-micro analysis of every at bat. A summary of the approach used by ProTrade says
ProTrade analyzed detailed data from each batted ball in every Major League game, including speed off the bat and where it landed. Based on typical results for batted balls over each of the last four years with similar characteristics ...
Using this procedure, they compute "lucky" and "unlucky" hits or outs and then recalculate batting averages, ERAs, wins, losses, and other outcomes for players and teams. Sports econ fellow traveler, J.C. Bradbury, garners three paragraphs in the article detailing similar work that he has done. In particular, it mentions his application of these methods to Chipper Jones' seemingly low numbers in 2004 and how they reflected little change in Jones' hitting, just a change in luck.

There are several interesting aspects to this line of research. One is that it indicates that sometimes what we treat as part of a random error term, in fact, grows out of lack of fine-tuned measurements. Dig deeper into measuring things more accurately and the error term shrinks. Ronald Coase might like such a result a lot. Second, there are game-theoretic reactions that complicate the results some. MLB teams do a ton of scouting. When I attend a game, I'm always amazed at how many hard hit balls to the outfield go for outs. To a large extent, the positioning effects are likely randomized over the course of a season. However, the article mentions that the adjustments for "luck" may be influenced where positioning responses are extreme, for example, with a Barry Bonds (or a Willie McCovey in my youth). Last, the applications of these methods are interesting. There is a little addendum to the article listing possible applications and making reference to Malkiel's Random Walk. ProTrade itself hosts a site for buying and selling players.

Eau de ShorteStoppe 

Today's game of baseball ain't your daddy's game.

Avon Products Inc. has signed Jeter to a deal in which it will create a men's fragrance called Driven, ''reflecting the unique personality of one of the most driven men in America,'' a company news release said.

The fragrance, the first in a line of men's grooming products bearing Jeter's name, will go on sale in November. It is a blend of chilled grapefruit, clean oak moss and spice.

What? You were expecting a blend of warm chew spit, stale beer, and dirty locker room? I just wanna know if it will change my softball glove from a frying pan into a soft piece of leather.