Tuesday, December 30, 2008
Race and coaching
Even if it's not proof of racial discrimination, the disparity between the percentage of black athletes and of black coaches is relevant, at least symbolically. A sport that's dominated by white coaches and black athletes—white overseers giving orders to young black bucks who do the physical work—can bear an uncomfortable resemblance to a plantation. (And, fair or not, this resemblance is just a tiny bit greater when the overseers give their orders with Southern accents and the school is located in the former Confederacy—sorry, Auburn.) Add to that what many consider to be the exploitation of so-called "student athletes," most of whom won't make the pros and don't receive a decent education because they need to spend most of their time practicing or playing ball. To the critics, we have an overwhelmingly white university administration and booster base that are happy to benefit from these black kids' efforts in their athletic primes but won't support even the best of them as coaches later in their careers. To be sure, none of this proves that Turner Gill was turned down by Auburn because of his race. But it does suggest that college football is in need of reform that goes much deeper than getting rid of the Bowl Championship Series.I have a couple of quick observations to make. First, the proportions are way out of whack here. Given the disparity -- 5% black coaches, predominantly black players -- something important is going on, and it is worth making an attempt to understand it.
The basic claim of Ford and others is that "soft discrimination," stemming from the onerous task of pumping rich white boosters for money, is unique to college football, and that black coaches have the wrong skin color to do this effectively. That is, boosters are bigoted. The proportions of black coaches in major college basketball (28.5%) and in the NFL (pushing 25%), where fund-raising is not in the job description, are viewed as evidence in favor of this claim. But if boosters are the problem, and boosters are unique to major college football, then the proportion of black coaches should be significantly higher in sports such as track and field and in Division II and III football. If the proportion of black coaches in these sports were on the order of 25%, that would be strong evidence in favor of the booster bigotry hypothesis.
I also have some contrarian points to make. First, Auburn's hiring of Chizik might be stupid, but in hiring a white guy they didn't do anything different than Clemson, Syracuse, and Tennessee in not hiring Turner Gill. Auburn is getting a bit of a bum rap on the race issue (Brian has already chimed in on the stupid angle). Second, Gill's record at Buffalo can be compared with Brady Hoke's (a white guy) at Ball State. Both coaches turned around losing programs. Gill's 8-5 Buffalo team upset Hoke's 12-1 Ball State squad in the MAC Championship game, but the better year overall clearly belonged to Ball State. So one might ask, for what jobs was Brady Hoke considered? I don't know the list, but in the end he took the job at San Diego State, which is not remotely close to the stature of the Auburn job. Turner Gill may indeed be destined to be a big time major college football coach. But it will help his cause to have more than one winning season on his record when he takes the next step.
Finally, consider the failure rate among black coaches in college. With a head coach count on the order of 5 or 6, the passing of Croom at Mississippi State, Prince at Kansas State, and Willingham at Washington has to give an AD pause. If Gill wins the MAC next year and ends up at a Big Ten school, Auburn will take another round of whipping in the media. But it just makes sense to me that Gill, or any other coach, put more on his resume before stepping into the recruiting and on-the-field wars of major college football. The process of integration in college football coaches has begun, but it will take a good while longer to play out.
Labels: college football, discrimination
Tuesday, December 23, 2008
Luxury Tax Paid by Yankees and Tigers
The New York Yankees not only failed to make the playoffs, they were hit with their highest luxury tax in three years. The Yankees were assessed a $26.9 million tax by the commissioner's office on Monday, up from $23.9 million last year and their biggest bill since paying nearly $34 million for 2005. The Detroit Tigers, who also failed to qualify for the postseason, are the only other team that must pay tax and owe $1.3 million to the commissioner's office.Just for fun: that $26.9 million figure for the Yanks is more than the entire payroll of the Marlins last year. Here's a little bit of history from the article.Checks are due by Jan. 31.
The Biz of Baseball gives us a handy table showing us who has paid and how much since 2002. Article XXIII of the current collective bargaining agreement describes the so-called competitive balance tax. Might as well call it the Yankees tax.While the Yankees pay at a 40 percent rate for the amount over $155 million, the Tigers pay at a 22.5 percent rate because they exceeded the specified threshold for the first time.
This year's figure brings the Yankees' total tax to $148.3 million in the six seasons since it began - 90 percent of the total.
Before this year, the only other teams to pay were the Boston Red Sox, who owed $13.9 million for exceeding the threshold in four seasons, and the Los Angeles Angels, who paid $927,000 in 2004.
More fun with numbers.: suppose the Yankees exceed the tax threshold in every year of of CC Sabbathia's (7 years $161 million) and AJ Burnett's (5 years $82.5 million) contracts. Further suppose the salary payments are made in equal installments over the lives of the contracts, the Yanks pay the top luxury tax rate of 40%, and face a discount rate of 5%. Then the after-tax amount they'll pay for these players is a discounted $286.3 million. To put this in perspective, Hank Steinbrenner could have bought the Tampa Bay Rays franchise for $290 million or the Florida Marlins franchise for $256 million (based on the Forbes franchise values for 2008).
Cross-posted at Market Power
Update: Dennis Coates notes in the comments that the Yanks have signed Mark Texeira to an 8 year $180 million contract. Updating my numbers, that puts the Yanks' present value of the contracts plus tax of CC, AJ, and Tex at $490 million. For that price they could have bought the storied Cardinals, the Phils, or one of 22 other franchises.
Labels: luxury tax, MLB
Monday, December 22, 2008
Baseball in the depression
In 1929, before the market crashed, major-league baseball ticket revenues were $17 million. By 1933, gate receipts had plummeted to $11 million. A big-leaguer made an average of $7,000 in 1929. That dwindled to $4,500 by 1936.Obviously, the impact of the depression on the finances of a baseball team was severe. They were fortunate to operate under the reserve clause in those years, which limited the duration of player contracts to one year, making adjustment to declining demand much simpler.
A key quote in Saunders' article is from Wharton's Kenneth Shropshire:
"There is a level of sports exuberance that doesn't go away. The apocalypse will come when we see an on-the-field impact for one of the big-three sports, and we haven't seen that yet."This is key. If you love sports, the great thing about it is that the best players will remain on the field of play whether their value is $10mm per year or $2mm per year. In contrast to the monetary figures, baseball attendance held up well during the depression. This is because teams lowered prices in response to declining nominal demand. [Note that the aggregate price level dropped 25% between 1929 and 1933.]. This should not be taken as evidence that sports are "recession-proof" since the financial side of the operations are inextricably tied to the aggregate economy. But the primary monetary cost for the major pro sports is in the form of player talent. Since the players earn such large rents over their next best alternative, the games will go on as scheduled, with the same cast of characters. Provided price adjustment takes place, the on-the-field-impact should be minimal, at least for the big three.
-------------------------------------------------------------------------------------
Whether you invest in sports related stocks and bonds or not, consider CFD trading. You can trade long or short at a fraction of the upfront expense of traditional trading.
Labels: economic impact
"Economic reality deals sports jarring hit"
Anyway, the conversations have interesting, and fun. At FoxSports.com, Greg Boeck captures more than a sound bite of my views in an article that is, I think, spot on. The money quote:
"Sports have been riding a tide of economic growth and tremendous growth in media-based revenue," says Sauer. "You didn't need to pay much attention to what was going on to make money owning a franchise. You go along for the ride, whether you are a bad manager and put a bad product on the field or a good manager with a good product. You can always sell out to someone who wants to love the team."Not sure that I said the word "love" (cellphone signals can get sketchy at times), but that will do.
Not anymore.
Labels: economic impact
Friday, December 19, 2008
Players' View of the AFL
"You know what, I loved it. I had more fun in the Arena League, and the fans had more fun," Heimburger said. "I like to think of it as having more of a college atmosphere. And it’s a more exciting game because it’s nonstop action. Those defensive games can sometimes get boring when here, it’s you’ve done a good job if you get two or three stops a game."
Last year, he helped the Cleveland Gladiators reach the National Conference Championship Game. Heimburger figured the league was doing well. The atmosphere at games - Cleveland averaged more than 14,000 fans per game last year - was always boisterous and attendance, TV ratings and merchandise sales were up across the league.
But the AFL reportedly lost money last season, and its board of directors voted Monday to take a year off to improve the league’s economic model. Acting Commissioner Ed Policy said the league is not closing its doors, and the official word is play will resume in 2010.
"The revamping will ensure that the AFL continues to provide value to its fans and not only survives but thrives in the years to come," Jon Bon Jovi, co-owner of the Philadelphia Soul, said in a statement.
Neither Ricker nor Heimburger is buying it. Teams have already started to lay off staff members. And Ricker, who played parts of two seasons in the AFL, said one of his former coaches with the Tampa Bay Storm painted a dark picture of the league’s future during a recent conversation.
"I knew it was done for this year," Ricker said. "But the tone of his voice was that it might not come back at all, which would be absolutely devastating."
"Coming back after a year off would be a stretch," Heimburger said.
Martin Schmidt and co-blogger here at TSE Dave Berri argue that after labor strife, league attendance comes back pretty quickly (although co-blogger Victor Matheson presents evidence to the contrary). Television revenue probably comes back quickly too. But the canceling of the AFL season is for a whole different reason: a financial one, not a profit-splitting one. Does it suggest that the AFL was loose with their money, or that demand for AFL games has dried up?
Labels: arena football
NASCAR and Detroit
I always enjoy popular press that is loaded with explanations for the way the world is because those explanations are often testable hypotheses masquerading as fact. Here are a couple of examples:
Attendance at races dropped drastically in 2008 (in large part because steep gas prices this summer curtailed the RV armada that follows the circuit), and TV ratings declined for the third straight year. The season-ending "Chase" has failed to provide fireworks or closure—if not for the BCS, it would be the worst playoff system in sports. There's also a growing disconnect between racing and its hardcore fan base that began when the Frances stripped races from traditional tracks in Rockingham, N.C., and Darlington, S.C., in favor of places like Kansas and Las Vegas. And the most visible part of NASCAR, the driver corps, has morphed from a crew of heroic-yet-relatable, older, mostly mustachioed hell-raisers to an interchangeable posse of corporate-ready drones fresh out of driver's ed.
But NASCAR's biggest problem isn't fixable with a couple of sexy drivers or a breathless season finale in Miami. The sport can't escape the fact that the internal combustion engine and fossil fuels are technologies on a steep downslope. With hybrids and electrics on the way in, it's hard to see where gas-guzzling, emission-belching stock cars fit in.
So, is NASCAR's problem high gas prices, uninteresting drivers, bad management decisions (moving popular races, moving out of popular areas, mandating changes to cars, an odd organization to the championship), or the down slide of the internal combustion engine? Surely all of these have been problems for NASCAR. Possibly better management decisions would have helped NASCAR be in a position to deal with gas prices and technological change. Indeed, better management decisions, those that are less proscriptive but allow greater flexibility and which do not try to push NASCAR too far outside its base may be enough to get it through the current problems.
Technological issues are really not that hard to deal with. Let the teams decide what technology they are going to use but handicap cars based on technology choices if doing so is necessary to give different technologies equal chances of winning. Other sporting events handicap or penalize contestants. Equestrian events use time penalties for missing jumps or knocking down barriers. In some horse races, horses have to carry additional weight to equalize the competition. It is true that such changes would alter the way races are conducted to some extent and it is not known how fans would react. However, changes that give added flexibility and opportunities for innovation to the race teams seem a better approach than relying on a bailout of the auto industry or in further top-down dictates about cars.
Similarly, changing the business model may be a wise idea. Struggling companies often go through restructuring to build on what is solid and prune away the unproductive operations. NASCAR may need to move away from the single entity league model under which it is largely a family owned business.
So, let's not debate whether or not NASCAR is worth salvaging and if bailout money from the car manufacturers should go to racing. Instead, let's encourage NASCAR to reorganize, rethink, and even re-invent itself to be successfully reach out to the next generation of racing fans.
Thursday, December 18, 2008
A quarter per quarter
It's no secret that the Orange Bowl features the worst matchup of all the BCS games (Virginia Tech-Cincinnati), but when was the last time you heard of tickets being sold for a buck for any sporting event by scalpers? I'm fairly certain even the WNBA requires fans to donate more than four quarters before walking through the turnstiles.Like Markazi, I like snooping around for bargains, but the lowest price I can find for Orange Bowl tickets is $10 at both StubHub and VividSeats. Perhaps he was referring to the seats being auctioned at StubHub, which are now fetching a bid of $3.25 (81.25 cents per quarter). It's a bull market, I'm telling ya!
The Orange Bowl is by far the cheapest ticket available of all the bowl games according to StubHub.com. Tickets for the Music City Bowl (Boston College-Vanderbilt) can be had for $1.99 while the Sun Bowl seems to be gauging fans for $7.50 to see Pittsburgh play Oregon State.
There are only two bowl games, the Rose Bowl and the BCS National Championship Game, where the lowest ticket price is over $100. There are 25 bowl games where the lowest ticket price is less than $50. You can see the Holiday Bowl (Oklahoma State-Oregon), my dark horse pick for best bowl game this season, for $12.
Wednesday, December 17, 2008
Chizik "A Good Buy Right Now"?
“I’ve found that when everyone is down on something, it’s usually a good time to buy,” Carreker said. “A lot of people are down on him right now, so it might be a good time to buy into Gene Chikiz.”If coaches were assets that could be "bought low and sold high" as well as "cashed in" at most any time, maybe such as analogy would fit. Even if the average opinion of Chizik is lower than his potential right now, he will have to outperform that opinion by a wide margin. While past stock performance says very little about future performance (except over very long horizons), past coaching performance holds more correlation.
On Chizik's upside, his last defense at Auburn led the nation in points allowed; in his lone year at Texas, their defense finished fifth while the team won the National Championship (they were 14th in D the year before he arrived). Of course, as some have pointed out, Auburn's defense was not their problem. They finished 18th in D this year in spite of an offense that put the defense on the field for most of their games.
On the downside, and the very, very unusual aspect of this hire is Chizik's performance as a head coach. No reasonable person would expect Iowa State to challenge AU's win totals. Yet, most of the stories I've read seem unaware of ISU's record pre-Chizik: from 2000-2006, they were 9-3, 7-5, 7-7, 2-10, 7-5, 4-8. So, the worst two seasons in those six exceeded Chizik's win total at ISU.
More stunning, though, is a coach "moving up" in the coaching world after losing his last 10 games. I wondered, has anybody even come close to that. Lacking Elias Sports Bureau's data, I racked my brain and asked some others. The closest that anyone (Dennis Wilson) could come up with was Dennis Green in moving from Northwestern to Stanford. In his last two seasons at NU, Green went 2-9 and 3-8 while losing his last five games; however, the move from NU to Stanford pales next to the ISU-AU jump if measured by metrics like attendance or football revenues. Tommy Tubberville lost his last 3 games at Ole Miss as part of a 6-5 season before moving to Auburn, so maybe the AD took the booster's advice and "doubled down" -- if Tubberville could have good success coming in with a 3 loss streak, think what could happen after a 10 loss streak!
Labels: NCAA; college sports; football
An interesting incentive clause
What caught my eye about this is that the contract stipulated that if Haynesworth met certain conditions, consecutive Pro Bowls being one of them, that he could become a free agent and the Titans cannot apply the franchise tag to him. Franchising a player means that the team retains his services for the next season but obligates the team to paying that player the average of the top five players at his position. I wonder what motivated the Titans to agree to eschew the franchise tag possibility. Perhaps they doubted the ability of Haynesworth to be a Pro Bowler two years in a row. Or maybe they realized that Haynesworth is already near the top five (seventh if I counted right) highest paid among defensive tackles (in total salary, see USAToday's website) and third in counting toward the salary cap, so franchising him might save relatively little money anyway. However, his $7.25 million in total salary (base plus bonuses) pales in comparison to the $13.98 million of Tommy Kelly of the Raiders ($13.35 million of which is bonuses). In any case, Haynesworth's big year on the field could end up costing the Titans lots of money or the anchor to their defense.
Here is an ESPN story about it.
Tuesday, December 16, 2008
Still Looking for a Tenant at Kansas City's Sprint Center
Now the Arena Football League cancels the upcoming season, and the Sprint Center has one fewer tenant than originally planned at least for the next year. So Blair Kerkhoff of the KC Star has devoted a column entirely to ways to bring more sporting events permanently to the Sprint Center.
I'm far from convinced that the Sprint Center would have been able to attract a major tenant for even in the absence of the tough economy. With all the sports options available in Kansas City (Royals, Chiefs, Wizards, three Big XII universities within 120 miles of KC), a new arena isn't enough to generate the requisite demand for sports. But when you're spending other people's money....
Chiefs ask for more state money
What do the Chiefs want?
The professional football team's owners are seeking the new subsidy to upgrade Arrowhead Stadium in Kansas City and finance an indoor training arena in St. Joseph.
What will the state get for this money?
In return, the Chiefs would move their summer training camp from Wisconsin to the new arena on the Missouri Western State University campus.
and
Lt. Gov. Peter Kinder is championing the plan. Because of the tourism it could generate (italics added), "he thinks it's an exciting opportunity for Kansas City, for St. Joseph and the entire state," spokesman Gary McElyea said.
I don't know about you all, but I can't wait to book my trip to St. Joseph, Missouri to see the Chiefs' new training facility.
Monday, December 15, 2008
Bowl Schwag
The NCAA permits up to $350 in gifts from their schools and $500 from bowl management.More relevant to some of you is the accounting of the revenue distribution for the bowl games from the ACC to its member teams. Worth a look.
Typically the school gives them shoes and athletic gear, but bowl gifts can be off the charts -- video recorders, game gear, jewelry. At the BCS bowls, players will be able to pick from a menu of Sony electronics during a visit to a gift suite.
Besides the Oakley Split Thumps MP3 sunglasses from the Gator Bowl, [Clemson's] players this year will receive a Bulova watch, Jostens ring, two pieces of Mercury luggage and a fitted cap.
Arena Football League: Off Again, On Again, Off Again
From the Kansas City Star:"Every owner in the AFL is strongly committed to the league, the game, and, most importantly, the fans," acting commissioner Ed Policy said in a statement. "Owners, however, recognize that, especially in light of the current unprecedented economic climate, the AFL, as a business enterprise, needs to be restructured if it is to continue to provide its unique brand of this affordable, fan-friendly sport."
Last week's statement came after a meeting of the league's board of directors and did not say the AFL definitely would play next year.
The AFL's woes come at a time when the world of sports, once thought to be largely recession-proof, has felt the economic chill. The NFL has said it would cut 150 jobs, while the NBA and NASCAR also have laid off dozens of workers. The NHL is in a hiring freeze while the Internet operation for Major League Baseball also has trimmed positions.
The New Orleans VooDoo folded in October. The VooDoo ceased operations for awhile after Katrina hit. Now they've folded. What will happen to the league?Speculation about the 22-year old league’s future only intensified in recent weeks, when it became apparent that a $100 million deal the cash-strapped league struck in October with Platinum Equity, LLC, was in limbo. The deal, which was supposed to be completed in November, would have given the AFL the infusion of capital it badly needed and allowed Platinum to operate the league as a single entity.
But with the deal in a state of flux, it is believed that several owners wanted to suspend the 2009 season to find another investor or explore other financial options.
Sayonara Arena Football
My take (as I've said before): investments in new forms of commercial sport will see both fan interest and financial backing dry up, until some sense of order returns to our balance sheets.
Labels: arena football, demand for sports, sports economics
Friday, December 12, 2008
Arena Football League to Go On in 2009 - For Now
The Arena Football League's 2009 season is on — for now.But there's still a chance that the show won't go on.The AFL's board of directors met via conference call Wednesday night but "despite rumors and reports to the contrary" did not suspend the upcoming season.
"The Board will continue to meet regularly to examine any and all long-term structural improvement options for the AFL," the league said in a statement.
Thanks to John for the pointer.Philadelphia Soul wide receiver Chris Jackson told the AP that the league's players had agreed to take pay cuts and had been told Tuesday that the season likely would be canceled.
Jackson said he still isn't convinced the AFL will play in '09.
"I'm still reluctant to get too happy," he said. "There's still a lot to plan out. We need to figure out how many teams are going to be in it, the finances of it all, and a working financial model for the future. There's still a lot to be done."
Labels: arena football, recession
Thursday, December 11, 2008
Arbitration in Burress' Future
The New York Giants have refused to pay suspended receiver Plaxico Burress a $1 million portion of a signing bonus from a contract signed in September.Burress has been put on the reserve-non football injury list, making him ineligible to play the final four games of the season and the playoffs. The Giants also suspended him and fined him an extra week’s salary for conduct detrimental to the team.
The NFL Players Association filed a grievance for Burress over the four-week suspension and said they will file a claim for him to receive the signing bonus.
The grievances will be heard by an arbitrator after the season ends.
Which they well-should. Unions are supposed to work to serve the interests of the workers they represent. Among other things, they need to take steps to make sure that the people they represent are being treated as the collective bargaining agreement says they should be treated. Yes, sometimes folks need to hold their noses when filing grievances in some cases. And according to the article, Burress has been no giant when it comes to being a team leader.
He has admitted to being fined dozens of times for violating team rules. In addition to his suspension in September, he also was fined $45,000 by the league for abusing an official and throwing a ball into the stands in a game with San Francisco on Nov. 19.
But, bad boy or not, the union needs to grieve this. It's part of the territory for unions.
Here's the CBA for the NFL. Articles VII, IX, and possibly X come into play here. Here's my previous thoughts on the Terrell Owens ruling (from Market Power).
Labels: arbitration, NFL
Arena Football League Considers Cancelling the 2009 Season
Pete Likens, the director of communications for the Kansas City Brigade, told The Star on Wednesday that the players union agreed to the decision to suspend the season, and owners will hold a final vote on the matter, probably later Wednesday.
Barring any unforeseen circumstances, Likens said the owners will likely approve the one-year hiatus.
“It’s pretty much a done deal to suspend the 2009 season and work toward a single entity-league,” Likens said. “We plan to start up again in 2010, if the owners vote this way. We’re prepared to play this year, and/or next.”
There's more here and a little more here.
According to the short-run shut-down condition familiar to economists, a business should shut down if it can't generate the revenue to pay its variable costs. No need to consider the fixed costs: the business can't do anything about them. Once demand "recovers", the business should open again. At least according to the public pronouncements, that's what the AFL is aiming for.
Compare that to the case of the Houston Comets, a successful WNBA franchise - successful on the court, that is - that completely ceased operations recently. This seems to be more of a case of the straw breaking the camel's back. The Comets never did that well in the past, but with the economic outlook as bleak as it's been in 2-3 decades, there was little hope that the Comets would ever grow sufficiently as a business. So the Comets disintigrated.
Labels: arena football, shut-down condition, WNBA
Vivid Seats -- NFL TIckets
NFL tickets including 2009 NFL playoff tickets are on sale. You may also want to view prices for Super Bowl tickets for this year.
The Sports Economist thanks VividSeats.com for their support.
Labels: vivid seats
Wednesday, December 10, 2008
Government Complaint Against Rod Blagojevich Regarding Public Funding for the Cubs
From the government's criminal complaint against Gov. Blagojevich (some paragraph breaks added):
13.... b. Defendants Rod Blagojevich and John Harris, together with others, offered to, and threatened to withhold from, the Tribune Company substantial state financial assistance in connection with Wrigley Field, which assistance Rod Blagojevich believed to be worth at least $100 million to the Tribune Company, for the private purpose of inducing the controlling shareholder of the Tribune Company to fire members of the editorial board of the Chicago Tribune, a newspaper owned by the Tribune Company, who were responsible for editorials critical of Rod Blagojevich ....
69. Intercepted phone calls reflect that Rod Blagojevich and John Harris, together with others, are corruptly using and threatening to use the powers of Rod Blagojevich’s office as Governor of the State of Illinois to exert financial pressure on the owners of the Tribune Company, the parent corporation of the Chicago Tribune newspaper, to fire Chicago Tribune editorial board members who were responsible for editorials sharply critical of Rod Blagojevich’s actions as Governor and, among other things, calling for his impeachment.....
72. On the evening of November 3, 2008, Rod Blagojevich talked to Deputy Governor A. Rod Blagojevich stated that he was concerned about possibly being impeached in the Spring and that the Chicago Tribune will be “driving” the impeachment discussion. Rod Blagojevich asked Deputy Governor A to check to see if the Tribune has recently “advocate[d]” that he be impeached. In fact, the Chicago Tribune recently had published editorials critical of Rod Blagojevich.
73. In another call between Rod Blagojevich and Deputy Governor A that occurred a short time later on November 3, 2008, Rod Blagojevich and Deputy Governor A discussed an editorial from the Chicago Tribune regarding the endorsement of Michael Madigan and calling for a committee to consider impeaching Rod Blagojevich. During the call, Rod Blagojevich’s wife can be heard in the background telling Rod Blagojevich to tell Deputy Governor A “to hold up that fucking Cubs shit... fuck them.” Rod Blagojevich asked Deputy Governor A what he thinks of his wife’s idea. Deputy Governor A stated that there is a part of what Rod Blagojevich’s wife said that he “agree[s] with.” Deputy Governor A told Rod Blagojevich that Tribune Owner will say that he does not have anything to do with the editorials, “but I would tell him, look, if you want to get your Cubs thing done get rid of this Tribune.”
Later, Rod Blagojevich’s wife got on the phone and, during the continuing discussion of the critical Tribune editorials, stated that Tribune Owner can “just fire” the writers because Tribune Owner owns the Tribune. Rod Blagojevich’s wife stated that if Tribune Owner’s papers were hurting his business, Tribune Owner would do something about the editorial board. Rod Blagojevich then got back on the phone. Rod Blagojevich told Deputy Governor A to put together the articles in the Tribune that are on the topic of removing Rod Blagojevich from office and they will then have someone, like John Harris, go to Tribune Owner and say, “We’ve got some decisions to make now.”
Rod Blagojevich said that “someone should say, ‘get rid of those people.’” Rod Blagojevich said that he thinks that they should put this all together and then have Harris or somebody go talk to the Tribune owners and say, “Look, we’ve got decisions to make now ... moving this stuff forward (believed to be a reference to the IFA helping with the Cubs sale) ... someone’s gotta go to [Tribune Owner], we want to see him ... it’s a political fuckin’ operation in there.” Deputy Governor A agreed and said that Harris needs to be “sensitive” about how he does it.
Rod Blagojevich said there is nothing sensitive about how you do it and that it’s “straight forward” and you say “we’re doing this stuff for you, we believe this is right for Illinois [and] this is a big deal to [Tribune Owner] financially” but what Rod Blagojevich is doing to help Tribune Owner is the same type of action that the Tribune is saying should be the basis for Rod Blagojevich’s impeachment. Rod Blagojevich said Tribune Owner should be told “maybe we can’t do this now. Fire those fuckers.”
Deputy Governor A suggested that Rod Blagojevich say, “I’m not sure that we can do this anymore because we’ve been getting a ton of these editorials that say, look, we’re going around the legislature, we gotta stop and this is something the legislature hasn’t approved. We don’t want to go around the legislature anymore.” Rod Blagojevich agreed and said that he wants Harris to go in and make that case, “not me.” Deputy Governor A agreed and said that he likes it. Rod Blagojevich asked Deputy Governor A to put the list of Tribune articles together....
76.... Rod Blagojevich stated that “our recommendation is fire all those fucking people, get ‘em the fuck out of there and get us some editorial support.”
There’s a good deal more factual detail in the complaint — have a look if you're interested. Thanks to Sean Parnell of the Center for Competitive Politics for the pointer.
Cross-posted over at Market Power.
Labels: public funding
More on Using the Airline Model of Pricing to Price Tickets
Granted this is just an experiment, and maybe selling seats in a stadium isn’t radically different from selling seats on an airplane. But with technology developments such as RFID — radio-frequency-identification chips that, among other things, let retailers and warehousing operations keep close tabs on inventory — you wonder how far “dynamic pricing” could extend into our everyday lives. Someday, will the grocery store raise the price of bananas based on how many fruits remain on the shelf? Or will the bus driver charge a different fare depending on how many riders are aboard?Technology has already changed how teams view scalping. Now that they can get a piece of the action with scalping, the secondary ticket market doesn't look like such a bad idea now. What's next in store for ticket pricing?
Cross posted at Market Power
Labels: ticket pricing, ticket scalping
Sports Pork
On Monday, the U.S. Conference of Mayors went to Capitol Hill to ask for a handout, or as they put it: "We are reporting that in 427 cities of all sizes in all regions of the country, a total of 11,391 infrastructure projects are 'ready to go.' These projects represent an infrastructure investment of $73,163,299,303 that would be capable of producing an estimated 847,641 jobs in 2009 and 2010."That's the view of Robert Poole, who goes on to describe the opportunity costs of these plans. His bottom line:
A wish list that is 11,391 projects strong! What vital infrastructure projects would cash-strapped taxpayers get for their $73 billion? Here's a sampling:
- Hercules, Calif., wants $2.5 million in hard-earned taxpayer money for a "Waterfront Duck Pond Park," and another $200,000 for a dog park.
- Euless, Texas, wants $15 million for the Midway Park Family Life Center, which, you'll be glad to note, includes both a senior center and aquatic facility.
- Natchez, Miss., "needs" a new $9.5 million sports complex "which would allow our city to host major regional and national sports tournaments."
- Henderson, Nev., is asking for $20 million to help "develop a 60 acre multi-use sports field complex."
- Brigham City, Utah, wants $15 million for a sports park.
- Arlington, Texas, needs $4 million to expand its tennis center.
- Miami, Fla., needs $15 million for a "Moore Park Community Center, Tennis Center and Day Care" facility. The city is also desperate for $3.6 million to build a covered basketball court and a new tennis court at Robert King High Park. Then there's the $94 million Orange Bowl parking garage you are being asked to pay for.
- La Porte, Texas, wants $7.6 million for a "Life Style Center." And Oakland, Calif., needs $1 million for Fruitvale Latino Cultural and Performing Arts Center.
And you thought infrastructure investment meant roads, bridges and schools. It is clear that any infrastructure stimulus money given to the country's mayors will lead to thousands of tennis centers to nowhere. News alert for mayors: We are officially in a recession. American families have to get by with less, and so do American cities.
It was very nice of the country's mayors to hand taxpayers a wish list worth $73 billion. But before taxpayers give them a dime, let's see the mayors rank those 11,391 goodies -- I mean "infrastructure" projects -- based on effectiveness and potential return on investment for taxpayers."Stimulus shouldn't be an excuse for pork" is the title. I'm not tickled about bringing up the dark side of the sports business, but there it is, brother.
Labels: sports economics
Tuesday, December 09, 2008
When the going gets tough...
The N.F.L., widely considered the most successful sports league in North America, will reduce its staff by about 150 employees after the Super Bowl in response to the slumping economy, Commissioner Roger Goodell told staff members in a memo Tuesday.Here's the story, from Judy Batista in the NYT.
The N.F.L. has a total of 1,100 employees at its New York headquarters, at NFL Films in New Jersey and at the Los Angeles offices of the NFL Network and NFL.com. Although voluntary buyouts are being offered now, the league will not determine the breakdown of cuts until after the championship game on Feb. 1.
...;
...Some franchises have started to trim their own staffs, as well. The Denver Broncos made cuts earlier this year, and the New England Patriots recently laid off about 5 percent of the staff from Gillette Stadium — about two dozen people — in anticipation of reduced trade-show and special-event business there next year.
The Patriots also closed their one-person China office, which opened when the team was scheduled to play a game there. With the N.F.L. focusing its overseas plans on regular-season games in Europe, the China game has since been canceled.
Labels: NFL
NASCAR & the auto bailout
The connection between auto jobs in Michigan and attendance at Talladega seems pretty weak. My sense is that brand loyalty -- NASCAR is the marketing king of sport -- may be the key factor. It is not uncommon in NASCAR country to see window stickers on a Ford truck that show a punkish-looking boy pissing on the Chevy logo. A strong form of negative brand identity, I submit. If the Ford and Chevy brands are irreparably damaged, will those loyalties transfer to Honda and Toyota?Last month, NASCAR chairman Brian France delivered a ban on testing next year at sanctioned tracks in a bid to save money. Over the weekend, the Associated Press said it had obtained a letter written by France to key senators lobbying Congress to support the automakers.
"I'm writing to you as a concerned American who wants what is best for our general country," France wrote, according to AP. "Of course, the domestic automobile manufacturers play a very important part of the heritage of NASCAR, but, more importantly, it is vital for all of America."
France added: "For these manufacturers to survive, your assistance is urgently needed. By immediately supporting America's automobile industry, you can help our nation avoid a devastating economic blow."
France knows what's good for the Detroit Three is good for NASCAR.
If thousands of jobs are lost through a collapse of one or more of the automakers, many fewer people will be in a position to attend Sprint Cup, Nationwide and Camping World Truck Series races next season. Sponsors, already tough to find, would become scarcer. TV might turn away from the sport.
Though France said NASCAR would survive a manufacturers' fallout, he may be fooling himself. Several people close to the Detroit Three told the Free Press this week that if Washington did not approve the bridge loans, motor sports support could be chopped -- not just shaved.
Labels: NASCAR
Monday, December 08, 2008
Southern Football
I think there is something to the argument made in the WSJ article, but the case is way overstated.
First, the focus in the article is on the success of the SEC over the last decade or so. Southern football extends outside the SEC and successful programs on the national stage, other than Alabama, also extend back in time. There is no doubt that Alabama is arguably the most prominent to have long sustained success. However, outside the SEC, Clemson was pretty good, both North and South Carolina (when it was in the ACC and after moving to the SEC) have had success, and Miami and Florida State have pretty rich traditions of success on the national stage. And, as commentators on the WSJ website note, Texas, Arkansas, and Oklahoma are traditionally considered southern schools and they also have traditions of success dating back decades. SMU also was quite a powerhouse until it got the death penalty for violating the cartel rules Brian mentioned in "Indiana through the looking glass".
Toward the end, the article turns to the cultural significance of college football in the south. Not to put too fine a point on it, but until the late 1960s/ early 1970s, when the Saints, Falcons, and Dolphins came into existence, there were no professional football teams in the south outside of Texas. The St. Louis Cardinals were the most "southern" of the professional franchises. Consequently, football fans in the south became avid college fans even if they had never attended the schools. Combine that with the fact that most southern states had only one or two "big time" programs and it makes sense that fans would rally around the University of Alabama, or the University of Georgia, etc. as the focus of their football allegiance. That translates into an incredible degree of financial support from boosters so that official coach salaries are often relatively small portions of their compensation. Contrast that with the state I grew up in, New York. There were three professional football teams and, to my knowledge, only one division one university team, certainly only one of any note, Syracuse University, a private institution. (For the record, I grew up a fan of the Johnny Unitas-led Baltimore Colts despite living 50 miles from Buffalo.) I suspect the typical New Yorker had, and continues to have, far more interest in one of the state's three pro football teams than in any collegiate team in the state. It is unlikely that any of New York state's public universities has enough booster support to offer a coach a million dollars on top of his university salary. I don't have the figures, but I am confident no college or university coach at a New York state college or university makes more than the governor. (Jim Boeheim, men's basketball coach at Syracuse, is the one coach likely to be that well compensated.)
If the article is correct, the changes that have wrought the SEC dominance are the seeds of SEC decline. More population and greater wealth will foster the development of more schools with aspirations to be "big time". As that happens, it will be more difficult for the schools to get the best recruits and they will no longer have overwhelming superiority in talent. Indeed, I have already heard discussions linking the decline of Miami and Florida State to the competition for recruits from two newly successful programs, at USF and UCF.
The bottom line to me is that the SEC is riding a wave of success fueled in some small part by the economic growth and demographic changes of the past few decades, but this likely will wane and in a few years we'll be seeing articles titled "What Has Happened to SEC Football?"
Labels: college football, NCAA; college sports
Saturday, December 06, 2008
Who Pays the College Coach
Mark Yost has an article on the pay of college coaches in this morning's Wall Street Journal, including a quote from yours truly written here at this blog awhile back.
Academic types have long lamented that coaches at many public universities make millions more than their schools' professors and presidents, not to mention the governors of their states. That much is true. Mr. Saban's eight-year contract will pay him $4 million a year -- $5 million if he earns all his performance bonuses. That dwarfs the salary paid to Alabama President Robert Witt ($611,000) and Gov. Bob Riley ($105,000).
But there are two fundamental problems with comparing teaching and coaching salaries. The first is simple supply and demand. With all due respect to the many great teachers, it's easier to replace them than Mr. Saban, Ohio State's Jim Tressel or Penn State's Joe Paterno (who makes a paltry $500,000 a year).
"The talent that Saban, Tressel and other coaches have is relatively scarce," Phil Miller, an assistant professor of economics at Minnesota State University, Mankato, wrote on The Sports Economist blog. "On the other hand, the talent it takes to teach effectively, for example, at the collegiate level is more abundant. So the price of coaching talent is much higher than the salary obtained by most professors." Or, as legendary Ohio State football coach Woody Hayes once told an antisports prof: "I can do your job, but you can't do mine."
I'm actually an associate professor, but we'll let that one slide ;-)
Here's the post to which Mark is referring.
Who pays the coach, and what for?
In both college football and basketball, the ability to recruit, train, and strategize define the value in a top coach. But what about the NBA, where cash does your recruiting, the talent is already developed, and nobody takes the game seriously until the last half of the fourth quarter? As Craig Newmark notes, "more research is needed."
Labels: coaching salaries
Friday, December 05, 2008
Southern Fried Football
The South is dominating college football like never before, but its ascent isn't just a matter of good coaching. How a population boom and a growing economy have helped turn a regional obsession into a national juggernaut.
Labels: NCAA; college sports; football
Thursday, December 04, 2008
Baseball Teams to Use Airline Pricing Model
In 2002, while I was still at ESPN, I was asked to do predictions for the following year. When I predicted that more teams would institute variable pricing, I don't think I was going too far out on a limb. But when I said "the sports world could eventually adopt the airline practice" of price fluctuation, I was definitely ahead of my time.This only makes sense, but I'm skeptical that the weak economy had much to do with it. Because the marginal cost of letting fans into a stadium is zero when attendance is below capacity, it only makes sense to broker deals with fans in order to maximize revenue (and profits). This is true in good times and in bad.Six years later, the San Francisco Giants are going to bring airline pricing to sports. The walk-up sales for hundreds of seats for each of next season's home games could dynamically change, based on supply and demand.
Brokers have done it forever, but teams haven't taken a shot at it. But the weak economy probably forced the issue, as teams are now going to look to get the most bang for their buck based on true market factors.
HT to student Chris Kaufman
Labels: ticket demand, ticket pricing
Indiana Through the Looking Glass
DeCourcy offered up some insightful observations, noting that restrictions on TV appearances and post-season appearances are "relics" of the 1970s. He suggests that in the 24/7 media world of ESPN and the internet, the NCAA can stigmatize a program and produce negative consequences without the outdated penalties:Josephine Potuto, the Nebraska law professor who chaired Indiana's infractions hearings, met with the NCAA board of directors last month to discuss the committee becoming more aggressive with its penalties against major violators.
"We have to be sure that what the committee does reflects the seriousness of the violations and the nature of the violations [emphasis added] - and is fair to other institutions that have not committed violations," Potuto said Tuesday.
Within days, charges were made public that Sampson had violated a ban on recruiting calls that resulted from a previous NCAA case at Oklahoma. Four months later, Sampson was gone. Before another month passed, the Hoosiers had closed out their season with a series of embarrassing losses and first-round tournament eliminations. Three months after that, every scholarship player who'd competed during that season was gone. The destruction couldn't have been more complete if they'd taken the basketballs from the gym.Unfortunately, DeCourcy's piece also echoes the upside-down morality of the sports media and the NCAA Infractions Committee when it comes to what is "clean" and "dirty" in college sports:
Indiana had been clean for 50 years before all of this occurred. Potuto said that was among the reasons the committee accepted the penalties the school had self-imposed and did not hit the Hoosiers with much more. A three-year probationary period is mere decoration. It says, simply: Get in trouble again, and you're really in for it. As if everybody at IU didn't know that already.
Ok, Kelvin Sampson broke NCAA rules; he may be stupid; he may have relatively low ethical standards, and taking the world as it is, received what he deserved. Yet, phrases such as "seriousness of violations" and Indiana's 50-year "clean" program only makes sense if you have slipped through the NCAA wormhole and emerged out in the alternative, Alice-in-NCAA-land universe. After all, Sampson violated the (labor restricting) administrative rules of a cartel, not a moral code or legal code.
In the Alice world, "Dirty" Kelvin Sampson makes phone calls out of the designated recruiting period. "Clean" Bob Knight punches a Puerto Rican policeman, (reportedly) body-slams his AD, throws pots at secretary, nails a player with a WWF move to the neck, dumps a trash can on a fan, throws a chair, and verbally abuses who knows how many people. He can move on to a big paycheck in Lubbock before handing the program over to his son with head held high for his "integrity." In this world, gaining an advantage in violation of NCAA rules is dirty, but the NCAA members gaining an advantage by enforcing their collusive restrictions on player compensation that would run into thousands and millions at big-time basketball schools by any market test are the moral code. (For a simple market-based calculation in basketball, take the ticket-related revenues including seat-related contributions, local and conference TV-radio, and the $500+ million per year tourney revenues allocated mostly to the top 100 programs, multiply by 60% (roughly labor's share in pro sports collective agreements) and you easily come up with something on the order of $1 to $2 million per player for better teams).
Yes, I know this is old hat to most sports economists. In studying college sports for nearly 25 years now, I should have become accustomed to the spectacles through which NCAA-dom is seen; but, it still gets me now and then. The NCAA's ability to survive typical cartel internal destruction is astonishing. Even more head-scratching, though, is its ability to steer views of morality and legality. Since the 1980s, many states have made the NCAA collusion de facto law by passing laws that turn agents or boosters assisting college players into criminals. At least the Courts, while whistling past the graveyard and upholding NCAA player-labor collusive practices, have pretty much called the NCAA what it is.
Wednesday, December 03, 2008
Houston Comets Fold
Cynthia Cooper-Dyke cannot fathom it: the Houston Comets, the team she guided to the W.N.B.A.’s first four championships, were shuttered Tuesday by the league, which scheduled a dispersal draft of their players, except the free agents, for Monday.But they could not strike a deal with the one interested local investor. Sandomir quotes WNBA president Donna Orender as saying "In another time, would there have been double the amount of interested investors? I don’t know." That's the big question: can the marketplace support the league once the economy gets healthy? From $10 million to zero in value for a speculative asset is not unheard of in the current environment, so there may be better days ahead for the WNBA.
...The league took control of the Comets over the summer from their underfinanced owner, Hilton Koch, a furniture retailer who acquired the team [ed: for $10 million] in early 2007.
Labels: sports economics, womens basketball
Tuesday, December 02, 2008
Policy Makers and Economic Analysis
Ministers ignored evidence from their own experts who found scant social or economic justification for bidding for the 2012 Olympics, The Times has learnt.Our politicians are disturbingly consistent on this point -- ignoring the advice of the very experts whose opinions they solicit. What a strange old game!
A 250-page strategy document, signed off in December 2002 by Tony Blair as Prime Minister but selectively distributed, found little support for the claim that the Games would produce significant economic returns or more people playing sport.
The Game Plan document, whose findings are not widely known even in sport’s upper echelons, has emerged as Games chiefs meet today to agree funding cuts for Olympic sports such as basketball and hockey.
...Researched for nearly a year by ten experts, Game Plan was intended as a framework for sports policy for the next decade – in particular, whether Britain should bid for events such as the Olympics and the World Cup.
Instead it was quietly forgotten when it did not present a strong case for a bid. Civil servants watered down the findings but the final draft was still unhelpful to bid champions within the Government, an unnamed source told The Times.
“This was a robust report that showed why we should not bid for the Olympics but it was an inconvenient truth. Almost the moment the ink was dry, there was a volte-face,” said Stefan Szymanski, a professor at Cass Business School.
“The justification for bidding should have been based on evidence placed in the public domain. Instead key evidence was suppressed or ignored.”
The revelations raise the question of why ministers backed a bid citing reasons dismissed by their own experts.
Labels: economic impact, Olympics
