Friday, February 27, 2009

Sports Porkulus 

There has been some speculation around here lately about how much of the stimulus money will go to professional sports. Interestingly, there was an attempt to explicitly prohibit the use of stimulus money for professional sports in the early going. Senator Tom Coburn (R-Okla) introduced an amendment to the stimulus bill
None of the amounts appropriated or otherwise made available by this Act may be used for any casino or other gambling establishment, aquarium, zoo, golf course, swimming pool, stadium, community park, museum, theater, art center, and highway beautification project.
that passed the senate on February 6th. However, this section got changed in the conference committee. The final wording in the stimulus bill is
None of the funds appropriated or otherwise made available in this Act may be used by any State or local government, or any private entity, for any casino or other gambling establishment, aquarium, zoo, golf course, or swimming pool.
The full text of the final stimulus bill can be found here. What remains of Senator Coburn's amendment, Section 1604, (the text above) can be found on page 189.

So the congress has spoken. No stimulus money for zoos, gambling, or golf courses, but feel free to shower stimulus money on stadiums. My hat is off to Senator Coburn, and shame on whoever eliminated the prohibition against stimulus money for stadiums in the conference committee.

Hat tip to Emily Sparvero.

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Tuesday, February 24, 2009

Glendale Bailing Out the Coyotes 

How can I get in on this action?

The city of Glendale has been quietly bailing out the money-losing Phoenix Coyotes for several months, according to documents obtained by 12 News.

A record of lease payments by the Coyotes shows the city has been letting the team play virtually rent-free at Jobing.com Arena for seven months. Based on past payments, the break could be worth up to $4 million over the course of a year.

The city is giving the team the multimillion-dollar break even as it tries to plug a multimillion-dollar hole in its own budget.
I wonder if Glendale ever made back the money they spent on getting the Super Bowl. Well, you know what they say about other people's money.

HT to Kip.

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Bonus-Skimming in MLB 

Don Coffin sends along two Chicago Trib links on the recent bonus-skimming scandal in MLB.

Here's one that describes some of the alleged skimming involving Dominican players.

Here's one on fired White Sox executive David Wilder who is alleged to have pocketed some bonus cash.

These sorts of stories seem almost routine in the entertainment industry. Young athletes, musicians, and other performers often underestimate their potential worth to the industry and end up signing bad deals.

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Olympic bust 

Some choice quotes from a fascinating article by Barbara Demick in the LA Times:
Reporting from Beijing -- "Empty," says Jack Rodman, an expert in distressed real estate, as he points from the window of his 40th-floor office toward a silver-skinned prism rising out of the Beijing skyline.

"Beautiful building, but not a single tenant.

"Completely empty.

"Empty."

So goes the refrain as his finger skips from building to building, each flashier than the next, and few of them more than barely occupied.

...The government spent $43 billion for the Olympics, nearly three times as much as any other host city. But many of the venues proved too big, too expensive and more photogenic than practical.

...The National Stadium, known as the Bird's Nest, has only one event scheduled for this year: a performance of the opera "Turandot" on Aug. 8, the one-year anniversary of the Olympic opening ceremony. China's leading soccer club backed out of a deal to play there, saying it would be an embarrassment to use a 91,000-seat stadium for games that ordinarily attract only 10,000 spectators.

The venue, which costs $9 million a year to maintain, is expected to be turned into a shopping mall in several years, its owners announced last month.

A baseball stadium that opened last spring with an exhibition game between the Dodgers and the San Diego Padres, is being demolished. Its owner says it also will use the land for a shopping mall.
In sum, waste on a massive scale. Thanks to Kevin Stovall for the link.

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The economic development pitch ain't sellin' or workin' 

If stadiums were economic stimulus, you'd think the Vikings' pitch for a subsidy would be flying high in Minnesota right now. But it was unceremoniously "brushed aside" in the legislature:
The Minnesota Vikings' already wobbly prospects of getting public financing for a new stadium this year got no firmer Monday at the State Capitol, where legislators said the state's dire financial picture made the project nearly unthinkable.

In doing so, a House panel brushed aside a new study by the Metropolitan Sports Facilities Commission, owners of the Metrodome, that said a new stadium on that site in downtown Minneapolis would generate $734 million in construction spending, create 13,400 jobs during construction and generate $32.2 million in taxes during the first year after a new stadium opened.

"To come in with a two-thirds publicly funded proposal for a brand new stadium here this session would appear to be a nonstarter," said Rep. Frank Hornstein, DFL-Minneapolis.
Can we agree then, Minnesota legislators, that stadium subsidies do not stimulate the economy?

On a related note, "The Sports Museum of America" is closing less than a year after opening for business in New York. The museum was financed by $57 million worth of "Liberty Bonds." These bonds were "part of a $20 billion package Congress granted New York City to assist an economic recovery in lower Manhattan following the September 11, 2001 attacks." Chalk up a stimulus failure on that one.

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Monday, February 23, 2009

Three soccer clubs in trouble 

In La Liga, recent champion Valencia has not paid its players this month. The players were touted as "keeping their focus" on playing, despite the financial condition of the club. But eight players were booked and one sent off in yesterday's 1-1 draw with Deportivo, which is not an encouraging sign.

At least they showed up. In England, players from Weymouth in the Blue Square Premier League refused to play on Saturday. And in Uruguay, Villa Espanola's players didn't even get the chance to strike, as the league expelled the club for failing to pay wages to former players. The tournament will go on with the remaining 15 teams, with Villa Espanola relegated to a lower division for next season. These clubs lack the economic scale of Valencia, but the stories provide more evidence that the weak economy is taking its toll on commercial sport.

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On sports and the economy 

Ownership structure in Japan is changing, as corporations continue to abandon the wholly owned subsidiary model of a sports club.

Royal Bank of Scotland, now a ward of the British government, has 200 million pounds of outstanding sports sponsorships, including a commitment made just last month to sponsor the Six Nations Rugby Tournament through 2013. I wonder what Chris Dodd would have to say about that, if RBS were an American Company?

Staying in Connecticut, the reporter who challenged UCONN coach Jim Calhoun about his salary explains himself here. He thinks the governor should get paid more than the basketball coach in his state. It's fine with me if he wants to waste Connecticut's taxpayer money on the governor.

Cost-cutting in F1.

Cost-cutting in Vermont, where the university is scrapping the baseball program.

A pitcher in the Marlins' organization gives an educated take on countercyclical policy. Burke Badenhop graduated from Bowling Green with a degree in Economics, earning a 3.94 GPA. He'll probably keep mum about the following quote, from Professor Tim Fuerst: "One issue was whether it makes sense to use state money for new stadiums, and I remember Burke was skeptical about using public money,'' Fuerst said with a laugh. "You better not tell that to his employers!''

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Friday, February 20, 2009

Minority coaches in the NCAA 

In today's New York Times, Tony Dungy challenges colleges and universities to hire more African American coaches. He lays much of the blame for there being few African American coaches at the feet of boosters and alumni, suggesting that they have so much power that they convince the presidents and athletic directors not to hire candidates the boosters/alums would not support. On this point, I think most of us would tend to agree: boosters, and especially big-money contributors, have inordinate influence over collegiate athletics, including on the hiring and firing of coaches.

But equilibrium involves both supply and demand. Coach Dungy is probably correct that demand for African American head coaches is reduced by the biases of boosters, alumni, and others. But what of the supply of candidates? Coach Dungy lists five individuals he recommended for jobs with NCAA institutions. Three of them took NFL jobs and have been successful. But how many individuals applied for the openings? How many guys would choose to be head coach at a college, possibly a small one or one with little emphasis on football, over being a position coach or coordinator for an NFL franchise? My point here is not that there isn't racism in the selection process that denies African Americans equal opportunity to be head coaches in Football Bowl Subdivision institutions. It is, rather, that before charging anyone with such behavior that we look deeper into the process so we know how to fix it. Telling people to do the right thing presumes they are doing the wrong thing. Maybe they are, but maybe they are not.

Those of us involved in recruiting for academic positions have faced exactly this question. Consider that between 1993 and 2006, the percentage of doctorates in economics awarded to minorities (African American, Hispanic, or Native American) was over 10% only once. Over those years, the percentage going to African Americans was over 5 only three times. The percentage of African Americans in the US population is more than double that. The number of African Americans earning doctorates in economics each year is generally between 20 and 25. The October 2008 Job Openings for Economists had something like 550 records. Many of them were not in the US, and some may have been duplicates, some were for senior positions. (I don't know how the number of records translates into the number of separate job openings for new ph.d's. However, the November JOE had another 558 records, some of which may have been duplicates from October.) If 400 of the records are separate US based entry level jobs, and all the African Americans newly earning their doctorate get one of them, then 375 positions, about 94%, went to candidates that are not African American and African Americans are a much smaller percentage of the newly-employed doctorate holding economists than they are of the general population. And all without anyone necessarily doing anything wrong.

The most effective responses to the small number of African American head football coaches are different if the root cause is racism than if the root cause is few candidates applying for the jobs. If racism is the cause, admonishing university administrators to do the right thing is appropriate, though its effectiveness is unclear. If the problem is at its heart a paucity of candidates, then finding ways to increase the number of candidates is the best approach.

Thanks to David T. for correcting my usage of alumnae where alumni belonged.

Tuesday, February 17, 2009

Charges Filed Against Stanford Financial Group 

The charges relate to selling bank CDs that yield twice the market rate. This bears a resemblance to Madoff, but on a smaller scale -- the SEC claims that $8 billion (rather than $50 billion) is missing. What's interesting from a sports perspective is the array of sponsorship deals that Stanford pursued.
Stanford Financial appears to be on quite a roll when it comes to locking up sports endorsements. Some of the recent deals it’s announced include ones with professional golf and tennis associations, US colleges and English soccer players. In Antigua, where Allen Stanford has dual citizenship and was knighted in 2006 by the island’s government, the firm is a sponsor of worldwide cricket competitions. International cricket tournaments are regularly played at Stanford Stadium on Antigua.

But maybe the glitziest sports marketing deal Stanford Financial struck came in February 2007 when the firm reached a deal with the NBA’s Miami Heat to get naming rights to one of the main entrances to the team’s home arena. The multi-year deal allowed Stanford Financial to create a so-called VIP entrance at the AmericanAirlines Arena for professional athletes, celebrities, dignitaries and the firm’s “high-level clients.’’ The terms of the deal weren’t disclosed.

Brian Bertsch, a Stanford Financial spokesman, says “the terms of sponsorship deals are confidential.’’ But he adds that the deal with the Heat makes a lot of sense given the firm’s “strong and diverse client base in the South Florida region.’’ As for the deal with [Vijay] Singh, he says, “I can tell you that the deal with Vijay is not exclusive.”

The sponsorship with the Heat is part of another strategy by Stanford Financial to spend big bucks on sports in US cities where it has a big footprint. In Memphis, Tenn. the firm is a major sponsor of charitable and professional golf tournaments. In October 2007, Stanford Financial became the official sponsor of the cheerleading team at Louisiana State University, located in Baton Rouge, another big hub. A year earlier, the investment firm struck a similar arrangement with the University of Mississippi’s cheerleaders.
These strike me as a bit bizarre and intriguing: did sponsoring cheerleaders bring in an unsophisticated clientele? Regardless, the Stanford? St. Jude golf tournament's financial status would appear to be in jeopardy. Vijay's game might get a little yippy too.

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Sunday, February 15, 2009

"Someone created the box score, and he should be shot"*** 

Michael Lewis has a piece in this weekend's NY Times Magazine, "The No Stats All Star." The focus is on the Houston Rockets' Shane Battier, and to a lesser extent on their General Manager, Daryl Morey. Morey is a a bit of a stats geek, and Battier is a basketball player with "no stats," a prototypical team player who Morey identified and signed for Houston. But how? Here's a clue:

One well-known statistic the Rockets’ front office pays attention to is plus-minus, which simply measures what happens to the score when any given player is on the court. In its crude form, plus-minus is hardly perfect: a player who finds himself on the same team with the world’s four best basketball players, and who plays only when they do, will have a plus-minus that looks pretty good, even if it says little about his play. Morey says that he and his staff can adjust for these potential distortions — though he is coy about how they do it — and render plus-minus a useful measure of a player’s effect on a basketball game. A good player might be a plus 3 — that is, his team averages 3 points more per game than its opponent when he is on the floor. In his best season, the superstar point guard Steve Nash was a plus 14.5. At the time of the Lakers game, Battier was a plus 10, which put him in the company of Dwight Howard and Kevin Garnett, both perennial All-Stars. For his career he’s a plus 6. “Plus 6 is enormous,” Morey says. “It’s the difference between 41 wins and 60 wins.” He names a few other players who were a plus 6 last season: Vince Carter, Carmelo Anthony, Tracy McGrady.

That's a small slice of an intriguing story; this is Lewis at his best. Thanks to Al Roth for sending the link. Roth's post at Market Design identifies the principal-agent problem as key to the conflict between individual and team productivity in basketball. Lewis' account also illustrates how innovative managers like Daryl Morey can mitigate the problem. While Lewis focuses mostly on Battier, the athlete and the person, the economic punch line seems to me to reside in Morey, the general manager. As Roth points out, "basketball contracts may change" as a result of his innovations. Great stuff.

***Daryl Morey, as quoted by Michael Lewis

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Thursday, February 12, 2009

Steroid Publicity & Hall Voting 

Whatever readers and contributors to TSE think about publicity given to MLB steroid use, it continues to hammer the chances of Hall of Fame inductions for an increasing set of players. Two years back, I posted regarding Mark McGwire's chances in view of his low first year ballot relative to his peers on the all-time home run list. In his third year of eligibility, McGwire's vote dropped just a hair from 23.6 to 21.9. Such dips are not without precedent. Duke Snider's numbers were in the same range and dipped to 21% in his third year only to rise steadily until his induction in his 11th year.

Beyond McGwire, what will be the fate of others caught up in the bad press? A Cincinnati Enquirer piece by John Erardi poses this question for A-Rod along with Bonds, Sosa, McGwire, Clemens and others. In a very small sample (10) of baseball writers who have Hall of Fame votes, 7 came out against any of the players while 2 were willing to consider a partiucular guy from their city -- roughly the same percentages currently seen in McGwire votes. On the other hand, it is hard to imagine that no players or very, very few from this era will be inducted. Phil Hagan (who votes uncomitted) of the Philadelphia Inquirer makes this Joe Morgan-esque point in the article:
"In the next several years, there are going to be many players becoming eligible who are suspected of or have admitted using steroids ... Either you vote for a player or players who used performance-enhancing substances or you don't vote for anybody ... I think it's fair to assume at this point that there was, in fact, a Steroid Era and that most players - and pitchers - probably at least tried the stuff ... And, honestly, I don't know where I stand on that right now."

The trouble with that view is that players who did not use such substances stand at a disadvantage, albeit an arguable one. The Astros ace, Roy Oswalt, speaks very forcefully to the views of at least one impacted non-users on MLB.com:
"A-Rod's numbers shouldn't count for anything," Oswalt said in a phone interview with MLB.com. "I feel like he cheated me out of the game." ... "The ones that have come out and admitted it, and are proven guilty, [their numbers] should not count. I've been cheated out of the game," Oswalt continued. "This is my ninth year, and I've done nothing to enhance my performance, other than work my butt off to get guys out. These guys [who took PEDs] have all the talent in the world. All-Star talent. And they put times two on it.
Of course, like the writers, Oswalt is more gracious to a former teammate, Roger Clemens, than he is toward others.

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Friday, February 06, 2009

Vivid Seats -- College Basketball Tickets 

March Madness is upon us again with 64 teams seeded across eight venues, including University of Dayton Arena, American Airlines Arena in Miami, and the Wachovia Center in Philadelphia. With the play-in game on March 17, 2009, fans will be scrambling to find March Madness tickets for the first two rounds of the NCAA tournament, as well as the NCAA basketball regionals and of course, NCAA Final Four tickets. To find the entire 2009 March Madness schedule, this year's venues, dates and times, visit VividSeats.com. This Chicago-based ticket broker is a one-stop information and ticket source for March Madness.


The Sports Economist thanks VividSeats.com for their support.

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Wednesday, February 04, 2009

A Bad Day for Barbie 

On Monday, Mattel, the toy maker who brings us Barbie and Hot Wheels, reported that its 4th quarter profits fell 46%. What does this have to do with sports? The toy industry, like the sports industry, is another area that is supposedly "recession-proof." The story goes, while we make stop giving expensive toys to our spouses, the gifts from Santa are the last thing to go.

Just like the old adage that states, "If you make something idiot-proof, someone will invent a bigger idiot," the magnitude of this recession is likely to expose just how recession-proof some things like professional sports really are.

Of course, in an industry characterized by price discrimination and low marginal costs, any attempt to identify a drop in demand solely by looking at quantity (that is, attendance) are almost certainly doomed to failure. Look for full stadiums and arenas but lower ticket prices and a huge increase in the number and variety of promotions in the coming months.

The silver lining for the big leagues in the Mattel profit report? American Girl dolls, the company's top-of-the-line, ultra-expensive model was one big seller this holiday while sales of $7.99 Barbies and $0.99 die-cast Hot Wheels cars fell. If the ultimate luxury is the last thing to go, that's good news for the NFL but not so good news for minor league baseball or the dear, departed Arena Football League.

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Tuesday, February 03, 2009

Sponsor Dollars on the Run 

The WSJ reports that Citi is looking at ways to back out of its $20 million annual sponsorship deal with the Mets. I suppose that signs can be changed without too much cost, with "citi FIELD" now nearly complete, wouldn't it be odd to never have a game played there?

The list of deals in jeopardy is growing. Forbes recently reported on the quasi-nationalized AIG's aversion to extending its $78 million sponsorship of the Man Utd shirt beyond 2010... if they are around that long.

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Sunday, February 01, 2009

Super Bowl Economics 

University of South Florida Economist Phil Porter is referred to here as the "Dr. Doom of sports economics," presumably for throwing cold water on economic impact claims surrounding the Super Bowl. That's what you get for telling it like it is, even if your abode doesn't sport ... unusual wall hangings. Some figures of the mundane variety (and not all that pretty) are here.

In spite of the gloomy reports on the economy, NBC is reporting that advertising revenue will hit a record $206 million for the game. This despite the fact that American car companies will be absent from the ad lineup. Frankly, I prefer the VW ads to the ones for Ford Trucks, and am somewhat heartened that my bailout contribution won't occupy my TV screen during the Super Bowl broadcast.

This report has a several interesting anecdotes on economic impact in Tampa. Most interesting to me was the following:

The Federal Aviation Administration is expecting about 1,000 more small private planes and bigger corporate jets than usual to use Tampa-area airports over the weekend - about the same increase that Phoenix saw for last year's game.

But this year some of those who favor deluxe private air travel may be staying home. Nathan McKelvey, chief executive officer of Jets.com, which books charter flights on private aircraft, said last year he booked 55 trips to the Super Bowl - many of them in premium aircraft with seating ranging from six to 12. This time around, McKelvey has booked 18 trips.

With fewer luxury planes in the sky, there also will be fewer courtesy vehicles - a mix of Cadillacs and Chevys - on the ground in Tampa. That's a reflection of the crunch at General Motors, which cut 14,000 jobs last year.

GM, which recently received $9.4 billion and is scheduled to receive another $4 billion in government bailout money, says it scaled back on the fleet of courtesy cars it makes available to the NFL for the weekend and it decided not to buy a costly in-game ad this year.

"We are cutting the courtesy fleet in half and providing the NFL nearly 200 vehicles," said GM spokeswoman Kelly Cusinato. She also said that although in the past GM hosted a dealer party in conjunction with the Super Bowl, this year "we are not hosting any dealer meetings and no GM executives are attending the game."

That seems prudent. Maybe Donald Fehr should take a lesson from GM rather than John Thain. It's only one quote, but Dave Zirin's interesting piece on sports & the economy quotes the MLBPA Chief as saying: "Historically, baseball has been recession resistant." Fehr could be posturing for the purpose of collective bargaining, or he could be ignorant. Or he could be referring to real output -- i.e. attendance and viewing in general, in the presence of lower ticket prices and player wages. But I don't think so. The 22% drop (annualized) in consumer purchases of durable goods last quarter, along with data from earlier eras, suggest to me that "resistance" could be an ill-timed strategy for baseball players.

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Sportsmanship 

From Rachel Cohen of the AP:
Shawn Crawford confirmed that he gave his Olympic silver medal to Churandy Martina, the sprinter who finished second in the 200 meters but was later disqualified for running out of his lane.

“I’m like, if a guy is 10 meters in front of me, I don’t care if he stayed in the middle of his lane,” Crawford told The Associated Press on Friday after finishing third in the 60 at the Millrose Games. “He was going to beat me anyway. He didn’t impede in anybody’s race.”

Crawford, the 2004 Olympic gold medalist, originally came in fourth in Beijing. Teammate Wallace Spearmon was third but was disqualified for running out of his lane.

American officials studied video of the race and then filed a protest against Martina for the same error. Martina and his Netherland Antilles team have appealed to the Court of Arbitration for Sport, arguing that the protest was filed too late under rules set by the International Association of Athletics Federations.

Martina finished in 19.82 seconds behind world record-setter Usain Bolt. Crawford’s time was 19.96.

...Crawford left the medal for Martina at a hotel during a meet shortly after the Olympics.
I remember the race, and being disappointed that Shawn didn't do better -- like me, Shawn is from Clemson. I also remember the hair-splitting decisions, and thinking that Spearmon and Martina both got hosed. I understand the principle of standing up for your man, but two wrongs don't make a right. Kudos to Shawn Crawford for his sportsmanship, and for being a first class Clemson Tiger!

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