Tuesday, April 29, 2008
Sports Econ Musings
A Real-Time Economic Indicator from Sports World: One of my colleagues returned from Talladega, reporting that crowds for the Sprint Cup and Nationwide Series races were way off from last year. He described the Nationwide attendance as sparse.
Free-Agency & MLBPA: Buck Martinez (TBS Analyst for NYY-Cleveland Game)went to some lengths describing the pressure put on C.C. Sabbathia, potentially the marquee free agent pitcher for next off-season, by the MLBPA to follow through and become a free agent rather than resign -- which is what Sabbathia says he prefers. Martinez' imputed rationale for the MLBPA is that getting the top guy on the market sets higher prices for everyone. That's a testable proposition for the sports economists out there with the free agent data sets -- does a higher quality player in the pool raise average offers?
My Ongoing NBA Playoff Beef: (See "Where Hardly Any Game Matters") Sixers beat the Pistons in Detroit, win in Philly, but must win two more to advance and one more to put the Pistons at the very brink of elimination. In spite of the Sixers play, there's been about as much drama as a Seton Hall-Providence matchup. A Celtic-Lakers matchup may be entertaining, but getting there will seem a lot like the WWF.
Free-Agency & MLBPA: Buck Martinez (TBS Analyst for NYY-Cleveland Game)went to some lengths describing the pressure put on C.C. Sabbathia, potentially the marquee free agent pitcher for next off-season, by the MLBPA to follow through and become a free agent rather than resign -- which is what Sabbathia says he prefers. Martinez' imputed rationale for the MLBPA is that getting the top guy on the market sets higher prices for everyone. That's a testable proposition for the sports economists out there with the free agent data sets -- does a higher quality player in the pool raise average offers?
My Ongoing NBA Playoff Beef: (See "Where Hardly Any Game Matters") Sixers beat the Pistons in Detroit, win in Philly, but must win two more to advance and one more to put the Pistons at the very brink of elimination. In spite of the Sixers play, there's been about as much drama as a Seton Hall-Providence matchup. A Celtic-Lakers matchup may be entertaining, but getting there will seem a lot like the WWF.
Labels: labor markets, MLB, NASCAR, NBA
Saturday, April 12, 2008
Pete Rose's Bets: How Smart?
Most readers will recall that Pete Rose has been banned from baseball for betting on the game. Rutgers Professor Douglas Coate does the sums on the bets listed in the Dowd Report as having been made by Rose:
In this paper the betting on baseball games from April 8, 1987 to May 12, 1987 attributed to Pete Rose in the Dowd Report to the Commissioner of Baseball is analyzed. The results show Rose lost $4,200 betting on the Cincinnati Reds, the team which he managed; $36,000 betting on other teams in the National League, and $7,000 on his American League wagers. These losses, which include about $20,000 to $25,000 in transaction fees are small relative to the $450,000 in winning and losing bets (including the transaction fees) and are consistent with an informational efficient market. Assuming these bets are Rose's, his expertise (24 years as a player, 4 years as a manager, major league leader in games played) was not an advantage when betting on his own team, on other teams in his league that he studied and competed against, or on teams in the other major league.Rose typically bet four or more baseball games each day, in addition to a bet on the Reds (always to win, apparently). Coate doesn't include betting on NBA games (see exhibit 16 of the Dowd report, which shows winning and losing bets on NBA spreads). It would be interesting to test the null hypothesis that Rose's wagering on MLB and NBA games was equally futile.
Wednesday, March 26, 2008
MLB in Japan & the EPL too?
From today's WSJ:
The number of MLB licensees in Japan has grown to 61 from just six in 2000, according to MLB. Retail sales revenue from licensed products has nearly tripled during that time to $103.7 million, according to MLB figures.So the money is there. No question about that. A similar prospect is roiling the waters across the Atlantic. English fans are out of sorts over the Premier League's consideration of playing "games that count" abroad. In MLB's case it is just two games out of two thousand or so, and the home field advantage is slight. The competition is marginally affected, at best, by playing games abroad at the start of the season. In English football, home field advantage is significant, and every point is precious when relegation is a threat or European places are at stake. But the money tide will be very difficult for EPL owners to ignore.
Local partnerships include Uniqlo, a unit of Fast Retailing Co. and one of Japan's leading clothing retail chains; LB-03, a fashion line for young women; and Toys "R" Us, whose stores in Japan have MLB corners selling branded toys and apparel. MLB apparel is also sold at some 2,000 sporting-goods stores around the country, according to Miki Yamamoto, senior vice president of IMG Licensing Asia, which handles licensing here for the league.
At the 109 shopping mall in the Shibuya neighborhood, a popular hangout for Tokyo's young and fashionable, "you can see kids with very hippy, trendy designs with a Red Sox logo or shocking pink Yankees clothing," Ms. Yamamoto says. "Those girls are buying those products without knowing how Daisuke is doing or how Ichiro is doing. This is not just about baseball; it's a culture now."
In terms of TV viewership, pitcher Hideo Nomo, who joined the Los Angeles Dodgers in 1995, was the wedge in the door, with the public broadcaster NHK showing the games he pitched. But the advent of Ichiro, a center fielder, took things to another level, because a position player plays every day, while pitchers rotate in every few days.
"Now you had an everyday player, who's out playing 162 games a year," MLB's Mr. Small says. "That made great television: Folks could tune in every day knowing he was going to play."
MLB soon negotiated a new six-year TV deal with Japanese advertising giant Dentsu Inc. valued at a reported $235 million, three times as much as the previous deal. The money from the broadcasts, as well as from sponsorship deals and sales of licensed merchandise, is split equally among the 30 major-league teams. Fans also can catch a nightly news feed with highlights of Japanese stars in the majors.
Labels: demand for sports, MLB, soccer
Wednesday, December 05, 2007
MLB's Hall of Fame Shame
Marvin Miller did more to reshape the economics of labor in American Sport than any man in history. He is currently 90 years old, and based on this account from ESPN's John Helyar, as sharp and pugnacious as ever. Yet Miller's nomination to baseball's Hall of Fame failed once again to obtain the required number of votes. I have wondered how this could be.
As executive director the players union, Marvin Miller single-handedly (in the sense of being a uniquely strategic and effective leader) won freedom of contract for major league baseball players by obliterating the odious "for life" interpretation of baseball's monopsonistic reserve clause. In doing so he erased much of the damage from one of the most bizarre and inexplicable Supreme Court Decisions in our country's history (The Federal League Case of 1922), breaking a logjam that subsequent courts and congresses could not breach.
More than any person I can think of, Miller merits a place in the Hall of Fame. Why is he not there? Pettiness, it seems. Helyar provides the background to this year's tally, along with commentary from Miller himself.
If there were ever a time to make peace between MLB, former commissioner Kuhn, and Marvin Miller, the Hall of Fame vote is a fit and proper place to do it. But MLB's executives have indeed succeeded in turning back the clock, once again cloaking their legacy in shame.
As executive director the players union, Marvin Miller single-handedly (in the sense of being a uniquely strategic and effective leader) won freedom of contract for major league baseball players by obliterating the odious "for life" interpretation of baseball's monopsonistic reserve clause. In doing so he erased much of the damage from one of the most bizarre and inexplicable Supreme Court Decisions in our country's history (The Federal League Case of 1922), breaking a logjam that subsequent courts and congresses could not breach.
More than any person I can think of, Miller merits a place in the Hall of Fame. Why is he not there? Pettiness, it seems. Helyar provides the background to this year's tally, along with commentary from Miller himself.
Miller's leadership reformed the reserve clause system. This led to a significant transfer of income to players from owners, who were ultimately forced to pay market prices. The owners responded with a twenty year long, Sisyphus-like ordeal of lockouts and strong-arm tactics in an attempt to turn back the clock in the labor market. Miller and the players were unfairly tarred by the media's brush throughout this period. Yet the game did not suffer from free agency, as economics implies. Indeed, the commissioner himself now proclaims the financial state of the game to be better than ever.When I called Miller at his Upper West Side apartment in New York on Monday night, he wasn't seething about the Hall of Fame vote. He was listening to the soundtrack of "Guys and Dolls" and letting his wife, Terry, handle the seething. But he, too, had a sense of deja vu.
"They seem to be the same kind of small-minded, vicious people as the owners were when I came in," he told me, though, ever the cool, rational man, he wasn't taking it personally."I'm only mad at myself," he said. "After the first time on the ballot, I should have just withdrawn my name from consideration. My judgment of my chances was, 'Never.'"
But Terry Miller and others talked him out of it. That first time, he drew 44 percent of the votes. And, indeed, he climbed to 63 percent the next time around, just 10 votes shy of what he needed for the 75 percent that would get him in.
Kuhn [MLB's commissioner and Miller's foil in the 1970s] made it onto only 17 percent of the ballots in the last round of voting conducted under the old process earlier this year.
Then the Hall of Fame changed the format. Instead of allowing all Hall of Famers to vote for "veterans" nominees, it created three new panels. Nominees in the "executive/pioneer" category were no longer being considered by 81 voters, but by 12, and that group is comprised primarily of former MLB executives.Voila!Kuhn, a longtime Hall of Fame board member, got 10 votes. Miller got three.
Vladimir Putin couldn't have done it better; Cooperstown couldn't look worse.
If there were ever a time to make peace between MLB, former commissioner Kuhn, and Marvin Miller, the Hall of Fame vote is a fit and proper place to do it. But MLB's executives have indeed succeeded in turning back the clock, once again cloaking their legacy in shame.
Wednesday, October 24, 2007
MLB, Same as it Ever Was
The arrival of the Colorado Rockies to play at Fenway tonight in game one of the World Series is sure to be heralded as sign that the new era of baseball economics is working. One writer at mlb.com goes so far as to say "Avoid logic at all cost... Parity = removal of logic." We won't avoid logic here at TSE, nosiree!
One can't argue with the idea that lessons can be drawn from the Rockies' success. They are relatively low in the spending rankings, listed as having the 25th highest of 30 payrolls in the 2007 database at USAToday.com. Like the 1999-2004 vintage Oakland Athletics, they built a successful, low budget team around a different model from the typical organization. But what does history say about the upstart Rockies? Are they a unique harbinger of change?
To examine the question, lets consider the data on playoff appearances since the league expanded to 30 teams ten years ago, and how playoff success matches up with spending. The top spending team during this period are the NY Yankees, who have an immaculate 10 appearances over ten years. Third in the spending category and second with 8 appearances are the Braves, whose average payroll rank is 6. Second in spending (average rank 5.7) and third in appearances are the Red Sox, with 6. The Red Sox and Yanks are so dominant that no other team from the AL East has managed a single playoff appearance in the past ten years.
What may seem novel about this year are the playoff appearances of three teams with below median payrolls. But this is not out of step with recent history. In 2000, there were also three playoff teams with below-median payrolls, and there has been at least one such team among the eight contenders in each year since: two in 2001, two in 2002, three in 2003, one in 2004, one in 2005, and three in 2006. It is hard to discern a trend in these figures.
The Red Sox and Yankees account for four of the last nine world series champions, and the Sox are heavily favored to win again. But even if the Rockies pull off the upset (they are currently given a 33% chance at tradesports), you don't have to go back very far to find a close parallel. The 2004 Marlins upset the league's biggest spender (the Yankees, of course) with a team ranked 25th in payroll.
Spending money on players doesn't guarantee a world championship, of course. But as the Sox and Yanks demonstrate, plenty of money plenty well spent sure increases your chances.
One can't argue with the idea that lessons can be drawn from the Rockies' success. They are relatively low in the spending rankings, listed as having the 25th highest of 30 payrolls in the 2007 database at USAToday.com. Like the 1999-2004 vintage Oakland Athletics, they built a successful, low budget team around a different model from the typical organization. But what does history say about the upstart Rockies? Are they a unique harbinger of change?
To examine the question, lets consider the data on playoff appearances since the league expanded to 30 teams ten years ago, and how playoff success matches up with spending. The top spending team during this period are the NY Yankees, who have an immaculate 10 appearances over ten years. Third in the spending category and second with 8 appearances are the Braves, whose average payroll rank is 6. Second in spending (average rank 5.7) and third in appearances are the Red Sox, with 6. The Red Sox and Yanks are so dominant that no other team from the AL East has managed a single playoff appearance in the past ten years.
What may seem novel about this year are the playoff appearances of three teams with below median payrolls. But this is not out of step with recent history. In 2000, there were also three playoff teams with below-median payrolls, and there has been at least one such team among the eight contenders in each year since: two in 2001, two in 2002, three in 2003, one in 2004, one in 2005, and three in 2006. It is hard to discern a trend in these figures.
The Red Sox and Yankees account for four of the last nine world series champions, and the Sox are heavily favored to win again. But even if the Rockies pull off the upset (they are currently given a 33% chance at tradesports), you don't have to go back very far to find a close parallel. The 2004 Marlins upset the league's biggest spender (the Yankees, of course) with a team ranked 25th in payroll.
Spending money on players doesn't guarantee a world championship, of course. But as the Sox and Yanks demonstrate, plenty of money plenty well spent sure increases your chances.
Labels: MLB, playoff systems
Friday, July 06, 2007
Downsizing while going upscale
In his review of the career of MLB's Bud Selig, Tim Marchman closes with the "milking the cow, but not feeding it" theme:
Despite Marchman's critique of downsizing, his review [part one, part two] credits Selig for successfully steering baseball through significant periods of economic change. It's a savvy account too, as shown by his take on the public subsidy game. "Blame the city councils, not Selig, for the waste of your money."
Across the nation, virtually every ballpark in the game has been replaced or scheduled for demolition over the last 15 years; those few that haven't, like Fenway Park and Wrigley Field, have been carefully renovated. The purpose of this new construction has always been the same: To build smaller, more intimate parks specializing in providing more high-end service to businessmen. Money isn't made these days from the family out to take the annual trip to the local park; it's made from clients who spend hundreds of thousands of dollars on luxury suites in which they entertain clients.I'm obviously sympathetic to Marchman's point. But while the risks of catastrophe are notoriously difficult to quantify, they must be quite small, at least over the next two decades. For the time being, electronic media will supply the product to the masses and generate future demand.
This is a broad conceptual shift, and I don't think it was inevitable. There is a great tension in marketing a mass entertainment as a boutique product, and a different commissioner would have made different choices, handling that tension differently. Selig has come down on one side, firmly and consistently.
You can see the ultimate example of this in California, where the Athletics are moving from a football field in relatively low-rent Oakland to a 35,000-seat park in Fremont, which isn't, by baseball's historical standards, even a definable place. It's the most extreme manifestation of the shift the sport has made toward valuing quality over quantity — to cater to the relatively few at the expense of the many. It was inevitable that baseball would move in this direction, but under Selig the sport has become totally committed to it. Even in New York, a city with enough passionate fans to support five successful teams, the new stadiums are limiting supply to increase demand and better serve the wealthiest patrons — the Mets' new field, for instance, will have 10,000 fewer seats than Shea Stadium does, and that's not because they have a problem moving tickets.
Only the years will tell, but I think this could prove to be a catastrophic choice.
Despite Marchman's critique of downsizing, his review [part one, part two] credits Selig for successfully steering baseball through significant periods of economic change. It's a savvy account too, as shown by his take on the public subsidy game. "Blame the city councils, not Selig, for the waste of your money."
Labels: luxury boxes, MLB, stadium subsidies
Monday, May 21, 2007
Stadiums and eminent domain
Raymond Keating has a nice column in Newsday, "New stadiums hit property rights." Those of you familiar with the literature on stadium subsidies will recognize Keating as the author of "Sports Pork", a fine Policy Analysis paper from the Cato Institute.
Here's some bits from Keating's column today:
, the willingness to use eminent domain was instrumental in the Dodgers leaving Brooklyn for L.A. The powerful Robert Moses blocked every move that WalterO'Malley and the Dodgers could make in Brooklyn (apparently preferring a location in Queens). Meanwhile, the L.A. city fathers gave O'Malley Chavez Ravine, easy freeway access, etc. in order to lure the team to the west coast. It seems clear that restrictions on the number of franchises (in contrast to the open systems of Europe) raise the stakes in the stadium game, and make the use of eminent domain more likely.
Here's some bits from Keating's column today:
Part of the allure of the recent retro parks has been asymmetrical playing fields. In place of the bland,As I recall from the excellent book Dodgers Move West
uniform dimensions that came with multipurpose stadiums from the 1960s to the 1980s, the new fields have varying outfield distances, walls of differing heights and assorted peculiar angles. It certainly provides these new ballparks with added character.
But a little history shows that this is a manufactured character, as opposed to the organic kind that sprang from the original ballparks of yesteryear.
...[W]here did the special dimensions come from? Well, teams had to make their
stadiums fit on a particular piece of urban land, often within a set of city streets and having to accommodate many neighbors.
For example, Griffith Stadium in Washington, D.C., which was home to the
Senators, had a center-field wall that jutted in towards the playing field. Why? Because, PhilipLowry reported in "Green Cathedrals," there were five houses and a large tree on the other side.
...What a difference a century makes. Developers, sports team owners and players now reap rewards not only from taxpayer-subsidized stadiums, but also from the government's muscling homeowners and small businesses off their properties to enrich the politically connected.
That's what looms with Mayor Michael Bloomberg's Willets Point proposal to move some 100 small businesses and one resident to alter the area near the new Mets home to fit his political vision. Eminent domain also is a weapon to grab property provided by government to Bruce Ratner for his multibillion-dollar Brooklyn residential, office and retail project, including an arena for the Nets.
, the willingness to use eminent domain was instrumental in the Dodgers leaving Brooklyn for L.A. The powerful Robert Moses blocked every move that WalterO'Malley and the Dodgers could make in Brooklyn (apparently preferring a location in Queens). Meanwhile, the L.A. city fathers gave O'Malley Chavez Ravine, easy freeway access, etc. in order to lure the team to the west coast. It seems clear that restrictions on the number of franchises (in contrast to the open systems of Europe) raise the stakes in the stadium game, and make the use of eminent domain more likely.Saturday, March 31, 2007
Questec, and tweaking the rules in baseball
I have a long-running interest in the use of technology to assist umpires and referees in calling the game. Umps and refs are fallible in ways that new technology is not. Hence I'm in favor of judiciously employing advances like QuesTec, which monitors calls of balls and strikes in Major League Baseball. Better measurement and adjustment using technology and umpire training can help restore the essential notion that the rules of the game are the same for all, i.e. that there aren't special rules for special players.
A relevant example is the case of NY Mets pitcher Tom Glavine, who was forced to switch from an in and out scheme (making use of erroneous strike calls off the outside corner), to an up and down strategy. Glavine deserves credit for adapting to how the game was being called in both the pre and post-QuesTec eras. In the pre-QuesTec era, and even today, high and low strikes are not called as the rules state. Glavine cant be faulted for pitching as dictated by umpires calls, rather than the rules per se. It is MLB's obligation to make the rules meaningful.
On this theme, there may be changes in store for the upcoming season, based in part on QuesTec. SI writer Tom Verducci spent a few days suited up as a Toronto Blue Jay during spring training. His account of the Blue Jays' team meeting with the supervisor of umpires foretells the changes:
A relevant example is the case of NY Mets pitcher Tom Glavine, who was forced to switch from an in and out scheme (making use of erroneous strike calls off the outside corner), to an up and down strategy. Glavine deserves credit for adapting to how the game was being called in both the pre and post-QuesTec eras. In the pre-QuesTec era, and even today, high and low strikes are not called as the rules state. Glavine cant be faulted for pitching as dictated by umpires calls, rather than the rules per se. It is MLB's obligation to make the rules meaningful.
On this theme, there may be changes in store for the upcoming season, based in part on QuesTec. SI writer Tom Verducci spent a few days suited up as a Toronto Blue Jay during spring training. His account of the Blue Jays' team meeting with the supervisor of umpires foretells the changes:
At 8 a.m. we are back in the classroom -- Wells, with a fresh apple, in the same seat -- this time for the annual umpires' presentation, delivered by umpire supervisor Rich Garcia. Garcia notes that the average time of game increased by one minute last year, to 2:51, and players need to be aware of pace-of-game guidelines. He also says more strikes on the upper and lower edges of the strike zone will be called this year -- too many were called balls last year, according to the laser-guided QuesTec umpire information system.
Johnson asks Garcia if it is true that QuesTec allows a two-inch buffer zone on each side of the plate when grading umpires. Garcia acknowledges that it's true, and adds that if you include the three-inch width of the baseball, the 17-inch plate actually becomes a 27-inch plate to QuesTec.
There are grumbles in the back of the room.
"Schilling gets more."
"Pedro gets more."
Garcia moves on to beanballs. The quick warnings issued by umpires are designed to cut down on brawls. "And they have," he says. "We had only three last year. Myth: Once a warning is issued, my guy can't pitch inside. Fact: 75 percent of hit batters following a warning did not result in an ejection. So it's working."
"I thoroughly disagree!"
It is Batista, raising a loud objection.
"Last year I was given a warning for throwing a changeup in the dirt," he says angrily. "A changeup!"
Garcia admits umpires can make mistakes but reiterates that brawls are terrible for the game's image and the umpires will act aggressively to prevent them.
Labels: MLB, rules, technology
