Tuesday, December 22, 2009

More on the Economics of Bowl Games 

Inside Higher Ed reports that a number of teams participating in bowl games will not be taking the marching band, as well as reducing the number of cheerleaders and the size of the "official party" of administrators, faculty and staff that often travel with teams to bowl games. Boston College and Nevada will leave the band at home; Minnesota will reduce the number of band members and cheerleaders traveling to the Insight Bowl in Tempe. The reason? The bad economy, and the high cost of travel. Airfare (or charter flights), hotel rooms, food, practice facilities at the bowl site for the team and band all add up to large travel costs associated with playing in bowl games.

That's just the tip of the iceberg. An article in the San Diego Union-Tribune exposes the dirty little secret of bowl games: on average, schools lose money when they participate in bowl games. Although participants in the BCS bowls will each receive $18,000,000 this year, some of that revenue must be shared with other conference members, reducing the payday to individual participants. Also, all bowls require participants to purchase a certain number of tickets, usually more than 10,000, to the game, no matter how many they actually sell to fans. Last year, Western Michigan was stuck with over 10,000 unsold tickets to the Texas Bowl, costing the university over $400,000. The Union-Tribune article claims that unsold ticket guarantees cost bowl participants over $15 million last year, and expects the cost to rise this year as fewer fans travel to bowl games across the country.

Bowl games are viewed as local economic development projects by host communities. The losses incurred by many participating institutions suggest a subsidy flowing from college football fans to cities that host bowl games. Worse, the existing evidence indicates that college bowl games actually do not actually generate much local economic benefit for host cities.

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Friday, December 18, 2009

Winners and Losers in College Bowl Games 

It's well-known that in terms of accounting entries, many college athletic departments lose money. Some economists have questioned whether the expense and revenue entries are an accurate measure of the costs and benefits associated with athletic departments. One reason given is that athletics may benefit other parts of the school. Even if the athletic departments bleed money, other areas of the school may benefit.

A second argument given is that the revenue and expense entries are convoluted by the accounting conventions used by colleges. If athletic souvenir revenue is entered in the general university revenue account, then the athletic revenue accounts understate the "true" level of revenue. Similarly, it's not at all clear that the true cost of an athletic scholarship is as high as the posted tuition and room and board rate. If not, then athletic expenses as entered overstate "true" expenses.

In any case, the San Diego Union-Tribune has recently posted a couple of interesting stories about who benefits and who doesn't benefit from college bowl games. The answers may (or may not) surprise you. Here is one story. Here is the other story.

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Tuesday, December 15, 2009

Non-Pecuniary Gifts in College Football Bowls 

Unlike coaches who get bonuses for making bowl games, the athletes can't be paid cold, hard cash for their efforts. But participants in bowl games get an array of gifts. The Sports Business Journal has the complete list for this Christmas-New Years bowl season.

HT Wiz of Odds.

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Monday, December 07, 2009

Frustrated With the Big XII Bowl Selection Process? 

"Frustrated." "Slighted." "Snubbed." Those awords describe the feelings many Missouri fans, adminstrators, players, and coaches have towards Mizzou's selection to play Navy in the 2008 Texas Bowl. The Texas bowl gets the last pick among the bowls affiliated with the Big XII conference and a 6-6 Iowa State program, a program that 8-4 Missouri beat, got picked ahead of Mizzou to go to the Insight Bowl.

Moreover, Mizzou finished with a better record than Oklahoma (7-5) and the bipolar Texas A&M Aggies (6-6) but got picked after them. No doubt the relative strength of the South division over the North division was a determinant of OU's and aTm's being selected ahead of an 8-4 North division team.

It's the third year in a row that Mizzou interests felt jobbed by the bowl selection process. Despite finishing in first place in the 2007 North division, having carried a number one ranking for one week at the end of the season, and having beaten Kansas head to head, Kansas got the BCS at-large berth. Yes, Mizzou had one more loss but it also played one more game, that being the the honor of getting whupped by Big XII champion Oklahoma (Mizzou lost twice to Stoops' boys that year - they also lost to OU in the regular season).

Snubbed by the Orange Bowl, Missouri went on to destroy Arkansas in the Cotton Bowl where 35,000 Mizzou fans partied hard in the cold sun in the Metroplex.

In 2008, Mizzouri once again won the north, got pummeled by OU in the Big XII championship crushing Nebraska handily in Lincoln 52-17 earlier that season.

These are not the first instances of a Big XII team getting bumped down a notch in the selection process. In 1998, Kansas State came into the Big XII championship game ranked second in the AP poll. The Wildcats were loaded on both sides of the ball and were headed to the BCS championship game with a win over Texas A&M. It didn't work out that way as KSU lost a two-overtime shocker to the tenth-ranked Aggies.

But instead of an at-large berth in the BCS, the 3rd ranked 'Cats fell all the way to the Alamo Bowl where they lost to unranked but Drew Brees-led Purdue Boilermakers 37-34. Watching that game, it was pretty clear to this observer that Kansas State, with one of the best and most well-rounded teams in college football, was playing as if it didn't want to be there.

What's got Mizzou fans in particular and North Division fans outside of Nebraska concerned is the conference's bowl selection process, a process that probably won't be changed anytime soon. The Big XII has outsourced its selection process to the bowls themselves and other than the BCS invitations, the bowls can pick whatever team they want to pick as long as that team is bowl-eligible. Four of the bowls are in Texas, which works out rather well for the Texas and Oklahoma schools in the conference. Add to that the well-traveling Nebraska fans who are coveted by every bowl and you have 7 of the 12 schools that are happy with the current selection process.

Perhaps we could call it the NebOkieTex conference? But I digress.

For this year's selections, Mizzou's situation is like being the last kid picked on the playground. The bowl's payout is nearly half of the next-lowest paying bowl ($612,500 compared to the $1.1 million payed by the Independence Bowl (source)). The Texas Bowl's estimated expense allowance is $500,000 less than the Insight's (source). The Mizzou administrators have a reason to be frustrated for cash flow reasons.

But I'm not so sure that Mizzou fans, players, and coaches should feel slighted, snubbed, frustrated, etc.. Both the Insight and Texas bowls are New Year's Eve bowls. There are more Mizzou alumni in Texas than in Arizona. Moreover, the game is more accessible on television since the Texas Bowl is broadcast on ubiquitous ESPN where the Insight Bowl is broadcast on the not-so-ubiquitous NFL Network. In addition, Mizzou recruits Texas heavily

I know the bowl system has suffered a sort of grade inflation with so many games being played and where mediocrity is awarded over merit. We'll probably never know about the "intense lobbying efforts" that go on behind closed doors for these bowl slots and I realize it's about the benjamins. That is, it's about the determinants of the overall demand for each game: the absolute and relative quality of the matchup, any feelings of rivalry the two schools' fans have, the willingness and ability of fans to travel, etc.

But it's a bowl game and the Tigers, and all other programs that feel slighted for one reason or another in NCAA FBS football, could be doing what many other teams and their fans will do this year: stay home for the holidays.

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Monday, January 12, 2009

Bowl "Location" & Congestion 

Skip's college bowl post brought to mind my wife's puzzlement over why big college bowls are so spread out after New Year's Day. Maybe her question expresses more her discontent with my extended watching than with the bowl ratings, but I laid a little econ theory and bowl history on her nonetheless. In short, "location" theory and a "tragedy of the commons" problem go along way toward an explanation.

At one time, the big four bowls (Rose, Sugar, Orange, and Cotton) held the marquee NYD spots. This semi-collusive, oligopoly structure involved only small competitive forces such as the Sugar's experimentations with NY Eve and different NYD time slots. In 1981, the Fiesta bowl busted up the stability, switching to NYD. Basic "location theory" predicts the Fiesta's decision -- if the NYD bowls sit right in the middle of a big pool of consumers, then move right up next to them (the Burger King - McDonald's outcome).

Eventually, the Citrus Bowl (now Capital One) figured out this logic, then others followed. The prime real estate became congested -- the "commons" problem" -- leading the most prominent bowls (except the Rose) to explore post-NYD dates. As in many "commons" situations, the final result can look perverse. Now, the old prime real estate on the day that many football fans devoted (or devoted) to watching bowl games has turned into the outlet mall. With the exception of the Rose Bowl, all four of the other games involved at least one team with at least four losses. In the old days, I watched football from 11 AM to 10 PM on NYD. This year, I probably saw 30 minutes, opting to attend a basketball game instead. I watched quite a bit of the Fiesta Bowl because and quite a bit of Championship game, but my overall number of hours watching is considerably less than when NYD reigned supreme.

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