Sunday, March 21, 2010

March Madness: O Canada Version 

The second round game between Syracuse and Gonzaga today has an interesting sub-plot:  a lot of Canadians will be on the floor.  Syracuse guard Andy Rautins and forward Kris Joseph are Canadian citizens; Gonzaga has four Canadians on the roster.  In Canada, sports channel The Score has the broadcast rights to the Big Dance, and they have naturally been promoting teams with Canadian players heavily. They also do a lot of old school, ESPN-style switching between games to show close finishes.

Dave Berri and a slew of coauthors have investigated the effect of the globalization of sport on competitive balance in sports leagues.  The idea is that, in a given population, relatively few people have the skills necessary to play sports at the elite level, so as sports recruit players from a larger pool, the amount of talent available increases, increasing competitive balance.  The WaPo article linked above credits the NBA expansion into Canada and increased availability of NCAA basketball on TV up here for the increased number of Canadian players in the NCAA, and predicts that there could be 200 Canadians playing NCAA basketball in the NCAA within 10 years.  Bracket-buster Saint Mary's has five Australian players on the roster, further reinforcing the global nature of college basketball.

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Thursday, March 18, 2010

Accounting Madness 

In an article today on CNN.com, the normally quite sharp Chris Isidore, a senior writer for CNNMoney, perpetuates one of the most enduring myths in sports economics: that college sports teams generate significant profits for their host institutions.

The article shows the individual revenues, expenses, profits, and margins for essentially all NCAA Division I men's basketball teams and finds that across the 340+ D1 institutions in the country, basketball made a profit of nearly $280 million last year. As noted by Isidore, "it's clear that men's basketball is a major source of funding for many colleges, and that profits are still far more common than losses for the major teams in March Madness." It's a nice story. It's also 100% wrong.

Let's just take a look at two schools, my own Holy Cross and big-time power North Carolina to highlight the flaws.

According to the article, the Holy Cross basketball team racked up $1,549,329 in expenses while generating an identical amount in revenue and therefore exactly broke even. Nearly a third of the schools on the list show exactly zero in profits as well. A quick look at the source data, however, shows that about $1 million of the supposed revenue for the team came from direct institutional support. The team didn't break even. It lost about $1 million. Large numbers of D1 basketball programs include direct and indirect insitutional support, direct government support, or student fees as part of basketball "revenues". In fact, these are simply tranfers from students, taxpayers, and other parts of the college that disguise losses in the basketball program and athletics in general.

But what about a powerhouse like North Carolina? While Holy Cross sells, perhaps, $100,000 in tickets per year, UNC boasts basketball revenues of nearly $20 million, and this money comes from hard sources like ticket sales, NCAA and conference distributions, and media rights. While the most current year's data from the Department of Education is not broken down into great detail, older data from the IndyStar shows no shenanigans on the revenue side at UNC.

Costs, however, are another matter. Nearly half of all the Tarheels' athletic expenses are not allocated to any individual team, but instead expensed to the athletic department as a whole. The older IndyStar data shows that the University allocated exactly zero dollars in expenses to the basketball team for things like medical trainers, facilities and maintenence, promotion, or indirect institutional support. It's pretty easy to have a profitable basketball team when all of your revenues count towards the bottom line but many of your expenses don't.

Sometimes it is worth presenting the best information you have even though it's not perfect, i.e. something is better than nothing. Other times the information is so flawed that it less than worthless, verging on the harmful. This is one of those cases, and CNN should know better.

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Monday, March 15, 2010

NCAA Men's Basketball Postseason Roundup 

March Madness is upon us again.  This year, the men's college basketball postseason features some interesting economic madness across the board.  For the second year in a row, there are four postseason tournaments. Here's a roundup of the four events:
  1. The NCAA Division I Men's Basketball Championship. The "Big Dance."  65 teams in a single elimination "knockout" tournament spread over three weekends in March and April.  Games are held at predetermined neutral sites across the country.  The big economic news here is that this could be the last year of the much-loved 65 team format, which has been in place since 2001.  The tournament had a 64 team format from 1985-2000.  The NCAA generates about 90% of its operating revenue from the massive 13 year, $6 billion contract with CBS to televise this tournament.  The NCAA/CBS contract is in year 10, and the NCAA has an opt-out clause following this year's tournament broadcast.  Much speculation revolves around the NCAA exercising that option, putting the broadcast rights for future tournaments up for bid, and expanding the field to as many as 96 teams.  A new auction and expanded field could substantially increase the value of the contract.  I am a big fan of the 64/65 team format, and would hate to see it go.  The NCAA seems to have a strong incentive to change the format.  Stay tuned.
  2. The National Invitational Tournament. The second tier postseason tournament.  32 teams in a single elimination "knockout" tournament.  The finals are played in Madison Square Garden in New York City.  Founded in 1938, the NIT is actually older than the NCAA tournament, and for a long time it was more prestigious.  The NCAA has owned the NIT since 2005, when it purchased the rights to operate the tournament for 10 years from the Metropolitan Intercollegiate Basketball Association (MIBA), a consortium of NYC colleges, for $56.5 million.  The NIT and NCAA Tournament do not compete for teams; NCAA rules prohibit a team for turning down an NCAA bid for the NIT. Interestingly, Marquette University did just that in 1970, when Coach Al McGuire turned down the NCAA bid to play in the NIT closer to home.  Marquette won the NIT that year.  Most NIT games are televised on ESPN.
  3. The College Basketball Invitational Tournament. A sixteen team tournament operated by the Gazelle Group, a sports marketing company.  Now in its third year of operation, the CBI has a single elimination format until the championship round, which is a best of three series between the last two teams. CBI games are held on campus. Up to 11CBI  games will be carried on HDNet, an all hi-def channel that is available on many satellite and cable providers around North America.  There is some anecdotal evidence that the CBI has tried to compete with the NIT for teams, but it has not been successful. Participants:Akron (24-10), Boston University (19-13), College of Charleston (21-11), Colorado State (16-15), Duquesne (16-15), Eastern Kentucky (20-12), George Washington (16-14), Wisconsin Green Bay (21-12), Hofstra (19-14), Indiana State (17-14), IUPUI (24-10), Morehead State (23-10), Oregon State (14-17), Princeton (20-8), Saint Louis (20-11), and Virginia Commonwealth (22-9).
  4. The CollegeInsider.com Tournament. A sixteen team single elimination tournament operated by, I think, the people who run the CollegeInsiders.com web site.  This tournament is in its second year of operation.  As best as I can tell, the CIT has no television coverage, but games will be streamed on Fox College Sports broadband.  There appears to be quite a bit of competition between the CBI and the CIT for teams.  A recent newspaper report on the CIT indicates that the Athletic Director at Marshall University, the #1 seed in the CIT, was offered bids to both tournaments and "struck a deal" with the CIT that included the possibility of playing 4 home games.  The CIT financial model is to charge each home team $30,000 per game to participate and allow the home team to keep all gate revenues. participants: Fairfield (22-10), George Mason (17-14), Western Carolina (22-11), Marshall (23-9), South Dakota (22-9), Creighton (16-15), Harvard (21-7), Appalachian State (22-10), Middle Tennessee State (19-13), Missouri State (20-12), Portland (21-10), Northern Colorado (24-7), Pacific (20-11), Loyola Marymount (18-14), Southern Mississippi (20-13), and Louisiana Tech (23-10).
For those keeping score, 129 of the 342 Division I men's basketball teams are participating in one of these four postseason tournaments. The biggest issue in men's postseason college basketball is clearly the potential expansion of the NCAA Championship Tournament, which would have an impact on the other three.

There is only one team from a "Big 6" BCS conference in the CBI and CIT: Oregon State.  Three BCS teams participated in the 2008 CBI (Washington, Cincinnati and Virginia), and three participated in the 2009 CBI (Stanford, Oregon State and St. John's).  The University of Michigan ruled out participating in the CBI before bids were announced.  No BCS team participated in the 2009 CIT. Unlike the NIT, these two tournaments allow participating home teams to keep a large fraction of gate revenues. which would seem to appeal to major conference teams that have large arenas and large numbers of fans and students.

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Tuesday, November 10, 2009

Astounding Breakthrough in Tournament Design 

Not sure if you noticed it, but college basketball started last night. The schedule still needs fixing. The NCAA men's championship game takes place before the start of baseball season, but the World Series ended last week. If MLB adds a few more rest days to the postseason schedule, or the NCAA pushes the start of the season back a few days, we will reach Nirvana (located just outside Bristol, CT), where college hoops and MLB fully overlap, providing round-the-calendar sports action.

Anyway, college basketball starts off this year with the 2K Sports Classic, which is billed as a basketball "tournament." I have some old fashioned ideas about how tournaments work. A dated, 20th century notion that in knockout tournaments two teams play a game or a series and the winner advances to the next round while the loser is either eliminated, or perhaps moves to the losers' bracket in some cases (I am open to the idea of a losers' bracket - it works in the College World Series, for example). The problem with my quaint idea of how a tournament should work is that sometimes unexpected events take place - we called them "upsets" back in the day - and a team like Gardner Webb would beat Kentucky at home, advancing to the widely televised later rounds, thus taking up valuable tee-vee exposure and drawing miniscule viewing audiences.

Thanks to the astounding developments made by the Gazelle Group, organizers of the 2K Sports Classic, those pesky "upsets" have been eliminated from their "tournament." Here's how it works. The tournament participants are divided into "hosts" (the Big Boys: Syracuse, North Carolina, Ohio State and Cal), and the "others" (Albany, FIU, Alcorn State, Murray State, Robert Morris, NC Central, Detroit and James Madison). In the "Regional Round," the Big Boys play two games each and the others play one game. Regardless of the outcome of these games, the Big Boys "advance" to Madison Square Garden in NYC to play in the Championship Rounds on the Deuce; the other teams move to the "Subregional Rounds" to play additional games in an "undisclosed location" presided over by former vice president Dick Cheney.

As far as I can tell, the "Championship Round" games will be decided by points scored. In the future, the outcome of these games should be decided by the size of the revenues generated, with the teams drawing the most "supporters," as measured by $0.99 text messages sent to the Gazelle Group, advancing to the championship game.

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Wednesday, October 21, 2009

Report: Lower Ticket Prices for Women's Basketball is Due to Institutional Sexism 

From the Chronicle of Higher Ed.:

"Colleges charge a premium for admission to see males play, even when women's basketball teams are ranked as among the very best performers in the nation," write the authors, Laura Pappano and Allison J. Tracy, both of the Wellesley Centers for Women. By charging less for admission to highly ranked women's games, the authors say, athletics departments engage in "institutional discrimination that is camouflaged as sensible economic practice."

The report analyzed ticket prices at every level, from single-game to season tickets, at 292 Division I colleges. The results showed that ticket prices for women's games lagged far behind those for men's games at the same institution at all of the top 25 women's basketball programs in the country—even at colleges where the men's team ranked lower than the women's team.

Here is the abstract to the report.

Tickets to college sports—and men’s and women’s Division I college basketball in particular—may appear on the surface no different than tickets members of the public may buy to attend professional sporting events. But unlike professional franchises, colleges are non-profit organizations and, in many cases, public institutions. Decisions around ticket prices do not reflect an actual marketplace, but internal calculations and decisions that necessarily reflect a value placed on the event by the institution. This distinction is critical because previous research shows that lower-priced events are perceived as lower quality and less worth watching or attending. Our review of ticket prices for men’s and women’s Division I college basketball for the 2008-2009 season considered entry fees charged by 292 institutions at various seating levels, including season ticket packages and single game tickets. Our results showed significant gender gaps at every pricing and seating level with colleges charging a premium for male play. This gap persisted even among teams identified by the NCAA as top-ranked women’s teams with large fan followings. Analysis of attendance figures further showed that the gender differential in price across schools is not accounted for by differences in attendance. Because athletics, and particularly college basketball, have an increasingly prominent cultural profile, the practice of effectively de-valuing women on the court has implications off the court as well. The results support the broader contention that women athletes—as women in traditionally male arenas—continue to face institutional discrimination that is camouflaged as sensible economic practice.

I do not doubt their findings, but I wonder if they took into consideration something: that basketball fans are more willing to buy men's tickets than women's tickets, and not because of sexist attitudes. Perhaps, just perhaps, sports fans find men's games, on average, more exciting to watch than women's games.

I wonder if the authors asked themselves this question: why would those in athletic departments be willing to "leave money on the table" to feed their sexist attitudes? They note themselves that top-ranked programs tend to charge less for women's games than men's games. If fans are willing and able to pay the premium, why aren't they charged the premium?

One "solution", if you want to call it that, would be to force all colleges to charge exactly the same price for men's and women's ball (and to not set lower prices for men's games). Then let's see what happens to attendance at women's games.

Here's Stacey Brook with a similar take that it is the demand side of the market that the authors of the paper are ignoring.

Cross-posted at Market Power

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Friday, May 29, 2009

Turning pro early, in Europe 

After two years at Clemson, Terrence Ogelsby will play basketball next year in Europe. A Florida player with NBA level talent, Nick Calathes is also leaving school after two years to play in Greece. These are the only two college players mentioned in this discussion (Frederick has completed his eligibility at South Carolina), but I expect this will become more common in the years ahead. Ogelsby's dad played in Europe, and Calathes is a native of Greece, so they are well enough informed to blaze the trail to Europe for underclassmen. As basketball institutions improve across the pond and information spreads, playing for a scholarship won't seem such a good deal alongside the opportunity to earn a few hundred grand, or more.

Institutions change slowly, but the improvement in world basketball is a long term trend that is plain as day. College basketball has imported top foreign talent for some time, but economic forces imply that the flow will reverse. I doubt college basketball will soon mirror college soccer (where the best talent flows to the money centers fairly early, and skips college), but that is the direction it is headed.

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Thursday, April 02, 2009

Conference Dating Game: Winners and Losers 

Several college athletic conference realignments have taken place over the past 20 years in a process not unlike Match.com. Different parties size each other up based on similarities of athletic programs and TV market appeal. Many matches make sense, such as Florida State, BC, and Miami "hooking up" with the ACC, Oklahoma and Texas matching up in the Big 12, or Louisville and UConn joining forces in the Big East. Just as with dating, this process leaves some players out in the cold such as Rice, SMU, Temple, and others.

One interesting result of the matching and leftovers is that sometimes being left behind works to your advantage and sometimes getting a date works against you. Memphis has benefited and may continue to benefit by its exclusion from the C-USA schools that went to the Big East. Instead of scratching and clawing just to keep their head above water in the Big East anarchy, their dominance of C-USA provided them with nice seeds and a run to the finals and the Sweet 16 over the past two seasons.

In contrast, DePaul received the Big East invite and schools like Seton Hall and Providence retained their places. However, are these non-football schools really a fit for the current 16-member Big East behemouth. An NJ.com post by Steve Politi addresses some aspects of the current dilemma, including touching on whether it make sense in terms of money:
so much of what made the Big East special in its heyday of the late '80s is missing from its monstrous state in 2009. For every St. John's-Georgetown tilt, like the 64-59 victory for the Red Storm Tuesday, you end up with a Cincinnati-DePaul.

For every matchup between two longtime rivals, you end up with two teams thrown together out of necessity, in a league that might be too big and too competitive for its own good.

"It's good for the cash register," Carnesecca said when asked about the 16-team tournament, but even that seemed debatable. The bottom eight Big East teams squared off Tuesday, but in an era when it seems like every dribble is televised, the four games were only available on the internet.
Would some of the weaker, non-football members of the Big East be better suited for a conference tailored to their interests. A conference made up of DePaul, St. John's, Seton Hall, Providence and mix them with a group such as Xavier, Dayton, Temple, St. Louis, UMass, Butler and give or take one or two of these or others, and one is left with something more similar to what the Big East started out as in the late 1970s.

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Tuesday, March 24, 2009

The More Things Change ... 

CBS college basketball analyst and former coach (Manhattan, Villanova, UMAss), Steve Lappas made this (paraphrased) observation over the weekend:
The game has changed. We used to think that you had to pass the ball to get shots. Things have changed over time with the three point shot. With guys spotting up at the three point line, dribbling and driving has become more important. Getting the ball to the low post doesn't matter much anymore.
Lappas' views fit my own (making them more appealing to me) -- the three point line has changed a lot of things. It makes an interesting econ story. Rule changes change incentives. The effects show up in obvious ways, more long distance shooting but also in not-so-obvious and maybe unintended ways -- less ball movement, less player movement, more dribbling, fewer assists, less low post play, and so on.

I decided to do a little, preliminary data analysis, thinking to confirm my predictions. Of course, there are always limitations to data. Unlike hockey, basketball does not award for the pass leading to the pass leading to the score. As a result, assists might stay high (dribble and "kick-out" type assists) while passing leading up to the assist may diminish.

I collected data on assists, field goal attempts, free throw attempts, and points scored for second round NCAA tournament games in 1986 (the last year before the 3-point line) and for 2008. This comprises only 32 teams and 16 games for each year, so the results are hardly the final world. Here they are:

Assists 1986 = 13.8
Assists 2008 = 13.7

FGA 1986 = 58.9
FGA 2008 = 57.4

FTA 1986 = 21.8
FTA 2008 = 21.1

PTS 1986 = 70.9
PTS 2008 = 72.6

None of these differences come close to statistical significance and certainly don't set off alarm bells in terms of big, big changes. So, while dribbling may be substituting for passing some and maybe some three point shots are substituting for low post play some, the end result in terms of assists, shot-taking, free-throw taking, and point scoring is surprisingly similar to the pre-3 point eara.

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Tuesday, March 17, 2009

More March Madness! 

Remember the good old days when there were only two postseason men's college basketball tournaments? Things were simple then. If your bubble popped, you either landed in the postseason NIT, or you went home, licked your wounds and dreamed of next year.

Things got a bit messier last year, with the debut of the College Basketball Invitational (CBI), a 16 team tournament sponsored by a sports marketing company that tried to steal a few teams from the NIT. I had a post about the CBI last year. The CBI is back again this year, although the games will be televised on HDNet, which appears to be available only on DirecTV and Dish Network. I suppose that is better than YouTube or streaming web video. The CBI field includes St. John's (16-17), Richmond (18-15), Vermont (23-8), Green Bay (22-10), College of Charleston (26-8), Troy (19-12), Houston (21-11), Oregon St. (13-17), Buffalo (21-11) , Wichita St. (16-16), Northeastern (18-12), Wyoming (19-13), Boise St. (19-12), Stanford (18-13), UTEP (19-12), and Nevada (21-12). Yes, you read that correctly: 13 and 17 Oregon State is dancin' Bay-Bee!

This year we have yet another new entrant into the market, the CollegeInsider.com Postseason Tournament. This is another 16 team tournament; the games will be televised on Fox College Sports. The inaugural field includes Austin Peay (19-13), Belmont (19-12), Bradley (18-14), The Citadel (20-12), Drake (17-15), Evansville (17-13), Idaho (16-15), James Madison (19-14), Kent State (19-14), Liberty (22-11), Mount St. Mary’s (19-13), Oakland (22-12), Old Dominion (21-10), Pacific (19-12), Portland (19-12) and Rider (19-12).

There are now 129 postseason basketball tournament participants. A few notes on the field:
  • Higest ranked (by Sagarin) teams staying home: Cincinnati, NC State, Seton Hall, Vanderbilt, Iowa, Mississippi. Power conference teams snubbed by the NIT.
  • Highest ranked (by Sagarin) CBI participants: Stanford, Wisconsin-Green Bay, Houston
  • Highest ranked (by Sagarin) CollegeInsider.com team: Portland, Old Dominion
  • Why are they playing: The Citadel (193 in Sagarin) in CollegeInsider.com field; Troy (171 in Sagarin) in the CBI field. Oregon State (12-17, ranked 114 in Sagarin) in CBI field.
And the $60,000 questions: Is there any incentive for additional entrants in this market? Are the CBI and CollegeInsider.com tournaments viable in the long run?

Hat Tip: Brian Soebbing

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Thursday, October 16, 2008

The Value of Recruiting 

Echoing Skip's post below, I link to this article about Kansas State assistant basketball coach Dalonte Hill, about whose salary a recent stink was raised:
Michael Beasley made Kansas State basketball relevant for the first time in more than a decade last season, and his presence put a few extra dollars in the pocket of the man responsible for luring him to Manhattan, Kan.
Kansas State had been a perennial also-ran in the Big 12 during the 90's and the early part of this decade. It was in large part due to Michael Beasley - with all due respect to Bill Walker - that KSU had the run they did last year. In a typical competitive labor market, Beasley would be able to capture his value through a salary. The same can be said of other top recruits throughout the nation.

But the labor market for college basketball talent, although very competitive, is anything but typical because the top players cannot receive payment anywhere close to their value. So their value gets captured somewhere down the line, most likely by the coaches with the ability to recruit them.

Cross-posted at Market Power

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