The Sports Economist

Labels: golf, marginal revenue product, television

"The problem is it's hard to compare eras," Nicklaus said. "It's a different game today, and a lot of guys from before, like even Hogan and Player, would have had a hard time today because of the distance you need to drive it. That's just a fact of what the game is. "I don't know if we had as many good players, but the great players we had all were multiple major winners, so when I slipped up, there was somebody else on their 'A' game. "There are great players now, but they might not have won a lot of majors, except for Tiger. Phil [Mickelson] could be close. Ernie [Els] approached it, Vijay [Singh] approached it. But that's about it. And that's a fact of life today."

• Suppose that winning a major not only signals your ability as a player but enhances your ability to do it again (or maybe it takes a couple of times). You learn to deal with the pressures, courses, ... The increasing depth of the field reduces the likelihood of breaking through to that second or third major victory, thereby reducing the "learning effect" and the likelihood of reaching the 6th or 7th major. Tiger's is good enough relative to "the field" for his performance record not to be affected.

Labels: golf, PGA, Tiger Woods

Labels: golf, sports economics

GolfWorld's Ron Sirak has an interesting article on the LPGA. Endorsement money has begun to flow in to the top players:

When Meg Mallon won the 2004 U.S. Women's Open she wore a hat purchased in The Orchards golf shop and her caddie carried a bag uncluttered by corporate logos. The following week, after she took the Canadian Women's Open, Mallon received one congratulatory call from an equipment rep -- and no endorsement offers. What made the situation more depressing was that Mallon had 17 LPGA victories, including four majors, and possessed one of the most marketable personalities in her sport.

"It's very frustrating when you watch the men's qualifying school and the winners say [golf manufacturers] are throwing money at them right and left, and our tour can't even get a bonus pool," she said at the time. She was not alone in her frustration: Beth Daniel, Juli Inkster and Rosie Jones were unrepresented or under-represented in endorsement deals.

Fast forward to today and LPGA players are hot commodities -- at least the stars. All four major winners from a year ago had endorsement deals well in excess of seven figures annually, many from multinational companies outside golf. Three have lucrative equipment deals. As the tour embarks on its 59th season at next week's SBS Open at Turtle Bay in Hawaii, Mallon said she was "ecstatic that [equipment companies] have finally found the value in the women's game. I hope the trend continues."

Via Golf Blogger (HT to John LaPlante). John noted that the improvement in deals is partly driven by the change in womens' labor market presence and by Title IX requirements. But those factors have been more gradual and don't go well in explaining the spike in the right tail of the star spectrum. A better explanation of the spike, as Sirak argues, is that several of the LPGA's rising stars, such as Paula Creamer and Natalie Gulbis are new to the LPGA and provide, well, sight-utility. And they are good golfers. As John noted in an email to me:

Three youngsters--Paula Creamer, Natalie Gulbis, Morgan Pressel--have both good looks AND game. Nothing succeeds like success.

Labels: golf, lpga, Morgan Pressel, Natalie Gulbis, Paula Creamer

Labels: golf

A given tournament player is often thought to put forth more effort when he/she faces better competition. But what if there is a superstar in the tournament (HT to Don Coffin)? Do the non-superstars continue to put forth as much effort?

Managers use internal competition to motivate worker effort, yet I present a simple economic model suggesting that the benefits of competition depend critically on
workers'’ relative abilities,— large differences in skill may reduce competitors'’ efforts.
This paper uses panel data from professional golfers and finds that the presence of a
superstar in a rank-order tournament is associated with lower competitor performance.
On average, higher-skill PGA golfers' ’tournament scores are 0.8 strokes higher when
Tiger Woods participates, relative to when Woods is absent. Lower-skill players' ’scores
appear unaffected by the superstar'’s presence. The adverse superstar effect increases
during Woods's streaks and disappears during Woods'’s slumps. There is no evidence
that reduced performance is due to “riskier ”play.

That is from Jennifer Brown's job market paper entitled "Quitters Never Win: The (Adverse)
Incentive Effects of Competing with Superstars." Here is a Slate write up on Brown's paper. Here's the conclusion in the Slate piece (by Joel Waldfogel):

What does this mean for the nongolfing world? It's generally agreed that people work harder when they are paid for performance. Anyone who has ever languished in a Paris cafe, €”where service compris translates roughly as "the Republic of France mandates a minimum 15 percent tip regardless of service quality" €”can appreciate the power of incentives. But the effects of incentives appear to be muted when the incentives are based on relative performance and the competition is tough. We're taught that quitters never win, but if the evidence from golf is any indication, it might be more accurate, if less pithy, to say that expected losers are more likely to quit, or at least not perform as well. If you're running a business, and you have the opportunity to hire the Tiger Woods of office work, you're not going to pass up the chance. But Brown's study suggests you might want to consider its effect on your other workers' performance. Steak knives might not cut it as second prize.

Here is a link to Sherwin Rosen's 1983 American Economist article on the economics of superstars. Economists have known for a long time that the amount of effort put forth depends on its benefits and the costs. Brown's paper, according to the abstract, shows us empirical evidence that the lower the probability of succeeding, the less effort non-superstars put forth (all else equal).

I have three quick thoughts: how often are there superstars in tournaments? If superstars rarely come around, then it might make no sense to alter the structure of tournament play.

What if there are two superstars in the tournament? Then the battle among the non-superstars becomes for third place and, all else equal, this should lead to even less effort being put forth.

What about the situation where the superstar is very young and looks to dominate the sport for years to come? It seems reasonable that some with potential talent but who have not invested in that sport may decide to look elsewhere to compete.

Labels: golf, superstar effect, Tiger Woods