Sunday, February 21, 2010

Support for Olympic Curlers (and other athletes?) 

As I have watched the curling from the 2010 Olympics, I have heard several of the commentators tell us that so-and-so from such-and-such country is a full-time curler. S/he is sponsored by their government and unlike Canadian curlers does not have to have another job to support themselves. There is always a whinging, wistful tone to such pronouncements, suggesting that in Canada we should also provide government financing for our top curlers.

I find this tone and its implications offensive for two important reasons:

  • It ignores the considerable sponsorship and prize money for curling that is provided by the private sector in Canada. Top curlers earn an acceptable (though probably not luxurious) living when their winnings and sponsorships are added up. This private support for curling in Canada is monumentally greater than the private support for curlers in other countries.
  • If the government were to provide support for Canadian curlers, who should receive that support? Only the top teams? If so, how might the gubmnt bureaucrats determine which are the best teams? And keep in mind that the fourth best team in Alberta could well be considerably better (and more likely to win on the international level) than the best teams from some of the other provinces. Governments are notoriously bad at "picking winners" in other industries, and I see no reason for them to be any more successful at picking winners in sports.

In fact, one might well argue that one of the several reasons for Canadian success in curling (aside from years of practice and inculcation) is that curlers in Canada must compete for sponsorship and prize money. Those who aren't very good don't receive much money; those who are better tend to receive more money. There is a huge incentive to improve one's game.

I doubt if these arguments would apply to all Olympic sports, but they certainly are important when discussing sponsorship for curlers (and probably most other sports for which private sponsorship and prize money are sizable).

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Wednesday, May 20, 2009

CBO Study on Tax Preferences for College Sports 

The Congressional Budget Office has released a study on the Tax Preferences for College Sports. The main findings:
Athletic departments in NCAA Division I schools derive a considerably larger share of their revenue from commercial activities than do other parts of the universities.

In the case of Division IA schools (a subset of schools in Division I that meet NCAA requirements for football programs), 60 percent to 80 percent of athletic departments’ revenue comes from activities that can be described as commercial. That proportion is seven to eight times that for the rest of the schools’ activities and programs, suggesting that their sports programs may have crossed the line from educational to commercial endeavors. Revenue from commercial activities accounts for a much smaller share of athletic department revenue (20 percent to 30 percent) for schools in the rest of Division I.

Nonetheless, removing the major tax preferences currently available to university athletic departments would be unlikely to significantly alter the nature of those programs or garner much tax revenue even if the sports programs were classified, for tax purposes, as engaging in unrelated commercial activity. As long as athletic departments remained a part of the larger nonprofit or public university, schools would have considerable opportunity to shift revenue, costs, or both between their taxed and untaxed sectors, rendering efforts to tax that unrelated income largely ineffective.
Congress has been looking in to the commercialization of intercollegiate athletics recently, which prompted the study. Sen. Charles Grassley is quoted in this story, whining about the problem and the study, presumably since it throws cold water on Congress' ambition to alter the nature of college sports by threatening to change their tax treatment. I think the CBO study (get it here) is a useful source of facts and analysis on the issue, with informative tables on revenue sources and estimated profitability of sports programs at the 164 D1 institutions. Recommended.

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Friday, October 03, 2008

Britain takes a page from China 

The cost of hosting the Olympics should perhaps include the induced subsidy to produce a high medal count.
The government has said it will provide the first £20m of the £80.1m earmarked for elite British athletes competing at the London 2012 Olympics. The £20m is the first installment on a funding package that runs from 2009-2013.

As to the remaining £60m the government is still hopeful that some of it can be raised through fundraising via the recently launched Medal Hopes plan. Given the current economic climate this seems unduly optimistic.
I'm not sure if Government promises spur private contributions or crowd them out. Might make for an interesting cross-country comparison. Here's more on the somewhat controversial British plan.

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Friday, November 02, 2007

England's "Minister of Sport" 

In England, there is a government "ministry" that administers .... err, make that meddles with commercial sport. The mere existence of this agency is as fine an example of government bloat as one could imagine. For further evidence, gives us some quotes from the head honcho:
Gerry Sutcliffe, the sports minister, on Thursday prompted a furious response from Chelsea after singling the club out in remarks about football’s highest earners being paid “obscene” wages by teams losing touch with economic reality and their working class roots.

He singled out John Terry, the England captain who commands a salary from Chelsea of more than £130,000 a week, making him the Premier League’s highest wage-earner. Speaking at an FT sports industry conference, Mr Sutcliffe said: “It’s obscene. To be paid [about] £150,000 a week, in relation to the ordinary man in the street – people can’t understand that.” While accepting that professional sportsmen had a relatively short career, the minister said it was unsustainable for clubs such as Chelsea to be heavily in the red. “That’s not living in the real world, in my view. Fans move away from that. Fans can’t understand that level of funding.”
Neither, apparently, does Mr Sutcliffe. The article continues: 'Mr Sutcliffe said there was a balance to be struck in sport between commercialism and governance, “and it’s going too far down the commercial route”.' Ah yes, a government minister making the case for "more governance." As I was saying...

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