Thursday, May 01, 2008

Emerging scandals? 

If the favorite, Big Brown, wins the Kentucky Derby, expect the tone of the news coverage to change. His trainer has a history of doping that the mainstream press is putting aside in the usual rose-colored pre-race stories. Journalist Paul Moran has the story though, at his blog. Oddly, the story comes via the New York Times top horse racing writer Joe Drape, whose blog "The Rail" gives outstanding coverage of the Triple Crown. This is my first stop for horseracing news these days.

As an aside, I think that doping and horses provides a good example of the social costs of doping in general. The Nash equilibrium is to dope, and it has been going on for decades. But doped, muscle-bound thoroughbreds are more likely to suffer a catastrophic injury than horses that run clean. (Granted, I think the links here are much stronger than with humans.) Drape has a good post on this issue as well, "The Last Winstrol Derby?", which discusses the possibility that American racing will ban & test for steroids in the near future. Winstrol has been used on horses long before it was injected - allegedly - into Roger Clemens' butt.

And now to the land of scandals, European soccer. This time we go off the beaten path, to Romania, and the run-in for the league championship. The story has everything: ethnic tension between the two protagonists, allegations of payments to referees, payments to opposing teams, and mafia-like sniping between the clubs.

Labels: , ,


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.

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.
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.

Labels: , ,


Tuesday, March 11, 2008

Joint selling and antitrust in the Bundesliga 

The new TV contract for the Bundesliga, like many in the States and elsewhere, is a joint selling arrangement, although revenue sharing appears to be more complicated than a simple 1/N rule. This sets the stage for a massive wrangle over just what the shares will be, with redistribution from the large to small clubs being the key issue. Enter the antitrust agency:
A new lucrative television contract for the Bundesliga was criticized by Germany's anti-trust agency on Monday.

The federal office said the €3 billion (US$4.5 billion) contract will only be allowed if small clubs are awarded more money. The agency has investigated the central marketing policy of German top division clubs for several years.

"Central marketing of media rights has the same effect as controlling prices," Ralph Langhoff, an anti-trust agency official, was quoted as saying in the trade magazine Kicker.

Media mogul Leo Kirch's new company, KF 15, has offered the Bundesliga a sizable increase in television revenues with the €3 billion spread over six years.

The Bundesliga, composed of both the first and second division leagues, splits TV revenues and is regarded as more equitable than the other top European leagues in England, Spain and Italy.
So, the threat of a price fixing charge is the leverage for squeezing more money out of Bayern Munich. No wonder the German giants are playing in the B-league European competition (the UEFA Cup), rather than the Champions League. Germany's politics won't allow Bayern the funds to compete at the top level any more. And yes, Bayern are currently leading the Bundesliga and are thus likely to return to the Champions League next season. But they will do so with a revenue handicap of about €75m, if the article's figures are accurate.

Labels: , ,


Tuesday, March 13, 2007

Does Soccer Have a Chance to Ever Become a Major Sport in North America? 

After spending some time in England last summer, and planning to return this summer, I have spent much more time than I ever imagined watching soccer, both live and on television, during the past year or so. I still do not find it all that gripping, which probably stems from my lack of knowledge and understanding about the game. In fact, the most fun I have had watching soccer so far has been in pubs that do not encourage drunken teenagers (see this) and at small stadia in lesser leagues. The hooting, yelling, singing, chanting, and atmosphere are lots of fun, but the downright deadly stupors of some of the younger crowd at some pubs during the World Cup last summer were very off-putting.

If I am remotely representative of the potential North American audience, does soccer have any chance of ever becoming a major sport in North America? Will it ever be as big, by some measure, as MLB or the NFL? [notice I omit the NHL because soccer probably does have a chance of surpassing hockey by some measures; in terms of participation, it already has.].
  1. One big plus for soccer is that its games typically last less than two hours, which is great for the television market. This scheduling (with a half hour studio show between each game) allows us (in Canada, anyway) to watch three UK Premiership soccer matches every Saturday in 7 hours, about the time it takes to see two NFL games. Instead of the NFL double-headers, we could easily have soccer/football triple-headers on weekends and double-headers on Tuesday and/or Wednesday evenings. Also, even if soccer/football games begin to take more time (see below) as has happened with both MLB and the NFL, they are unlikely to become much longer than 2 1/4 or 2 1/2 hours, which would still permit the weekend triple-headers with no difficulty [I know, I know: the NFL has Sunday triple-headers now, but they take for-friggin'-ever].
  2. At the same time, to make the product more attractive to potential sponsors, soccer will almost surely start guaranteeing that there will be 10-second or 15-second breaks when the ball goes out of bounds or especially when a team is granted a corner kick or free kick near the goal; mark my words, this will happen in FIFA even if soccer never takes off in North America. Purists will hate this, but purists also hated all the commercial time-outs that have become so prevalent in the NFL and that have added to the time baseball games last. Adding time-outs for commercials is, after all, a minor alteration in the game, and doing so would not unduly lengthen the games, so this is a change I can imagine would be comparatively easy.
  3. Lots and lots and zillions and tonnes of kids grow up playing soccer/football in North America these days. So there is some interest in the game at the young participatory level. But that interest does not necessarily translate into yuppie, high-income spectator interest [reductio ad absurdum?: kids like lots of things that do not translate into major adult markets].
  4. To capture the young adult, high-income, and corporate-account market segment, soccer/football will have to be more exciting for North American spectators. Some possibilities might include:
    • loud music during every break. MLB seems to think this is a good idea, but I hate it; as one MLB executive once told me, "Doc, your demographic isn't really the one we're targeting..."
    • Scantily clad cheerleaders?
    • More body contact; this change in the NBA over the past fifty years seems to have played a role in the growth of interest in the NBA. At the same time, though, it hasn't helped the NHL, which seems to be trying to reduce the amount of contact to some extent. Maybe the marginal revenue product of body contact in team sports is diminishing as the amount of contact increases, becoming negative at some point. [note: Brian Goff thinks there is already too much body contact in soccer.]
    • Scoring. I'm sure I'm revealing my ethnocentric loutish ignorance, but soccer/football is boring when there are so few goals scored. What a drag! We watch for a couple of hours and maybe there's a goal scored. And maybe it's the result of skill, but some/much of the time, it seems to be the result of randomness (in play, in officiating, in wind currents, in hair length [Peter Crouch's big goal last summer in the World Cup], etc.]. But nobody can agree on what to do to increase the scoring.
Brian Goff made some very interesting suggestions here (be sure to see the string of comments, too). Also, see this by Skip Sauer. And here is something Tyler Cowen wrote on the topic several years ago.

Labels: ,


Sunday, February 18, 2007

Real Salt Lake Subsidy 

The following account is from an editorial in the Daily Herald Newspaper, (from the Provo area south of Salt Lake City). It sketches the timeline of negotiations between the MLS soccer club and various government entities in Utah. The subsidy is rather small at $35m, but the sequence of events is fairly typical in the subsidy negotiation game:
Dave Checketts, owner of Real Salt Lake, threatened to move the professional soccer franchise to St. Louis if he didn't receive public funding to build a 20,000-seat stadium in Sandy.

Real Salt Lake is playing at the University of Utah until it can get a permanent venue, a dream that was momentarily placed in doubt when Salt Lake County Mayor Peter Corroon withdrew the county's promise of $30 million to help Real relocate to Sandy. Corroon had been warned by financial advisers that it was a risky investment.

An alternative proposal from Utah County was snubbed. Anderson Development offered to buy the team and base it at the former Geneva Steel site in Vineyard. Checketts insinuated that we're second-class citizens down here and rejected the deal.

In the eleventh hour, the Utah Legislature, goosed by Gov. Jon Huntsman Jr., came through, pledging $35 million in public money. The cash is supposed to come from taxes on hotel rooms and rental cars.

House Minority Whip Brad King, D-Price, called it a chance to promote Utah to the world. "This is worth millions and millions of dollars we will never commit from state coffers to promote us," King said.

Checketts is not the first sports team owner to get help from state government. Utah Jazz owner Larry H. Miller leases the land under the former Delta Center for $1 a year until 2040. Salt Lake City is also using taxes to pay off the center's $25 million bond.

There may be times when it's proper for government to help a business get started, but we are not convinced this is it. A soccer stadium hardly qualifies as an economic kick-start.

This is a subsidy for a special interest, in our view.

We console ourselves with the fact that $35 million is a small amount compared to other stadium deals. But that doesn't change the principle.

Salt Lake County's financial advisers said that revenue projections by Checketts were "too optimistic." Likewise, economists Roger Noll of Stanford University and Andrew Zimbalist of Smith College -- co-editors of the book "Sports, Jobs and Taxes" -- say that stadiums are more of a consumption expense than an economic booster.
Yes indeed. One might argue that the consumption expense is worth it to Utah's public. But equally valid is the claim that this expense is inflated by league restrictions on the number of franchises, and imperfections in the political process.

Labels: , ,


Wednesday, February 07, 2007

The Third-Largest Industry in Italy 

What would you guess is the third-largest industry in Italy? Wine? Apparel? the Roman Catholic Church? Housing? Tourism? Automobiles?

According to Aldo Spinelli, quoted in The Economist [$], it is soccer/football.
The level of violence—some of it politically motivated—at Italy’s football grounds is said by the interior minister, Giuliano Amato, to be still rising. Despite this, club presidents have been pressing hard for a re-think on the government’s draconian measures. Ivan Ruggeri, the chairman of one team, Atalanta, said clubs should simply stop playing till the government changed its mind. “Italy’s third-biggest industry cannot be penalised in this way”, stormed Aldo Spinelli, who chairs Livorno, another Serie A side. [emphasis added]
If so, the Italian economy is in big trouble.

Wikipedia lists the following as the major industries in Italy:
tourism, machinery, iron and steel, chemicals, food processing, textiles, automobiles, clothing, footwear, ceramics
Sports, despite our immense interest in them, are small potatoes, economically speaking.

Labels: ,