We’ve been over the logic and the figures on the economic impact from sports ad infinitum. But this piece by Joe Eskenzai at SF Weekly, with an assist from USF economist Phil Porter, is worth your attention. Eskenazi provides a pithy statement detailing why two methods of estimating the economic impact of events like the Super Bowl come to starkly different conclusions. One method, preferred by the NFL and served up by consultants, tallies the estimated spending from visitors in town for the game. A second method practiced by academic economists compares public measures of spending in the city with the game, versus spending in the city without the game, based on historical statistics. Over a great many events, the latter method always and everywhere yields an estimate that’s a small fraction of the former, at best. Why? Here’s Eskenazi (and Porter):
[M]easuring the number of people who head to a Super Bowl city for the game is a straightforward endeavor. Measuring the number of people who stay away from an overpriced, tourist-infested zoo is not. Especially in a year-round tourist destination like the Bay Area, Super Bowl visitors aren’t flocking to hotels that would otherwise be empty; they’re displacing would-be visitors. What’s more, hotels in many Super Bowl cities triple their rates and insist on multiday packages. This drives away non-Super Bowl visitors and also leads to fans booking rooms for more days than they’ll actually use — meaning those rooms aren’t being occupied by actual people who could be spending actual money.
To claim an economic windfall based on visitor numbers without factoring in those who avoid the area or are pushed out “is like going to the hen-house, counting all the foxes, and saying ‘Look at the economic impact of all these foxes here eating!’” Porter says. “You’re not counting all the hens who are gone.”
Capiche?
It’s been a week of interesting contrasts in North American and European soccer, particularly with regard to issues of control and ownership in the game. In MLS, an attempt to keep teams on sound financial footing is the alleged reason for resting substantial authority over player contracts in the league office. But a story in the Toronto Star — Toronto FC’s hands tied by meddling MLS – claims that MLS rejected Toronto FC’s contract offer to Olaf Mellberg for rather mundane reasons, as if the defender was not flashy enough for the league’s marketing objectives. If the Star’s take on this is correct, MLS refused to allow the club to spend its money as it saw fit, and not for the first time either. Regardless of MLS’ motives, this is an interesting tussle between the rights of a franchise and the heavily unitized league entity. If indeed player selection is to be based on part on league marketing objectives and not on a franchisee’s view of its best interest on the pitch, you can expect further squabbles of this nature in the future.
Across the pond, it was a great week for German teams in the Europa and Champions League., where Bundesliga teams went 7-0-1 including high profile victories over Arsenal and Real Madrid. Gabriele Marcotti contrasts this with the poor results for English teams, not just on the pitch, but in the stands and on the books. Unlike MLS, both the Bundesliga and Premier League sit atop a pyramid system of relegation and promotion from lower tier leagues, but there are important differences in ownership structure. In England (and Scotland), pretty much anything goes (and has: see the turmoil at Leeds and Portsmouth, not to mention Rangers to the north, now nestled in the fourth tier of Scottish soccer). Swashbuckling, debt-fueled ownership is ruled out in the Bundesliga, where majority ownership resides by rule in club members, who pay an annual fee for the right to govern the club. This model appears to be working:
Last season, the average Bundesliga club drew approximately 45,000 fans per game to the Premier League’s 34,600. Part of it is down to bigger and often better stadiums, some of which were refurbished or built with public money ahead of the 2006 World Cup. But a lot of it is down to ticket prices, which are substantially lower in Germany.
The bigger crowds in the Bundesliga, coupled with the fact that Germany is a wealthier country with a more vibrant economy, allow clubs to attract sizable sponsorships and commercial deals. Indeed, according to Deloitte’s “Football Money League” report, in 2011 Bayern Munich’s commercial revenue ($230 million) was greater than that of global juggernauts like Manchester United ($148.2 million) and Arsenal ($66.2 million) combined. And even a team like Schalke, huge in its own way but hardly a household name beyond the cognoscenti, earned more commercial revenue ($117.7 million) than global soccer brands like Chelsea, Liverpool, Tottenham or Manchester City.
To be sure, as Marcotti notes, the global TV rights for Premier League games lead the chasing pack by a huge margin. But what has all of that TV money done for the Wigans and Wolves of the world? It will be interesting to see how these two forms of ownership fare in the next few decades, in what is ultimately a highly competitive marketplace.
In 1980, the long drive guy was hitting it 285, and now if you hit it 285, you’re one of the shortest guys on the Tour. To me, it’s a bigger change to go from that size head to what we play now than the putter” — Webb Simpson’
Banning the belly putter along with the broom handle putter or any putter that allows the club to be “anchored” against the body looks increasingly likely according to recent statements by golf’s rulemakers. All sports rules have an arbitrary element and many have long and and circuitous histories. However, changes in rules sometimes have a strong political element where certain factions within a sports impose their will on others. For instance, in 1968 a few influential people effectively targeted the putting style of one player, Sam Sneed, who had long used a “croquet-style” stance. That episode amounted to some of golf’s staunch traditionalists joining forces with some of Sneed’s competitors to ban a stance used really by a single player. A stance for goodness sakes!
Now, some of golf’s traditionalists have teamed with short putter pros to form a coalition capable of adjusting the length of the putter. Ben Crenshaw, a long-time critic of the long putters, spoke for traditionalists many years ago when he said, “it just doesn’t look like golf” — whatever that means. The politics of it all, and the importance of the traditionalists gaining allies among players with a competitive axe to grind — is shown in Webb Simpson’s comment. Persimmon (and other wooden) heads ruled the day for decades — the clubs were even called “woods” (how much more tradition can there be than that) — until metal “woods” took over around 1990. These newer materials allowed for incredible variation in shapes and sizes of club heads, so that the clubs not only hit balls farther but straighter. They made every course obsolete. By the late 1990s, long-hitting players were reaching the par 5 15th at Augusta National with a driver and wedge. Modest (and old) hitters like Tom Kite could reach Augusta’s 18th with driver-wedge. Other technological changes were taking place in wedge design, in shaft design, ball design, and beyond.
Yet, with the exception of square grooves, none of these prominent and game-changing developments prompted rules changes. Why? Purists may not have liked them and may have hated to make costly and controversial changes to venerable courses, but there was no major coalition of players to join with them. Although the long putters represent a much more minor influence on the game, the fact that some players use them and some don’t generates a natural interest group that the purists can lobby to join their push for a ban. Interestingly, as the Simpson article notes, the PGA stats don’t really support the idea that the longer putters create any clear advantage. As Graeme McDowell, a traditional putter, observes
“But having said that, if it was so easy, everyone would be using one. They have their advantages and their disadvantages. It just so happens that a lot of very good players in the world now are using long putters and it’s tough to ignore the timing of the decision, if one gets made, that the major champions in the last 12 to 18 months have wielded the long putter.”
McDowell’s followup really tells the story, “It wasn’t such a big issue two, three, four years ago, when perhaps they weren’t quite in the spotlight and winning major events. But the Open Championship, what was it, one, two . .. Adam Scott.” As long only as a few low tier players and senior tour guys used the longer sticks, no big deal. Once some of the pros felt serious competitive pressure from long putter users, the alliance between the short handle putters and the traditionalists took shape.
Game 1 of the ALCS between the Tigers and Yankees once again spotlighted the flaws in the use of MLB “closers.” I’ve written about the topic in How Much v. How Well and Closer Madness. By and large, managers are optimizers. That model works well in analyzing many decisions; but managers are also imitators, which often makes sense when thinking about copying useful “technologies,” but not when these technologies are player or situation-specific.
There are some aspects of how the “closer” and other reliever roles have developed that make sense:
- People value certainty; bringing players into games in consistent situations increases certainty for them and likely aids physical and mental preparation as well as gaining practice both physically and mentally in the same situation over and over;
- Some players are much better suited to pitching a smaller number of innings due to limited variety of pitches or mechanics.
Nevertheless, a couple of items don’t compute:
- Why use the best reliever consistently in the 9th inning rather than in the most threatening late inning situation (as they were used prior to the late 1980s)? The term “fireman” emerged to describe someone who, well, put out fires. The “closer” role could often be better described as janitor — sweeping up after most of the action is over.
- Why do managers use “closers” until they’ve blown it? This is what really popped out from Game 1. No other pitcher on the staff, not even Justin Verlander receives that treatment. Of course, sometimes, in a one run game, a homer changes things instantly. In Game 1 of the ALCS, however, Jose Valverde entered with a 4 run lead. As most managers practice, Jim Leyland went with the “pitch til the closer blows it” approach. Valverde gave up a 2-run homer, then a walk, and looked very fragile. Nonetheless, he faced one more hitter even though the bullpen has several capable arms.
To Leyland’s credit and implicitly indicting the nearly universal use of closers, the Tigers opted for other pitchers to finish Game 2 (which Leyland announced he would) and Game 3, which came as a surprise. Of course, the media was all a buzz over such deviance from standard operating procedure, but the Tigers won both games and without surrendering the lead, even with much smaller leads than Game 1.
Readers of thesportseconomist.com know that we generally take a very hard line against public subsidies for sports. So, I am a bit surprised to find myself, I think, on the other side for once. Travis Waldron at ThinkProgress, who has written some very nice pieces in the past about stadium subsides, I believe, gets one wrong here.
Quoting a report by Republican Sen. Tom Coburn of Oklahoma, Waldron notes that,
The National Football League (NFL), the National Hockey League (NHL), and the Professional Golfers’ Association (PGA) classify themselves as non-profit organizations to exempt themselves from federal income taxes on earnings. Smaller sports leagues, such as the National Lacrosse League, are also using the tax status. Taxpayers may be losing at least $91 million subsidizing these tax loopholes for professional sports leagues that generate billions of dollars annually in profits. Taxpayers should not be asked to subsidize sports organizations already benefiting widely from willing fans and turning a profit, while claiming to be non-profit organizations.
My sense is that this accusation is misplaced. While revenues earned by the NFL are not taxed directly, the NFL itself only serves as an organizing body for its member teams. The NFL disburses the revenues it takes in to individual team owners who then pay income taxes on the proceeds at the team level. As such, I can’t see how this is a loophole.
Since I am not an accountant, I am more than willing to stand corrected on this point, so I invite comments.
P.S. Hats off to Tom Coburn. It is nice to see a small-government Republican on the right side of sports subsidies for a change unlike George W. Bush, who made his fortune by convincing the residents of Arlington, TX to build his baseball team, the Texas Rangers, a new stadium in the early 1990s, and Mitt Romney, who rose to national prominence through his management of the 2002 Salt Lake City Winter Olympics, which managed a healthy profit only if one doesn’t count as an expense the $567 million contributed by state, local, and federal governments.
The Baltimore Sun reports on one of our own, economist Stephen Walters, who runs some numbers for his hometown Baltimore Orioles. It’s an interesting story, delving into the O’s current success, Walters’ statistical contributions, and the history of his interest in the game. The latter is particularly interesting:
Like many who have embraced the principles of sabermetrics, Walters spent his childhood playing not just catch but strategy baseball games. Specifically, he and his friends spent hours playing Strat-O-Matic baseball, a simulation game that quantified each major league player’s skill and then allowed “games” to be played with dice.
When he and his wife, Melanie, decided to move to Baltimore 30 years ago, Walters, who grew up a Red Sox fan in New England, showed his wife the neighborhoods near Memorial Stadium. They ended up living not far away, spending evenings sitting out in the front yard with neighbors listening to the games.
“He’s just always been so into baseball,” Melanie Walters said. “This is such a dream for him.”
After a long day of work, Walters often would come home and relax by creating rosters of players he thought would exceed expectations if given the chance to play together. That led him to pursue serious academic work in baseball, and he began publishing papers in the 1990s. He ended up writing for Sporting News — and running into considerable resistance from old-school scouts and scribes who scoffed at his methods.
Back at Loyola, though, his research caused a buzz. He has long been a popular teacher — he was honored as one of the school’s best in 2005 — and his other academic work has been distinguished. He’s currently on sabbatical, working on a book about the future of big cities, a project that grew out of research he did before Baltimore’s last mayoral election.
There is much more of interest in this very nice piece. Congratulations to the Orioles, and well done Steve!
It seems that almost everything is shocking these days. Yahoo’s main page always seems to have a headline screaming about some actress’s shocking dress or some soccer player’s shocking flop. It seems that to call attention to an article, somehow or another the headline writer has to work the word “shocking” in.
Sports economist Jeff Owen sent me the following short essay about the use of the word shocking to describe team Europe’s win in the Ryder Cup. I post this with his permission.
Judging from the comments made by Johnny Miller et al during NBC’s coverage of the Ryder Cup and the reaction that followed from the sports media, the European comeback in singles play from a 10-6 was miraculous. The logical implication is it was only possible because of a collapse by the American team. However, basically probability theory tells us that words like “unlikely” or “improbable” better describe what actually happened. If we assume that all of the matches were between even matched players with an equal likelihood of winning, then the outcome of a European comeback has the same odds as flipping a coin and turning up heads at least eight out of 12 times. This is a binomial distribution with a probability of about 20% (see http://stattrek.com/online-calculator/binomial.aspx for any easy calculation tool.) A one in five chance is not exactly “Miracle on Ice” territory. Of course this ignores factors such as actual matchups, home course advantage, and momentum. However, given the highly random nature of one round of golf, I don’t think any of those factors would be large enough to shift the odds substantially. None of this will change the opinion of those who want to point fingers at the players or question captain Davis Love’s decisions, but it may just have been one of those days.
Matthew Futterman, however, sees things a bit differently when looking at the results over the past 13 years. It may have been one of those days, but most of the last several matches have been won by Europe.
When something happens six out of seven times over 13 years, it’s probably not an accident.
If we go back to 1985, Europe has won 9 out of 14 times with one tie.
If there were any doubt that the best European golfers are better than the best Americans now, it was erased Sunday when the Euros erased what had been a 10-4 deficit to retain the Ryder Cup with a 14 ½ -13 ½ win. Beyond this, four of the top five players in the World Golf Rankings are Europeans.
This shouldn’t be the case. Europe has the population advantage, with roughly 700 million inhabitants, but golf is virtually nonexistent outside the European Union. And former Eastern Bloc countries inside the EU like Lithuania, Latvia, Estonia and Poland, aren’t exactly golf hotbeds. That essentially levels the participation gap.
Another mystery: The members of Team Europe mostly hail from Great Britain, Ireland, Spain, France, Italy, Germany, Belgium and the Scandinavian countries—places that, climate-wise, aren’t exactly Florida, California or Arizona, to say nothing of Texas, Georgia, the Carolinas or the rest of the Sun Belt. The U.S. should have an advantage there, too.
While Europe has had a nice run since 1985, the US dominated Ryder Cup play before then, winning 22 of 25 matches since the Cup’s first match in 1927. However, before there was team Europe, the US was pitted against team Britain or team Britain and Irleland from 1927 until 1977. That’s a much, much smaller population from which to draw world-class golfers compared to the whole of Europe. But what explains the recent success of the Europeans?
One difference is that the 12 Americans on the Ryder Cup team all attended college. Just two members of Europe’s team, Graeme McDowell and Luke Donald, spent those crucial, formative years of development playing collegiate golf.
…Here’s what happens when top golfers, tennis and soccer players attend college: They subject themselves to rules about how often they can compete and practice. They throw themselves at the mercy of coaching that is not always world-class. They live in housing filled with…let’s call them distractions. And in order to play, they have to pass classes in biology and political science.
Compared with the experience of Rory McIlroy or other European golfers, who turn pro as teenagers, then do little else but practice and compete (sometimes for their next meal or train ticket), the college life is pretty appealing.
But it’s also a safety net. It’s not crazy to think that the European approach creates athletes who work a bit harder and perhaps become just a wee bit tougher.
It’s an interesting hypothesis and there may be something to it. But it still doesn’t mean that college is a bad choice for golfers with an eye on the PGA circuit.
Maybe I just enjoy defending the dead horse that keeps getting kicked or the indefensible (like Monday’s Nights call against the Packers), but here goes one last post as the replacement refs exit through the back door
I readily admit that the regular refs were and will be better than the replacements. My basic contention is that it is impossible to tell how much, at least using data that is widely available and discussed. Many of the replacements’ critics would use Monday’s egregiously bad call or other missed calls as prima facie evidence of the replacements’ inferiority. How soon these critics seem to forget the 2011 worst calls that had a major impact on the game including one in the Packers’ favor. All 2010 lists include the silly “going to ground” call against Calvin Johnson where the officials tried to hide behind technicality. Here’s a list of worst calls ever which includes incredibly funny 1998 coin flip fiasco — imagine if a replacement ref had pulled that, it would be on an endless C’mon Man loop. The list includes the entire 2006 Super Bowl game where several mistakes piled up against the Seahawks (mabye Monday Night was a bit of karma). Here’s the referee lamenting his errors in a 2010 article.
If bad calls don’t indict the replacements on their face, then the amount of complaining does. The trouble here is the classic chicken and egg problem. Is the enhanced complaining the result of poorer calls or is the complaining the cause for the view of poorer calls. With meticulous review of game tapes, NFL officiating insiders maybe able to separate these two from each other, but merely relying on media or coaching noise doesn’t disentangle them.
With my indefensible defense out there, I’m as happy as anyone else that the regular refs are back on board. Not only will games be officiated better, but everyone can go back to standard complaining about calls. As long as the replacements were in place and a viable (and better by whatever margin) substitute in the wings, perception became reality. With the regular refs, there is not fall back, so coaches, media, and fans, while grousing, don’t bang the drums for some alternative. Instead, it’s treated as a given.
I will add a defense of my proposition that the main advantage of regular refs is through their build-up of training (however long that takes) versus some underlying rare skills. I would identify 3 main skills that NFL referees need: 1) intelligence to deal with complex situations and tasks, 2) emotional control to deal with stressful situations, and 3) physical traits that allow them to be mobile and observe/process fast moving action. Since all NFL refs are currently male, I’ll start with the male population between the ages of 25 and 60. If we take the top 25 percent of the distribution of intelligence, handling stress, and key physical traits, then that culls the 67 million down to about 1 million. (The outcome would be a bit different with dependencies between these traits.) Why a person would need to be a lot farther out in the tails of any of these skills distributions isn’t at all clear to me unlike the players where small differences in ability show up as big performance differences. In fact, the top half of the distribution would likely be sufficient.
Earlier today my colleague Brian Goff weighed in on the current NFL referee strike. I think he got almost everything right except one crucial point.
As current D1 college soccer referee and a former Major League Soccer official, I have to take issue with Brian’s claim, “Yes, there are some specific skills, both individually and as a coordinated unit, that officials need in order to effectively manage an NFL game, and these skills take some time and training to attain to the level of the old refs. However, there are literally thousands if not millions of people capable of acquiring these skills in a relatively short time.”
Let me tell you from first-hand experience that this is almost certainly completely untrue. High-level sports officiating is extraordinarily difficult. I’m smart enough to have received a Ph.D. in economics from a good school. I am fairly athletic and fit. I have over 100 professional games and 750 collegiate games of experience as a referee. At the peak of my ability I was among the 100 best referees in the US out of over 100,000 registered soccer officials in the country. And yet, if I were called upon to serve as a replacement referee in the event of an MLS referee’s strike, I would be a significant drop in quality compared to the average referee in MLS. If someone with my skills and experience would have a hard time stepping into the lion’s den, there’s simply not some huge pool of potential MLS or NFL referees out there just waiting to be discovered.
So, would it just take me a little time to get acclimated to the difference between the Ivy League or Big East and MLS? My general rule of thumb is that no one can be a decent soccer referee without 1000 games of experience, and even then only a tiny fraction of those experienced referees have what it takes to make the right calls under intense pressure from thousands of fans and future Hall of Fame players and coaches. Are there really millions of people out there who have the ability to go face to face with Ray Lewis without blinking?
The MLS refereeing pool entirely turns over roughly every 10 or 15 years on its own, so the current crop could probably be effectively replaced in well under a decade. But that is probably longer than Brian meant by “a relatively short time.” The turnover in the NFL is probably somewhat slower since the physical demands of soccer refereeing significantly limits the number of top-level officials over the age of 45 while NFL referees typically hang around much longer.
Steve Young noted after Monday night’s officiating debacle between the Atlanta Falcons and my Denver Broncos that, “Everything about the NFL now is inelastic for demand. There is nothing they can do to hurt demand for the game. So, the bottom line is they don’t care.”
Props to Steve Young for using a nice economics term, and if he is correct, and I suspect he largely is, both he and Brian are exactly right in saying that the referees have a weak hand.
But, it’s not because officiating ability is simply a commodity that is easily replaced.
A few observations on the NFL “replacement ref” situation:
1. The locked-out refs hold a very weak bargaining position. Unlike the players, the refs possess no rare set of skills or endowments such as a 280 pound frame able to run a 4.7 40 yard dash. Yes, there are some specific skills, both individually and as a coordinated unit, that officials need in order to effectively manage an NFL game, and these skills take some time and training to attain to the level of the old refs. However, there are literally thousands if not millions of people capable of acquiring these skills in a relatively short time. At the end of the season, if the league were to stick with the replacements, will attendance or viewership figures be reduced any this season or future season? With replacement players, yes, with replacement officials, not likely. The old refs have to hope for some major, outcome-altering blunder near the end of a widely viewed game; that’s really the only leverage they have. Otherwise, at some point along the way, “replacement” refs slowly become simple “refs.”
2. For whatever reason, the mainstream media almost universally sides with “labor” in these sports strikes — maybe it’s the view of owners/league office as “the man” or maybe an attempt to gain credibility with their journalistic colleagues in “news.” Whatever the reason, one would think that the locked out refs never made blunders, never had coaches complain about calls, never need to sort things out … Even Ed Hochuli, reported to be among the top-graded refs, made the infamously bad “no fumble” call in a 2008 Chargers-Broncos game. The process of the job that requires application of a large set of rules to a fast-moving game embeds mistakes — it’s built in to the system. One could easily argue that the replacement refs are of incrementally lower quality, but to argue that they are inferior by a wide margin is based on a comparison to utopian refs that don’t exist.
3. What about all of the grousing and complaining by coaches and players in Week 2, isn’t that sufficient evidence of the bad job by replacements? That’s the view of Shutdown Corner’s Doug Farrar. To me, this is a classic case where although coaches/players are employees of owners, the compensation/motivation of coaches and owners are at odds — an “agency problem.” Coaches fixate solely on winning the game, while owners (or their surrogate, the Commissioner) looks at a broader picture. As a result, the coaches and players started treating replacement refs like substitute teachers — “hey, we can take advantage of these guys.” At the end of the weekend, my view was that the league had to adjust the incentives of coaches — send the message that both refs and the league office will take a much more hard line stance against bad behavior. I suggested Roger Goodell himself calling every head coach to spell out these incentives. Instead, the league office issued a warning. It will be interesting to see if coaches respond, or if the league will have to make the signal credible by bringing the hammer down on someone.
