Sunday, February 29, 2004

Bloomsday and the Girl Scouts have something in common 

A few days ago, John Quiggin noted and commented on the copyright cloud hanging over the centennial anniversary of Bloomsday, "the day" of James Joyce's Ulysses, in Dublin this June. It seems that Joyce's grandson Stephen (the copyright owner) is, shall we say, a bit churlish. He will not allow a public reading of Ulysses at the celebration.

Quiggin's fine missive prompted me to investigate further. Copyright protection has been increased several times in the past century (here is a useful summary of the U.S. history). The most recent legislation is the Sonny Bono Copyright Term Extension Act (CTEA) of 1998, which increased the term from 50 to 70 years beyond death of the creator, putting the U.S. on par with Europe.

Could the CTEA possibly be in the public interest? Economics suggests that copyright stimulates effort from artists motivated by monetary returns, but could years 51 through 70 matter? An artist might be motivated by the knowledge that her children's children will benefit from royalty income when raising their children, and this should receive due consideration. But Nobel Prize winning economists George Akerlof, Kenneth Arrow, James Buchanan, Ronald Coase, and Milton Friedman - as politically diverse a group of economists imaginable - have done that, so I will defer to them. In an amicus curiae brief filed in Eldred vs. Ashcroft (2003), the Nobels concluded that economic reasoning finds the extension harmful:
… a lengthened copyright term under the CTEA keeps additional materials out of new creators' hands. Would-be new creators face increased transaction costs: the necessity to engage in costly locating (especially for very old works, the very ones that would be in the public domain but for the CTEA) and bargaining with multiple parties. These higher costs give new creators less incentive to produce. As a result, the CTEA imposes two kinds of burden on society, fewer new works produced, and higher transaction costs in the creation of some works.

The Nobels discussed other factors which weigh against the CTEA, but this seemed the most telling to me. Nevertheless, their brief failed to carry the day. In a 7-2 decision, the Supreme Court ruled that the CTEA was not unlawful under the Constitution's copyright clause.

The Joyce flap echoes other recent clashes between long standing social norms and the new economics of copyright. The Girl Scouts were recently reminded that when they sing copyrighted songs around the campfire, they do it at ASCAP's pleasure. As relayed by Harvard law professor Jonathan Zittrain in an engrossing survey of the problem:
"They buy paper, twine and glue for their crafts—they can pay for the music too," John Lo Frumento, ASCAP's chief operating officer, told The Wall Street Journal.
Zittrain observes:
We are in the midst of a cultural war over copyright, in which the salvos show the complete disconnect between the colliding copyright regimes of statute and practicality, law and life.
Sounds right to me. The CTEA is another victory doled out by Congress to special interests. I'm late to the party in commenting on this, but surely, there is much more to come.

Quote of the day 

We go to the well that is Thomas Sowell once again (directed there via Newmark's Door):

"Heavyweight champion Lennox Lewis' retirement is as welcome as it is rare. In other sports, playing too long risks only embarrassment. But in boxing it risks damage to the brain."

Government to firm: don't test your meat! 

I kid you not:

"A beef producer in Kansas has proposed testing all its cattle for mad cow disease so it can resume exports to Japan, but it is encountering resistance from the Agriculture Department and other beef producers.......

Creekstone's president, John Stewart, said in an interview that the company used to sell a quarter of its premium black Angus beef to Asian markets. Those markets are now closed, and the company is losing $80,000 a day. The Japanese government, he said, indicated it would probably buy meat that was tested with the same equipment."

The USDA is opposed because it hasn't approved any testing equipment. But who gives a damn if the Japanese agree that the test suits them just fine?

There's nothing like having a compassionate government to take care of you when times are tough.

Araton unloads the lumber 

In today's New York Times, Harvey Araton reports and opines on steroids in baseball. Here are two facts from the article. On incidence:

Where were Bonds and Sheffield and the others when it took management and labor about 20 minutes to agree on a weak testing plan that was designed to disappear, and would have if enough players — 5 to 7 percent of the tests were positive — weren't so arrogant or ignorant they couldn't pass a test they knew was coming?

As Christine Brennan wrote Thursday in USA Today, the 5 to 7 percent "might sound pretty low until you consider that in the U.S. Olympic movement last year, the percentage of those who failed tests was 0.4 percent, according to the U.S. Anti-Doping Agency." And those results were derived in part from unannounced testing, far more stringent than baseball's. The happy spin baseball put on its first round of testing was a bigger disgrace than anything out of Pete Rose's mouth.

On the trickle down effect:

….Taylor [Hooton], a high school pitcher, committed suicide by hanging last year in what was believed to be a chemical reaction upon discontinuing the use of anabolic steroids. … [Hooton's father] said that he had read Dusty Baker's steroid comments while traveling last week and reacted viscerally. "I believe he said he had never seen steroids and wouldn't know it if someone was taking them," Hooton said. "Well, Coach, whose job is it to know? And it's that same attitude, the same silence, high school coaches are mimicking."

While I don't believe it was Baker's job, it is baseball's job to police itself in a manner which is a) consistent with U.S. law, and b) society's view of what constitutes legitimate sport. It did not, so it will pay a price. The episode displays poor foresight and a lack of will on baseball's part. "Steroids? We're too busy arguing about how to split the money." Chalk one more up in the negative column for Selig.

Saturday, February 28, 2004

Why The Club? 

In this week's Sports Illustrated (not online), Michael Lewis takes a shot at The Club and its "women's auxiliary," his term for members of the media who defend baseball's status quo in exchange for access to those who operate the teams. Lewis has a dim view of The Club, his term for the group that appears to be managing major league baseball in a drunken stupor.

Lewis took quite a few hits from The Club in 2003. Why? He exposed them by broadcasting to the world how innovative and sensible management could win more games at a fraction of the cost. He showed they were incompetent. Lewis told the truth as he saw it in Moneyball. In return, The Club turned on Lewis, and now it's his turn to fire back.

There is a difference between the shots fired by The Club and the reply from Lewis. The salvos from his critics were, if I can say this gently, a load of ignorant crap. Some of it - particularly a set of Toronto Star articles aimed at J. P. Ricciardi's Moneyball Management of the Blue Jays - was just malicious. But Lewis' retort simply tells us what they said, and in so doing, illustrates without having to say it directly that an unhealthy percentage of them are bozos.

Lewis has done us another favor by writing this article. Moneyball was intended to provide an inside view of management in baseball, and of course it did much more. His SI article documents the unthinking and hostile reaction to Moneyball from the baseball fraternity, many of whom never bothered to read the book. Why the reaction? Why The Club?

Lewis states that "there are many reasons." But if we focus on economic forces, two words suffice: monopoly and protectionism. MLB is a monopoly league, facing no meaningful competition. Teams in the American League, no matter how morbid, are granted the right to host the Yankees and collect the revenue. They are protected by an absolute barrier to entry. If a franchise perpetually underperforms and local enthusiasm wanes, there's a queue of would-be owners willing to pay for the right to move the team to their fair city. The penalty for failure is small. Performance on the operations end is surely influenced by this fact.

The problem is not unique to major league baseball. It is endemic in the economic structure of American sport, which is built on the monopolistic model. The NFL's Cardinals and the NBA's Nuggets, among others, have been asleep at the switch for a decade. In an open system of sporting competition, these teams would have been flushed out of the system and replaced by more ambitious teams.

Two small market clubs, Bolton and Middlesborough, will contest Sunday's Carling Cup Final in Britain. Ten years ago, both teams were toiling in the First Division, the Triple A version of English soccer. As discussed in the post "More on the managerial revolution" below, these clubs feature highly innovative management. Bolton and Middlesborough thought and fought their way to the top. They replaced teams with less thought and less fight. Good for them. If small markets in the U.S. were given the same opportunity, complacency within The Club would be dealt a devastating blow.

Let them eat brioche 

Stephen Karlson at Cold Spring Shops points to a story by Jonah Goldberg on what is allegedly the most insensitive statement in history: "let them eat cake" by Marie Antoinette. Apparently she never said it. Further, whoever said it, the proper translation of the sentence is "let them eat brioche." And more telling:
"back then France had a law on the books that required bakeries to sell expensive breads - including brioche - at the same price as cheap bread if the baker ran out of cheap bread."

The price of cheap bread was regulated too, of course, which gives rise to the problem. One regulation begets another, and pretty soon you get a bread riot because the system is so rigid and unresponsive that waste and want are commonplace. Antoinette's (allegedly) famous quote deals with the want side of the problem. On the waste side, Karlson points out that in 20th Century Russia
"controls on the price of bread provided an incentive for herders to buy bread at the controlled price, rather than grain at the supported price, to use as feed for cattle and swine."

Great point. Watch what you regulate. You might not get what you expect.

A battle for control at Manchester United 

The soap opera that is Manchester United - serialized daily in the papers of England - has attracted the attention of The New York Times. Alan Cowell's story, "A Horse, a Soccer Club and the Tampa Bay Bucs," lays out the important facts, which involve takeover rumors and rifts between major shareholders and manager Alex Ferguson.

Ferguson’s talents as a manager are well known. But there are suspicions that some of the club’s recent transactions have been managed to line the pockets of Ferguson and his son, an agent who gets a cut of transfer deals. The trust between Ferguson and shareholder John Magnier, who once gave him a 50% interest in the sensational racehorse Rock of Gibraltar, has been shattered.

The takeover rumors - which involve Tampa Bay Bucs owner Malcolm Glazer -have doubled the market capitalization of the club to $1.3 billion. This for a firm that earned $73 million on revenue of $323 million last year. Glazer might just want another toy. But the high valuation of Man Utd might also be a signal that plans for a European “Super League” might be more than a pipe dream.

Friday, February 27, 2004

More on the managerial revolution 

Two Englishmen have their teams in Sunday's League Cup Final, which ensures a native born manager will win a major English trophy for the first time since 1996. This story from the Telegraph, "Sweeping aside old-fashioned mentality," discusses the approach of Bolton's manager Sam Allardyce.

Allardyce comes from an old school background. But watch a Bolton game, and when the camera pans to the shot of the manager in the stands, you'll see Allardyce talking into a recorder attached to his head. I'd always thought it looked a bit silly, but Allardyce could care less about appearances. In his position you wouldn't want to lose the random on-the-fly observation the way I often do. But it goes deeper than that:

"When the Bolton boss addresses his troops at half-time on Sunday, he will have a stream of data available to him from the laptop computer of one of his analysts. If Kevin Nolan has not done enough running, he will be given a read-out before the manager's bawl out."

And deeper still: Tai Chi anyone? Mental performance coach? Calls to Formula One teams to gain insight from their methods? Its all there in the Telegraph story. Makes the boys in "The Club" depicted in Michael Lewis' SI piece look like Neanderthals. Work beckons. More on that tomorrow.

An exchange on the information economy 

Professors Eli Noam and Richard Epstein present their views on the economic problems inherent in the new economy.

Noam is concerned about the structural stability of new economy industries: "we need to recognize that the entire information sector - from music to newspapers to telecoms to internet to semiconductors and anything in-between - has become subject to a gigantic market failure in slow motion." The problem stems from the high fixed costs - low marginal cost structure that characterizes these industries. Economists have worried about the stability of such industries for over 100 years. Noam extends the argument to macro-instability, given the increasing share of information goods in the economy.

Epstein offers a sober rebuttal. He focuses on the implications of these cost structures on pricing practices, rather than stability. He suggests that Noam's case for subsidizing old industries for the purposes of diversification and stabilization may be worse than the disease.

My take? Epstein wins by TKO. But Noam does us a favor by making us consider the economy-wide implications of the new economy. Perhaps Fed policy has been motivated by this concern in recent years.

Note: this cost structure characterizes professional sports as well as information goods.

Via the angry economist, who has no donut for Noam.

Brewer Nepotism 

HBO reported that members of the Selig family were paid more than $2m per year by the Brewers. They deny it.

Nepotism typically yields a mediocre firm. Hmm, think the Brewers. But unless you are a fan of the Brewers, what difference does it make if the firm wastes its income among family members?

Thursday, February 26, 2004

A Michael Lewis Sighting 

Lewis has a piece in Sports Illustrated (not online) that Jon Weisman on Dodger Thoughts parses nicely. Readers of this blog will recognize that both Weisman and Lewis' statements are consistent with the posts below on management and success.

Why hasn't my copy of SI arrived yet? Something to savor. Via the always informative Baseball Musings.

Free Trade, Growth & Convergence 

Virginia Postrel has a must-read piece in the New York Times today. It discusses a study of convergence of income among the states, by Kris James Mitchener and Ian W. McLean in The Journal of Economic History.

She makes some important points.
1) The U.S. is a giant free trade zone.
2) In the 19th Century there were enormous differences in the wealth of the states: "A century ago, the poor states were like third world countries compared with the richest states."
3) The poor states have closed the gap with the rich states by growing faster, but the rich states remain richer. Trade between the states has not pulled the rich states down.
4) Much of the convergence in income took place in the South, but only after 1960: "even in a free trade region like the United States, different legal institutions matter. Most of the South's improvement occurred after 1960, around the time the civil rights movement ended official segregation. Jim Crow laws had hurt the region's productivity, Professor Mitchener suggests, by limiting the ability of black Southerners to build skills and savings.

"There are still differences out there, but those differences have fallen significantly - and not at the expense of rich states," Professor Mitchener says. "The poorer states have caught up. The pie isn't a fixed pie."

There is no evidence here that free trade among the states has harmed the rich states. There is evidence that legal institutions matter a great deal. The evidence keeps piling up. Go to the link and look at the graphic depicting convergence in regional income. Its impressive.

Baseball Acts on Drugs 

International Baseball, that is. Three players have been banned from international competitions for periods ranging from three months to two years.

Keeping in mind the theme of competition between leagues advanced below, suppose that the Olympics, Basketball, and Football all manage to drive drugs out of their sport, while MLB continues to sit on its lonely island where testing is irrelevant. That is where we are currently headed. When owners and players feel the monetary sting of fans turning away from the "juiced up" game, perhaps they'll wake up and take action.

Player Wages & Competitiveness 

The Sports Law Blog points to an entertaining article by Joel Stein on the A-Rod trade. Stein: "The Yankees now have a slightly better lineup than the National League All-Star team, one of whose members will undoubtedly be the Yankees' second baseman by the play-offs."

People who are enamored with the ideal of equality might not think that funny. Understood, but then again, humorous types often find the truth where others do not: "If all the cities had the same amount of money, every year might be as exciting in a roll-of-the-dice way, but there would be no truth in it. America is a nation of vast economic, educational and ethnic disparities. The Yankees are the real America."

If you want sports to be a fantasy game where talent and advantage are handicapped, there is a way to do that. The NFL comes close. The economist Edward Gramlich, currently a member of the Federal Reserve Board, once wrote a scholarly paper contrasting the socialistic structure of the National Football League with the capitalistic structure of professional baseball.

I favor the latter, and here's one reason. If our favorite sports -- say the NBA -- gain increasing interest outside the U.S., salary caps and extensive revenue sharing will preclude our teams from competing with the best in the world.

Here is a concrete example. The U.S. will produce numerous soccer superstars in the future. But they will all go to Europe unless our clubs pay competitive wages. MLS rules are currently designed to limit player wages. Until that changes, MLS will be a business with a sensible plan, but a second rate league on the world stage.

Wednesday, February 25, 2004

Inside Information? 

"US senators' personal stock portfolios outperformed the market by an average of 12 per cent a year in the five years to 1998."

Other facts from the study, by Georgia State's Alan Ziobrowski: (1) Junior senators did even better, earning excess returns of 20% per year. (2) The gains come from uncanny purchases, not prescient sales. (3) There was no difference in performance between Democrats and Republicans. No surprise there.

Here's the story. You be the judge.

Quote of the Day 

ESPN ranked him as the #3 athlete of the century, behind Jordan and Ruth. Time Magazine rated him among the 100 most important people of the 20th Century. So on the 40th Aniversary of the Ali-Liston fight, the quote of the day goes to Mohammed Ali (via Simon Barnes, linked below):

"I'll tell you how I'd like to be remembered: as a black man who won the heavyweight title and who was humorous and who treated everyone right."

Here's a stunner from Larry Schwartz' bio on ESPN:

"When the military attempted to draft him, Ali said he was a conscientious objector. "I ain't got no quarrel with them Viet Cong," he had said in 1966.

Appearing for his scheduled induction on April 28, 1967 in Houston, he refused three times to step forward at the call of his name. An officer warned him he was committing a felony punishable by five years in prison and a fine of $10,000. Once more Ali refused to budge when his name was called.

That day, the New York State Athletic Commission suspended his boxing license and stripped him of his title. Other boxing commissions followed suit.

At the trial two months later, the jury, after only 21 minutes of deliberation, found Ali guilty. The judge imposed the maximum sentence."

Courage of conviction in Houston. Suspended in New York on the same day. Guilty in 21 minutes. Maximum sentence. My, times have changed. As Simon Barnes argues in "The greatest story sports has told," Ali deserves some of the credit for that.

Levitt -- and Wenger -- On Penalties  

Marginal Revolution picks up the Steve Levitt story (below) from Old Fishinghat, and quotes this passage on sports:
"In Europe, Levitt is feted as one of the authors of the "penalty-kick paper". Probably only a trio of economists would have watched videos of 459 penalties taken in the French and Italian football leagues. The authors were testing a complex point of game theory. What they found was that the best place to put a penalty was the middle of the goal, largely because goalkeepers always dive. Yet few penalty-takers actually choose the middle. "I think one reason people don't is that it's just incredibly humiliating to a kicker if he kicks in the middle and doesn't score," guesses Levitt."

I mentioned in a post below that Arsenal's manager shares an economics degree and an intellectual approach to his game with the Patriot's Bill Belichick.

There may even be a tighter analogy:

Patriot Manger Bill Belichick - Economist David (4th down) Romer
Arsenal Manager Arsene Wenger - Economist Steve (down the middle) Levitt

Consider this:
Last September, in the 80th minute of a 2-2 game, Arsenal's Thierry Henry stepped into the pressure cooker to take a penalty, and calmly chipped the ball down the middle. 3-2 to the Gunners.

Nice time to pull the ace out of your sleeve.

Click here for a picture of the soft little chip that won the game.

Just in case you want text too, here is the recap from the BBC.

Suit vs. ACC Dismissed 

In a Connecticut court, Judge Sferrazza dismissed all claims against ACC schools in the Big East suit (over conference realingment) filed by Connecticut AG Richard Blumenthal. Good.

Sports are highly visible in our world. Politicians understand this, and have long tried to capture the benefits that come through media exposure associated with sports. Why do you think championship winners are routinely invited to the White House for photo ops?

I believe Connecticut AG Blumenthal sued people -- one of whom is my neighbor -- simply to gain media exposure. I'm glad he lost.

Feb. 25th: The 40th Anniversary of Clay vs. Liston 

There's only one thing from the sports world of 1964 that I can recall to this day, and that is Cassius Clay's knockout of Sonny Liston. Not just because it was a big heavyweight fight. Clay made people take notice with his outspoken, in your face attitude. He said what was on his fertile mind, liberally and courageously. He shook up the white world in America, and subsequently the entire world, like few men before him or since.

The Liston fight set the stage for the worldwide phenomenon of Muhammad Ali. I'd bet that many of today's African Americans with Muslim names come from parents inspired by Ali.

The Times (London) has a series of articles (free!) marking the anniversary of Clay vs. Liston. Neither are for the faint of heart, whether you are an Ali fan or an American patriot. Simon Barnes, a gifted writer with strong opinions, focuses on the social aspects of the Ali phenomenon. John Goodbody's piece discusses the accusations that the Liston fight was fixed; the second page of this link (see the bottom) has a sharp rebuttal by Matthew Syed.

Note: much of The Times' content has been put "beyond registration," but they seem to have recently altered their policy on the sports page. Here's hoping these links remain accessible.

Update: There is an archive of Ali stories, some current, some historical at The Times. All appear to be free of charge.

Tuesday, February 24, 2004

Quote of the Day 

"[S]ometimes a single fact will tell you all you need to know. When you know that central planners in the Soviet Union had to set 24 million prices -- and keep adjusting them, relative to one another, as conditions changed -- you realize that central planning did not just happen to fail. It had no chance of succeeding from the outset. "

From Thomas Sowell's piece in todays WSJ (subscription).

De Soto on Development 

Lynne Kiesling has an interesting summary of a recent talk by Hernando De Soto. Bottom line: "legal and economic institutions are more important than roads or ports." I buy it. Build the institutions, and the roads will follow.

Two Pieces on Superstars 

From the FT, a story which discusses Steve Levitt's work, which includes a series of papers on economics and sports. Steve, a genuine good guy, was awarded the J. B. Clark medal last year. Within the profession, the Clark Medal is as esteemed as the Nobel Prize. Read the piece to see why.

From abroad, Rob Hughes' story about a fellow most Americans have never heard of. They should.

"More than 40 years after anyone had seen the prime of John Charles either in the white of Leeds United or the zebra stripes of Juventus, the masses remembered him. For John Charles, arguably the most complete and versatile player of all time, equally powerful as a goal scorer or a defender, misjudged the effect of his own legendary status.

He emerged and thrived in the pre-television era and in a period when men still pursued a career in sports for love rather than money. He felt that a player had his time and passed the baton on. He never quite saw or heard or believed the reverence with which generations of soccer followers passed on his prowess, so not only grandfathers, not even the sons of grandfathers, but anyone with a feeling for the fabric of the game recognizes who and what he was.

In a career spanning 1949 to 1966, he played 377 matches in the English league and 165 games in Italy's Serie A and had 38 caps, including inspirational performances in Wales's finest hours at the 1958 World Cup.

Statistics tell us he scored 172 goals in England, 97 in Italy and 15 for Wales. Yet the numbers do not round out the picture because he was selected to bolt up the defense as often as he was picked to lead the attack.

In any case, the statistic that means most is that Charles was never sent off, never once cautioned by a referee, never seen to lose his temper or to throw his considerable weight and force around. Hence "The Gentle Giant." Hence his special place in the minds of Juventus fans - who number 16 million and who in 1997 voted for the finest all-time Juve player.

Their verdict: (1) John Charles; (2) Michel Platini; (3) Zinedine Zidane."

Never booked? That's astonishing.

Just so you know, Platini and Zidane are regarded as the best players ever to come from France. John Charles the player was in exalted company. But it seems that he was an even better man. Read the whole thing and you'll understand why.

Via the WSJ's "The Fix" (subscription).

Monday, February 23, 2004

Another Zen Master 

Add the name of Arsene Wenger to the list of Zen Master managers of sports teams: Jackson, Beane, Belichick.

Wenger is the manager of Arsenal, who sit comfortably atop England's Premier League with a run of 26 unbeaten games since the start of play in August. Since he joined Arsenal in 1996, he's had them playing what some say is the best football in Europe. England's sportswriters take turns showering him with praise followed by invective laced with hints of xenophobia (they're English, he's French, enough said).

An article in today's Daily Telegraph (you may need to register) includes some delicious details on how talent is judged at the Arsenal camp. His striker Dennis Bergkamp, aka "the Dutch Master" showed signs that age was catching up to him last year. Wenger saw what any observer could see on the pitch, and more:

"Wenger noticed a dip in results in speed, power and endurance tests in which the demanding Frenchman places so much store.

Then there was the data spilling relentlessly from ProZone, a favourite toy of coaches that assiduously records during the course of each game the precise movement and mileage of every individual.

There it was in plain black and white. The Dutch master was no longer able to threaten the space behind defences. He wasn't getting about the pitch like he used to."

Two lessons in this. First, what can you say about ProZone but Wow! That takes sabremetrics to a whole new level. Can you dream up an "instanteous reaction range factor" statistic? Might get there applying ProZone to baseball.

Second, Bergkamp's decline in these tests did not cause Wenger to send him packing. He re-signed Bergkamp, and somehow, some way, he's back to his exquisite best, terrorizing defenses with skill and guile.

Two more points on this episode. 1) Money doesn't make champions. In the game discussed in the Telegraph link, Arsenal saw off the title challenge of Chelsea, who have spent over 100 million pounds in transfer fees alone this year trying to catch them. Manchester United, the Yankees of England, also trail in Arsenal's wake.

2) Wenger shares something in common with Belechick, his football counterpart on this side of the pond. They are both innovators who are known for a cerebral approach to their craft. Recall Belechick going for it on 4th down from his own 43 in the AFC championship game? He was reading from the book of Romer the economist, not Parcells when he made that decision.

Both Wenger and Belichick have college degrees in economics, and are known to apply the economic way of thinking to management problems. This short bio of Wenger from the BBC also shows some similarities to Beane. But the lead-in of the bio makes my main point:

"AC Milan rejected him for looking too much like a schoolmaster, and distrustful players tagged him "Clouseau" on his first day in England. But in the six years since he became Arsenal's mystery manager, Arsene Wenger has been credited with transforming British football in general, and the Gunners' fortunes in particular."

From Clouseau to Zen Master. Interesting.

Steinbrenner's no Deaniac 

You won't find much political content here, but I can't resist this one. Apparently, George Steinbrenner put $100,000 into a negative ad campaign against Howard Dean in the Democratic primaries. I wonder if he funds projects which torpedo opposing ballclubs? Wouldn't put it past him. Link via instapundit.

Update: Old Fishing Hat directed me to Offwing Opinion, who presents a more nuanced version of this news. Might have been Steinbrenner, might have been the CEO of YES, who is known to be a donor to the Dems.

I'm very impressed with Offwing's stuff. I see from the reviews there that everyone else is too. Where have I been?

Now to crawl back under my academic rock. Most folks refer to our affliction as the Ivory Tower, but regardless, we don't get out as much as we should.

Aaron Schatz' "Off Base" 

Aaron Schatz' column at TNR has stimulated a fair amount of discussion in the baseball blog world, particularly at sites I read such as Baseball Primer, Baseball Musings, and the economically minded Old Fishing Hat.

It’s a good piece, with good points. Schatz' bottom line is that widespread recognition of the usefulness of statistical analysis will help the rich get richer. His conclusion: “thanks to the mainstreaming of sabermetric techniques … the future of Major League Baseball probably looks a lot more like today's AL East” where the same five teams have “finished in the exact same order for six years in a row. “

Schatz attacks the view that sabremetrics the ideal weapon for cash-strapped teams. This view is that the big teams have money to burn, and acquire the best talent that everyone knows about. Not-so-big teams need to find an edge by some other means. But Schatz is correct that statistical analysis will be much less productive once it is commonplace. Everyone doing it cancels out everyone’s effort. In econospeak, this is a common feature of a Nash equilibrium.

I have criticisms of two points. First, if we accept that widespread use makes the tool less powerful, how can it be such a strong factor in reinforcing inequality? That’s a non sequitir.

Second, Schatz’ use of the AL East as the demonstration of “fundamental inequalities that plague the sport” effectively dismisses contrary evidence. Specifically, the consecutive championships won by the Diamondbacks, Angels, and Marlins. The low-budget A’s have been consistent contenders in each of these seasons. The A’s performance did prove “that poor teams, with a little managerial ingenuity, could lift themselves up by their own bootstraps.” While Schatz states that this “was true -- at least for a while,” I’m more optimistic. I think it remains the case, but that none of us knows what the next bit of ingenuity is likely to be. If we did, we should be working for the Detroit Tigers.

Sunday, February 22, 2004

Billy Beane for Commissioner! 

Baseball Musings has a slew of posts on the management revolution touched off by Billy Beane's regime in Oakland. A very good point is made in these posts: Beane exploited a large gap in the market using sabremetrics, but the future will yield lower returns to the method as it's more widely adopted.

You can be confident that Beane knows this too. Now that the idea has spread, my hunch is he will find other methods of beating the competition. To my reading, that was the real message of Moneyball: Beane as an innovator, and the story of how he overcame resistance to his inspired thinking.

Bud Selig has had his run as commissioner. He's been a PR nightmare in my book, but Jayson Stark argues that changes of real value have been accomplished on his watch. Stark's analysis seems accurate to me, and it underscores the importance of innovation over image.

An innovator like Beane might be what baseball needs to regain its position in America's sports hierarchy. Would the owners be bold enough to hire him when Selig steps down?

Doing the Math on the A-Rod Deal has an AP story with some interesting numbers.

The Yankees sold $4.6 million worth of tickets in the first four days after the A-Rod deal was announced, bringing ticket sales to $104.3 million for the season. The deal at least makes marketing sense.

On the baseball side, the Yanks are replacing Boone's $5.75m salary with a $14m obligation to Rodriguez, and capturing some of the financial difference by replacing Soriano ($5.4m) with a journeyman. Makes sense to me, as they are getting one of the best players in the game.

Government in the Gambling Business 

State governments have a history of turning to gambling revenues when their budgets get blasted. Now Illinois Governor Blagojevich is considering whether to the state should run its own casino.

That there is monopoly rent in casino ownership is obvious; bids of $300 million for a mere license to operate testify to that. Illinois currently rakes in significant revenues from existing casinos. Apparently Gov. Blagojevich believes additional profits for the state can be realized through ownership. For this belief to be correct, either license revenue is lower than it could be, tax revenues are lower than they could be, or the state of Illinois can run a casino more efficiently than Harrah's.

Licenses are granted though competitive bidding, so license fees should soak up monopoly rent, given casino taxes. That the state of Illinois has special expertise which Harrah's and other casino companies lack is risible. If Blagojevich's idea has any merit, it's a substitute for raising casino taxes, which may be difficult given prior agreements between the state and casino operators.

Award to Honor Fritz Pollard 

The big news in college football this week is about a certain tone deaf coach in the Rockies who was apparently unaware that his program has been heading for a fall.

Better news comes from the East Coast, where Brown University and the Black Coaches Association announced the establishment of the Fritz Pollard award for the male college coach of the year. Fritz Pollard was a skilled collegian and professional player. He was the first black player to play in the Rose Bowl, and if you classify him as a quarterback (there was little passing in the NFL in that era so opinions differ, but he did throw the ball some), he was the first black QB to win an NFL championship. His career after football was also distinctive. Let's hope the recipients of Pollard's award meet his high standards.

I first became aware of Pollard by reading a superb article by Daniel Coyle in the December 15 issue of Sports Illustrated (not available on line, but try Lexis-Nexis if you have access). The story is about the Brown Bombers, a team of black players led by Pollard in the 1930s that successfully took on all comers. The Bombers were Pollard and co.'s answer to pro football, when the NFL adopted an unwritten rule of segregation in 1933.

Searching SI for Pollard did turn up a piece by their resident football guru, Dr. Z, in which he places Pollard on his short list of "seniors" for the NFL's Hall of Fame. Curiously, such players as Bob Hayes and Jerry Kramer also populate the list. As Dr. Z's title says, choosing among these guys is a brutal job, and the committee should probably expand the number of players eligible for enshrinement to two per year. If they don't, it will take them forever to catch up, and their memories will have long faded.

Revisiting Pollard's story reminded me of John M. Caroll's book, Fritz Pollard: Pioneer in Racial Achievement. I've ordered it and will let you know what I think when I'm finished.

Baseball Arbitration Results 

The baseball arbitration season is over, and owners came out on top in the majority of cases for the 8th straight year.

Players aren't exactly suffering though, as the average award was over $3.2 million, about $800k over last year's average salary in MLB. The biggest gainer was Albert Pujols, whose salary increased from $950k to over $14 million. As Harry Carray would say, Holy Cow!

Albert may have "gotten his," but the Player's Association believes owner collusion may be lurking in the shadows. The AP story linked above states that many players signed contracts prior to the Jan. 15 arbitration deadline "because their team threatened to release them the previous month." Hmm, were those threats coordinated? If so, that's collusion. Player unhappiness on the issue is discussed here.

Good analyses of baseball arbitration can be found Paul Sommers' Diamonds are Forever, published by Brookings, and The Money Pitch, by law professor Roger Abrams.

High School Sports Subsidies 

Speaking of subsidies (see post below), today's Sports Illustrated has a short note by Daniel Habib, "Varsity Blues," which provides a glimpse at the extent of the subsidies for high school sports.

Faced with significant budget cuts last spring, Winthrop High School in Massachusetts decided to eliminate its sports programs. Last week, voters in the town of 20,000 rejected a proposal to fund Winthrop sports through a property tax levy. SI states that the tax hike would have amounted to $1,200 per home, although other projects were apparently included in the referendum -- standard politics at work here. That's a lot of money. SI also notes that a Winthrop student participating in sports currently pays a $325 user fee.

Eliminating sports at Winthrop seems draconian. Perhaps this is yet another example of the government threatening to "shut down the Washington Monument" when a budget crisis emerges, in order to maintain its flow of revenue from citizens. Nevertheless, if I were faced with the opportunity to have my children participate in high school sports at $325 each, and a perpetuity of $1,200 per year in taxes, or even a fraction of that, I think I'd decline.

Are high school sports worth the subsidies they enjoy? Private colleges provide a market test. Students who pay tuition at private colleges, in effect, are casting a vote for the sports programs operating at their school. Many private colleges have extensive and expensive sports programs. But others have none. The essential difference is that high school students are generally limited in their choice of the mix between academic and athletic programs.

My hunch: government subsidies for high school sports are excessive.

On Obesity: Subsidizing Health with Veggie Vouchers 

Democratic institutions promote the health of individuals in a number of ways, beginning with payments to teachers of "physical education" in our elementary schools. But concerns about obesity in the population have given rise to a new subsidy proposal. A bill in Britain's Parliament attacks what MP Boris Johnson describes as the "fatness epidemic," by issuing veggie vouchers. MP Johnson doesn't buy it:
The fatness epidemic is not something that can only be "cured" by the intervention of doctors or government. The cause of the epidemic lies entirely in our own volition.

This is how the fatness epidemic spreads. You go to the fridge; you take out that Onken biopot yogurt, with the little barley grains to make it seem somehow more dietetic; you eat, and you repeat. The cause of the fatness epidemic is not society, or poverty, or government failure. It is millions of fatties deciding after lunch that they might just have room for an extra large Kit Kat.

There is an economic case for some subsidies, but the veggie voucher reaches a new level of absurdity. Of the welfare recipients who would get veggie vouchers, some would not change their habits one iota (they'd continue to eat plenty of veggies along with everything else), some will add the biopot yogurt to their diet with a voucher and use cash for their Kit Kat bar, and others will find a way to convert their voucher into the Kit Kat. Veggie vouchers are silly policy. Don't government ministers have anything serious to do?

Johnson's take on the issue is both amusing (he admits to a fondness for Kit Kats) and accurate. Recommended reading: Kit Kats & Veggie Vouchers

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