Friday, April 30, 2004

Derby analysis at the Courier-Journal 

The pace scenario. Lion Heart from post #3, and Quintons Gold Rush from post #20 have no choice: they must gun it from the get-go. It will be very busy behind them, with Read the Footnotes and Pollard's Vision prominent. Too busy for any of these to last, I believe. Lion Heart has a chance to steal it on the front end, but the pace-pressers will not let that happen.

Given a choice between intelligence and temperament, trainers want temperament in a horse. Apparently Smarty Jones has it. If so, it will be a big asset in the midst of a very competitive race. When the dust settles, I look for a stretch battle between the favorites: Smarty will be joined by the stretch-runners Tapit and The Cliffs Edge.

Don't put a high probability on that scenario though. In this year's Derby, most of the horses have shown exceptional ability, but not consistently (save the three just mentioned). And the horses are trained by people who know what they are doing. So its not a bad year to take a chance on the skills of a Frankel or a Mandella at long odds. And what to make of Castledale, the Santa Anita Derby winner who is 15-1 in the morning line? I'm confused. But never mind. There's plenty of time left to sort out the puzzle. Happy Derby!

Thursday, April 29, 2004

The NCAA announces it has reformed 

College football may have a new method of scoring, with regard to academic progress that is:
The new system, if approved, will go beyond graduation rates that are currently used as a measure of academic progress. Instead, a team will be awarded points when an athlete remains eligible and when that athlete advances academically from semester to semester. One point can be earned for each athlete who remains eligible during a given semester and another awarded for each athlete enrolling for the next semester. This will determine an academic progress rate, a statistic meant to provide a snapshot of how each team in every Division I sport is performing in the classroom. It will measure only athletes on scholarships.

In the next several months, another N.C.A.A. committee will determine the acceptable score on this academic progress rating and set the cutoff below which teams will be warned that they may lose scholarships, recruiting privileges or, in the case of repeated violations, postseason eligibility.

Setting the cutoff mark is complicated by academic rates that vary widely from sport to sport and by the N.C.A.A.'s desire to compare athletes' progress rates to those of the entire student body. But these rates also vary because of the diverse academic missions of N.C.A.A. members.
Sounds like a difficult proposition to me, but there's a chance the scheme will induce something besides substitution of basket-weaving courses for calculus. Meanwhile, NCAA president Myles Brand has already declared that the mere proposal itself is "a major change in the academic culture." Gee, I'm impressed!

One way to reduce gas prices 

EPA restrictions vary across regions, limiting fuel substitution and thus creating sharp price differences, as some have been pointing out for a while now. Professors Richard Gilbert of Berkeley and Justine Hastings of Yale have an interesting proposal to address this problem: de-couple the fuel from the additives. This would allow greater substitution between refineries. Retailers could then combine the fuel with the additives.

Their plan would appear to be based on the following logic. Tying fuels and additives together in markets segregated by EPA regulation leads to price variation that competition can't erase. Eliminate the tie-in, and the market for raw gasoline is re-integrated. Hence the law of one price will take hold, and scarcity premiums will disappear. If additives can be purchased on competitive terms, and little efficiency is lost by unbundling the two elements, the price for the final product will fall. Interesting idea.

Wednesday, April 28, 2004

The stadium subsidy saga, continued 

Doug Pappas references testimony from Art Rolnick of the Minneapolis Fed. From a hearing in the Minnesota House on the Twins' stadium proposal:
"My kids and I are all the time talking sports.... That quality-of-life issue is worth something... but a public investment in early childhood education is far more important. Hands down."
Maybe if we keep saying it enough, we can nudge policy an inch or two in the right direction. I'll put my two cents in on Friday.

NBA down 

Greg at the Sports Law Blog notes that the TV ratings for the NBA playoffs are down. Way down in fact, if his figures are representative, and I have no reason to doubt them.

This is clearly a problem for the NBA. Greg opines that this is due to youth, but I'm not convinced. Perhaps the ole Blue Devil is in a funk about this ... ;)

Tuesday, April 27, 2004

A cool billion dollars... 

in security expenditures for the Olympic games in Greece this summer. Given the expense, I can understand why the IOC is purchasing cancellation insurance for the first time: "a $170 million policy to cover the risk of the Athens Games being called off because of war, terrorism, earthquakes or flooding."

These figures suggest to me that terrorists have increased the cost of staging the Olympics by close to $1 billion (i.e., over and above prior security expenditures) - yet another measure of the seriousness of the problem.

Monday, April 26, 2004

Efficiency in the NBA... 

as measured by $ per marginal win.

The good: Indiana & Detroit (~$490,000).

The mediocre: The Lakers & Timberwolves (~$750,000).

The ugly: Atlanta & New York (~$2,000,000).


Intermittent posts this week 

I'll be traveling, and once I get home it's time for a religious holiday, the Kentucky Derby. Here are a few links to things near and dear.

There is truly something special going on at Arsenal, who clinched the title to England's Premier League on Sunday, having yet to taste defeat. Four games remain to be negotiated before Arsenal can claim a truly historic accomplishment - no one has gone unbeaten in England since Preston's "invincibles" in 1888. Yet, for all the beautiful football and accompanying accolades, yet there is a taste of something missing. Henry Winter reports here, and former goalkeeper Bob Wilson adds perspective for those interested in the history of the club.

Update: Almost forgot... In addition to the reliable Jennie Rees (see below), here's a link to more good writing on Saturday's Kentucky Derby. Steve Haskin, like me, loves the look of a good horse, and his reports on the workouts from Churchill's backstretch show it. The problem with the Derby - if you want to call it that - is that almost every single one of the horses entered in the race is truly exceptional, and has trained to be in peak condition on the first Saturday in May. Steve just reports what he sees, and its true, every year: these horses look great. They are truly special. In my opinion Steve is right: even longshot Pro Prado has a decent chance to hit the board. This year's Derby trifecta will be one tough cookie to crack!

Its Derby Week 

Don't have a clue about the field for Saturday's Kentucky Derby? Consider these observations from Jennie Rees, of Louisville's Courier-Journal. Here is a list of the horses, ranked by earnings in graded stakes races.

Maury Wolff is an economist who is also a professional handicapper. Mr. Wolff now makes his bets through rebate shops - a controversial innovation in the industry - and understands price elasticity of demand. Unfortunately, despite 25 years of conversations with racetrack operators, he's never been able to convince them that their price (i.e. betting takeout) is too high. Perhaps the reality of competition from rebate shops will prove more successful than Mr. Wolff's economic arguments.

Sally Jenkins on fallen soldiers 

You just knew Pat Tillman was a special person, but some of the facts in this story drive home the point.

Are stadium tax breaks going federal? 

ISC owns 12 racetracks in the US, and are planning a new 80,000 seat facility in the Pacific Northwest. This story about site selection has a number of interesting details which characterize the political and economic problems associated with stadium development -- the availability of large land tracts, transport, and the cooperation of local officials. One thing in particular struck my eye though - a proposed federal tax break for construction of racing facilities.
[I]f the ISC opens the "Great Northwest Speedway" by 2007, it may be able to write off a hefty portion of its construction costs, thus saving millions of dollars in taxes. A provision tacked into a proposed federal law would extend the amount of time in which companies can depreciate expenses of constructing a track, grandstands, suites, souvenir shops, parking lots and even landscaping.

That bill emerged from the Senate Finance Committee and is awaiting action by the U.S. Senate. Committee spokeswoman Jill Gerber said it would apply to companies that open race facilities after the law is enacted and before 2007. She said an economic analysis projects that companies would save -- and federal coffers lose out on -- an estimated $92 million in the next 10 years.
If someone can convince me that this subsidy is in the national interest, I'd have to quit calling myself an economist.

Sunday, April 25, 2004

The psychology of winning 

This story in the NY Times chronicles the use of psychological tests by the NFL and others when considering whether to draft or sign players. Some interesting tidbits:

--Dr. Herbert Greenberg has been at it for 43 years, and his firm Caliper now generates $22 million in revenue each year from testing.

--Greenberg's concept: "The qualities we study in athletes are self-discipline, competitiveness and a positive sense of one's self. Those are the qualities that make up what we call the psychology of a winner."

--Good calls: Wayne Chrebet of the Jets (green light with enthusiasm), & the ill fated Lawrence Phillips (red light).

--Do-over? Chris Bosh (red light), who just completed a successful rookie season.

--What motivated Greenberg to start his business? Greenberg "was denied numerous jobs in his younger years because he was blind. Upset that people like him did not have 'the opportunity to make the best of what they are,' he devised a method to help personnel managers spot talent." Looks to me like Greenberg's a winner!

Clarett op-ed 

Professor Robert A. McCormick of the Michigan State Law School penned this op-ed on the Clarett case. McCormick is one of the lawyers representing Clarett in his lawsuit against the NFL. Here is the key part:
Is the NFL rule, in existence for some 70 years, legal? The answer should be a resounding “no.” A similar rule in basketball crumbled more than 30 years ago when Spencer Haywood of Detroit successfully challenged a similar National Basketball Association restriction, and the NFL rule should fare no better.

The antitrust laws forbid “contracts, combinations and conspiracies in restraint of trade.” Their purpose is to protect a vital American ideal — free economic competition. Here, the NFL owners have agreed not to hire an entire group of otherwise qualified players, which obviously restrains Clarett’s ability to trade his services for payment.

Under the law, certain “reasonable” restraints may be permitted, but those restraints must further economic competition, and the NFL rule only stifles it. Other reasons, like protecting the health of players, are not valid excuses under the antitrust laws.

The NFL, however, seeks to shelter its anti-competitive agreement by making it part of the collective bargaining agreement with the union that represents NFL players. But this argument should also fail.

It is true that union activities, and some labor-management agreements, are exempt from the antitrust laws because without an exemption, unions could not lawfully exist in this country. After all, every strike is, in a real sense, “a combination in restraint of trade.” Under Supreme Court precedent, however, labor-management agreements are exempt from the antitrust laws only when the parties to that agreement restrain themselves. Once they agree to restrain strangers to their relationship, the exemption ends.

Friday, April 23, 2004

A note on protectionism in Korea 

Here's a stunner. South Koreans eat about 5 million metric tons of rice per year. Protection limits imports to 4% of domestic consumption. The world price of rice is about $250 per metric ton, 25% of the domestic price in Korea. Using these figures, the size of the transfer from Korean consumers to producers is thus $3.75 billion per year.

That's a lot of money.

Bad Call 

If there is one thing that Sabremetrics and Beane-ball have illustrated beyond a shadow of a doubt, it's the value (or cost on the flip side) of an out. Outs are the ultimate scarce resource in baseball.

The 3rd base umpire in last night's Cardinals - Astros game cost the Astros two outs, in part because he was too lazy to get in position to view the plays. Lankford trapped Biggio's sinking liner to left, but the ump called him out. Far worse, Everett was clearly safe at third on Bagwell's single to center. The ump blew the call in part because he was on the outfield side of third base and couldn't see the tag. The difference between men on first and third with 1 out and a man on first with two, is large: 1.3 runs in expected value by my calculations. The 'Stros lost 2-1 in 12 innings on a dribbler, stolen base + throwing error (Ausmus is now 0 for 12), and a squeeze play. What a way to lose a game.

The Dutch Master 

Here's a good interview with Dennis Bergkamp, an extraordinary artist on the soccer pitch. Bergkamp is a linchpin of Arsenal's transition from a defensive minded club to one that has taken the beautiful game to a new level of brilliance. Unbeaten thus far in the Premier League, they can win the title at Tottenham on Sunday.

The Perfect Mile 

Tim Morris offers a fine review of Neal Bascomb's The Perfect Mile: Three athletes, one goal, and less than four minutes to achieve it. This one's going on the reading list.

Thursday, April 22, 2004

Ulama, the world's oldest ballgame 

From the Economist, we learn a bit of sports history, both recent and ancient:
IT IS a strange coincidence that many popular sports played today with a ball, big or small, were first played in the latter half of the 19th century. Only cricket set its rules earlier, in 1788. Basketball was invented in 1891. Other sports had antecedents: soccer, rugby and American football were all formalised in the 1860s and 1870s from what appears to be a common origin, while baseball was standardised around that time, as was golf—though many Scots claim earlier origins. Tennis as we know it today was devised by Major Walter Clopton Wingfield, a British army officer, for the entertainment of guests at his country estate in 1873. Tennis, though, is an exception in that the indoor form of the game was played with formal rules in England and France at least as far back as 1600. But even this is recent compared with ulama, a game once played all over Mesoamerica, from the American Southwest to Peru.

The oldest ulama court, in the Mexican state of Chiapas, was built around 1500BC, while latex balls used by the Olmecs, farther west, have been carbon-dated to 300-500 years earlier. This is not to say the rules of ulama have not changed over the years—ritual sacrifice of the losers is thought to have died out in the 1300s. But, says Manuel Aguilar, a professor at California State University, in Los Angeles, who studies the game, it is unique in having a continual recorded history stretching back almost 4,000 years.

Guinness in a horse? Brilliant! 

Many are aware that "Guinness is good for you." But who'd have thought it would be good for horses? Michael Dickinson, that's who. Dickinson trains the gifted Tapit, winner of the Wood Memorial and one of the favorites for next Saturday's Kentucky Derby. Dickinson has charted his own course in a tradition bound profession. This very interesting story by Bill Finley provides some of the details.
Most horses train at a racetrack, which can be a stifling environment. Dickinson refused to do it that way, instead building a 200-acre training center in Maryland he named Tapeta Farm. It is unlike anything in this country.

No detail has been overlooked: the farm has three turf tracks, a dirt track he designed to provide the safest possible conditions, stalls the size of a small apartment, wooden horse trails and well water, the only type of water his horses are allowed to drink. They also consume three eggs and a bottle of Guinness daily to go along with standard feed.
I became a believer in Dickinson by following the exploits of (and cashing tickets on) Da Hoss in the Breeder's Cup Mile. I'm a believer in Tapit, too. He's got a great chance to win the Derby. Bottoms up!

The Baltimore-Washington franchise war 

There's good information in this Washington Times story on the fight to put a team in DC:
The most heated battle in this Baltimore-Washington war, however, has been within the research community. Barely a year has gone by without a new study aiming to document the level of support for the Orioles in the Washington area or predict the impact a team placed in the District or Northern Virginia would have on the Baltimore club.

The Orioles say they derive at least 25 percent of their attendance and corporate support from greater Washington. The team operates a retail shop at Farragut Square and regularly conducts aggressive marketing efforts in and around Washington. The Virginia Baseball Stadium Authority three years ago challenged that view, releasing a study that estimated that the Orioles derive 13 percent of their attendance from greater Washington and just 5 percent from the District and Northern Virginia.

An update of that study from Kagan Media Appraisals last fall projected that rather than losing crucial local TV revenue if a team were placed in Washington, the Orioles instead would gain a healthy increase of 4 to 6 percent per year.

That projected increase is predicated on the arrival of another regional sports network (RSN) to compete against Comcast SportsNet should Washington get a baseball team and a vigorous battle for the distribution rights of every local pro team.

Already, Comcast SportsNet faces a difficult juggling act each spring with its live coverage of the games of the Orioles, Washington Capitals and Washington Wizards. Comcast is forced to rely heavily on over-the-air stations such as WBDC-TV (Channel 50) to meet demand.

"There's definitely room in the Washington-Baltimore corridor for another RSN," said John Mansell, analyst with Kagan Media Appraisals. "Most of your other major markets have two, and in many cases, three such networks. If Fox Sports Net didn't step in and get involved in such an effort, I'm sure somebody else would."

A study conducted last year by Williams' cabinet similarly found a majority of District-based businesses holding seats at Camden Yards would either maintain or increase their spending with the Orioles should Washington get a team.

But for all the number-crunching, the only opinions that truly matter are those of MLB commissioner Bud Selig and the members of the relocation committee.
It is interesting to note that the NFL lost the "Raiders' Case" - when they voted to stop Al Davis from moving his team from Oakland to Los Angeles - for the very reasons cited by the Orioles. The court viewed the actions of the League as protecting the Rams from competition.

From an economist's perspective, I'd argue that approximating the free entry outcome would be the best move for fans. Free entry would surely yield multiple teams in areas as large as Baltimore and Washington. The soccer leagues in England provide evidence on entry and team location. In the Premier League, five of the twenty teams are located in London. Three more are doing well in the Nationwide League and could earn promotion to the top level for next season. What is most appealing to me about the English system, however, is that team relocation is a rare event.

On Clarett v. NFL: tell it like is! 

There is at least one newspaper columnist willing to discuss the real motivations of the NFL and NCAA in this case. Here's John Romano:
There have been all sorts of legal maneuvers in the NFL's battle to keep younger men out of its annual draft.

All we lack is this:

Honesty.

In the next day or two, a U.S. Supreme Court decision will determine whether Maurice Clarett and Tampa's Mike Williams will be permitted to join Saturday's draft. Justice Ruth Bader Ginsburg has asked the NFL to file a response to Clarett's emergency appeal by this morning.

The NFL, that font of compassion, would have you believe it cares only about the welfare of young athletes. Ditto for the players association. The NCAA suggests its greatest concern is the education of students.

In legal terms, this would be known as deceit or misrepresentation.

Outside of court, it would be crapola.

Now, understand, there is great anticipation the NFL will win this legal battle. That antitrust laws and precedent are on the league's side.

And many of the issues raised by the NFL are valid. Particularly when the league argues most 19- and 20-year-olds are not physically prepared to handle the rigors of playing at the sport's highest level.

But it is difficult to throw support behind the NFL and the NCAA when you realize the hypocrisy that is driving their arguments.

When push comes to shove, the NFL could care less about the well-being of its players. It is a league of disposable parts. A league that loved the cost-effectiveness of artificial turf. A league without guaranteed contracts. A league that markets brutality in its video games.

There is one, overriding reason the NFL is fearful of high school graduates or college freshmen entering the league:

It would be an added expense.

Under the current system, the NFL essentially pays nothing for a farm system. Not only does the NCAA function as a de facto minor league, but it serves as a marketing tool. This way, by the time they reach the NFL, players already have a measurable star appeal.
Romano is right on the money. Check it out.

Wednesday, April 21, 2004

Terrorists at Old Trafford? 

This hits close to home, even for an Arsenal fan:
Manchester Utd tightened security for Tuesday's home game against Charlton after reports Old Trafford was to be the target of a terrorist attack. Assistant Chief Constable Dave Whatton said the decision had been made in the light of media speculation.

It follows the arrest of 10 people under the Terrorism Act on Monday, seven were detained in Manchester. ... Newspapers reports claimed the 10 being held under anti-terror laws had tickets for seats scattered throughout the stadium.

... The nine men and one woman were arrested on Monday after 400 police were involved in raids.

Greater Manchester Police is seeking warrants for further detention from magistrates in the city for eight of the suspects.

They stand accused of involvement in the commission, preparation or instigation of terrorism.
The Man Utd site reports that the ten tickets in question were reportedly for this weekend's match with Liverpool, always a prominent fixture in the English season. Old Trafford seats 68,000, a frightful thought.

The stepped up security for the Charlton match was referred to on Sky Sports News last night, but I had no idea that the threat was of this magnitude. Via Andrew at Always Right, who notes: "This would be the worldwide equivalent of attacking Yankee Stadium and The Rose Bowl (combined)." This is troubling, as ever. But like many a sports fan, I feel a connection to places I've been and people I've watched perform at the highest level. It heightens ones sensitivity to the threat.

My gut reaction? No mercy for terrorists and their accomplices. Otherwise unprintable

Keynes on the value of limited revisions 

From Kieran at Crooked Timber:
Keynes complains about having to rework his Treatise on Probability for publication: "After every retouch it seems to me more trifling and platitudinous. All that is startling is gradually cut out as untrue, and what remains is a rather obscure and pompous exposition of what no human being can ever have doubted."
My stuff is trifling from the get-go, and the more I revise the more I recognize it.... so its best not to revise ad infinitum.

There are other interesting biographical bits on Cambridge economists in Keiran's post; check it out .

Youth development 

The spectre of 20 year olds practicing football with intent to play professionally has the NFL and its supporters spinning away. Meanwhile, across the pond in Scotland, Glasgow Rangers are making plans to train more teenagers:
The club have formed a separate entity to be known as Rangers Youth Development Company, in order to fast-track their stars of the future. Four businessmen - Ian Russell, Paul Murray, Jim Whitelaw and Walter Nimmo - have contributed £1 million and Rangers have doubled that amount to fund the project.

..."It will be a long time before what we want to happen happens. At the moment we have some of the best talent at Under-15 level and below, but it will take four or five years to see the best of them."
One can make a case that market division between the NFL and the NCAA over 18-20 year old football players raises the value of player development. Collegefootballl is fun to watch. But the primary motivation for the NFL is even more simple: it reduces their costs. The cartel-like ban on competing for younger players (nicely protected by insertion into the collective bargaining agreement) saves them from spending millions of dollars on developing young players.

Update: while the combination of higher value (the college game) and lower costs (for the NFL) suggests that the draft restriction on youth could maximize aggregate welfare, it does not guarantee it. Regardless, that is not the issue being argued in the Clarett case.

Integration and the US Open Series 

Tennis is taking a page from league sports by integrating its tournaments into a series to increase interest. The benefits of integration is one of the major lessons of the evolution of sports in the 20th Century.

Baseball was first to adopt a cohesive league structure. Before leagues, baseball was, like most sports, a collection of mostly unrelated "performance events." In a performance event, such as figure skating, the enjoyment is confined to the appreciation of skill and beauty on display at the moment. Organized competition proved to add interest, and as football and basketball developed, they naturally adopted league structures as well. Popular sports in 1900 that were less able to integrate - boxing and horse racing, baseballs' companions in the "big 3" - declined as integrated competitions attracted more interest from sports fans.

Tennis is betting that linking a series of tournaments together will add more interest.
The intent of the series is to bring continuity to tennis fractured schedule by linking 10 tournaments in a six-week regular season that concludes on the eve of the U.S. Open.

Both a men's and women's series champion will be crowned, and the top three male and female finishers will see their prize money in the U.S. Open bumped from 25 percent (third-place finishers) to 100 percent (series champions).

For the 10 series tournaments, the benefits should be more far-reaching.

First is increased TV exposure. The U.S. Open Series will have a regular home on ESPN, which will air weekly coverage of the 10 tournaments. CBS and NBC will also provide live coverage on the weekends.
Other sports have tried similar things in recent years, notably Horse Racing and NASCAR. Both are essentially performance event sports, but the NASCAR experiment may prove me wrong. It is certainly the case that NASCAR benefits from the advantage that integration gives them over Indy Car racing.

The bottom line: Tennis' plan makes good sense to me. Thanks to Bob Tollison for the tip.

Tuesday, April 20, 2004

Aging and slugging in baseball 

The SF Chronicle asked Jim Albert, Professor of Mathematics and Statistics at Bowling Green, to analyze the relation between aging and slugging. JC at Sabernomics has been at this recently as well. At issue is this chart, which depicts the "home run rate" by age for famous sluggers.

The home run rate measures the % of balls in play that are home runs, which Albert argues removes random factors from performance. By this measure, McGwire and Bonds clearly peak at a later age than their predecessors. What's up? Albert is circumspect in the story, stating merely that "something is driving these changes." John Perricone at OBM - ace Bonds defender - pulls part of the answer out of a Peter Gammons story:
For history's sake, the home run rate in Major League Baseball from 1954 through 1976 -- essentially the careers of Willie Mays and Henry Aaron -- was one homer per 44 at-bats. The rate from 1993, when Barry Bonds first hit 43 homers, through this week was one homer per 32 at-bats.
So part of the Bonds-McGwire uptick late in their career can be attributed to a league-wide increase in the propensity to hit home runs, coincident with their reaching an advanced age. But this observation gives too little credit to Bonds and McGwire - compare the dark and light lines in the charts. These guys lapped the field - their contemporaries - at ages when the performance of their predecessors declined. Professor Albert is right: something's going on, and I'd wager much of it is benign. While it would be great to talk about these feats without reference to the S-word, unfortunately, it ain't gonna happen.

Monday, April 19, 2004

Clarett ruling stayed 

Clarett (and Mike Williams) will not be eligible for the NFL draft this Saturday, as an appeals court in Manhattan granted a stay of the lower court ruling in Clarett's favor. Clarett won at the lower court level using an antitrust argument, one that has a strong precedent in the Spencer Haywood case. The main bone of contention is whether the exemption from antitrust enjoyed by labor unions protects the NFL's draft restriction from an antitrust challenge. Although this was only a stay of the original decision, the quotes from the judges in this piece reflect a somewhat hostile attitude toward the plaintiff.
The judges had the option to either let the earlier ruling stand, reverse it and block Clarett and Williams from the draft, or simply issue a stay to give themselves more time to decide.

Clarett's attorney, Alan C. Milstein, argued that the age restriction was not agreed upon as a result of collective bargaining and that the league should not be allowed to enforce one even if it is collectively bargained because it affects players not in the union, who therefore have no voice in it. The judges, however, seemed to dismiss that part of the argument in their questioning of Milstein.

"That's what unions do, they protect people in the union from people not in the union," said Judge Sonia Sotomayor, extending her point to say the league and union could decide not to have a draft, as long as they agreed on it. That, she said, was the essence of labor law. "It might not be nice," she said. "But it's not illegal."
It is more than "not nice." The agreement (if it can be called that) excludes a well-defined class: 20 year old players like Mike Williams. Were it just the usual union "protection," there is no doubt that labor law trumps antitrust law. But an agreement to exclude a well-defined class of market participants seems different to this observer. Substitute "black" or "white" or "more than 30 years of age" in place of "two years removed from high school", and ask yourself if you think the appeals court would overturn the original decision.

Footnote: Last night, ESPN interviewed a half dozen NFL coaches etc. on the restriction, all of whom echoed the party line. To paraphrase the typical response: "it's for their own good." Hogwash, and shame on ESPN for being a promotional shill for the NFL. The purpose of the restriction is to reduce the costs of player development to NFL teams, pure and simple. European soccer clubs routinely sign players younger than Freddy Adu, the 14 year old soccer phenom. Typically, they train with the club for years before playing in a competitive match (see Beckham, David). Absent the NFL restriction, young American football players - the few who would be worth drafting - would do much the same.

Update: Greg at the Sports Law Blog has commentary and links. He points to a column by Michael Wilbon, whose final sentence is "But it's becoming more and more apparent that barring a last-minute change of heart, serving an apprenticeship for the NFL will continue to be a job requirement." That's right. And the NFL avoids the costs of the apprenticeships in the bargain!

Unwired 

Craig Newmark, who finds the darnedest things, points to Intel's list of the top "100 colleges with the greatest access to wireless computing." Clemson, my institution, comes in at #31. Clemson thus scores again in the perennial rivalry with the University of South Carolina (96th), but must settle for 2nd in the state to the College of Charleston (27th).

Public ownership of the Twins? 

From State House Rep Phyllis Kahn's opinion piece in the Star-Tribune:
Instead of wondering "How or where do we build a stadium?" we should first ask, "How do we keep the Twins here?"

The answer lies in community ownership of the team (a version of the Green Bay Packers model). Two bills (HF 1925 and SF 1769) promoting this concept have passed through committees and are sitting on the respective House and Senate floors.

The House bill alone has 34 authors, a bipartisan group from every region of the state. Many of these coauthors have serious concerns about investing public dollars in a private business operating in the dysfunctional economic environment afflicting Major League Baseball.

Without going into the section-by-section description of the proposal, the community ownership legislation has the following characteristics:

• A range of investment possibilities from a 25 percent private managing partner, responsible for all team operations, expenses and interaction with Major League Baseball.

• A class of major investors who would own stakes in 1 percent to 5 percent increments (akin to the board of directors of a corporation).

• Class B souvenir stock at $100 a certificate. This final class would only get to vote on the relocation of the team.

The bylaws of the corporation would require a supermajority vote on the sale or relocation. We would assume that someone like the Pohlad family would be managing partner, the big beneficiaries like tourism interests would fill out the second class, and graduation presents and the like would be a perfect fit for the Class B stocks.
Interesting. The value of a team rises if the public is willing to pay enough to gain control over relocation - i.e., by more than the net return to the current owner from relocation threats. If this difference is large enough, the current owner would be willing to sell, and the relocation issue would disappear. The concept does not solve the entry issue however, so folks who want a team in Portland and DC might not be fond of the idea.

Economic impact 

Darren Rovell at ESPN.com reports some stats on the LeBron effect:
Aside from the projected $12 million gross revenue bump in ticket sales, James' presence this year was worth at least an additional $18 million more in other revenues, estimates sports business analyst Hadrian Shaw, author of "Shaw's Pro Basketball Blue Book."

...Radio listenership more than doubled, local television ratings increased by 300 percent and, thanks to James' best-selling jersey, the Cavaliers ranked fourth overall in the league in apparel sales, according to the NBA. Approximately $72 million dollars worth -- or 1.6 million jerseys -- featuring James' name and No. 23 have been sold since they first went on sale on June 26, according to Neil Schwartz, director of marketing for SportsScanINFO, a sports retail tracking firm.

...The economic impact of James is hard to miss. Enough James jerseys have been sold to outfit 76 capacity crowds at Gund Arena or 55 percent of the greater Cleveland area.



Sunday, April 18, 2004

Quote of the day 

Bob Bluthardt, SABR's ballpark committee chairman, from a good story in Portland's Business Journal:
It'd be refreshing to hear a city official say, 'We're not here to make a dime, but boy, this stadium would be great for civic spirit.

Saturday, April 17, 2004

Adu scores 

It was a "poacher's goal," but hey, he was there and did the business. Gerhard Mueller became world famous by scoring goals like that. Freddy's team lost to the Metro Stars though, 3-2. I'll link a story here when they come online.

Update: Here's a nice writeup from the Washington Post.

Gas tax? 

Stephen Karlson at Cold Spring Shops links to discussion of a gas tax, notably this from Andrew Sullivan:
We're at war. So far, the Bush Administration has refused to ask for a general sacrifice to pay for this effort. But that leads to a sense that we're not all involved, that we do not all owe the troops our support. More important, the war is about the Middle East. A long-term strategy to protect us from constant involvement in that region would include greater energy independence. A gas tax helps pay for our current struggle and helps us avoid future ones. Why not therefore a wartime gas tax of a dollar a gallon?
A "wartime tax" is not the way to go. Wars are typically financed via deficits. This makes perfect sense, since wars are temporary, and temporary taxes distort decisions in inefficient ways. Bond finance minimizes the distortionary effects of financing temporary expenditures.
But a gas tax itself is not a silly idea. Fellow economist and good friend Ron Johnson proposed to me over spring break that we should impose a permanent $1 tax on gasoline. Why? To avoid the costs of intermittent, but essentially permanent, military interventions in the Middle East. Perhaps these costs should be counted when considering how much we spend on oil. I told Ron I'd go for his proposal if it were accompanied by a revenue-equivalent reduction in income taxes. (I'd rather avoid a tax on gas than a tax on income, wouldn't you?) Before he went to DC, CEA Chair Greg Mankiw said much the same thing. He's quoted in Sullivan's piece, which is worth reading.

Friday, April 16, 2004

On social aspects of fans 

From England, Mary Riddell predicts that football followers will shed their reputation for drunken loutishness, as their heroes have done.
Even so, and contrary to almost every popular myth, football is one of the civilising forces in British society. If you go to Arsenal matches, as I do, you will see a model of what the Government would love to impose, in terms of applying glue to atomised and fearful communities. Besides the father-son bonding of which society is so short, elderly ladies make friends with tattooed blokes who, in New Labour propaganda, would normally be mugging them for their pension books.
Not all of the players are model citizens, of course. The story begins with a recent sex scandal, which Riddell suggests is an exception to the new order. Competition - the economic incentive to stay at the top level of the game - has driven the drinking culture out of the dressing room.

From this side of the pond, psychologists argue that sports fans are happier than non-fans. Even though each contest has a winner and a loser, in the big picture, sports are a positive sum game.

Ernie bounces back 

The roar triggered by Phil Mickelson's put to win the Masters must have been quite a blow to Ernie Els as he was practicing on the putting green. How'd he cope? "After the seventh beer ... I felt a lot better." Here's an interesting story on how he's come to terms with playing so well yet tasing defeat in the tournament he wants most to win.

Thursday, April 15, 2004

On winning & attendance in MLB 

My suspicions regarding the Star-Telgram study proved warranted. That data hound and regression maestro, JC Bradbury of Sabernomics picked up the ball and did some analysis. Here's JC's picture of the bivariate relation between winning % and attendance in MLB.



That's an impressive chart.

JC notes that the Star-Telgram's
model includes winning percentage along with runs and era. This is not much different than including runs scored and runs allowed, which would correlate with the Pythagorean win percentage. This is almost like putting win percentage in the regression twice. This creates a problem known as multicollinearity, which can bias the standard errors upwards and lower t-scores.
Worse, winning percentage is what we economists call endogenous, hence its coefficient cannot be identified in the Star-Telegram's regression. The correction for this is not immediately obvious. If you share my belief - that fans are more entertained when the home team wins 4-3 than when it loses 5-4, you need to estimate a model which includes "superfluous" scoring, not all scoring. If you share the Star-Telegram's professed belief, that fans care only about scoring and not about winning, you need to include a variable for the propensity to win that is not predicted by, say the Pythagorean formula. Perhaps JC (or I) can address that issue with a little free time.

In the meantime, JC's chart rules!

Wednesday, April 14, 2004

A down-the-middle penalty save 

Last night I saw some soccer highlights from the Mexican League, between innings of another Clemens gem. In the Toluca match (recap en espanol) a penalty taker attempted to emulate Thierry Henry, by casually chipping the ball down the middle. The keeper stayed on his feet though, and hence caught the ball with ease. Maybe they are adjusting? See the posts below on the down-the-middle theory of penalty kicks.

Footnote: If someone can interpret Spanish, I'd be grateful to know what the recap says about the incident. The host on Fox Sports World mumbled something about the penalty taker throwing the match. He had no clue that an interesting episode of a long run strategic game was unfolding before him.

Update:Rey Hernandez (an first rate graduate student at Clemson) provided a translation of the story in the comments section, which belongs on the main page. The newspaper writer called it a mistake too.
The relevant paragraphs are the last three. Here's a loose translation.

With a near tie, Tecos had clear possibilities: a penalty kick because Da Silva pulled Abreu, pointed out by the assistant Pedro Rebollar to the central judge Manuel Glower Guerra.

But Abreu infamously failed this opportunity by giving away a soft kick down the middle, and never made it past Hernan Cirstante, the keeper, who was practically waiting for the ball to reach his chest.

In the end of the game Abreu worked hard to make up for his mistake and had two more scoring possibilites, but the Diablos' keeper saved the shots and led his team to a close victory.
Note that the media's response to this incident supports Chiappori, Levitt, and Groseclose's conjecture that pursuing this strategy and failing would bring disproportionate costs to the penalty-taker.

Thanks, Rey!

An economic look at happiness 

A paper by David Blanchflower and Andrew Oswald in The Journal of Public Economics (forthcoming in July, now online), examines the factors that contribute to individual happiness, as reported on surveys. Measured happiness has declined in the US over the past 25 years, and has been unchanged in Britain.

Blanchflower and Oswald's estimates show that married people are much happier than those who are not, including those "living as married." Not surprisingly, higher income makes one happier. The estimated equations thus allow one to pose the question: "how much additional income would be required to compensate for a shock which ended a marriage in some way?" The answer: $100,000 per year. Marriage appears to be a key factor. The authors state that the decline in the US marriage rate "from 67% of adults in the mid 1970s to 48% by the late 1990s - may be one reason for the secular decline in happiness."

In the US, women are happier than men, although their well-being has fallen relative to men over time. Blacks and non-whites are less happy than whites, but their happiness has been rising.

An interesting puzzle thus emerges. Economic growth has made us richer, increased our health and life expectancy, yet people are no happier. Why? There are many possibilities, among them the famous Duesenberry hypothesis that utility depends on relative income. This may account for the happiness data, but I doubt it is a good guide for development policy. A better guide is the observation of Nobel prize winner Amartya Sen, that poverty is the lack of a capability to function, and that its remedy is economic and political freedom.

Tuesday, April 13, 2004

Miles Brand is very concerned about Mike Williams 

The NCAA has filed a brief supporting the NFL in the Clarett case. According to this wire report, NCAA president Brand claims that the "NCAA was supporting the NFL not because of its economic interests but rather that it would lead more college athletes to make poor decisions."

That's lame. The NCAA will not allow Clarett to play. Mike Williams, the only NCAA player to take advantage of the initial ruling in favor of Clarett, is projected to be among the first ten players chosen in this year's draft. Now, whose interests do you think Miles Brand is serving?

Can the PGA Tour survive the decline of Tiger? 

Of course. But his lack of form has the money men scratching their heads.
Among broadcast executives, it is an article of faith that Woods boosts ratings 40-60 per cent when he is within reach of victory. Ratings for the final round of last year's PGA Championship, in which Woods was not a factor, plummeted 41 per cent from the final round a year earlier, when Woods and the unheralded Rich Beem went mano a mano over the last nine holes. Hopefully, Sunday's closing round of the Masters defied the trend.
Note: the numbers I saw indicated the ratings dropped below last years' at least for Houston.
For golf and television executives, not to mention fans, the hope has to be that the stars have now come into alignment - and that Woods, chagrined by his poor showing at Augusta has been given his wake-up call. But it may also be that the game now has such depth and competitive balance that sustained dominance - by one player or several - is just not possible. And that could spell trouble for a sport that has ridden Woods's coat-tails to unprecedented popularity.
Well, for fans like me, a donnybrook among Els, Mickelson, Singh, and Woods would be compelling, regardless of what the superstar worshipers think. But that too requires that Tiger find his game. He says he close. Let's hope so.

There goes the brand name 

From FT.com (scroll down to the bottom):
Martha Stewart has really fallen from grace now. Before she was found guilty of lying to federal investigators over a suspicious share sale, her cooking and gardening books were all the rage in wealthier American neighbourhoods.

Now at a Barnes & Noble bookstore in Bethesda, Maryland, a wealthy Washington suburb, Stewart's books have been relegated to the table reserved for books that are no longer in fashion or so unpopular that far too many remain in stock.

The 70s? Let's not go there 

Michael at Two Blowhards rues that he's a member of the generation that came of age in the 1970s. This generation of would-be flower children was stripped of illusions by hangovers and an economy that was the worst of the last half century. Here are a few facts from Michael's list:
There was a dramatic productivity and wage growth slowdown. From WWII until 1973, wage and productivity growth averaged 2.8% per year. After '73, it averaged between .5% and 1%.

During the '70s, there were not just one but two major recessions.

Detroit produced its most awful cars ever, got whipsawed by the oil shock, and lost a huge amount of market share to Japan.

...in the '70s, unemploment and inflation rose together ... By the early 1980s, inflation and unemployment were both over 10%.

Nixon -- a conservative Republican -- imposed price controls.

The country was full of angry, political women; divorce became much more common.

Cities continued to crumble. In 1975, New York City declared bankruptcy. (A personal note: I moved to the city in the late '70s. The place was in terrible shape. It had a "Blade Runner"-ish, eve-of-destruction glamor that could thrill a young person. But it was clear even to idiot me that respectable people and money were fleeing the city. And for good reason: I remember one garbage strike when trash was piled waist-high along the curb for entire blocks. Crime and poverty were awful. In my first five years here, I was attacked, I was mugged, and I was pickpocketed twice.)

There was serious talk around about how the country simply had no choice but to accept a third-rate status. America's time was said to be past.
Stephen at Cold Spring Shops finds other aspects of Michael's presentation interesting, as do I. There are plenty of thoughtful muses at Two Blowhards' page.

Monday, April 12, 2004

Down the middle 

Darius Vassel of Aston Villa scored on a penalty today against Chelsea. The British television commentary was typically understated: "Straight down the middle, and how often it proves successful." Add another one to the list. Perhaps penalty taking is catching up with Chiappori, Levitt, and Groseclose (2002), but the goalkeepers are still diving ...

The award for the cheekiest down-the-middle penalty kick remains in the possession of Thierry Henry (of course), from Arsenal.

How good was yesterdays' Masters? 

Amazingly good. The last eleven holes must rank with the greatest golf ever played. It is one thing to watch a birdie fest in a tournament where everyone is under par. But yesterday Els and Mickleson fired birdies and eagles back and forth, with nary a bogey on a course that punishes the slightest error. Jim Nantz apparently shares the same view:
When a golf tournament signs off the air, network protocol calls for the talent and crew to dash to their courtesy golf carts, beat a hasty retreat back to the parking lot, and get on the road as quickly as possible to catch the next plane home.

This weekend, however, was different. Almost three hours after Phil Mickelson birdied the 72nd hole Sunday to win the Masters, Jim Nantz was still holed up at CBS Sports' Augusta National compound, marveling about a tournament he ranks with Jack Nicklaus' win in 1986 and the Nicklaus/Johnny Miller/Tom Weiskopf showdown in 1975 as perhaps the greatest.
Mickleson's transformation from a golfer with unfulfilled promise to Masters champion is well chronicled in this story by Sally Jenkins. There has been a sea change in Mickleson's approach to the game. I'd say he's got another major or two in his future.

On noise and decorum, and the Masters 

Frank Deford:
Each year stadiums and arenas become artificially noisier, as the public address blares out trumpet calls and canned music and just plain loud racket. There used to be something so wonderfully pure about a crowd letting out with a spontaneous roar. Now, unfortunately, fans are just as liable to, in unison, scream vulgarities. It is called free speech, although you have to pay your way in to hear it. Civility and courtesy are not protected by the Constitution, even if, as I always understood it, if you bought a ticket, you were, in effect, buying a license that could be revoked.
Deford's rant illustrates one reason why many people - like me - love the Masters golf tournament. Vulgarities and canned music are absent from Augusta. The atmosphere is one of appreciation and civility. The fans roar when great things happen, as they often do at the Masters. And when its over, they don't engage in criminal "celebrations" by destroying other peoples' property.

Minnesota stadiums 

Jay Weiner of the Star Tribune (following up on the Poitras and Hadley study) asks, "can teams afford to pay for their own stadiums?" The Twins and Vikings' answer is "no."

Managing Fenway Park 

Here's a great story by Alan Greenberg on the business side of the Red Sox. Its packed full of information: the revenue gap between the Sox and Yanks, innovations made by the new Sox ownership, and the value of preserving the undersized but unique Fenway Park. Greenberg writes that Red Sox tickets tickets are "snapped up with record speed ... with fans sleeping in line on the cold sidewalk for a chance to buy" them. Tickets to a game at Fenway are the most expensive in baseball, yet would appear to be a bargain.

Sunday, April 11, 2004

Does baseball refute the 1st law of demand? 

Someone at the Fort Worth Star-Telegram studied the factors which influence baseball attendance. The results, published in this story, demonstrate that regression analysis in the hands of a reporter can be a dangerous thing. Items that affect attendance according to the Star-Telegram:
• Every increase of 100 runs scored brought in 273,160 fans.

• Every $10 million increase in payroll brought in 130,000 fans.

• Every $10 increase in the cost of attending a game brought in 51,372 fans.
Ahem. Higher prices "brought in" fans? I believe we have a specification issue here!

The title of the story is "Runs, not victories, keep fans in stands." Fans like offense, no doubt, but I'm not ready to buy the Star-Telegram's analysis just yet.

Saturday, April 10, 2004

USDA won't budge on meat testing case 

From today's New YorkTimes:
The Department of Agriculture refused yesterday to allow a Kansas beef producer to test all of its cattle for mad cow disease, saying such sweeping tests were not scientifically warranted.

The producer, Creekstone Farms Premium Beef, wanted to use recently approved rapid tests so it could resume selling its fat-marbled black Angus beef to Japan, which banned American beef after a cow slaughtered in Washington State last December tested positive for mad cow. The company has complained that the ban is costing it $40,000 a day and forced it to lay off 50 employees.

The department's under secretary for marketing and regulation, Bill Hawks, said in a statement yesterday that the rapid tests, which are used in Japan and Europe, were licensed for surveillance of animal health, while Creekstone's use would have "implied a consumer safety aspect that is not scientifically warranted."

Lobbying groups for cattle ranchers and slaughterhouses applauded the decision, but consumer advocates denounced it, saying the department was preventing Creekstone from taking extra steps to prove its product was safe.

Under the Virus Serum Toxin Act of 1913, the department decides where cattle can be tested and for what.

....Gary Weber of the cattlemen's association called 100 percent testing misleading to consumers because it would create a false impression that untested beef was not safe. He compared it to demanding that all cars be crash tested to prove they are safe.

Asked if American beef producers were content to give up the $1.5 billion Japanese market, Mr. Weber said: "We're not going to give in to their demands. If that means in the short-to-medium term that we don't have that market, that's the price we'll pay. But in the long run, it means there's testing that's science based and that creates a level playing field."

Asked if beef producers did not want to be pressured to imitate Creekstone and pay for more tests, Mr. Weber said it was "absolutely not about the money."
Two observations. First, Mr. Weber's statement that it's "not about the money" is an absolute howler. Second, perhaps the Japanese government has an unreasonable standard (a problem not foreign to this country). But to prohibit Creekstone from satisfying the Japanese standard seems actionable, even if a lower cost testing regimen were effective and feasible.

We noted this issue several weeks ago.

Friday, April 09, 2004

Students Sue for Right to Drink Cheaply 

That's the title of a story ($) in today's Chronicle of Higher Education. Students at the University of Wisconsin are suing because bars in Madison have agreed to eliminate "drink specials on Friday nights and Saturday nights." The Badger Herald has a publicly accessible story from March 25 on the suit:
The ban began after the University of Wisconsin's Policy, Alternatives, Community and Education, or PACE Project, recommended the creation of an ordinance to ban drink specials in downtown bars.

Instead of making the ban public policy, a group of bar owners decided to voluntarily ban weekend drink specials. These bar owners are now being sued for their actions.

The lawsuit states four main objectives: to break up the Madison Bar cartel, to return price competition to the business of selling alcoholic beverages in downtown Madison, to uncover the full duration, scope, nature of operation and economic impact of the cartel and to recover and return to the victims of the cartel, primarily UW students, the full measure of damages to which they are lawfully entitled.
This is interesting. Under the State Action Doctrine, a bar cartel of this sort would pass legal muster, like California agricultural cooperatives, which were an early test of the concept. If the state sanctions a cartel, its ok. But without state sanction, an agreement to limit price competition, even if it has some positive public purpose, is generally unlawful under the Sherman Act.

The MIT case re-tested that argument. MIT and Ivy League schools shared information on scholarship offers, and directly limited competition among themselves for students. MIT argued that the policy allowed them to stretch a limited amount of financial support across a greater number of needy students. The program was alleged to be socially beneficial, but the court did not accept the argument. The Madison bar program falls into the same trap. But if a law were passed having the same effect, there is no antitrust issue. This is an interesting conundrum. The bars are likely to lose the case, but would that lead to legislation? That the bars would benefit from pure cartelizing legislation is obvious, but they're unlikely to be sanguine about giving the government a large role in their business.

The Pink Panther at Augusta 

I spent yesterday walking the course at the Masters, following my former student Jonathan Byrd (economics, not golf!), who had a bad day (+7). Those memories will fade - that was Jonathan's 3rd round of golf after returning from hip surgery. They say you can't "find your game at Augusta, you'd better come there with it." Add the rounds of Byrd, Mike Weir (+7) and Tiger Woods (+3) to the pile of evidence.

But what created a buzz throughout the course was Jonathan's playing partner, Ian Poulter, who was decked out in pink. Poulter, from England, wore pink pants. And a pink visor. And Adidas golf shoes with pink stripes! Poulter had previously shown up for the TPC, the "5th major," with his spiked hair died red. It turns out the colors were a tribute to Arsenal Football Club (dude's ok!).

What to make of the pink outfit? I figured he was taking a page from Jesper Parnevik's book: wear garish clothes, get some publicity, and sign a marketing deal. Wearing pink is a guaranteed attention-getter. But how would this go down with the traditionalists that run Augusta? The English papers were full of rumors this week that Hootie Johnson had served notice to Poulter that he tone it down. On the record, Poulter pays homage to the tournament, and says that "It's all got a bit out of hand. I haven't had a letter from him. And Hootie Johnson hasn't said anything to me. As far as I know he hasn't got any problem with me in any shape or form."

But the boys were having fun with it. From the Telegraph:
On Wednesday night, Charles Howell, one of the tour's practical jokers, had used his southern drawl to impersonate a member of Augusta's championship committee. Having dialed Poulter, he told the Englishman that word had reached the committee that he was not planning to be as soberly clad as they would wish.

Poulter, who was completely taken in, had a question for the official. "What about Doug Sanders?" he asked, in a reference to the garish dress of the runner-up in the 1970 Open.

"We weren't happy about that, either," returned Howell. So the conversation continued until Howell decided enough was enough on the eve of the player's first Masters.
After watching him for eighteen holes, I can confidently tell you that the young man's got game. He was hitting the crispest and most accurate irons in his threesome. Save the one that flew over my head and landed in the gallery forty yards right of the 11th green. (He was a great sport about that, by the way). Poulter has a chance to make some noise in the big tournaments. If you are intrigued, this Guardian story on Poulter is the most informative I've found. He's quite a character.

Wednesday, April 07, 2004

On Olympic subsidies 

Ron Rapoport looks ahead to an accounting of how much Olympic construction will cost the Greeks. It may or may not be a good investment, but this observation should make one cautious:
The 1976 Montreal Olympics are remembered for three things: Nadia Comaneci's three gold medals, an Olympic Stadium that was a white elephant before the closing ceremonies were over and a huge debt that only recently has been paid off.
Ouch. That's a long time to pay off a white elephant.

The strange politics of superstores 

Walmart wants to sell groceries in California, like they do in many parts of the country. When they announced plans to build a superstore in Inglewood California, the city passed "an emergency ordinance ... that barred construction of retail stores larger than 155,000 square feet that sell more than 20,000 nontaxable items, such as food and drugs." The site, located between Hollywood Park Racetrack and the Great Western Forum, is described in this LA Times story as "a crumbling asphalt parking lot." Voters yesterday rejected a referendum that would have allowed Walmart to circumvent the ordinance and start building.

Meanwhile, in Fort Worth, Texas, local politicians are pitching a $40 million dollar subsidy to lure a Cabelas Sporting Goods Superstore to their city. This brings to mind the Mississippi subsidies for a Bass Pro Superstore/baseball stadium project discussed a few posts below. There is a precedent here, and it does not bode well for taxpayers.

Regardless, it's a mysterious process that bans one flavor of superstore, and grants another millions in subsidies. What a country!

Hal, Hootie, & the Masters 

Here is a compelling column at SI.com on the 2003 media firestorm created by Martha Burk, Hootie Johnson, and Hal Raines over Augusta National's all-male membership. The column is an excerpt from Alan Shipnuck's The Battle for Augusta National, an appropriate title.

Here' the plot, as I see it. Burk, described by one of the battle's protagonists as an "attack activist," found an issue to exploit. Her effort was successful - everyone now knows of Martha Burk, women's activist. Few did before the controversy.

Hootie Johnson sensed Augusta was being used in this way. He refused to "be bullied" when Burk took the issue public, which was surely her intention all along. Hal Raines, editor of the New York Times, saw an opportunity to raise the national profile of the paper with the issue. Shipnuck's account makes this crystal clear. Raines began to "flood the zone" (his term) with story after story on the issue. Many of them simply didn't make sense. The Times was on a mission, and its objective was a social one, not journalism per se.

Ultimately, the Times' coverage of the Augusta flap revealed more than anything to date that an ideological agenda was inherent in Raines' editorship. Shipnuck's story highlights the role of internet commentary by Kaus, Reynolds, Shafer, and Sullivan in making this case, while the mainstream media was initially silent. With this well established, the Raines regime was toppled when the Blair affair, a case of serious mistakes in judgement with a similar activist undercurrent, was exposed. The Masters flap was the opening act in the downfall of Hall Raines.

The one issue that has always puzzled me in this saga is the basis for Johnson's scathing public letter to Burk at the outset of the controversy. It was more than a defense of Augusta National; its scathing and intemperate tone fanned the flames of the issue. It was clear that it would incite further criticism of the golf club. In an odd way however, this had a salutary effect in the end, as Raines fell into a trap, and the Times was rescued from an ideological takeover. But that remote outcome could not have been Johnson's intent, so the reason for issuing that letter remains a puzzle. Perhaps Shipnuck's book offers an explanation.

Footnote 1: Read Shipnuck's piece when you have a few moments. Its a long, and rich in information. A single excerpt here would not do it justice. Note also - based on his prior work, I'm pretty sure that Shipnuck is not a reflexive defender of Hootie or Augusta.

Footnote 2: Eric McErlain is a Hootie defender, on the basis of principle. Read his post, "Who Is Hootie Johnson," to learn important facts about the man that Raines would never print. I've linked this before, but it's a hall of famer, and deserves a reprint.

Tuesday, April 06, 2004

NOPEC 

That's the tile of a bipartisan bill (natch) aimed at OPEC. Introduced last week by Senator Mike DeWine (R-Ohio) and Herb Kohl (D-Wisconsin), the legislation "would permit the U.S. Department of Justice and the Federal Trade Commission to bring antitrust actions against foreign states." Ahem. Perhaps the boys should first nullify the Webb-Pomerene Act (1917), which allows US firms to participate in export cartels. Then they can step up and claim the moral high ground.

A hearing on the cause of high gas prices is set for Wednesday. Set to testify are Justine Hastings, assistant professor of economics at Yale, and William Kovacic, general counsel at the FTC. Might make for interesting viewing - in between the senators' sound bites - on CSPAN.


Height and the economic historians 

Newmark's Door points to an article in the New Yorker which discusses work by economic historians on variations in human height. Initiated by Nobel Laureate Robert Fogel, the path of this work was not pre-conceived, but rather guided by the formation of intellectual puzzles and subsequent data analysis. The findings are stunning, and important.

From studying height differences between African-American slaves and their African contemporaries, Americans and Europeans, oriental peoples over time, and so on, emerges an intriguing and engrossing tale. We now know that the average height of a population is a long run indicator of a society's health, a summary index of nutrition and disease. Urbanization in the middle ages decreased height, due to the effects of concentrating disease. The migration from Europe to America increased height dramatically, one of Fogel's early findings. But this trend has been dramatically reversed in the last half century, as the height of American's has reached a plateau while other societies have shot past. The stereotypical image of a small oriental male does not fit that of professional athletes such as Yao Ming, Ichiro, or Chung Ho Park. These fellows are the leading edge of a dramatic increase in height of oriental populations as their economies develop, and nutrition and health improve.

These findings are of immense interest and importance for public policy. For example, should pre and post-natal care be entirely free to everyone in a society? They are so in the Netherlands. This is a critical stage of development, with long term implications for the future health of children. As the New Yorker article notes, the Dutch have grown from "among the smallest people in Europe to the largest in the world" over the last century. Maybe this is a coincidence. Or do the Dutch have the model policy for "no child left behind?"

The economist's manifesto on stadium subsidies 

Brad Humphreys, an economist and baseball fan like myself, testified at the DC Committee in Finance and Revenue last summer on the case for funding a baseball stadium in DC. Brad has studied the issue extensively and knows what he's talking about. I recommend reading it all, but here is the bottom line. The figures and location are obviously specific to DC, but the case is general and eloquently made by Brad. One might as well call it the "economist's manifesto on stadium subsidies."
I am not against baseball. I am not opposed to public subsidies for baseball stadiums. I am opposed to public financing for sports facilities on the grounds that they will be engines of economic growth, generating thousands of new jobs and raising the income of taxpayers. The evidence from the academic literature on the economic impact of stadiums overwhelmingly suggests that there will be no net economic benefits from a new stadium. So let this be your guiding question: Is it worth $338 million in tax money spent on a new baseball stadium to incrementally improve the quality of life of the taxpayers, civic pride, and the national image of the District?
And the way to evaluate that question is to compare the benefits of $338 million in stadium spending with $338 million in alternative public investments, including tax relief.

Monday, April 05, 2004

Point spreads and the mythical "balanced book" 

Papers on point spreads commonly claim that bookmakers set the spread in order to "balance the book," and adjust it in order to take equal amounts of money on either side of the proposition. This is a myth. In reality, bookmakers often have a serious imbalance on either side of a game. Duke-UConn was such a game. Duhon's "meaningless" three-pointer at the buzzer rescued millions of bookmaker dollars from the Blue Devils' collapse. Here's an interesting case, from an intriguing story at ESPN:
The Duhon shot caused a $630,000 positive swing for BetCBSports.com, an online sportsbook based in Costa Rica. The sportsbook took more than 10,000 bets on the Duke-Connecticut matchup, with more than 8,000 bettors placing an average wager of $50 on UCONN to cover a 2- to 2 1/2-point spread. If Duhon didn't hit the shot and Connecticut prevailed 79-75, BetCBSports.com, which has no affiliation to the network broadcast partner, would have lost $290,000 instead of making $340,000, according to Dan Johnson, senior oddsmaker for the betting site.

When Duhon made the shot, there was an overwhelming feeling of euphoria here," said Johnson, who was in the company's headquarters surrounded by televisions. "We all jumped up in unison and that doesn't normally happen in this business.
A couple of points. If the line is right, and the outcome of the bet is 50-50, BetCBSports.com's expected profit is $25,000 on this game. Assuming the line is correct, random plays like Duhon's shot typically settle matters, which, given the vigorish, is where the bookmakers get their edge. Bookies make their living off of garbage time. Second, although they seem suspiciously rounded, the numbers reported in the story add up. Assuming the standard 11-10 rule, they point to betting volume that was four times higher on UConn than Duke. Not balanced, not at all.

Bookies take big risks, but note: even if the public is cuckoo for UConn, the wise guys are not. If the book had raised the line to, say 3.5 to 4.5 points, smart money would have flooded in on Duke. The bookmakers would have set themselves up for fleecing, which is not their business model.

Line-setting is tricky, and there is alot of money riding on whether the line is correct. Mike Roxborough, who set the initial spread in Vegas for many years, kept a nylon rope in a plastic bag nailed to his office wall. Below it was a sign "For a Middle on Super Bowl." Books can lose to both sides (a middle) when the line moves significantly. Another reason, assuming no change in fundamentals, to sit tight and accept the risk from one-sided action in situations like the Duke-UConn game.

Stadium deals - AA edition 

The Braves AA team has played for 20 years in Greenville, SC. They played in Municipal Stadium under the following terms: no rent, with all revenue from tickets, concessions, parking, and souvenirs going to the Braves. Not bad, but the stadium is old, and attendance was on the wane. So it was time to "listen to competing proposals," as Bud Selig, in reference to the Expos, said on ESPN2 last night. That is, run an auction among political entities to see who'll provide the best bag of goodies.

Greenville came up with an $18 million proposal, based on the following principles: the stadium "must promote economic growth downtown," "not use residential property taxes," and "not jeopardize the city's bond rating," while allowing "the Braves to keep enough revenue to operate a team in Greenville."

Sensible enough. But a competing proposal, to use Selig's term, was sufficient for the Braves to divorce themselves from Greenville. The G-Braves will become the Mississippi Braves next season and play their games in Pearl, just east of Jackson. The $25 million stadium in Pearl is part of a $55 million complex planned by Bloomfield Properties. The twin pillars of the project are the stadium and a 125,000 square foot Bass Pro Shops. The state is providing $7.5 million in tax rebates for the stadium. Also reported are $8.2 million in incentives for the overall project, and the usual infrastructure work.

The stadium is reported to be "privately financed," although this raises the question of how the returns to private financing will be realized. Regardless, it is clear that state-level subsidies are central to the Pearl project. In a political competition between the city of Greenville and the state of Mississippi to subsidize stadium construction, the winner is obvious. Citizens of Greenville may rue the loss of the Braves, but the price of keeping them appears to have been too high.

Nearby Jackson had its own AA team until 1999, when it moved to new digs - apparently very nice ones at that - in Round Rock, Texas. Now its Greenville's turn to feel the sadness, though its a safe bet the city will find a team before long. There are plenty of teams around, including an independent league team in Jackson who will soon be looking for a new home. The game of musical chairs continues. Who's the winner, Bud?

Sunday, April 04, 2004

Cuban on taking a charge 

Worth thinking about, at least.
Off the ball defender charges should be eliminated. It should ALWAYS be a block. It would mean we could get rid of the half circle under the basket since that only applies to off the ball, 2ndary defenders, and we would speed up the game and add highlight plays to every game and reduce the number of injuries suffered by our best players every year.

One thing to clarify on for those who aren’t familiar with NBA rules. This would in no way apply to charges taken when you are actively guarding your man. So if Nash is guarding Marbury, and Marbury lowers a shoulder and knocks over Nash, or vice versa, it would still be a charge.
Update: Dan Lewis has more on the issue of rules. He makes the point that fouling "should offer no strategic benefit." This is a problem in many sports -- soccer and football have similar issues, and designing proper rules to address the problem is difficult. If Cuban is right, and his proposal was summarily dismissed by the old guard, that's unfortunate, to put it mildly. His proposal deserves consideration.

Weekend update 

Adu watch: The watch is over. Freddy entered in the 61st minute and showed some skill, but never got off a shot. Looks like his coach plans to bring him along slowly, which is surely the right thing to do. He'll score soon enough, but I'll wait for the highlights.

Pollard's Vision: The one-eyed colt named after Seabiscuit's jockey turned in a sharp performance, winning the Illinois Derby by 2 3/4 lengths. He didn't beat much though, and had things his own way the entire race. The Kentucky Derby will be a much tougher proposition, but he's earned his place in it. He'll be a big talking point in the media run-up to the race. Meanwhile, at Santa Anita, the Derby picture got even murkier. Favorites Wimbledon and St. Averil each turned in a stinker, while 30-1 shot Castledale edged newcomer Rock Hard Ten in a thrilling stretch duel. Imperialsm, another horse with limited vision in one eye, was also in the thick of it when Rock Hard Ten drifted into his path, for which he was disqualified and placed 3rd. All three appear bound for Kentucky.

Replays of the Illinois Derby & Santa Anita Derby can be seen in Real Player here. Next up are the Blue Grass, and the Arkansas Derby, where the focus will be on Smarty Jones' final furlong. If he finishes fast and wins, he'll be the Derby favorite, but as with Pollard's Vision, there are questions about stamina and his ability to get a mile and a quarter.

Update: There's also the Wood Memorial next Saturday, where the highly regarded Eddington has a chance to redeem himself.

Friday, April 02, 2004

The jobs puzzle 

Much has been written about the jobs puzzle - the slower than usual recovery of employment as the economy has pushed out of the recession. In today's New York Times, Eduardo Porter's piece is titled "Estimates of Job Creation Versus the Facts." Mr. Porter states that economists will be watching today's jobs report to see if "the numbers that they were forecasting are as embarrassingly off target as they have been in recent months."

All indicators point to a strong economy and strong employment growth, but employment estimates from the BLS, the "facts" that Mr. Porter takes as given, have stubbornly refused to fall in line with past experience.
Ever hopeful, many economists are still expecting a burst of employment. The consensus forecast this week puts employment growth at 120,000 jobs in March. Goldman Sachs is betting on 160,000. And High Frequency Economics is forecasting 200,000, saying good weather and the end of a supermarket strike in California should give the jobs data a big boost.

Some "whisper numbers," which economists do not write down but which make their way into trading rooms along Wall Street, are even higher.
Here is an interesting conjecture, that if true, might solve the riddle. Brian Wesbury and Bill Mulvihill, economists at a Chicago Investment Bank, argue that the current BLS benchmark for employment is probably too low. Unlike other agencies, the BLS is slow to revise its benchmarks in light of contrary evidence. The BEA, for example, recently revised its January estimate for wage and salary income of private workers upward by 0.7%. The disconnect between income estimates and employment estimates is what has economists confused.

Wesbury and Mulvihill state that the BLS won't revisit its benchmark until February of 2005, and that employment figures may be off by as much as 100,000 per month. If this argument has force, employment will remain surprisingly low until next winter when the BLS restates the employment "facts." Can it be that simple?

Adu watch 

I wasn't aware of this fact on the switching of draft picks:
As a single-entity operation, M.L.S. had the luxury of engineering the swapping of the rights to Adu from Dallas, which held the first selection in its draft, to D.C. United, which is based close to Adu's home in Potomac, Md. ....

Ultimately, it was Adu's mother, Emelia, who insisted that her young son live at home, intimating that if the league did not agree, the family might accept a more lucrative deal from a European club.
Most of the rest of this story is well known, but check it out if earlier stories slipped under your radar. Freddy Adu, the 14 year old soccer phenom, plays in his MLS debut tomorrow (ABC TV, 4:30 ET).

The University of Colorado and the State 

The Chronicle has an interesting story about The University of Colorado System's President, Elizabeth Hoffman. The story focuses on her handling of the sex scandal associated with the Buffalo football program, of course. In an odd twist of fate, responsibility for athletics had been removed from the President's office prior to her arrival in 2000. The move is traced to the stormy relations between her predecessor Judith Albino and the Board of Regents. But the public scandal has thrown responsiblity for managing the issue back into the President's court, where it surely belongs. But what I found most interesting was this passage:
During the past couple of years Ms. Hoffman has been pushing for even more autonomy. She wants the state's General Assembly to grant the university "enterprise status," which would make it a semiprivate institution with more independence over financial matters such as raising money and setting tuition rates.

Even in the midst of the athletics scandal, she has continued to lobby for passage of a measure that would create a voucher system for students at the state's public and private colleges, bringing out pages of charts and graphs on the university's budget over lunches and dinners with state legislators. If the bill passes this spring, Ms. Hoffman says, the university's "enterprise status" is a done deal.

The new status is essential for the university's financial future, she says. The university system now receives only about 10 percent of its funding from the state. After three years of significant cuts in money from the state, she says, the university needs more autonomy to manage its finances in order to maintain quality.
This issue is not unique to Colorado. The University of Virginia is a well known example where state funding has become a small percentage of operating expenditure. Clemson has the same problem. The issue is not just "managing finances," but having the freedom to make autonomous decisions on numerous margins which affect the university. Given the dry well in public funding, schools want to be released from regulatory constraints on what they do. Increasingly, good state universities are obtaining a more private character. Schools that do not move in this direction will surely suffer in the national competition for quality students and faculty.

The Chronicle piece is very interesting in all its dimensions, and is worth reading. By the way, President Hoffman was well known among economists before entering the realm of university administration. Good luck to her as she navagates these treacherous waters.

Thursday, April 01, 2004

'Tis the season 

From Baseball Musings: Steinbrenner Repents
In what some people call the most unlikely turn of events since Bobby Ewing's return to Dallas, George Steinbrenner apologized today for running the Yankees as an evil empire. As a way of doing penance, Steinbrenner has traded rosters with the Tampa Bay Devil Rays.

"I didn't know what else I could do," Steinbrenner explained. "We've been on a ten year roll, and Tampa's never won more than 63 games. Besides, I thought I owed Lou one after firing him two or three times. And with all the time I spend in Tampa, I'll still get to see a championship team. Besides, maybe now the fans will get off my back for letting Tino go."

....

Derek Jeter looks forward to playing in the relative obscurity of Tampa Bay.

"It's cool. I'm tired of staying out late and partying at night clubs anyway. I can use the extra time to work on my defense."
Go on over to Baseball Musings. There's plenty more.

Update: Doug Pappas has been at it as well, and pays his respects to Bud Selig here.

An informative piece of trivia from the 1915 Rose Bowl 

I'm reading John M. Carroll's biography of Fritz Pollard, a black football player whose career was cut short when the NFL instituted a policy of segregation in 1933. Pollard, a collegiate hall of famer for Brown, probably belongs in the NFL hall of fame as well.

The book is packed full of interesting facts. Here is one observation from preparations for the 1915 Rose Bowl.
During its stay in the Los Angeles area, Washington State held its practice sessions on the movie set of the film Tom Brown of Harvard. The players worked as extras in the low-budget film with a football theme, and Coach Dietz had a principal role. Dick Hanley, a star halfback of the 1915 team, recalled that "for two weeks before the game we were busy all day filming the football scenes. We thus combined our movie work with training for the game." He added that the players made about $100 apiece for their movie work and "bet it all on ourselves to beat Brown." ... Most sportswriters, in deference to the alleged superiority of Eastern football, made Brown a heavy favorite in the contest.
That's not a bad chunk of change in 2004 dollars, and participation in the film would certainly violate NCAA rules today. And the gambling -- what a scandal that would be!

My point? Remember your history the next time someone alleges that the modern game has lost touch with the ethics of "the good old days." I'll have more on Carroll's book when I finish reading it.

Champs or cheats? 

Rumors of a drug scandal from 50 years ago are coming back to haunt the Germans, according to the Daily Telegraph (registration).
Half a century after Germany's 1954 World Cup victory, widely considered to mark the moment the country regained international respectability, Germans are transfixed by a row over allegations that the players may have been doped.

The German football team, who emerged as the "Heroes of Bern" after a 3-2 victory over Hungary in the Swiss capital, may have been injected with performance-enhancing substances before the match, according to a new book and two television documentaries by publicly funded broadcasters.

Former doctors claim that they injected the men with Vitamin C, but the documentaries suggest that subsequent health problems raise further questions.

The victory was an unlikely one. Hungary were regarded as the finest side in the world and in an earlier game in the tournament beat the Germans 8-3. The events were dramatized last year in the film The Miracle of Bern which has broken box office records in Germany and on his own admission, reduced Chancellor Gerhard Schröder to tears.

To football enthusiasts the very fact that the topic has been brought up at all has come as a crushing blow. Bild, the mass tabloid, yesterday referred to the claims as "the most horrendous accusation in the history of football".
This is an odd story. Sustained excellence, which even my English friends will admit has been produced by the German team for decades, is unlikely to stem from a one-off set of injections. Nevertheless, the claim that the syringes were filled with Vitamin C sounds dubious from this vantage point.

Direct democracy and college athletics 

California's budget problems are forcing colleges to cut funding across the board, sports included. Accompanying these cuts, according to this story in the LA Times, are referendums to support programs with student activity fees.
Priorities were put to a vote earlier this month at San Francisco State, and sports lost. Students narrowly rejected taxing themselves $33 a semester to pay for half of the $2.6-million athletic budget, putting the school's 16 remaining intercollegiate teams in jeopardy. Swimming has already been axed.

"It's saying that healthy growth through sports is not a priority and that college athletics is not important," said student body President Natalie Batista, a former softball star.
$66 bucks a year doesn't seem like much, but I have no idea what San Francisco State athletics does for its students. The story does not make clear whether the remainder of the budget is generated from athletic revenues or school subsidies. Students at San Diego State, where athletics are more prominent, vote next month on a $95 per semester fee. Having local hero Tony Gwinn (former Padre, and Aztec basketball and baseball star) for your baseball coach might help get out the "pro" vote, but $190 per year is real money.

In general, I give the edge to athletics over the English Department when it comes to students voting on funding programs. It is interesting to ponder what it means that university administrators are cutting sports programs and throwing back the option to a student vote, but I haven't sorted it out yet.