The Sports Economist

Germany is home to about 2.7 million people of Turkish origin around 500,000 of whom are German citizens. In the run up the match, the first time the two countries have met in a major tournament since the 1950s, Turkish and German flags (more...) have been flying together from car windows and balconies in a nation gripped by football frenzy.

In downtown Berlin, an estimated 500,000 fans packed into the "fan mile" public viewing area next to the historic Brandenburg Gate, with access shut off a full hour before the game even kicked off after the organizers declared it full. The winning goal by the Germans saw the huge crowd erupt into a frenzy of football celebration.

Labels: basketball; soccer, fan zones, media

They find a large positive impact: if a team replaces a coach who never played NBA basketball with one who played many years of NBA All-Star basketball, it can expect to move six places up the ladder.

One possible explanation is that a coach cannot push top players to their limit unless he has competed at their level. Or perhaps effective NBA coaching involves a considerable degree of ego-management, and only a former champion can win the players’ respect. Either way, the results have important implications for any high-performance workplace where the CEO must manage a large number of experts. From law to technology to universities, could it be that the best boss is a former all-star?

Labels: coaches, NBA, sports economics

Brandon Jennings smiled Sunday afternoon when someone suggested that he might be considered a trendsetter.

If he makes good on a threat to go from high school to professional basketball in Europe, Jennings will become the first high school player to spurn college to go overseas and play professionally.

Trendsetting.

This is the latest — and most brilliant — plan yet to combat the three-tiered maneuver by the N.C.A.A., the N.B.A. and the players union to prevent talented high school players from going directly to the N.B.A.

The N.B.A. instituted an age limit of 19, and required that a player be at least a year removed from high school, as part of its collective bargaining agreement with the union. The N.C.A.A. didn’t protest, and why would it?

Under this arrangement, the great high school players have little choice but to do time in college for a season at a high-profile college. Kevin Love wound up at U.C.L.A., Michael Beasley at Kansas State, Derrick Rose at Memphis and O. J. Mayo at Southern California. All entered this week’s N.B.A. draft after one season in college.

Jennings, an 18-year-old from Los Angeles who played the last two seasons at Oak Hill Academy in Virginia, signed a letter of intent to play at Arizona.

Jennings was pushed into action by the N.C.A.A. After doing poorly on his first standardized test, he did well on the second, but because of the difference in the scores, the testing service asked him to take the test a third time. He relented, but at that point Jennings decided that he was through with the N.C.A.A. Why jump through hoops to go to Arizona, endure the charade of an academic regimen, then switch into N.B.A. mode the instant the season is over?

Labels: labor markets, NBA, NCAA

Lawrence: I think the reality is because there are so many varying opinions, that actually supports the city opinion that it's difficult to measure to the degree of certainty that you need to award damages, what the value to the community is of the Sonics playing in Seattle. The fact that you've got a wide range of opinions among economists just tells us it's a hard number to measure which is a fact that supports specific performance.

Q In general, what's the conclusion you come to about the
tangible benefits to a community from the presence of a pro
sports franchises, if it can be summarized?

A Yes. I come to the same conclusion that I think every
economist that has studied the issue comes to. That is, that
a community that is trying to attract professional sports
team or contemplating building a new sports facility, from
either of those that community cannot anticipate a positive
economic development benefit from that activity.

Q Well, based on your work over the years and your studies
of various towns, have you reached any conclusions about
whether the departure of a pro sports franchises has any
economic impact on a city?
A Yes. I have reached a conclusion on that.
Q Tell us about that.
What did you conclude?
A I concluded that the departure of a professional sports
franchise from a city will have no detectible economic impact
on the economy in that city.
Q Wait a second. Sonics have a payroll of $60-odd million.
That payroll the will go to Oklahoma City.
Won't there be a $60 million hole in the economy?
A Well, it's important to recognize the difference between
economic activity that the Sonics generate. The Sonics
clearly generate economic activity. You can't go outside
KeyArena on game night and not conclude that Sonics are
generating economic activity.
But the question is, do the Sonics generate new economic
activity in the Seattle economy? And the answer is, no, they
don't. The Sonics are an entertainment business like many,
many other entertainment businesses in the Seattle area. And
so consumers spend their entertainment dollars on whatever
entertainment options they have that makes them happy.
And for Sonics fans that is spending it on the Sonics.
But when the team leaves, they don't take that consumer
spending with them. That spending remains in the local
economy. It simply gets spent on other entertainment
activities by whatever those consumers want to spend it on
all over the metropolitan area.

Q How does the fact that this is a lame-duck team, with all that that implies, affect your analysis of the intangible
benefits?
A Well, basically, Counsel, my analysis is that even under
much more stable circumstances and knowable circumstances the
results that have come out of the existing scholarship that
tries to estimate the tangible benefits are highly variable.
All of those results agree upon one thing. That one thing is
that there are very significant substantial intangible
benefits that accrue to a community from a professional
sports team. They agree about that. But the magnitude of
those benefits is highly variable. So that when you throw in
some other variables, like the lame-duck status and the other
things that I mentioned, it becomes yet more problematic to
make that kind of an estimate.

Q And you would agree that it is difficult to put a money
value on those intangible benefits, would you not?
A People have done it. I mean in the research literature
people have done it. There are many such examples of --
Q Can you -- Sorry. Go ahead, finish your answer.
A -- putting dollar values on intangible benefits like that.
Q Can we see Page 68 of your deposition? Starting at Line 5
I asked you: "Would you agree that the -- trying to place a
money value on those intangible benefits is difficult?" And
you answered: "Difficult but not impossible."

Q That general opinion about tangible benefits that you've
just expressed relates to an MSA, a larger --
A Correct.
Q -- geographic area?
A Yes.
Q Do you have any reason to believe the general conclusion
you just talked about, that the situation presented here
presents some differences from the general conclusion you
talked about?
A Insofar as we're interested in this case, or one is
interested in this case about the City proper of Seattle,
rather than the MSA of Seattle, then yes, there could be a
difference. Because insofar as there is relocation of
economic activity within the MSA towards the downtown area,
that is, to say if people travel from the suburb of Bellevue
or other suburbs into downtown Seattle to watch a Sonics
game, then that could bring new economic activity into the
City proper. But it's just relocating activity within the
broader MSA.

Q And your theory is that dollars -- if I have a
discretionary dollar to spend on the Sonics I will spend it
somewhere else?
A Yes.
Q And when you look at as big an area as King, Snohomish and
Pierce County there is a lot of places I can spend my dollars
if I don't spend it in Seattle and still have a net zero,
correct?
A But there is -- there are other transactions going on.
Q Is that -- Sorry. Go ahead.
A There is all sorts of -- there is quite a bit of spatial
complexity in economic transactions. I mean, people are
going across these political borders and buying stuff, goods
and services. It is impossible. We don't have the data to
answer that question. I don't know. You can make
assumptions. You certainly can. I don't think they would be
justified.

Q When you say it's an unusual consensus among economists,
what does that mean?
A Well, I think that economists typically have a -- the
general public has the perception that economists can't agree
on very much at all. Ask two different economists their
opinion on some issue, and you'll get three different answers
to that.
But in this case it's pretty clear, and there is a pretty
strong consensus among the academic researchers that work in
this area about this lack of economic impact from a departure
of a pro sports franchise.

Q Let me ask you another question.
Among trained economists, is there a view one way or the
other about the reliability of these RIMS studies?
A I will say this: RIMS studies are never published in
peer-reviewed economics journals.
Q They never make the cut?
A No, they don't make the cut.
Q Why not?
A Because the methodology is flawed, is the consensus among
research economists. They're not -- they wouldn't be able to
get through the cut to make peer-reviewed journals because of
these methodological problems, which are well recognized. I
mean there are papers about the methodological problems in
regional input/output models.

Was that "huh" sarcastic? Because he most definitely does not have a PhD in economics nor hold the title of economist. Typically, trial experts have advanced degrees in the field they claim to be an expert in. (italics in original identifying the comment of another person)

Show me where you have to have a PhD in economics to be considered an economist? From Wikipedia:

"While a lawyer, for example, may be generally defined as a person possessing a law degree and state license to practice law, there is not a legally-required educational requirement or license for economists. In some job settings, the possession of a Bachelor's or Master's degree in economics is considered the minimum credential for being an economist."

"A professional working inside of one of many fields of economics or having an academic degree in this subject is widely considered to be an economist, and any person within any of these fields can claim to be one[citation needed].

Well I guess that makes me an economist too, since I have a bachelor's degree in economics, master's in business, and work in an applied economics field (real estate). In fact my training was specifically in urban economics and feasibility. I don't know anything about this guy's study except what I read of his testimony in the blog, but I did read portions of Beyers' study. One fatal flaw that both make is "crediting" half of the players' salaries as flowing back through the local economy. Beyers defended this assumption on the basis that half of the players have a permanent residence in the area. Even so, I sincerely doubt that more than a much smaller fraction gets spent here. Whether Gary Payton had a residence here or not, where is his $85 million? It's mostly with him, where it will provide for his retirement and family. Shawn Kemp's millions are in Peru (OK, cheap shot). The point is, the millions of dollars spent on player salaries doesn't "spend" the same way normal salaries do.

If Hatamiya said that dollars not spent on Sonics would disappear or be saved in a tin can in the backyard, he has an eccentric view that's not supported by any other professional economist I know of. The standard theory is that they will be spent on other leisure time activities.

No academic economist has ever, to my knowledge, shown any significant increase in regional wealth from pro sports. There's an army of these guys who can produce reports on demand showing robust economic benefits from a sports team, or a WalMart, or whatever "investment" some powerful business or political group wants to make. People can buy the study they want.

Labels: economic impact, economists' agreement

Labels: governance, horse racing, regulation

Labels: golf, marginal revenue product, television

3:09 p.m. - After going through his background a little more, questioning begins about the intangible benefits of a pro sports teams, which Zimbalist says includes cultural enrichment, a sense of community, bridging economic gaps (he uses an example of a taxi driver, a doctor, a lawyer can all be in an elevator and have...

3:15 p.m. - Zimbalist goes through three types of intangibles: 1. Consumer surplus - when a person buys a product for less than they're willing to pay. He uses the example of getting a Sonics ticket for $30 when you'd be willing to pay $50. 2. Externality -- Someone goes to a game but you don't, but the person that went tells you what happened. 3. Public good - Zimbalist says a sports team is something everyone can share in and it's not exclusive to anyone.

At Monday's performance of Verdi's "La forza del destino" (The Force of Destiny), only 71 percent of seats were filled, a near-disastrous showing for a house that regularly sells up to 99 percent of its seats on most evenings.

Indeed, the opera house said it had even decided to cancel a ballet performance (La Bayadere) scheduled for June 29, the day of the Euro 2008 final in Vienna.


...In the run-up to the Euro 2008 soccer championships being held in Switzerland and Austria, the State Opera had predicted that performances were unlikely to be affected, since opera-goers were not interested in football.

Labels: economic impact, soccer, substitute goods

Labels: legal, NBA, The Stadium Game

"The problem is it's hard to compare eras," Nicklaus said. "It's a different game today, and a lot of guys from before, like even Hogan and Player, would have had a hard time today because of the distance you need to drive it. That's just a fact of what the game is. "I don't know if we had as many good players, but the great players we had all were multiple major winners, so when I slipped up, there was somebody else on their 'A' game. "There are great players now, but they might not have won a lot of majors, except for Tiger. Phil [Mickelson] could be close. Ernie [Els] approached it, Vijay [Singh] approached it. But that's about it. And that's a fact of life today."

• Suppose that winning a major not only signals your ability as a player but enhances your ability to do it again (or maybe it takes a couple of times). You learn to deal with the pressures, courses, ... The increasing depth of the field reduces the likelihood of breaking through to that second or third major victory, thereby reducing the "learning effect" and the likelihood of reaching the 6th or 7th major. Tiger's is good enough relative to "the field" for his performance record not to be affected.

Labels: golf, PGA, Tiger Woods

Labels: PGA; golf, Tiger Woods

"There's no way on God's green Earth that David Stern has ever done anything to influence the outcome of a game."

The nightmarish reality that hangs over what was supposed to be Stern's dream Finals is that public confidence in NBA officiating is maybe even lower now than it was when Donaghy's betting on games and association with known gamblers were first revealed last summer. With no clear-cut way to raise it.After the Lakers lost Game 2 of these Finals in Boston, shooting only 10 free throws to the Celtics' 38? After the Lakers took a must-win Game 3 at home to slice the series deficit to 2-1 and save their season, shooting 20 of the evening's first 24 free throws and with Kobe Bryant going to the line 18 times?

This is the only sports league in America in which it's a routine reaction by folks on the inside as well as the outside to respond to bitter defeat with charges of biased refereeing or outright game-rigging. It's a massive problem magnified by the fact that no one I've encountered in 15 years of covering the league is overflowing with suggestions for how to stop such perceptions from mushrooming any further, let alone for how to put a halt to them.

Labels: NBA; refeering

“It’s clear that some of the information Major League Baseball and the players union gave the committee in 2005 was inaccurate,” Waxman said in a written statement. “It isn’t clear whether this was intentional or just reflects confusion over the testing program for 2003 and 2004. In any case, the misinformation is unacceptable.”

Manfred, speaking for the commissioner’s office, said that he and Selig had testified truthfully.

“The testimony of Major League Baseball officials was completely accurate, and we are happy to address any concerns that Congressman Waxman may have,” Manfred said.

Michael Weiner, the union’s general counsel, said in reference to Fehr: “Don’s statements at the March 2005 hearing were accurate. If Congressman Waxman has any questions, we would be happy to respond.”

Before the Preakness, Three Chimneys Farm in Midway, Ky., purchased a percentage of Big Brown’s stallion rights in a deal valued at $60 million.

If he had become the first to sweep the series since Affirmed in 1978, Big Brown would have been expected to stand for at least $200,000 a mating and, as the only living Triple Crown champion, would have been worth up to $120 million.

Instead, I.E.A.H. and Big Brown’s other co-owners are going to be hard pressed to restore the colt’s stallion market to perhaps half of that $60 million level. Big Brown does not have a particularly fashionable pedigree: his sire, Boundary, stood for $10,000 for 11 seasons before being pensioned, and he produced a modest 16 stakes winners, mostly sprinters.

Big Brown is pointed to run in the Travers at Saratoga in August, and the Breeders’ Cup Classic in October at Santa Anita, where he is likely to meet Curlin, the reigning horse of the year.

“It puts a little more pressure on us to win those races,” Iavarone said. “I know a lot of people say we haven’t beaten anyone, and we needed to take on older horses.”

So for now, Big Brown’s future is pretty straightforward.

Labels: horse racing, MLB, steroids

Yes, the decision to eliminate men's wrestling, swimming and tennis is a reflection of the state's free-falling revenues. Facing a $3.4 million deficit, eliminating the three programs will save ASU $350,000. Budget cuts, of course, are necessary for all enterprises that must meet a bottom line, and the programs headed by Lisa Love, the ASU athletic director, are no different. But the choices that left ASU with eight men's programs and 12 for women were forced on the university as much by federal requirements regarding proportional resource allocation for men and women - Title IX, in other words - as by the need to cut spending. Given the extraordinary impact - both good and bad, by the way - that Title IX has had on college sports, it is irresponsible to pretend that elephant isn't there.

Labels: college sports, Title IX

Labels: NBA, ticket prices

A secret NHL report detailing the ticket revenues of its 30 teams reveals [that]... The six Canadian teams account for 31 per cent of the $1.1 billion (U.S.) in league ticket revenue, and have gone through league-leading double-digit increases over last season, according to the internal NHL report.

Overall, the league has seen its ticket revenue rise almost 10 per cent, but 11 of the 24 U.S.-based clubs were either revenue-flat or lost ticket income.

"This really makes the case for another team in Canada, whether it's Hamilton, Winnipeg or Quebec City," says former Vancouver Canucks owner Arthur Griffiths.

"I think Hamilton has the best facility, but obviously faces challenges in what it would have to pay Toronto and Buffalo. Winnipeg is a good possibility, but the market there has shown a resistance to paying top dollar for tickets, and you wouldn't want to add a team that was going to be in the middle-of-the-pack for revenue, while Quebec City needs a huge infusion of investment for a new facility."...

NHLPA executive director Paul Kelly has reviewed the document and said it highlights the importance of placing more franchises in Canada, instead of potential expansion cities such as Las Vegas, Houston or Kansas City.

"I think it would be a huge error not to relocate one of the existing franchises to Hamilton or Winnipeg," Kelly said.

1. The largest revenue generator in the league is the Toronto Maple Leafs [despite their relatively poor performances of late] with Montreal a close second. Still from the same source,
   

   Atop the list of income winners is the Maple Leafs, who nudged out the Montreal Canadiens to lead the league this past season with $1.9 million worth of ticket revenue per game. Based on 41 home games, that's $77.9 million a year – not counting revenue from pre-season games. A year ago, the Leafs generated $1.5 million a game, according the report obtained by the Star from several league sources.



2. And keep in mind that these figures are all in terms of US dollars. The appreciation of the Canuck Buck during the past few years has played a major role in the rise in Canadian ticket-sale revenues. Even with no increase in Canadian dollar revenues, the Canadian teams would, cet. par., be reporting 20 - 30% more revenues in US dollars.
   

   The increase in the value of the Canadian dollar may be responsible for as much as half of the league's revenue gains since the NHL went through the lockout of 2004-05, say several sources familiar with NHL finances.
   
   "If you take out the Canadian teams, which have done so well since the lockout largely because of the Canadian dollar, the league's revenues are actually only growing at a 2 per cent clip per year," says an executive with a U.S.-based NHL team, who requested anonymity.

Labels: nhl

the information used in CBC's fantasy baseball games is all readily
available in the public domain, and it would be strange law that a person would not have a first amendment right to use information that is available to everyone.

Labels: horse racing

On a hot afternoon in July 1986, the St. Petersburg City Council placed a big bet that would be unimaginable today.

"It was billed as a once-in-a-lifetime chance," I wrote as a young City Hall reporter for the front page of the next day's St. Petersburg Times. "Thursday, St. Petersburg's City Council took it. The council voted 6-3 to build a domed stadium downtown that is promoted as the cornerstone of a new beginning for the city."

Downtown St. Petersburg became a more vibrant place over the years, and it eventually got a baseball franchise after the dome marked time hosting its share of flea markets, monster truck rallies and rock concerts. Now the city finds itself in the midst of another stadium debate. The Tampa Bay Rays are making a pitch for an iconic downtown waterfront stadium that would open the door for redevelopment on the Tropicana Field site that city leaders a generation ago would have instantly embraced.

...Fast-forward 22 years.

The Rays are in their 11th season, hold a long-term lease and own one of the best records in baseball after years of having one of the worst. The relatively new team owners have spent millions to refurbish the Trop, and they have followed through on promises to invest in the franchise. They are not publicly threatening to leave, but they want a new $450-million stadium to boost attendance that ranks at the bottom of the major leagues. They promise to invest $150-million and are seeking no tax increases or new public money to pay for it, only the extension of about $11-million a year in city tax dollars and county resort taxes being spent on the dome now. It would be a public-private partnership, and St. Petersburg would get an enormous redevelopment project as well.

Labels: MLB, stadiums

Labels: draft, labor