Wednesday, October 29, 2008
Economic woes for the sports business in Baltimore
The Baltimore Sun had a front page article this morning devoted to the impact of the general economic decline on the fortunes of the Orioles and the Ravens. There is also a bit of discussion about the prospects for the proposed downtown arena project.
Here's one tidbit from the article:
It would be interesting to see the study, but I question the relevance. First, our current economic problems seem substantially more severe than a "bear market". The 6 contractions identified by the NBER since 1969 have averaged a bit under 11 months in duration; focusing on those since 1980 the average duration is about 9 months. The two most recent contractions lasted 8 months each. The contraction associated with the Great Depression, by contrast, is listed on the NBER website as lasting 43 months.
Second, if franchises are valued appropriately it strikes me as unlikely that the value would be terribly responsive to relatively short term economic downturns of the sort we have faced since 1970. Extrapolating from those circumstances to a downturn possibly lasting far longer is very difficult and highly suspect.
It is also interesting to me that the publicly funded arena project may be in danger. Consider that most estimates of job creation from stadium and arena construction done by consulting firms effectively assume that workers on these projects would have been unemployed if not for building the sports venue. If the unemployment rolls continue growing, businesses unable to borrow to finance new projects, and real investment falling, the economy may actually match up with the consultants' assumptions. Just when the case for building the arena may be strongest, at least from a Keynesian fiscal stimulus perspective, the possibility of building it dries up.
Finally, Orioles attendance declined below 2 million for the season for the first time since the 1992 opening of Camden Yards. Since 2004, per game attendance at Camden Yards has fallen from 34300 to 25000. The biggest one year drop occurred between 2005 and 2006, from 32404 to 26583, a rate of 17.96%. Orioles officials argued that major factors in this years decline, 7.61% relative to the 2007 season, are high gas prices and the economic downturn. Ten straight years of sub-500 ball and the first last place finish in two decades may also have had an effect.
Here's one tidbit from the article:
"It's kind of like booze and movies," said John Moag, founder of Moag & Co., a Baltimore-based investment banking firm that specializes in sports. "Psychologically, people do not want to give it up."
A recent study by Moag's firm found attendance and franchise values went up during the bear markets that have occurred between 1970 and this year.
It would be interesting to see the study, but I question the relevance. First, our current economic problems seem substantially more severe than a "bear market". The 6 contractions identified by the NBER since 1969 have averaged a bit under 11 months in duration; focusing on those since 1980 the average duration is about 9 months. The two most recent contractions lasted 8 months each. The contraction associated with the Great Depression, by contrast, is listed on the NBER website as lasting 43 months.
Second, if franchises are valued appropriately it strikes me as unlikely that the value would be terribly responsive to relatively short term economic downturns of the sort we have faced since 1970. Extrapolating from those circumstances to a downturn possibly lasting far longer is very difficult and highly suspect.
It is also interesting to me that the publicly funded arena project may be in danger. Consider that most estimates of job creation from stadium and arena construction done by consulting firms effectively assume that workers on these projects would have been unemployed if not for building the sports venue. If the unemployment rolls continue growing, businesses unable to borrow to finance new projects, and real investment falling, the economy may actually match up with the consultants' assumptions. Just when the case for building the arena may be strongest, at least from a Keynesian fiscal stimulus perspective, the possibility of building it dries up.
Finally, Orioles attendance declined below 2 million for the season for the first time since the 1992 opening of Camden Yards. Since 2004, per game attendance at Camden Yards has fallen from 34300 to 25000. The biggest one year drop occurred between 2005 and 2006, from 32404 to 26583, a rate of 17.96%. Orioles officials argued that major factors in this years decline, 7.61% relative to the 2007 season, are high gas prices and the economic downturn. Ten straight years of sub-500 ball and the first last place finish in two decades may also have had an effect.
Sunday, October 26, 2008
MLB and collusion
After being found guilty of collusion several times in the 1980s and 1990s, including being assessed millions of dollars in damages, one would think MLB owners would be very careful about colluding again. Yet it seems the MLBPA thinks that may be why no team made a bid for Barry Bonds. The Sports Network reports the story.
One suspects that the decision to file the grievance at an "unspecified time" is baseball-speak for "after the World Series". Surely neither side wants to distract fans from the Fall Classic.
It will be interesting to see if there is any evidence of collusion or if the only evidence is that no team would offer Bonds a contract.
Report: MLBPA to file grievance over potential Bonds collusion
New York, NY (Sports Network) - The Major League Baseball Players Association has reportedly found evidence that team owners acted in collusion to keep former Giants slugger Barry Bonds from playing in the majors this season.
MLB.com cited Bonds' agent, Jeff Borris, in stating that it's not if a grievance will be filed but when, and that the union has agreed with the commissioner's office to delay the filing of such a grievance until an unspecified time.
Baseball's all-time home run leader at 762, Bonds sat out the entire 2008 season and asked the union in May to consider filing a grievance after he was unable to find a home as a free agent. A 15-year stint with San Francisco ended in 2007 when the team informed him he would not be returning.
Bonds is still in the midst of defending 14 counts of perjury and one obstruction of justice charge in a case with ties to his alleged use of performance-enhancing substances brought against him by the federal attorney's office in San Francisco.
One suspects that the decision to file the grievance at an "unspecified time" is baseball-speak for "after the World Series". Surely neither side wants to distract fans from the Fall Classic.
It will be interesting to see if there is any evidence of collusion or if the only evidence is that no team would offer Bonds a contract.
Friday, October 24, 2008
Sabermetrics to rescue health care
Here's an interesting op-ed from today's NY Times. It isn't exactly sports, but Billy Beane proposes, essentially, that the methods that made the Oakland A's a success in the 1990s ought to be brought to bear on medical treatments. In other words, medicine ought to use statistics to assess treatments.
After seeing this, I have a few questions. Why did health researchers, health economists, epidemiologists, biologists, biochemists, etc, never think of this? What does the Food and Drug Administration do if not assess the efficacy of drug therapies? How did Newt Gingrich and John Kerry come to agree on something?
After seeing this, I have a few questions. Why did health researchers, health economists, epidemiologists, biologists, biochemists, etc, never think of this? What does the Food and Drug Administration do if not assess the efficacy of drug therapies? How did Newt Gingrich and John Kerry come to agree on something?
Yankees would have left the Bronx
In testimony before Congress today, President of the Yankees, Randy Levine, said that without the stadium subsidy, the Yankees would have left the Bronx. Here's the story.
I don't know if Mr. Levine means the Yanks would have headed to NJ or Long Island. The idea that they would have left the NY metropolitan area is patently absurd. There is no report about whether the Congressmen and their aides who were present burst out laughing when Levine made the statement.
I don't know if Mr. Levine means the Yanks would have headed to NJ or Long Island. The idea that they would have left the NY metropolitan area is patently absurd. There is no report about whether the Congressmen and their aides who were present burst out laughing when Levine made the statement.
More news on the sports economy watch
Sunil Gulati, Columbia economist and president of US Soccer:
In the land of the giants (NFL & EPL), viewing is stable, but broadcast revenue is under pressure:
Look, economic downturns have negative effects, full stop. For people to say sports is somehow recession proof, that's basically nonsense.Gong!! I wonder where this term "recession proof" and its relation to sports originated anyway. Anyone know? Here is more from Gulati on the downturn and US soccer.
In the land of the giants (NFL & EPL), viewing is stable, but broadcast revenue is under pressure:
As in the classic case, price adjustment in the face of an aggregate downturn is key. This story reports adjustments from St. Louis and elsewhere:At a conference on the globalization of sports held ahead of Sunday's NFL game in London, Goodell also reiterated that the league will face challenges in the current economic climate, but that the NFL is "incredibly strong" and should weather the downturn relatively unscathed.
However, he said network partners are already reporting that advertisers are pulling back, both on a local and national level.
"The sales market is different than it was even several weeks ago," Goodell said during a panel discussion with Richard Scudamore, the chief executive of the English Premier League. "We see it primarily on a local level, which I think is through a large extent a reflection of what is happening in the automobile industry. But it has now in the recent weeks gone to the national level. It's had an impact. The fortunate thing is that it hasn't had an impact on our viewership."
The Cardinals cited the uncertain economy this week as a reason for freezing prices on 70 percent of their season-ticket packages. The team is prepared for attendance to be below last season's 3.4 million.If prices were "right" last season, is freezing them the right move? Moreover, the language suggests price increases for 30% of the Cards' tickets. Perhaps last year they were underpriced?
The Blues, who last season opened unsold luxury boxes to noncorporate buyers for individual games, are finalizing a new ticket program -- described by a team official as "creative" -- to meet their goal of 30 sellouts.
Labels: sports economics
Wednesday, October 22, 2008
PILOTS Episode 3
The IRS has issued a ruling allowing the Yankees to use PILOTS to float an additional $300 million of bonds to finance the New Yankee Stadium. Interestingly, the Daily News suggests the IRS may be giving the Yankees a special deal that won't be available to other franchises. "The tax agency imposed tough new national regulations aimed at tightening up the use of tax-exempt financing for private businesses, including sports teams." Of course, the IRS also had some nudging from the politically influential Rep. Charles Rangel (D-Harlem), head of the House Ways and Means Committee, who submitted a letter to the IRS advocating the Yankees' position.
But that isn't all. Regular readers may recall having seen the story about the city of New York allegedly falsifying the assessment of the stadium to give the Yankees a larger benefit. That issue is still alive and well, as this article in the New York Daily News makes clear. New York State Assemblyman Charles Brodsy had this to say about the city's assessment, "This assessment was cooked. It was done in violation of sworn promises to the IRS. That, in and of itself, requires more investigation."
It is fascinating to see the comments following the articles. As of my reading, the comments are nearly unanimous in their opposition or at least their disdain for the subsidies and the Yankees ticket pricing and request for subsidies.
Here is more on the NY case I found after making the original posting:
So, all you landlords out there...It seems that renters may ask you to let them rip up your property and sell it off piece by piece after you have built them a new place to rent.
But that isn't all. Regular readers may recall having seen the story about the city of New York allegedly falsifying the assessment of the stadium to give the Yankees a larger benefit. That issue is still alive and well, as this article in the New York Daily News makes clear. New York State Assemblyman Charles Brodsy had this to say about the city's assessment, "This assessment was cooked. It was done in violation of sworn promises to the IRS. That, in and of itself, requires more investigation."
It is fascinating to see the comments following the articles. As of my reading, the comments are nearly unanimous in their opposition or at least their disdain for the subsidies and the Yankees ticket pricing and request for subsidies.
Here is more on the NY case I found after making the original posting:
The recent announced sale for both Mets and Yankee stadium assets such as old seats, player lockers, etc, confirms once again the taxpayers and sports fans have been thrown another curve ball by Yankees and Mets owners. ... Now they want to rip off taxpayers by keeping millions of dollars in proceeds from the sale of old stadium assets!
So, all you landlords out there...It seems that renters may ask you to let them rip up your property and sell it off piece by piece after you have built them a new place to rent.
Tuesday, October 21, 2008
Internalizing Fan Externalities
The out-of-control fan problem has concerned me for quite a while. Taking two teenage daughters along to many sporting events is about the equivalent of taking them to a frat party -- I can't tell who is more uptight, them or me. The recent venture to the USC-Ohio State game serves as Exhibit A. Recent articles, one in the WSJ (sub required) and one the the LA Times, discuss attempts by the Philadelphia Eagles and LA Dodgers to reduce the negative externalities, including violence, imposed on other fans by the unruly ones. Around both college and pro sports, many measures have been installed to deal with the issue. It's not easy because a few fans can create havoc for many others.
The old days at the Vet were not about a few unruly fans. It was more an experiment in anarchy or a "mob mentality" as one season-holding police officer calls it. In those days, the Eagles took the approach of undercover cops in the stands and even on onsite court. Since moving to their new stadium, the Eagles intalled an updated, preemptive policy:
In a counterpoint to efforts to limit bad behavior, I went to a PBR bull-riding event in Nashville (hey, I'm an eclectic sports fan) a few years ago and was surprised to see whiskey and mixed drinks being sold. I don't generally take my daughters to bars. I thought, what next, pole-dancing?
The old days at the Vet were not about a few unruly fans. It was more an experiment in anarchy or a "mob mentality" as one season-holding police officer calls it. In those days, the Eagles took the approach of undercover cops in the stands and even on onsite court. Since moving to their new stadium, the Eagles intalled an updated, preemptive policy:
Before fans even enter the Linc, they go through three layers of scrutiny. If the ticket-taker suspects the fan is intoxicated or has other concerns, he raises his hand and a second usher makes an assessment. If there's still a question, a "black shirt," usually an off-duty police officer, pulls the fan aside and questions him. If the black shirt thinks the fan is unfit to enter, he walks him over to the ticket booth, gives him a full refund, and says, "Have a nice day."(Of course, if that guy gets on the road, the externality has just shifted to a different venue.) The Eagles also installed a system that allows fans under siege to anonymously text security who can investigate without the fan becoming a target. The Dodgers have addressed the problem in the more traditional way by employing more patrolling officers -- a system that doesn't always work well:
"It was pretty intense," said Dan Pike, 28, a Las Vegas resident and Phillies fan who was tormented for much of Monday's playoff game at Dodger Stadium by two brew-bleary home-team supporters sitting behind him. He endured pushing, shoving and obscene taunts, along with a seat soaking by strategically spilled Buds whenever he stood to cheer. "After about eight beers, they were getting a little physical," said Pike, whose misery ended only when security officers hauled off the pair.From a team's perspective, even if only thinking about the bottom line, the degree of aggressiveness in limiting fan behavior can be a tricky thing, balancing the long term and short term. Long term, if parents cannot take their children to games, where will the future fans come from?
In a counterpoint to efforts to limit bad behavior, I went to a PBR bull-riding event in Nashville (hey, I'm an eclectic sports fan) a few years ago and was surprised to see whiskey and mixed drinks being sold. I don't generally take my daughters to bars. I thought, what next, pole-dancing?
Running Nonsense
This is more Sports Statistician than Sports Economist, but, shooting down sports "folk wisdom" of the talking heads is one of my hobbies. Cold, Hard, Football Facts' Kerry Byrne (via Si.com) blisters the prevailing notion among the "tough guy" pundits that running and stopping the run wins NFL games. What about the Titans? A separate post on CHFF lauds their defensive prowess (so far) at keeping teams from passing into their end zone versus intercepting other teams.
Monday, October 20, 2008
Sports & the economy
An informative AP wire story on current and past troubles in the market for stadium sponsors, with quotes from Depken & Zimbalist.
Darren Rovell is watching the Jets' auction of PSLs, and thinks the results imply they'll have to cut some ticket prices. Either that, or 50 yard line PSLs are at steal at $14,300.
On the humorous side, Joe Queenan argues the case for a "skybox bailout," and USAToday's Del Jones seeks business advice from MLB umpire Randy Marsh. An odd choice Del, since Randy is a union mug!
Darren Rovell is watching the Jets' auction of PSLs, and thinks the results imply they'll have to cut some ticket prices. Either that, or 50 yard line PSLs are at steal at $14,300.
On the humorous side, Joe Queenan argues the case for a "skybox bailout," and USAToday's Del Jones seeks business advice from MLB umpire Randy Marsh. An odd choice Del, since Randy is a union mug!
Labels: sports economics
Thursday, October 16, 2008
The Value of Recruiting
Echoing Skip's post below, I link to this article about Kansas State assistant basketball coach Dalonte Hill, about whose salary a recent stink was raised:
But the labor market for college basketball talent, although very competitive, is anything but typical because the top players cannot receive payment anywhere close to their value. So their value gets captured somewhere down the line, most likely by the coaches with the ability to recruit them.
Cross-posted at Market Power
Michael Beasley made Kansas State basketball relevant for the first time in more than a decade last season, and his presence put a few extra dollars in the pocket of the man responsible for luring him to Manhattan, Kan.Kansas State had been a perennial also-ran in the Big 12 during the 90's and the early part of this decade. It was in large part due to Michael Beasley - with all due respect to Bill Walker - that KSU had the run they did last year. In a typical competitive labor market, Beasley would be able to capture his value through a salary. The same can be said of other top recruits throughout the nation.
But the labor market for college basketball talent, although very competitive, is anything but typical because the top players cannot receive payment anywhere close to their value. So their value gets captured somewhere down the line, most likely by the coaches with the ability to recruit them.
Cross-posted at Market Power
Labels: college basketball, labor markets, marginal revenue product
The Bowden Buyout
In the comments, J. A. requested a post on coaching buyouts in the wake of Tommy Bowden's departure at Clemson.** The fundamental point is that buyouts are not the key economic issue. They key issue is that coaches salaries, particularly in Tommy Bowden's case, are proxies for player talent. Bowden was paid $1.8 million per year in part because of his ability to stock the Tiger dressing room with loads of (largely uncompensated) talent.
The $3.5 million buyout is being paid out of a "rainy day" fund that has been built up specifically for this, or some similar purpose. The contract states that it will be paid out over six years, or about $600,000 per year. This is the right context: buyouts are a form of insurance in a high stakes game; tragedy triggers the "lump sum" buyout, but it is effectively an annual cost, part of the cost of doing business in major college football. Moreover, $600,000 is not a ton of money in today's college football world. And in the context of Bowden's salary and ten year's of coaching at Clemson, it's a decent reward for a pretty good job. Further, if Tommy takes another FBS job, I'd bet those payments will cease.
I'm not sure if he needs another job though, in the psychological sense, as the pressure clearly showed in his demeanor in recent years. Also, despite the severance in employment, his family has a good bit of orange blood in it now, as his two kids are Clemson alumni. He could stay put and be, as he put it on Monday, Clemson's #1 fan. One thing that is poorly understood is that Clemson fans deeply appreciate the work he has done to reconstruct the program, but the game day results over ten years were not good enough. Tommy was "building a Ferrari" but always had a missing part or two, and when the car crashed (repeatedly) it looked ugly.
The hullabaloo over Bowden's buyout, and indeed over mid-season departures is overdone. I find it hugely ironic that pundits who piled on the media pressure are now decrying the result. Pat Forde would be exhibit #1. Ironically, Tommy's father and brother, who one might expect to be bitter, are not. Indeed, Terry's column earlier this week hit the nail on the head.
**Disclaimer: this poster is employed by Clemson University and is a season ticket older. He expects a fired up team on Saturday against Georgia Tech. Go Tigers!
The $3.5 million buyout is being paid out of a "rainy day" fund that has been built up specifically for this, or some similar purpose. The contract states that it will be paid out over six years, or about $600,000 per year. This is the right context: buyouts are a form of insurance in a high stakes game; tragedy triggers the "lump sum" buyout, but it is effectively an annual cost, part of the cost of doing business in major college football. Moreover, $600,000 is not a ton of money in today's college football world. And in the context of Bowden's salary and ten year's of coaching at Clemson, it's a decent reward for a pretty good job. Further, if Tommy takes another FBS job, I'd bet those payments will cease.
I'm not sure if he needs another job though, in the psychological sense, as the pressure clearly showed in his demeanor in recent years. Also, despite the severance in employment, his family has a good bit of orange blood in it now, as his two kids are Clemson alumni. He could stay put and be, as he put it on Monday, Clemson's #1 fan. One thing that is poorly understood is that Clemson fans deeply appreciate the work he has done to reconstruct the program, but the game day results over ten years were not good enough. Tommy was "building a Ferrari" but always had a missing part or two, and when the car crashed (repeatedly) it looked ugly.
The hullabaloo over Bowden's buyout, and indeed over mid-season departures is overdone. I find it hugely ironic that pundits who piled on the media pressure are now decrying the result. Pat Forde would be exhibit #1. Ironically, Tommy's father and brother, who one might expect to be bitter, are not. Indeed, Terry's column earlier this week hit the nail on the head.
**Disclaimer: this poster is employed by Clemson University and is a season ticket older. He expects a fired up team on Saturday against Georgia Tech. Go Tigers!
Labels: coaching salaries, college football
Wednesday, October 15, 2008
NCAA graduation rates
An NCAA report proclaims that graduation rates of student athletes are at their highest ever. I certainly join in the applause for any improvement in the academic performance of student athletes. In conjunction with this report, the organization is releasing its own graduation statistic, the "Graduation Success Rate." This measure is higher than the graduation rate measured by the Federal government. Schools don't like the latter, in part because if fails to track transfers (are athletes more or less likely to transfer? I would think eligibility rules would make them less likely to transfer.) But they like the GSR measure for another reason, since they are allowed to "subtract student-athletes who leave their institutions prior to graduation as long as they would have been academically eligible to compete had they remained."
Comparing the GSR to the Federal measure indicates that - spin games aside - they are measuring pretty much the phenomenon. Here are the data, as reported by Inside Higher Ed:
The GSR averages 15% higher than the Federal measure. Neverthless, at .92, the correlation between the two figures is quite high.
One notices immediately that for the same sport, the graduation rate for women is consistently higher than that for men. This is true for both measures: the average differential is 8% using both the GSR and the Federal measure. Only in the case of the GSR for water polo do women graduate at a lower rate than men. The female-male gap is smallest for fencing and rifle shooting, sports with little or no professional market, and volleyball, in which the market opportunities are more similar than most sports. This lends some credence to the idea that the low graduation rates for baseball, basketball, and football are driven in part by professional opportunities and not just the dumb jock syndrome, a tag that the NCAA is clearly trying to avoid. Perhaps reporting the GSR will help puncture this myth, but as long as the drive to win in the major sports remains strong, the incentive to cut corners with marginally qualified students will remain intact.
As an aside, for anyone interested in studying these data, this NCAA website has loads of it (including that from the Feds). Although the NCAA may be deploying a bit of puffery with the GSR, they should get some credit for making this data easily accessible.
Comparing the GSR to the Federal measure indicates that - spin games aside - they are measuring pretty much the phenomenon. Here are the data, as reported by Inside Higher Ed:
Sport | Grad Success Rate | Federal Rate |
| Baseball | 68% | 47% |
| Basketball (Men’s) | 62% | 46% |
| Basketball (Women’s) | 82% | 64% |
| Bowling (Women’s) | 68% | 57% |
| CC/Track (Men’s) | 74% | 60% |
| CC/Track (Women’s) | 84% | 70% |
| Crew/Rowing (Women’s) | 91% | 75% |
| Fencing (Men’s) | 86% | 78% |
| Fencing (Women’s) | 90% | 81% |
| Field Hockey | 94% | 81% |
| Football — Bowl Subdivision | 67% | 55% |
| Football — Championship Subdivision | 65% | 54% |
| Golf (Men’s) | 79% | 61% |
| Golf (Women’s) | 87% | 71% |
| Gymnastics (Men’s) | 86% | 70% |
| Gymnastics (Women’s) | 95% | 85% |
| Ice Hockey (Men’s) | 83% | 64% |
| Ice Hockey (Women’s) | 90% | 74% |
| Lacrosse (Men’s) | 88% | 74% |
| Lacrosse (Women’s) | 94% | 84% |
| Rifle (Men’s) | 80% | 60% |
| Rifle (Women’s) | 82% | 64% |
| Skiing (Men’s) | 82% | 73% |
| Skiing (Women’s) | 96% | 73% |
| Soccer (Men’s) | 79% | 58% |
| Soccer (Women’s) | 89% | 71% |
| Softball | 86% | 70% |
| Swimming (Men’s) | 83% | 69% |
| Swimming (Women’s) | 90% | 75% |
| Tennis (Men’s) | 83% | 64% |
| Tennis (Women’s) | 89% | 70% |
| Volleyball (Men’s) | 83% | 69% |
| Volleyball (Women’s) | 88% | 71% |
| Water Polo (Men’s) | 87% | 71% |
| Water Polo (Women’s) | 86% | 76% |
| Wrestling | 72% | 54% |
The GSR averages 15% higher than the Federal measure. Neverthless, at .92, the correlation between the two figures is quite high.
One notices immediately that for the same sport, the graduation rate for women is consistently higher than that for men. This is true for both measures: the average differential is 8% using both the GSR and the Federal measure. Only in the case of the GSR for water polo do women graduate at a lower rate than men. The female-male gap is smallest for fencing and rifle shooting, sports with little or no professional market, and volleyball, in which the market opportunities are more similar than most sports. This lends some credence to the idea that the low graduation rates for baseball, basketball, and football are driven in part by professional opportunities and not just the dumb jock syndrome, a tag that the NCAA is clearly trying to avoid. Perhaps reporting the GSR will help puncture this myth, but as long as the drive to win in the major sports remains strong, the incentive to cut corners with marginally qualified students will remain intact.
As an aside, for anyone interested in studying these data, this NCAA website has loads of it (including that from the Feds). Although the NCAA may be deploying a bit of puffery with the GSR, they should get some credit for making this data easily accessible.
Tuesday, October 14, 2008
Mixed signals on the sports economy
Season ticket renewals for the LA Lakers ran at 99%, "despite price hikes that raised the cost of Jack Nicholson's seats at Staples Center to $2,500 a basketball game." In contrast, the NBA itself has let 9% of its staff go, and the Nets are resorting to a "buy now, pay later" promotion to combat a decline in their renewal rate to below 80%. Purchasers can watch the games this fall but aren't obligated to pay until Jan. 5. The scheme bears an eerie resemblance to a sub-prime mortgage....
NHL ticket sales are up, but newspaper coverage is in serious decline. (HT: Ken Houghton) Although the latter may say more about newspapers than the nexus of sports and the economy, having a reporter on the team's beat would seem quite valuable for a team. Were it not for conflict of interest issues, perhaps even worth subsidizing! ;)
One interesting experiment will begin on Sunday, when the NY Jets launch an auction of 2,028 premium seat licenses at StubHub.com. It's an awkward time to turn what has traditionally been a renewable subscription into a capital asset, with callable loans being called in, credit drying up for all manner of businesses, etc. The Jets claim they won't hold any tickets back, and are going into this "with eyes wide open." Could they be desperate for cash as well?
NHL ticket sales are up, but newspaper coverage is in serious decline. (HT: Ken Houghton) Although the latter may say more about newspapers than the nexus of sports and the economy, having a reporter on the team's beat would seem quite valuable for a team. Were it not for conflict of interest issues, perhaps even worth subsidizing! ;)
One interesting experiment will begin on Sunday, when the NY Jets launch an auction of 2,028 premium seat licenses at StubHub.com. It's an awkward time to turn what has traditionally been a renewable subscription into a capital asset, with callable loans being called in, credit drying up for all manner of businesses, etc. The Jets claim they won't hold any tickets back, and are going into this "with eyes wide open." Could they be desperate for cash as well?
Labels: demand for sports, PSL, season ticket sales
Monday, October 13, 2008
Dodger Stadium: 50 More
While Dodger Stadium benefited from a generous land grant from the city and infrastructure subsidies detailed in Dodgers Move West
(also, see Stadiums and Eminent Domain), the team erected the iconic building with its own $23 million. Since 1962, they poured over $100 million into various renovations (and have now played more games there than in Ebbets Field). In April, the Dodgers announced plans for a $500 million extensive renovation of the structure and grounds (The Next 50) scheduled for completion in 2012. The update will preserve the pre-cookie-cutter "West Coast" feel of the original design while adding a 360-degree green walkway to replace some of the surrounding parking lots now moved to underground parking garages. It also adds a grand vista behind the home plate seats and a promenade entrance into centerfield.
Much has been written about stadium subsidies with the typical public share running around 70 percent. Why does most or all of the money come privately in some situations? By this, I'm not asking about what drives subsidies, per se, but what's the "political economy" driving differences in the private/public split across cities?
The private-leaning outcome is so rare in the U.S. to make it more of a case study comparison than a systematic data analysis. In San Francisco and L.A., maybe the number of alternative forms of entertainment (including natural endowments) make the population (or threshold share of it) unwilling to support major subsidies. Why is private-leaning the default position in the English Premier League? That one is harder to answer and may draw more from historical standards of public-private mix for such things.
The Dodger Stadium renovations will establish a retail area (and, if rezoning approved by LA) an adjacent housing area in an attempt to establish an entertainment hub beyond game days as well as before and after games -- "Dodgertown." As SE writers and readers have observed, such projects often fail. St. Louis recently tried a similar idea without much success. There almost has to be some kind of organic reason supporting people hanging out in or living in the area, otherwise people just prefer to drive in and out for games. Dodger Stadium may have the necessary underlying situation for the idea to pan out -- lots of people who live relatively close. Anyway, the Dodgers are the ones on the line.
(also, see Stadiums and Eminent Domain), the team erected the iconic building with its own $23 million. Since 1962, they poured over $100 million into various renovations (and have now played more games there than in Ebbets Field). In April, the Dodgers announced plans for a $500 million extensive renovation of the structure and grounds (The Next 50) scheduled for completion in 2012. The update will preserve the pre-cookie-cutter "West Coast" feel of the original design while adding a 360-degree green walkway to replace some of the surrounding parking lots now moved to underground parking garages. It also adds a grand vista behind the home plate seats and a promenade entrance into centerfield.Much has been written about stadium subsidies with the typical public share running around 70 percent. Why does most or all of the money come privately in some situations? By this, I'm not asking about what drives subsidies, per se, but what's the "political economy" driving differences in the private/public split across cities?
The private-leaning outcome is so rare in the U.S. to make it more of a case study comparison than a systematic data analysis. In San Francisco and L.A., maybe the number of alternative forms of entertainment (including natural endowments) make the population (or threshold share of it) unwilling to support major subsidies. Why is private-leaning the default position in the English Premier League? That one is harder to answer and may draw more from historical standards of public-private mix for such things.
The Dodger Stadium renovations will establish a retail area (and, if rezoning approved by LA) an adjacent housing area in an attempt to establish an entertainment hub beyond game days as well as before and after games -- "Dodgertown." As SE writers and readers have observed, such projects often fail. St. Louis recently tried a similar idea without much success. There almost has to be some kind of organic reason supporting people hanging out in or living in the area, otherwise people just prefer to drive in and out for games. Dodger Stadium may have the necessary underlying situation for the idea to pan out -- lots of people who live relatively close. Anyway, the Dodgers are the ones on the line.
Sunday, October 12, 2008
Kansas City Royals Increase Ticket Prices
It looks like the Royals are betting on stadium renovations to boost the demand for tickets.
The Royals rolled out a new ticket-price structure Friday for their first season in a renovated Kauffman Stadium.
And, yes, prices are going up.
The average single-game ticket will cost $24.84 in 2009, an increase of nearly $2 from the average 2008 cost for a nonpremium game.
Club officials said the increase still positions the Royals below the average 2008 major-league price of $25.43 and, based on 2008 prices, would rank 24th among the 30 clubs.
“We feel this is a fair and balanced plan that will allow fans a broad menu of price options depending on their desired amenities,” said Kevin Uhlich, the club’s senior vice president for business operations.
Labels: MLB, pricing, stadium renovations
Saturday, October 11, 2008
One more baller goes to Europe
Josh Childress, to Greece for $20 million over three years:
This doesn't presage the end of the NBA, but it does put pressure on the collective bargaining agreement.
"I get paid double, my role increases, I have no expenses and I move to a nice city?" Childress said. "How many guys wouldn’t do that, regardless if you’re a lawyer or a doctor?"Or an economist!
This doesn't presage the end of the NBA, but it does put pressure on the collective bargaining agreement.
Labels: labor markets, NBA
Thursday, October 09, 2008
College football and academic reputation
The chancellor's decision at UNC Charlotte to compete on the college football field has generated some local controversy. Is the expense and institutional effort involved in starting up a football program consistent with fulfilling the educational mission of the institution? Here are two views from North Carolina's Pope Center for Higher Education. Both are worth reading in their entirety.
First, Jane Shaw writes a "qualified defense" of football at UNCC:
First, Jane Shaw writes a "qualified defense" of football at UNCC:
Schools that have been around for many years (especially the Ivies, which are centuries old) are well ahead in the reputation game. Because of the difficulty of measuring quality and because reputations are entrenched by time, those reputations are extremely durable, even if they are based on inaccurate information. Upstarts are always trying to catch up.Here's the view of George Leef:
To break into the circle of eminent institutions, a school must triumph in a mysterious competition that involves the opinions of peers (who funnel their views into the U.S. News rankings), national publicity, and evidence of having money (whether from an endowment or state coffers).
So, will a football team contribute to the process of building UNC-Charlotte’s reputation, bringing it up from the also-ran level where it appears to be now? Given enough time—and [Chancellor] Dubois is planning for the next 25 years, not the next five—Dubois bets that it will.
In fact, Dubois not only argues that it will improve UNC-Charlotte’s reputation, he specifically stated that a football team will boost the academic reputation of UNC-Charlotte.
“Within North Carolina, does anyone doubt that the excellent institutional and academic reputations enjoyed by Chapel Hill, N.C. State, Wake Forest, and Duke have been strengthened by the prestige of their athletic programs?” he asked. He even cited research by two Charlotte faculty members confirming that a strong football program provides “measurable benefits to the academic reputation of a participating university.”
Odd as this seems, it is not entirely unrealistic. As long as we don’t know what actual education is going on (and even research is difficult to evaluate), then academic reputation depends on this smoke-and-mirrors competition that could be influenced by almost anything.
All the substance of cotton candyMy take is that if they didn't play football, colleges would be competing for reputation through orchestras, operas, etc., and the market void would be filled by minor league teams. I don't much like opera, and prefer college sports to the minor league form in the U.S., where even AA baseball teams threaten to pack up and leave town in search of a stadium subsidy.
Instead of trying to feed the sparrows of academic reputation through the horses of intercollegiate football, why not spend resources on programs that have a direct bearing on teaching and scholarship? With but a small fraction of what it would cost to compete in football, the school could establish several academic centers such as the James Madison Program and the Alexander Hamilton Institute. Initiatives like that would enhance the atmosphere of scholarship and debate at UNCC. That would do much more do make people think positively about the school as an educational institution than would a costly foray into entertainment.
Labels: academia, college football
Wednesday, October 08, 2008
Vivid Seats
With the NCAA sports season approaching, finding affordable tickets could mean the difference between a season in front of the television or live, in front of the action. Visit VividSeats.com to purchase tickets for college basketball. This sports ticket broker has a variety of tickets for NCAA sports events including Duke basketball tickets, NCAA game schedules and cheap NCAA football tickets. You can also choose where you want to sit by using the interactive seating chart available for all NCAA sporting venues.
Labels: vivid seats
Spillovers from finance into sports
From the Independent (U.K.):
There's more to the story. By the sound of it,Formula One Racing may be in serious trouble.
Sport feeling the pinchFinance for Liverpool's new stadium has been iffy since last fall, and was one of the early signs to your bloggerspondent that the credit crunch was not-trivial and having an impact on the "real" economy.
By Rich Jones, PA
Wednesday, 8 October 2008
Sport has become the latest victim of the credit crunch as a wave of financial turmoil threatens to throw some of the world's biggest names into crisis.
Football and Formula One look most in danger as global economic problems deepen, with leading figures in both sports yesterday voicing concern that the lavish spending of recent years may no longer be sustainable.
On a day when Football Association chairman Lord Triesman claimed debts totalling £3billion could leave some English clubs in "terrible danger", West Ham were forced to play down concerns over their financial future.
The nationalisation of Icelandic bank Landsbanki left Hammers chairman Bjorgolfur Gudmundsson with a major shareholding which at a stroke became almost worthless.
Already talk has turned to the effect Gudmundsson's problems may have on manager Gianfranco Zola's plans as the club looks to reduce costs, although chief executive Scott Duxbury was last night confident that the disruption would be minimal.
He said: "The position of Landsbanki has absolutely no effect on West Ham United and Mr Gudmundsson's ownership of the club.
"Mr Gudmundsson is an investor with a large portfolio, of which Landsbanki was just part. He remains as committed as ever to West Ham United and is not looking to sell the club."
The Hammers also lost their shirt sponsor when travel company XL folded, owing the Londoners £2m.
West Ham are far from the only Barclays Premier League club suffering as a result of the economic downturn.
Liverpool chief executive Rick Parry admitted at the weekend that the Merseysiders' new stadium would be delayed until credit markets improve.
There's more to the story. By the sound of it,Formula One Racing may be in serious trouble.
Labels: sports economics
Tuesday, October 07, 2008
Two on the economy & attendance demand
"Economic downturn isn't slowing luxury box sales," at the NY Times. The focus is on the New York market and sales at the new stadiums. The article stresses the size of the market in sustaining demand. My hunch is that demand is indeed less than anticipated, but that much of the adjustment will come through negotiations on price.
"Wall Street woe could transform team-fan divide," at Bloomberg, with anecdotes about company and team responses to the economic situation. One of note: GM will take a pass on Super Bowl ads next February.
"Wall Street woe could transform team-fan divide," at Bloomberg, with anecdotes about company and team responses to the economic situation. One of note: GM will take a pass on Super Bowl ads next February.
Labels: attendance, demand for sports
Monday, October 06, 2008
Sports econ potpurri
NFL ticket prices are up this year, in some venues. The average price is 8% higher.
But the bloom may be off the rose. Along with other bits of anecdotal evidence, David Moulton reports that 10,000 seats are covered with a tarp in Jacksonville. Moreover:
At Time Magazine, Sean Gregory discusses the new "Jock Market" at OneSeason.com, where you can trade shares in players. Problem is, there is no intrinsic relation between the value of a share at OneSeason and player performance, other than what traders think of it. I refer to it as "the ultimate beauty contest" and state that I expect the market to collapse. Which would be too bad, because the market is based on real money transactions and the price changes would be interesting to study. Stocks and real estate are passe', so perhaps OneSeason is the next bubble ;)
Finally, anyone who has read this far must be a TSE junkie, so here's the obligatory stadium subsidy piece. This installment has facts and figs on the new stadium for Real Salt Lake, which will have its debut on Thursday. The pics are pretty (pdf).
But the bloom may be off the rose. Along with other bits of anecdotal evidence, David Moulton reports that 10,000 seats are covered with a tarp in Jacksonville. Moreover:
Something strange happened on our radio show this week. We had Miami Dolphins tickets to today’s game against the San Diego Chargers to give away.The question is whether the change is cyclical or permanent. Here's more on the cyclical worries for franchises.
No one wanted them! Free tickets to an NFL game and they had less value than a station T-shirt. 2007 Dolphins tickets, I could totally understand, but these guys just drilled the Patriots.
Now, this moment could have been a fluke, but I don’t think so. I think the sports landscape is changing.
At Time Magazine, Sean Gregory discusses the new "Jock Market" at OneSeason.com, where you can trade shares in players. Problem is, there is no intrinsic relation between the value of a share at OneSeason and player performance, other than what traders think of it. I refer to it as "the ultimate beauty contest" and state that I expect the market to collapse. Which would be too bad, because the market is based on real money transactions and the price changes would be interesting to study. Stocks and real estate are passe', so perhaps OneSeason is the next bubble ;)
Finally, anyone who has read this far must be a TSE junkie, so here's the obligatory stadium subsidy piece. This installment has facts and figs on the new stadium for Real Salt Lake, which will have its debut on Thursday. The pics are pretty (pdf).
Labels: mls, NFL, sports economics, stadium subsidies
Friday, October 03, 2008
Britain takes a page from China
The cost of hosting the Olympics should perhaps include the induced subsidy to produce a high medal count.
The government has said it will provide the first £20m of the £80.1m earmarked for elite British athletes competing at the London 2012 Olympics. The £20m is the first installment on a funding package that runs from 2009-2013.I'm not sure if Government promises spur private contributions or crowd them out. Might make for an interesting cross-country comparison. Here's more on the somewhat controversial British plan.
As to the remaining £60m the government is still hopeful that some of it can be raised through fundraising via the recently launched Medal Hopes plan. Given the current economic climate this seems unduly optimistic.
Labels: government, Olympics
Wednesday, October 01, 2008
Football in Dixie
After my futile attempt to secure tickets to the USC-Ohio State game (Ticketless Trojan), a friend passed along a copy of Dixieland Delight: A Football Season on the Road in the Southeastern Conference. It's not exactly Grisham or Faulkner but provides insightful and humorous observations ranging from the pre-game culture and rituals to comments on "Bama Bangs" (male adolescent hair styles of AL fans). On funny excerpt on the relative confidence-insecurities of Georgia fans in the run-up to the 2006 Tennessee game in Athens :
DD also draws out socio-economic and cultural contrasts to my USC adventure. Twenty- and thirty-somethings dominate the USC fan base. I would estimate fewer than 10% were older than me (47) with hardly any below college age. In contrast, from both my experiences and Travis' book, the SEC demographics include a much wider dispersal of ages both on the low and high ends. Why such a difference? The SEC v. USC games reflect differences that others have noted about places such as Chicago's U.S. Cellular Field versus Wrigley Field (affluent 20s and 30s). No doubt, the alumni base from a relatively small private institution differs from that of large, public institutions in terms of affluence, and this may but why the age differences?
"... as we cross the campus a Georgia fan approaches me and syas, "I just want to go ahead and congratulate you on kicking our ass." Then he shakes my hand. The Georgia Bulldogs are the defending SEC Champions, yet, based on their fans, you'd think that they were Vanderbilt about to kick off against the Chicago Bears."DD's author, Clay Travis, relates ticket purchasing experiences on gameday on each campus. In all cases, tickets were available. In seven of the eleven cases with data (AL-AU seemingly not provided), he secured tickets at or below face value (UK-GA, Ole Miss-MSU, VU-SC, AR-AL, MSU-AU, TN-Cal, LSU-UK) and one slightly above (AU-LSU). The games substantially above face value include GA-TN, SC-TN, FL-SC. The ease of tickets at quality games (AR-AL) or rivalry games (Miss-MSU) likely owes itself to the size of the stadiums relative to the fan population base. Highest price (GA-TN at $100/ticket) involves high quality teams with relatively close proximity, relatively close to the South's largest metro area. Of course, the availability of tickets leads back to my question of the lack of them at the Trojan game. (Additional insights on ticket markets appears in the Boston Magazine, quoting one of the sports econ crowd, Craig Depken.)
DD also draws out socio-economic and cultural contrasts to my USC adventure. Twenty- and thirty-somethings dominate the USC fan base. I would estimate fewer than 10% were older than me (47) with hardly any below college age. In contrast, from both my experiences and Travis' book, the SEC demographics include a much wider dispersal of ages both on the low and high ends. Why such a difference? The SEC v. USC games reflect differences that others have noted about places such as Chicago's U.S. Cellular Field versus Wrigley Field (affluent 20s and 30s). No doubt, the alumni base from a relatively small private institution differs from that of large, public institutions in terms of affluence, and this may but why the age differences?
Labels: college football, ticket pricing, ticket scalping
