Tuesday, April 28, 2009
Yanks Slash Ticket Prices
The New York Yankees slashed prices on more than 40 percent of their front-row seats by up to 50 percent Tuesday and announced many of those who bought tickets closest to the field for $325-$2,500 will be eligible for additional free seats.
Those initiatives could help pack previously unfilled areas that were an eye sore on television broadcasts during the opening homestand at the $1.5 billion ballpark.
“There are a few hundred suite seats in our premium locations that have not been sold on a full season basis,” Yankees managing general partner Hal Steinbrenner said in a statement. “As a result, and for many of our fans who have already purchased full season suite seats in such premium locations, the Yankees are announcing today a program that adjusts certain prices and benefits.”
We'll see how this goes. Meanwhile, the politicians continue to be blustery.
“It’s the public that built Yankee Stadium, and even at these prices, the public has been excluded from the very stadium they built,” Brodsky said. “It’s a continuing disaster.”
First the financial disaster. Now the swine flu that has hit some areas of NY. Will we see prices slashed even more?
Labels: MLB, ticket demand, ticket prices
NFL Draft Trifecta
It is certainly the case that the non-statutory labor exemption to the antitrust laws places rookies and draft picks at a huge disadvantage when it comes to salary negotiations. While we are fond of talking about how the reserve clause in the major sports leagues died with the advent of free agency, in fact the reserve clause is alive and well today. It's just that it is only applied to players in the first few years of their career. Of course, given the relatively short careers of most professional athletes, the current reserve clause rules may cover a typical athlete's entire career.
That being said, let's not be too hard on the non-statutory labor exemption. Without this judicial understanding of the labor laws, most of the league rules put in place to promote competitive balance would be under constant threat of antitrust litigation. Without a union's consent, the reverse order draft, salary caps, luxury tax, roster limits, etc., all of which are the result of individual teams coming together and conspiring to limit player compensation, would clearly be, if not per se violations of the antitrust laws, at least subject to significant scrutiny under the rule of reason.
Without the ability to negotiate in good faith without the threat of impending antitrust action, it is unclear how modern sports leagues would be able to function efficiently, at least in terms of promoting competitive balance.
Monday, April 27, 2009
The NFL Draft: Shotgun Marriages v. Marriages "For Love"
The NFL draft is an example of a market "design mechanism" -- the particular decision rights, sequences, and incentives that determine choices and transactions. A subsection of this literature focuses on matching mechanisms -- including two-sided matching like marriage, medical residencies, or the free-agent versus one-sided like the draft (see Google Scholar search for a sampling).
One design-outcome question that jumps out from the draft data is whether the 6th and 7th rounds make sense when only 3 players per round become starters. A related question -- linked to this post's title -- is whether the starting rate is higher for undrafted free agents who play a role in the matching process. Does the object of affection having a say change anything? Instead of starting, what about making an NFL roster -- does this data look similar and how does it break down in comparing drafted rookies versus undrafted ones.
The matching issue pops up in media discussions of "fitting the needs" of a team but rarely goes much beyond positional depth. I'm struck, however, by how critical the matching problem can be. Player value can depend heavily on details of the environment. Randy Moss in MN (good), in Oakland (terrible), in New England (good). If Drew Bledsoe stays healthy, does Tom Brady get the opportunity to become, well, Tom Brady? Every Jacksonville Jags receiver in the past several years had been dissed as unproductive but is their productivity a function of poor skills or bad QB, bad O-line, bad coaching? Does having a say in the match change the likelihood of success?
Labels: NFL; decision making; statistics
Saturday, April 25, 2009
A Little Fascinating NFL Draft History
Although it took the Wagner Act to get the ball rolling, American sports unions have thrived for two reasons. First, they serve a group of people with very specialized skills that work for a cooperative body: the league. Leagues are little more than the collection of team owners. They are cooperative bodies in two senses: 1. in terms of setting schedules, the season play-off format, etc.; 2 the cooperate in the labor market in a cartel sense. The unions fight this monopsonistic cartelization
Second, sports teams and, by extension, leagues, enjoy a mlot of market power in their markets, which leads to higher profits and more rents that can be extracted by a union. Unions don't thrive very often in competitive markets because the competition restrains profits which thus restrains the rents that can be obtained through collective bargaining. Despite the "peculiar economics" of sports leagues, the leagues themselves are not operating in a competitive output market.
John Palmer (Eclectecon) sends this fascinating Slate piece by Eriq Gardner about the history of NFL draft along.
In 1968, the Washington Redskins used their first-round pick (12th overall) on Smith, an All-American defensive back from the University of Oregon. The rookie signed with the team for $50,000, and his unremarkable first season culminated in a career-ending neck injury during Week 14. Smith seemed destined for quick obscurity. Then he sued the NFL.
Two years after his retirement, Smith went before a judge and asserted that the draft constituted an unreasonable restraint of trade in violation of the Sherman Antitrust Act. Had it not been for the draft, he argued, he would have been able to negotiate a more lucrative contract for his one year as a professional. And he demanded that the NFL make up the difference.
The case succeeded at the district court, securing $276,000 in treble damages for Smith, and he won again when the league appealed. In 1977, the U.S. Court of Appeals for the District of Columbia Circuit ruled the "draft inescapably forces each seller of football services to deal with one, and only one buyer, robbing the seller, as in any monopsonistic market, of any real bargaining power."
Gardner notes that it looked like the Smith had the case won. But the NFL knew that it could effectively get an exemption from the Sherman Act if the players' union would agree to it. How did it get the union to agree to it?
Keep in mind that any collective bargaining relationship is composed of three groups: the employer, the unionized workers, and the union leadership. One of the interesting things about the NFLPA is that the leadership is largely composed of senior union workers, and Gardner argues that it is this arrangement that has led to the draft being kept.
The union's leadership is determined by seniority, with the upper echelon composed of veterans whose financial stakes conflict with those of the rookies. For example, take the way that draftees are paid by their assigned teams. According to the current collective-bargaining agreement, each club is allotted a set amount of "rookie pool money" to sign its draft picks. (Here's last year's breakdown of pool money.) It benefits the veteran players who run the union to keep that pool small: Since the NFL maintains a hard cap on the total amount of money distributed to players throughout the league, less money for rookies means more for the old-timers.
Lawyers for the professional sports leagues argue that is a perfectly acceptable arrangement, as wages and benefits go up with seniority in many other industries. But pro football is not like other industries. According to the players association, the average NFL career lasts about three and a half seasons. That just about covers the term of service that a player must devote to the team that drafts him before he's eligible for unrestricted free agency.
These days, draft reform is a very low priority for the union, especially since any serious demands for change would probably require other sacrifices during the collective-bargaining process—such as lowering player salaries or allowing more restrictions on free agency. In fact, there's buzz that in the next agreement, the union will accept an even tighter wage scale for rookies.
...In other words, those who wish to challenge the NFL draft in the post-Yazoo Smith era should think hard about their target. It's not the league. It's the union.
There's little that young players can do but hope they don't get hurt so they can stick around long enough to get the seniority that allows them to get the really valuable stuff out of the union contract.
Cross-posted at Market Power
Wednesday, April 22, 2009
The Law of Unintended Consequences Strikes Again
Was it really so bad for guys like Kevin Garnett, Kobe Bryant and LeBron James to skip college to play in the NBA?
NY Attendance
The empty seats are a fresh sign that the teams might have miscalculated how much fans and corporations were willing to spend, particularly during a deep recession. Whatever the reason, the teams are scrambling to comb over their $295- to $2,625-a-seat bald spots.
I find it hard to imagine there are really that many people interested in $2625 per seat tickets to an April baseball game even in the best of times.
Tuesday, April 21, 2009
Soccer in Seattle
Seattle’s Major League Soccer expansion team has already landed more than 30 sponsors with only a few weeks to go before the season opener in March. That includes deals with Virginia Mason, QFC and a blockbuster deal with Microsoft worth a reported $20 million that will have the Sounders’ green jerseys emblazoned with the Xbox 360 logo.
The Sounders have sold about 20,000 season tickets, which eclipses the number sold by the 32-year-old Mariners team, which estimates it will sell about 14,000 by the start of the season.
Of course, the Mariners play more than four times as many games as the Sounders, and an M’s season ticket therefore costs much more. Plus, the recently announced return of future Hall of Famer Ken Griffey Jr. could give Mariners marketing a big bump.
So far the Sounders have drawn 28,000 to 32,000 for their games. By comparison, the LA Galaxy led reported MLS attendance last year (from Soccernet) at 26,000 per game with about half of the 14-team league drawing over 15,000 per game. As the excerpt mentions, the total expenditure for 81 regular season baseball games exceeds that for 18 soccer matches. The total is about a 3:1 difference according to the article.
I'm not so concerned with whether soccer has "passed" baseball in Seattle, but the fact that it has pulled up into the same neighborhood says something positive about soccer's growth but negative about baseball's long, slow decline from its former position as king of U.S. sports. Baseball has been both the beneficiary and victim of television. TV has raised salaries in baseball as in all sports but it has also boosted other sports, football in particular, relative to baseball and may have created incentive problems.
Has baseball hitched its wagon too closely to TV over the years? Certainly, baseball does not want to go into TV purgatory like the NHL. However, TV's contractual horizon and MLB's long term horizon do not necessarily dovetail. Boosting short-run TV ratings and revenues over the last 30 years with World Series games going into the early morning hours in the east may not boost long term interest in the game. One writer noted that the trend has been longstanding now -- even Carlton Fisk's famous homer in the 75 series came after midnight ET. Here's a Ron Fimrite piece from SI.com in the wake of last season's Phillies-Rays closer-to-dawn-than-sunset finish.
Labels: Major League Baseball, soccer
Sunday, April 19, 2009
Mixed Use Developments
That's left the Richmond politicians trying to figure out plan B.As Richmond continues to debate its baseball future, Gwinnett County and its residents celebrated the opening of the $64 million stadium that was built in about nine months.
The aggressive schedule contributed to a $19 million cost overrun but was necessary after the Braves announced early last year that 2008 would be the team's 43rd and final season in Richmond. Officials had grown frustrated over a lack of progress on a plan to replace The Diamond on North Boulevard.
"In some regard, it's been a six-year trek that wound up in Gwinnett. It wasn't designed to be that way. It's just the way it worked out," said G-Braves General Manager Bruce Baldwin, who helped pitch the idea of a new stadium in Shockoe Bottom in 2003.
Richmond Mayor Dwight C. Jones is now considering a different proposal for baseball in Shockoe Bottom. A group of developers led by Highwoods Properties has proposed Shockoe Center, a $318 million mixed-use development that would be anchored by a ballpark near Main Street Station.These mixed-use developments seem to be the norm now that the cat is out of the bag regarding the economic impact (i.e. job and income creation nature) of subsidizing sports stadium construction. But are these developments catalysts for economic growth or are they little more than attachments to stadiums to get sufficient voter approval*?
The public goods aspect of sports is certainly in play here. To the extent that sports generate public goods, some type of stadium subsidy is warranted. But the non-sports portion of these mixed-use developments is typically used for shops, restaurants, bars, and condos/apartments, stuff that falls squarely under the umbrella of private goods and where subsidies are not warranted. If a private good needs to be subsidized to get produced, it's probably not a good investment.
*Which came first: the stadium or the attached development - a chicken-or-the-egg problem?
Labels: mixed-use development, stadium subsidies, The Stadium Game
An idea that won't catch on
Saturday, April 11, 2009
Baseball Stadium Quirks
Myself, speaking for students of baseball, I'm sorry, but in constructing some things, the trick is not to run away from nostalgia, but simply to monkey around with it and try to gussy it up a bit. Architecturally, baseball parks are like mousetraps. No one has found a way to build a better one than the Orioles did in 1992, when they gave Camden Yards to a grateful world. All of the 18 major league fields and scores of minor league parks built since then have been wise enough to follow that pretty model.Part of it is because in football, basketball, and hockey, the dimensions of the entire playing surface are standardized. Sure, you can paint your basketball courts all sorts of colors. You can paint your football field blue if you want. You can choose between grass, fieldturf, and Astroturf in football. You can put a pirate ship in the stands. But the playing dimensions are standardized, and that leaves no room for little nooks and crannies.
...People simply feel more affectionately about ballyards than they do other sports' stadiums and arenas. Madison Square Garden, for all its fame, is merely an address, not a home. And a place like Gillette Stadium may be a cathedral to New England Patriot fans, just as Old Trafford is to Manchester United fans, but linear football stadiums -- of both varieties -- and the cereal boxes that accommodate basketball and ice hockey are pretty much just so many efficient people containers. Ballyards are quirky and idiocyncratic, living things because the architecture is part and parcel of the outfield itself -- all the better that that's in utter counterpoint to the infield, that diamond of inviolate geometry.
Baseball field dimensions, on the other hand, are not so much standardized. The dimensions of the diamond portion of the playing surface is standardized. There are 90 feet between the bases. The pitching rubber is 60 feet 6 inches from home plate. But the outfield and the foul territory? That’s libertarian, baby!
As economists might say, the outfield and foul territory characteristics are constrained choice variables. They can have virtually any quirk the team wants as long as the park as a whole fits into it’s geographic corner of the world. Got an old warehouse? No problem. Just build it into the park. Asymmetric outfield? Go for it! A flagpole in dead center field? You got it! You want foul territory big enough to land a jumbo jet? The customer is always right.
We sports economists may turn our noses up at public funding, but teams (and the architect firm HOK that has designed a vast amount of new facilities) have done a nice job incorporating all kinds of things from warehouses to hills to strange corners into the new ballparks.
Thursday, April 09, 2009
Augusta National Changes: "Buzzkill" or Return to Long Run Form
The 13th is the end of Amen Corner and these days the golfers don’t have a prayer. It was once a 465-yard par 5 that was conducive to thrilling eagles that could lead to dramatic comebacks. Now it’s a 510-yard dogleg that forces golfers to lay up safely unless they just uncorked the most magnificent of drives. Safe should be reserved for the U.S. Open though, where survival is the goal. Back-nine shot making, incredible runs and come-from-behind drama are what the Masters is supposed to be about.The "ruining" Augusta theme and "Tiger-proofing" theme have run rampant the last couple of years with just passing mention of 30 mph winds or cold, cold temps. Wetzel does muster a wave of the hand to the idea that Bob Hope Desert Classic-type scores may be selective memory:
The last few years we’ve seen nothing of the sort. Whether it is two separate lengthenings of the course, adverse weather or a combination of both, where the roar once raged, it’s been ambivalence by the azaleas.Did they Tiger-proof this place or thrill-proof it? “It’s not the same,” Tiger Woods said. “The golf course is so much longer and so much more difficult; you just don’t have the same amount of birdie opportunities that you used to have. The scores reflect it.”
the romance associated with those specific memories has clouded reality though. As the [Augusta] Chronicle’s Scott Michaux pointed out, back-nine heroics are actually rare here. Only six players have shot 33 or better to win the Masters while 22 won despite failing to break par 36. Everyone remembers Nicklaus' back-nine 30 to win in 1986. They forget his limp-home-to-a-green-jacket in 1972.
Both the players and their media enablers have little sense of longer run history -- a common problem in data analysis. As some of the people involved with the course changes have noted, the changes only attempt to restore approach shots to by-gone levels. Tiger hitting a 9-iron into the par 5 15th or Phil hitting a wedge into the "long" par 4 11th did not reflect the kind of shot making of the 1986 run by Nicklaus or earlier tournaments. I watched a 1986 re-run last night. In his 1986 run, Nicklaus hit a 4-iron into 15. Seve Ballesteros (a long hitter) what appeared to be a 3-iron into 13. Nicklaus hit a 5-iron into 18. A few years back, a mid-to-late 40-something Tom Kite hit a driver/9-iron into 18 -- Tom Kite, a 9-iron!
Variability in scoring produced great back-nine, Sunday drama -- some high, some low, not just low and lower. The crazy weather of the last two years put a premium on conservative play. My guess is that better weather will restore scoring and drama on Sunday to the "salad days" (in my view) of the 1980s and before -- not the Bob Hope DC days of the late 1990s.
Labels: PGA; golf
Vivid Seats -- Tennis Time
Labels: vivid seats
Wednesday, April 08, 2009
Time to renegotiate?
Two aspects of Hicks' "tactical move" seem awry to me. First, if he can't get new lines of credit (would you loan to a king of leverage in this environment?), how willing are his lenders to give him more favorable terms than they did back in 2006? The notion does not make financial sense. Second, from an ethical perspective, Hicks is really stuffing it in the bankers' faces. As a group at least, the banks have taken an enormous hit as their loan portfolios have evaporated. Hicks is essentially saying, "mark my loan down too, and lower my payments or else!" The bluff is that he's willing to hand over the Rangers to his creditors. At least that is what Hicks' stance implies, in which case they won't be doing much future business with him. Alternatively, he really does need the relief, and his leveraged empire might be ready to crumble.
A few miles north in Kansas City, Missouri, the local pols are taking a second look at a $25 million deal with the Chiefs. The Chiefs were given a $25 million tax credit on the premise that they'd move their spring training camp from Wisconsin to a local venue. The pols think it was a ten year deal; the Chiefs are negotiating a five year deal (renewable), with the owners of the site, Missouri Western State University.
Absent an agreement with the public, the Chiefs are surely working on terms that make sense, with incentives for performance on the part of Missouri Western: do it right for the first five years, and we'll continue the relationship. The public subsidy -- and that's what the $25 million tax credit is, a transfer from the treasury to the Chiefs -- presumably requires a longer period than five years to pass the political smell test. The political reality creates a conflict with sensible private contract terms. But even on its allegedly original terms, this looks like a pure handout to me, one that is quite hard to justify. Stadium subsidies are one thing, but $25 million to hold a summer camp lasting all of three weeks (!!) at Missouri Western?
Labels: game theory, The Stadium Game
Sunday, April 05, 2009
"Wild Pitch"
Labels: Major League Baseball, new stadium, stadium subsidies
Opening Day Prices
The price drop for opening day should overstate the decline in demand for baseball in general. Baseball fans can substitute for lower priced games this season, or defer the opening day game experience to another year. The demand for tickets to opening day should drop relative to other games.
In New York, the Mets' have set up an auction for unsold tickets to the curtain raiser at Citi Field. The Yankees also have premium tickets left for Opening Day, at $2,625, + $59.70 S&H (Hey George, what is the 70 cents about??). These seats were likely targeted for the brass at AIG, Bear Stearns, Citi, et al. Adjusting their prices is tricky, since they're offered as season tickets at the top of the pricing structure pyramid. And who knows, the good times might return by the time next year's opening day rolls around.
Labels: Major League Baseball, ticket prices
Friday, April 03, 2009
"What Moneyball Missed"
The heart of the claim:
The only problem was that Lewis's explanation for the A s success was the same as Commissioner Selig's: the team was an aberration. Since most every other team looks at the market pretty much the same way, as Lewis explained, if every team tried to exploit these same inefficiencies, then no team could. The market would correct, and the most valuable players i.e. the players with the attributes most likely to produce wins would be bought by the wealthiest teams. The championship would be for sale again.I don't think it matters much whether Lewis' book had an explicit discussion of the reserve clause and how that factored into the A's menu. Implicitly, of course, it's effects are described throughout the book, with the A's focus on young (underpaid) players, and in particular on the
But it isn t. Moneyball missed something. That something is known as the reserve clause.
Fleisher's three key claims are that:
1) "Well-run teams" are exploiting the "reserve clause inefficiency."Regarding the first point, low-payroll teams have focused on trying to win with young, "underpaid" players for decades. The A's were unusually successful because of their particular mechanism for doing this. I disagree with the latter two points, and again, the Jason Giambi
2) This will create a "smoothing of salary distribution throughout players careers." (as in the Longoria contract, which supposedly locks him and the DRays together). Young players will not be as inexpensive and older players will not be as overpaid. Top free agents will become scarcer over time; their hometown teams have found a way to keep them.
3) "Payroll will matter less and less, management will matter more and more, and the game will stay competitive."
In short, this is an interesting piece, but at several critical junctures the economics are unsound. Regardless, it's a piece worth discussing over a beer or two.
Labels: baseball, labor markets
Thursday, April 02, 2009
Conference Dating Game: Winners and Losers
One interesting result of the matching and leftovers is that sometimes being left behind works to your advantage and sometimes getting a date works against you. Memphis has benefited and may continue to benefit by its exclusion from the C-USA schools that went to the Big East. Instead of scratching and clawing just to keep their head above water in the Big East anarchy, their dominance of C-USA provided them with nice seeds and a run to the finals and the Sweet 16 over the past two seasons.
In contrast, DePaul received the Big East invite and schools like Seton Hall and Providence retained their places. However, are these non-football schools really a fit for the current 16-member Big East behemouth. An NJ.com post by Steve Politi addresses some aspects of the current dilemma, including touching on whether it make sense in terms of money:
so much of what made the Big East special in its heyday of the late '80s is missing from its monstrous state in 2009. For every St. John's-Georgetown tilt, like the 64-59 victory for the Red Storm Tuesday, you end up with a Cincinnati-DePaul.Would some of the weaker, non-football members of the Big East be better suited for a conference tailored to their interests. A conference made up of DePaul, St. John's, Seton Hall, Providence and mix them with a group such as Xavier, Dayton, Temple, St. Louis, UMass, Butler and give or take one or two of these or others, and one is left with something more similar to what the Big East started out as in the late 1970s.
For every matchup between two longtime rivals, you end up with two teams thrown together out of necessity, in a league that might be too big and too competitive for its own good.
"It's good for the cash register," Carnesecca said when asked about the 16-team tournament, but even that seemed debatable. The bottom eight Big East teams squared off Tuesday, but in an era when it seems like every dribble is televised, the four games were only available on the internet.
Labels: college basketball, NCAA
