Sunday, November 29, 2009
Politics and Budgets in NFL playing time?
Had one watched the Ravens' first three games they would have seen Willis McGahee score 7 touchdowns. The assertion was that the Ravens have not played him as much since then because if he continued to score touchdowns and led the league, then 1) when they release him at the end of the season they (the Ravens) will have egg on their face and 2) the team would owe McGahee lots of bonus money.
(As I write this, the Ravens bring in McGahee who scores from the three yard line.)
One announcer then said he has seen it many times where teams cut the playing time of players who were close to earning incentive bonuses. Shades of Charlie Comiskey and the Black Sox!
If revenues are largely fixed, as they might be in the NFL where most games are sell-outs and tv revenues are largely shared equally, then the team may be able to raise profits in a given season by holding players out. But long run profits may be harmed it fans figure out that teams are sacrificing wins in a season to raise profits marginally. Consequently, it strikes me as unlikely profit-maximizing teams would do this.
The second point was that players are "in the doghouse" and that explains why they don't play. If coaches are trying to win games, it is unlikely they would keep the better players on the bench because they are in the doghouse, especially if those players were significantly more productive than the players in the game. So I don't buy this point.
What does the TSE readership think?
Tuesday, November 24, 2009
Evidence that I am an Obstacle to Civic Progress
I was especially amused by the comments made by Patrick LaForge, president of the Oilers, about me, and my well known anti sports subsidy position:
Yep, that's me. Slavishly devoted to sucking the joy and happiness out of urban life as we know it in North America, one article and blog post at a time. I'd like to write more about this, but I am busy trying to get the Edmonton Opera shut down.LaForge says Humphreys and economists like him have it all wrong, that their fixation on certain economic measures misses the bigger picture of what makes a city thrive.
"To a large degree, it's people with Humphrey's view that prevents us from building the next Eiffel Tower, the next Peace Arch, the next CN Tower, because people who think like him can't find the economic rationalization to do it.
"I think that sports and entertainment is a unique industry and it adds value to a city. ... You can't replace it with a refinery or a pulp mill. They might have similar economic impact, but it's not a substitute for entertainment for the masses.
"It's people like him (Humphreys) that are going to prevent the world from being a place of entertainment, arts and culture. And I said that to him. It's not that people have to buy into my thinking 100 per cent, either, but he represents a view that I just 100 per cent disagree with."
Labels: economic impact, nhl, stadium subsidies
Sunday, November 22, 2009
I'll Have What He's Having: Curious Contract Provisions in the NCAA
Perhaps Neil Cornrich, who represents embattled Kansas football coach Mark Mangino, should be mentioned in the same breath as Mr. Boras in terms of uber-valuable sports agents.
If the Kansas athletic department’s investigation into KU coach Mark Mangino’s treatment of players results in the school firing Mangino for cause, that decision could spark a battle for more than $6 million, according to Mangino’s contract.Mangino would be given a 21-day window after his firing to submit a written appeal of his termination to either KU chancellor Bernadette Gray-Little or athletic director Lew Perkins. The appeal would be reviewed by a three-person committee appointed by Gray-Little, comprised of faculty or professional staff employees, one selected by Gray-Little, one selected by Mangino and one agreed upon by both parties. Mangino would have the right to attend committee meetings and have legal counsel.
Two of the three committee members would have to rule in favor of the school to uphold the termination for cause. In that case, Mangino would be paid only what he is owed through the date of termination. But if the committee ruled in favor of Mangino, turning the termination for cause into a termination without cause, Mangino would be owed $6.6 million — the remainder of his contract ($2 million per year for three years plus a buyout in the range of $600,000). KU would also have the option of reinstating Mangino as coach.
The following brought forth my inner Spock when it caused me to raise an eyebrow:
Mangino would be given a 21-day window after his firing to submit a written appeal of his termination to either KU chancellor Bernadette Gray-Little or athletic director Lew Perkins. The appeal would be reviewed by a three-person committee appointed by Gray-Little, comprised of faculty or professional staff employees, one selected by Gray-Little, one selected by Mangino and one agreed upon by both parties. Mangino would have the right to attend committee meetings and have legal counsel.
Two of the three committee members would have to rule in favor of the school to uphold the termination for cause. In that case, Mangino would be paid only what he is owed through the date of termination. But if the committee ruled in favor of Mangino, turning the termination for cause into a termination without cause, Mangino would be owed $6.6 million — the remainder of his contract ($2 million per year for three years plus a buyout in the range of $600,000). KU would also have the option of reinstating Mangino as coach.
You could argue that Self is such a good coach, so confident in his ability, and such a known commodity that the value of extra-protective language is negligible to Self.
Yet the article ends by noting that another one of Cornrich's clients is former Kansas State University football coach Ron Prince, he of the super-secret $3.2 million in deferred payments, something that rightly rankles much of Wildcat Nation.
Once again, as with Mangino, Prince may have had more value from such an agreement than a coach of Self's stature. But bargaining is a two-way street. It takes two to tango. Pick your cliche. Any language has to be mutually agreeable to both sides to appear in a final contract.
Kansas State, when it gave Prince his extension, knew that he was a new coach and hadn't exactly been tearing up the North Division of the Big XII. Likewise, Kansas was well-aware that Mangino's reputation was not one of a jolly old elf.
Considering that Prince was fired shortly after signing a contract extension and that Mangino also recently signed his own extension, what in the blue blazes is going on with coach negotiations in northeastern Kansas FBS athletics?
Labels: bargaining, college sports, NCAA; college sports; football; coaching salaries
Wednesday, November 18, 2009
Here's Yer Intangible Effect - Right In the Kisser, Alice!
Family violence is a pervasive and costly problem, yet there is no consensus on how to interpret the phenomenon of violence by one family member against another. Some analysts assume that violence has an instrumental role in intra-family incentives. Others argue that violent episodes represent a loss of control that the offender immediately regrets. In this paper we specify and test a behavioral model of the latter form. Our key hypothesis is that negative emotional cues – benchmarked relative to a rationally expected reference point – make a breakdown of control more likely. We test this hypothesis using data on police reports of family violence on Sundays during the professional football season. Controlling for location and time fixed effects, weather factors, the pre-game point spread, and the size of the local viewing audience, we find that upset losses by the home team (losses in games that the home team was predicted to win by more than 3 points) lead to an 8 percent increase in police reports of at-home male-on-female intimate partner violence. There is no corresponding effect on female-on-male violence. Consistent with the behavioral prediction that losses matter more than gains, upset victories by the home team have (at most) a small dampening effect on family violence. We also find that unexpected losses in highly salient or frustrating games have a 50% to 100% larger impact on rates of family violence. The evidence that payoff-irrelevant events affect the rate of family violence leads us to conclude that at least some fraction of family violence is better characterized as a breakdown of control than as rationally directed instrumental violence.The typical negative external costs associated with professional sports include traffic, trash, and nuisance crimes like public intoxication. This result is similar to the one in a paper by Rees and Schnepel that appeared in the Journal of Sports Economics issue from the NAASE sessions at the WEAI conference.
I hope someone tells the Governator of California about this before they try to attract a new NFL team to LA.
Hat tip to Tyler at Marginal Revolution.
Labels: crime, economic impact, NFL; tradeoffs
Tuesday, November 17, 2009
Reinvesting Revenues From a New Stadium?
This is a common claim made by teams, but I'm skeptical.
According to economic theory, the value of any given player/coach/trainer on a profit-maximizing team is what that person contributes at the margin to the team and what fans are willing to pay for that marginal contribution. If, for example, Adrian Peterson contributes 1.5 wins to the Vikings and Viking fans are willing to pay $3,000,000 for each extra win, then AP is worth $4,500,000 to the Vikings.
In a profit-maximizing world, the only reason a team would use "money generated by the stadium" on the team is if the stadium enhanced the team's talent or if it increased fans' willingness to pay for the product on the field.
I think that it's likely that a new stadium would enhance fans' willingness to pay overall, but it's not clear that they are willing to pay more to see the action on the field per-se. They may be willing to pay more to enter a new stadium to experience the "newness" of the facility, to sample new concession items, or to experience something else that has little or nothing to do with the action on the field (like a huge scoreboard (like in Arlington, Tx), a giant pirate ship (as in Tampa), or nice views of the surrounding city/geography (as in so many facilities around the country)).
Consider a simplified numerical example. Suppose that the average fan, in an old stadium, is willing to pay $50 to watch the game and an additional $25 for stadium amenities. This fan would be willing to pay as much as $75 for a ticket to the game.
Now suppose that the same fan is willing to pay $50 to watch a game per-se in a new stadium and an additional $50 to experience the new stadium's amenities. This person would be willing to pay as much as $100 for a ticket to a game, a $25 increase. But his/her willingness to pay for the action on the field is unchanged, so the team has no incentive to spend the additional $25 it receives on "competitiveness."
The interesting question from my perspective is "are stadiums and talent complementary?" I think stadiums can be designed to impact the action on the field to improve the chance the home team will win. Here's a blog post I wrote over at The Sports Economist a year and a half ago on this subject. In that post I cite one paper in a professional economic journal that has looked at this question (this one). The paper finds little evidence that a new stadium improves the performance of the home team on average.
That's my response (edited for typos that I found later and with links embedded in the text) to a question posed to me by a reporter writing a story on the Vikings' quest for a new stadium. What I was referring to in the first sentence above was the common claim that because of the small size of the Vikes' market, money generated by a new stadium has to go towards investing in the team.
I touched on the question of whether stadiums and talent are complementary, but there is one other facet that I feel I should point out, and that's the question of do owners of professional teams (or AD's at colleges) maximize profits. I think that the answer is a resounding "yes" in American sports, but I do not doubt that some owners have run their teams as philanthropic organizations to some extent (Ewing Kaufmann, late owner of the Kansas City Royals, comes to mind) and some owners simply enjoy owning teams, much like I enjoy watching a college football game.Cross-posted at Market Power
Labels: new stadium, stadiums
Pontiac Silverdome Sells for $583k
The city of Pontiac played host to the Detroit Lions in the Silverdome for just shy of three decades. Yet judging by the picture in this article, the economic development spurred by the stadium largely consisted of parking spaces, which now sit empty. Moreover, they've been spending $1.5 million a year on upkeep for the empty facility, in a period when city budgets are a disaster. Apparently, they are relieved to "to shed the costly structure." Surely there is a message in this saga for public bodies with thoughts of taking the stadium plunge.
The story does recall a junket to Mexico for "a Pontiac councilman," two business associates and "three female companions."
HT to Steve!
Labels: stadium subsidies, stadiums
Monday, November 16, 2009
Belechick Understands Probability Better than Media
All in all, I hated the call. It smacked of I'm-smarter-than-they-are hubris. Let Manning, with the weight of the world on his shoulders and no timeouts under his belt, drive 72 yards in two minutes, with his mistake-prone (on this night) young receivers and the clock working against him. Sure he could do it. But let him earn it. This felt too cheap. It was too cheap. Belichick's too smart to have something so Grady-Littlish on his career resume, but there it is, and it can never be erased.Of the major media outlets I looked over, only Yahoo's Shutdown Corner link even flirted (and too quickly rejected) any real analysis that goes beyond the conventional -- you don't go for it from your own 28 -- kind of "analysis."
In contrast, Advanced NFL Stats breaks down the key elements, showing that the decision makes sense quantitatively:
With 2:00 left and the Colts with only one timeout, a successful conversion wins the game for all practical purposes. A 4th and 2 conversion would be successful 60% of the time. Historically, in a situation with 2:00 left and needing a TD to either win or tie, teams get the TD 53% of the time from that field position. The total WP [win probability] for the 4th down conversion attempt would therefore be:One can quibble with the exact numbers, but the framework for the analysis (rather than the media's reliance on mere convention) is correct. What the ANS framework highlights that the media misses is that their is a risk to punting just as there is a risk to going for it. Pushing a risk farther down the line doesn't make it disappear or make it less. As ANS notes, the numbers probably work out more in favor of going for it when customized for this particular game.
(0.60 * 1) + (0.40 * (1-0.53)) = 0.79 WP
A punt from the 28 typically nets 38 yards, starting the Colts at their own 34. Teams historically get the TD 30% of the time in that situation. So the punt gives the Pats about a 0.70 WP.
I went back and looked at the 4th quater stats: the Colts had already gained 175 yards in the quarter with two drives longer than what would have likely been needed here in clock times of 2:04 and 1:49 (without employing any special clock-stopping strategies). Prisco and former Patriot Teddy Bruschi thought it "insulting" to the defense -- well, exactly what about it's 4th quater performance would have inspired confidence. Just as important, the Patriots had already gained about 470 yards of offense in the game, nearly 7 yards per play.
Rather than "stupid," "dumb," or "insulting," this is is the kind of decision making that has made Belechick better than most NFL coaches. Risk aversion, media response (even if coaches deny it), or lack of analytical skill drives many coaches toward applications of "conventions" even when those conventions don't make sense. Belechick is willing to go with the analytics and live with it. After all, it's not how it turned out after the fact that makes it a good or bad decision, it's the likelihood going in.
Friday, November 13, 2009
A Cautionary Tale About Claims of Economic Benefits
In 2005, the Supreme Court of the United States, on a 5-4 decision in the Kelo v. City of New London case, ruled that local governments could use eminent domain to transfer private property from one person to another if the takings served the public interest by promoting economic development. The case emerged from the desire of New London, CT, to tear down an existing residential neighborhood in order to create a mixed use commercial/residential "urban village" anchored by Pfizer, a big pharma corporation. Last week, Pfizer announced that it was leaving New London. What is the legacy of the Kelo takings?
Pfizer said it would pull 1,400 jobs out of New London within two years and move most of them a few miles away to a campus it owns in Groton, Conn., as a cost-cutting measure. It would leave behind the city’s biggest office complex and an adjacent swath of barren land that was cleared of dozens of homes to make room for a hotel, stores and condominiums that were never built.At the time that New London began using eminent domain to take private property, the city claimed that the new development around the Pfizer facility would have a huge positive economic impact on the surrounding community. A majority of Supreme Court justices believed these claims. The opinion can be found here. It's one of the worst decisions the court ever made, in my opinion. Here's a quote from the opinion
The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including–but by no means limited to–new jobs and increased tax revenue. As with other exercises in urban planning and development, the City is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts. To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.So much for the careful economic development plans of New London. The important lesson here is that it is relatively easy to make seemingly credible claims about future economic benefits from an urban "revitalization" project. Five justices of the Supreme Court were so convinced by the purported economic benefits that would flow from the planned New London "urban community" that they let the government use eminent domain to take private property from local residents to make it happen. But realizing those benefits is a much more difficult accomplishment, even if the planners mean well. The final outcome in New London should serve as a warning to those who swallow claims of future economic benefits hook line and sinker.
Labels: economic development
Tuesday, November 10, 2009
Astounding Breakthrough in Tournament Design
Anyway, college basketball starts off this year with the 2K Sports Classic, which is billed as a basketball "tournament." I have some old fashioned ideas about how tournaments work. A dated, 20th century notion that in knockout tournaments two teams play a game or a series and the winner advances to the next round while the loser is either eliminated, or perhaps moves to the losers' bracket in some cases (I am open to the idea of a losers' bracket - it works in the College World Series, for example). The problem with my quaint idea of how a tournament should work is that sometimes unexpected events take place - we called them "upsets" back in the day - and a team like Gardner Webb would beat Kentucky at home, advancing to the widely televised later rounds, thus taking up valuable tee-vee exposure and drawing miniscule viewing audiences.
Thanks to the astounding developments made by the Gazelle Group, organizers of the 2K Sports Classic, those pesky "upsets" have been eliminated from their "tournament." Here's how it works. The tournament participants are divided into "hosts" (the Big Boys: Syracuse, North Carolina, Ohio State and Cal), and the "others" (Albany, FIU, Alcorn State, Murray State, Robert Morris, NC Central, Detroit and James Madison). In the "Regional Round," the Big Boys play two games each and the others play one game. Regardless of the outcome of these games, the Big Boys "advance" to Madison Square Garden in NYC to play in the Championship Rounds on the Deuce; the other teams move to the "Subregional Rounds" to play additional games in an "undisclosed location" presided over by former vice president Dick Cheney.
As far as I can tell, the "Championship Round" games will be decided by points scored. In the future, the outcome of these games should be decided by the size of the revenues generated, with the teams drawing the most "supporters," as measured by $0.99 text messages sent to the Gazelle Group, advancing to the championship game.
Labels: college basketball, technology, television
Friday, November 06, 2009
NFL Power Rankings -- TSE Style
First, I collected data on game-to-game point differentials for Super Bowl winners over the past 5 regular seasons to get a sense of the level and variability of performance. (Similar numbers appear if using just the first 7 games of the season.)
Average Differential = 7.0
Median Differential = 7.0
Standard Deviation = 13.3
The outcomes form a near perfect normal (bell) distribution based on all the typical measures. Cross-game performance varied more than I had expected. These very good teams can easily range from two touchdown winners to touchdown losers and with some regular frequency lose by two touchdowns or more. An NFL season is a lot like running a marathon -- it's a long, long race and everybody has at least a bad mile or two.
Second, what would a "Power Ranking" based on point differentials at this point of the season would look like? I used median differentials rather than averages so that a blow-out in seven or eight games would not carry too much weight. The Table below presents these results along side the SI and ESPN rankings as well as a ranking based on current odds to win the Super Bowl and VegasInsider.
| Team | W-L | Median Pt. Dif | Rank by Pt. Dif | SI | ESPN | Vegas |
| Colts | 7-0 | 21 | 1 | 2 | 2 | 2 |
| Eagles | 5-2 | 19 | 2 | 8 | 9 | 6 |
| Saints | 7-0 | 18 | 3 | 1 | 1 | 1 |
| Cowboys | 5-2 | 13 | 4 | 9 | 8 | 8 |
| Vikings | 7-1 | 12 | 5 | 3 | 3 | 5 |
| Steelers | 5-2 | 8 | 6 | 7 | 7 | 4 |
| Broncos | 6-1 | 7 | 7 | 4 | 4 | 10 |
| Cardinals | 4-3 | 7 | 8 | 13 | 13 | 11 |
| Falcons | 4-3 | 7 | 9 | 11 | 11 | 16 |
| Patriots | 5-2 | 6 | 10 | 6 | 5 | 3 |
| Ravens | 4-3 | 5 | 11 | 10 | 10 | 9 |
| Packers | 4-3 | 5 | 12 | 16 | 12 | 14 |
| Giants | 5-3 | 4 | 13 | 14 | 15 | 7 |
| Chargers | 4-3 | 4 | 14 | 15 | 16 | 12 |
| Bengals | 5-2 | 3 | 15 | 6 | 6 | 13 |
Next, for comparisons of these rankings, I estimated correlations between each pair:
| Rankings | Correlation |
| PtDif-SI | 0.64 |
| PtDif-ESPN | 0.66 |
| PtDif-Vegas | 0.71 |
| SI-ESPN | 0.96 |
| SI-Vegas | 0.68 |
| ESPN-Vegas | 0.67 |
The SI and ESPN rankings track each other nearly perfectly. The Point Differential ranking more closely correlates to Vegas odds but only slightly more than the SI or ESPN rankings. The Vegas market for predicting the Super Bowl winner seems to place more weight on "reputation" from recent season success such as New England which jumps up to third in Vegas and Pittsburgh which jumps to fourth.
Labels: NFL; statistics; betting
Thursday, November 05, 2009
Tour Operators and Mega-events
Well, here's a change of pace. Today comes news from the European Tour Operators Association, who claim that the London Olympics will have a measurable negative impact on their business. From BBC News:
The ETOA report, which said benefits of 2012 Games were "wholly illusory", looked at tourism figures for the past six Olympics, including Athens in 2004 and Sydney in 2000.How about that!
Whilst some of the events saw a peak in demand during the games, all saw a major disruption to their normal tourism market and none showed any obvious signs of tourism growth.
Beijing, the last city to host the Olympics, showed international visitor arrivals plummeted by 30% in the month before the games, compared with the previous year.
In the months after the games, the tourism slump continued with international arrivals down by more than 20%.
Beijing fared considerably worse than the rest of China in 2008, which was not a strong year in general for tourism in the Asia-Pacific region.
Following the Sydney 2000 Olympics, the city's tourism lost "significant ground" to other Australian and New Zealand cities, it added.
"We have yet to have a games where tourism has not been disrupted, and disrupted in a way that causes real harm," said ETOA executive director Tom Jenkins.
"Even in the case of Athens, where they carefully restricted new capacity, there were considerable losses before and after the games both in the capital and throughout Greece," he added.
Labels: economic impact, mega-events, Olympics
Wednesday, November 04, 2009
New Stadiums as Black Holes
A key feature of the amenity-laden modern stadium is the incorporation of numerous opportunities for fans to spend on food, drink, and apparel. As stadium design has morphed around this concept, the intended but little noticed consequence is that a chunk of the indirect spending associated with a sporting event disappears, and is captured by the team itself.
This interesting article in the NY Times focuses on the disappointing revenues of merchants around the new Yankee Stadium. Diversion of expenditure from restaurants and other vendors to operations inside the stadium appears quite evident:
On Monday, about an hour before the start of the Yankees-Phillies game, about a dozen customers were eating and drinking in the Hard Rock Cafe built into the southeast corner of Yankee Stadium. Less than a block south, the steel security gates were pulled down at Stan’s Sports Bar and Stan’s Sports World, longstanding businesses that catered year-round to the crowds drawn to the old stadium.The story has many other interesting anecdotes. It suggests to me that the models used to estimate indirect expenditures (such as that of the Economic Development Corporation) should be revisited, in light of the strategies employed by teams to capture these revenue streams.
The city’s Economic Development Corporation estimated that each home playoff game produced $15.5 million in economic activity, including $6.7 million in spending on hotel rooms and taxi rides and in restaurants, bars and stores.
But on River Avenue in the Bronx, merchants said that very little of that money was trickling their way. Mr. Alawy, who said he had pulled about $30,000 out of savings to cover his costs this year, wistfully recalled the bounty that his family reaped during the 1996 World Series, when the Yankees played the Atlanta Braves.
While working in his father’s souvenir shop up the block, he recalled, there was no time to fold the T-shirts before selling them. Customers were lined up three and four deep at the counter yelling out orders and tossing wads of bills.
Labels: economic impact, new stadium
