Dienstag, 13. September 2011

How much is a collegiate athlete worth?

A new paper, titled The Price of Poverty in Big Time College Sport, presented by an advocacy group representing over 14000 current and former NCAA collegiate athletes, is the latest attempt to estimate how much an average athlete is worth. In the paper sports management professor Ellen J. Staurowsky estimated that the average Football Bowl Subdivision (FBS) player is worth $121,000 per year. The average basketball player at that level would be worth $265,000 per year.

I have not yet read the full report, but my guess is that the authors have basically divided revenues generated in NCAAF and NCAAB by the number of participating athletes. Their argument is that athletes are much more valuable to colleges than the cost of tuition, student fees and room and board. They estimate the shortage of sports scholarships to be in the range of $952 to $6,127, depending on the college, not covering the true cost of attending college and participating in sports programs. They argue that  students on full athletic scholarships actually live "below the poverty line at around 85 percent of the schools". This leads them to call   for action from Congress to look into the matter.

As stated on CBS online,  the NCAA said it had not yet reviewed the report, but that  "they were eager to provide grants covering the full cost of attending college".  However the NCAA will certainly oppose any plans to allow monetary compensation and end the "amateur status" of collegiate athletics.

Quick calculations based on my own data give me a number of about $174,000 on average by year between 2006 and 2006 for the "value" of a FBS football player. This number is rather close to the number presented by the report. I am sure NCAA officials will dispute and question all estimations of athlete value. The best method to get the actual value would be to open up the market and let athletes look for outside compensation. If the colleges do not want to share their revenues, f.e. substantial TV revenues, with players, just let the market do that job.

Donnerstag, 8. September 2011

Kickoff day - big time sport and big business.

Today the world's most profitable league, the National Football League will enter a new season after an extended lockout period. The recently published Forbes list states that the most valuable franchises in professional football, listing the Dallas Cowboys franchise on top at a value of $1.85 billion. The Jacksonville Jaguars franchise, at the bottom of the list of 32 franchises, is worth "only" $ 0.725. However, the Jaguars franchise is always said to be in the wrong area and always mentioned as a possible candidate for relocation to the currently vacated Los Angeles are.

On average the value of the top 4 franchises rose by about 4 percent, mostly due to the new collective bargaining agreement. The changes in the CBA now shift a larger share operating incomes (currently an average of  $30.6 million per team) to the team owners.

While the Dallars Cowboys will not be listed on the list of top-25 companies in the US, the NFL as a whole will certainly be a significant player. Summing up all individual franchises in terms of value we get an overall value of   $33.28 billion. Not counting the value of the NFL as a brand itself. The operating income of all 32 teams is just below $1 billion. 6 of the most valuable sports franchises are NFL teams (Forbes). Only the English Premier League has more than one franchise in the top ten. The city of New York even has two NFL teams in the top 10.      

Today it is kickoff day in the most profitable sports league worldwide and the new CBA will make sure the franchise owners will have another great business year. The new ESPN $1.9 billion per year deal with the NFL for the rights to Monday Night Football will certainly do it's part to ensure that.

My pick for today: New Orleans Saints.

Donnerstag, 1. September 2011

Track and Field in Daegu - fair or unfair?

One of the most important principles of sports is the one of a fair competition. Performance enhancing drugs have always been a major obstacle and officials in many sports are struggling to keep competitions clean.

Now there are two interesting stories taking place at the IAAF track and field championships in Daegu, South Korea. One is the story of Oscar Pistorius who has no lower legs and uses two technical aids called blades to run. By allowing Pistorius to compete the IAAF made a groundbreaking ruling. What if his blades give Pistorius an unfair advantage over his competitors? I always guessed that this would not be a problem as long as he was not winning or close to it. Well, he was not but now he will compete in the 400m relay final after qualifying in the semis with a new South African record (2 minutes, 59.21 seconds). We will see what happens.

The second story is the one of Caster Semenya, who won the women 800m race at the IAAF championships in Berlin 2009. Afterwards a discussion started and she had to verify her gender. Several sources indicated that Semenya genetically was partly female and partly male. This discussion started after she dominated the final 200 meters of the race in Berlin, won the 800m at a unusually young age and improved her personal best significantly over the course of one year. Even the use of doping was suspected and an investigation was started. If her genetic features were the reason for her win is still debated. Now she will compete in the 800m semi final in Daegu.

Both cases are  arguably  examples for an unfair competition. It will be very interesting to see what happens in the aftermath of the two races. It is argued that sports audiences want a fair contest and competitive balance. And it is the key principle of any sports contest. But maybe stories like Pistorius' or Semenya's are what attracts fans and maximizes rents.