Speaking of the ages:
I wish all my readers a happy and successful new year 2012! See you back here next year!
We are looking forward to a very exciting sports year! Olympics, European Football Championships, NFL playoffs....
A good article to check out of 2011.
Freitag, 30. Dezember 2011
Donnerstag, 29. Dezember 2011
For the ages?
A few days ago a record in the NFL was broken. This is not that rare, as there are so many records out there that one loses track of them. But what happened on Monday night was rather special: Drew Brees of the New Orleans Saints broke the single season passing yardage record previously held by Dan Marino (Miami Dolphins, retired). The record now stands at 5087, 3 yards more than the mark Marino set in 1984.
Records. While they are just a statistical byproduct in European sports, they are big in US sports. They are an important element in all major US sports. There are team records, career records, season records, individual game records, and individual play records. Every other game some record is broken. In the case of Drew Brees' new record it took some time. During this time the game of professional Football certainly has changed. the tactics have changed, the level of athleticism has changed, the business side of the game has changed and even the rules have changed.
All the aforementioned changed caused some sports writers to question the new record and some even suggested to put an asterisk next to Brees' name in the record books. They argued that Marino set his record at a time when defensive players were allowed to do much more to defend receivers and dangerous hits were still a legal part of the game. Well, this might be true. But they neglect all the other elements of the game that have change since then. Defenders got faster on average (just compare the videos), more athletic and NFL Defenses certainly look faster and more athletic than in the mid 80s. It is often argued that the NFL has become a passing league. While that might be true, it still took more than 25 years to break the single season passing record. And it was broken at a point of time when defenses knew that they had to focus on defending the passing game. At a time when Linebackers are able to run as fast as Cornerbacks 20 years ago. Putting an asterisk next to know cheaters in ML Baseball is fair, but Drew Brees deserves to stand on top on the list of the most prolific passers in a single season.
Statistics are important. Especially for sports economists. They measure how individuals or teams perform. Records are one way to evaluate these performances. Still, they have to be interpreted with caution. So many factors can influence how performances can be rated. Often the best performances are not the record setting ones. If one wants to evaluate a QBs performance one has to account for the quality of the opposing teams, the ability of his team mates, the strategy of the coaches, the weather conditions and countless other factors. Career records are always difficult to evaluate, as they are often results of overly long careers (ask Brett Farve how his 71+k yards came by).
Anyway, Drew Brees definitely set a fantastic record and he should go to the Hall of Fame once he decides to call it a career. Congratulations! Let's see how long the record he will complete next weekend will hold...
Records. While they are just a statistical byproduct in European sports, they are big in US sports. They are an important element in all major US sports. There are team records, career records, season records, individual game records, and individual play records. Every other game some record is broken. In the case of Drew Brees' new record it took some time. During this time the game of professional Football certainly has changed. the tactics have changed, the level of athleticism has changed, the business side of the game has changed and even the rules have changed.
All the aforementioned changed caused some sports writers to question the new record and some even suggested to put an asterisk next to Brees' name in the record books. They argued that Marino set his record at a time when defensive players were allowed to do much more to defend receivers and dangerous hits were still a legal part of the game. Well, this might be true. But they neglect all the other elements of the game that have change since then. Defenders got faster on average (just compare the videos), more athletic and NFL Defenses certainly look faster and more athletic than in the mid 80s. It is often argued that the NFL has become a passing league. While that might be true, it still took more than 25 years to break the single season passing record. And it was broken at a point of time when defenses knew that they had to focus on defending the passing game. At a time when Linebackers are able to run as fast as Cornerbacks 20 years ago. Putting an asterisk next to know cheaters in ML Baseball is fair, but Drew Brees deserves to stand on top on the list of the most prolific passers in a single season.
Statistics are important. Especially for sports economists. They measure how individuals or teams perform. Records are one way to evaluate these performances. Still, they have to be interpreted with caution. So many factors can influence how performances can be rated. Often the best performances are not the record setting ones. If one wants to evaluate a QBs performance one has to account for the quality of the opposing teams, the ability of his team mates, the strategy of the coaches, the weather conditions and countless other factors. Career records are always difficult to evaluate, as they are often results of overly long careers (ask Brett Farve how his 71+k yards came by).
Anyway, Drew Brees definitely set a fantastic record and he should go to the Hall of Fame once he decides to call it a career. Congratulations! Let's see how long the record he will complete next weekend will hold...
Donnerstag, 22. Dezember 2011
Merry Christmas
I wish all of my followers merry Christmas and (even if the system is flawed) a good bowl season!
By the way: Sports economics has made it to the NFL.com frontpage with this article. Although it is good to see the economics of sports in the media spotlight, I have to say the argument Dubner makes is pretty weak. The final conclusion on the effect of coach changes is far from being made. There is a lot of endogeneity involved in this problem. But I am working on it...
Merry christmas!
By the way: Sports economics has made it to the NFL.com frontpage with this article. Although it is good to see the economics of sports in the media spotlight, I have to say the argument Dubner makes is pretty weak. The final conclusion on the effect of coach changes is far from being made. There is a lot of endogeneity involved in this problem. But I am working on it...
Merry christmas!
Dienstag, 13. Dezember 2011
Biased coaches?(!)
A recent posting in the Freakonomics blog is dealing with the results of a new working paper analyzing voting behavior of NCAA football coaches in the USA Today coaches poll.
In their work Matthew Kotchen and Matthew Potoski find that "coaches distort their rankings to reflect their own team’s reputation and financial interests.". And, as Stephen Dubner notes, it is absolutely not surprising. It is amazing that the BCS system and the NCAA is still relying on this ridiculously biased form of finding a ranking of collegiate teams. Of course coaches will follow their interests in the poll because their salary and job depends on it. They have clear incentives to do so. The image of the coach who should lead by example and be a role model to students is becoming harder and harder to sell to the public these days.
Dubner writes:
In their work Matthew Kotchen and Matthew Potoski find that "coaches distort their rankings to reflect their own team’s reputation and financial interests.". And, as Stephen Dubner notes, it is absolutely not surprising. It is amazing that the BCS system and the NCAA is still relying on this ridiculously biased form of finding a ranking of collegiate teams. Of course coaches will follow their interests in the poll because their salary and job depends on it. They have clear incentives to do so. The image of the coach who should lead by example and be a role model to students is becoming harder and harder to sell to the public these days.
Dubner writes:
[...]the more one learns about incentives and bias (and self-delusion), the more one is unsurprised by this sort of behavior.Yes, the BCS and FBS football is continuing to delude itself as it increasingly fails to delude the public. If a student athlete sells memorabilia there is a huge outcry. Mostly from the media and NCAA officials, but also from coaches. Where is the outcry now? Why are there no sanctions?
Dienstag, 6. Dezember 2011
Sorting the pile
Now we have it. The BCS bowls and their matchups (and all non-BCS bowls) are set. And once again it is painful to watch the system. Here are the BCS games:
BCS Title Game: No. 1 LSU (13-0) vs. No. 2 Alabama (11-1)
Orange Bowl: No. 15 Clemson (10-3) vs. No. 23 West Virginia (9-3)
Sugar Bowl: No. 13 Michigan (10-2) vs. No. 11 Virginia Tech (11-2)
Fiesta Bowl: No. 3 Oklahoma State (11-1) vs. No. 4 Stanford (11-1)
Rose Bowl: No. 5 Oregon (11-2) vs. No. 10 Wisconsin (11-2)
The champion will either be LSU or Alabama. The almighty Southeastern Conference (SEC) will get even more powerful and revenues will flow to the already rich universities. Both colleges are ranked 1 (LSU) and 2 (Alabama) and this will automatically select them into the BCS championship game. So the BCS champion is from the SEC, no matter who wins the game. Oklahoma State has an 11-1 record as well but they were selected into the Fiesta Bowl. Well, they are not from the SEC....
Now one can understand why Texas A&M and Missouri will join the SEC in 2012. The name SOUTHEASTERN Conference is a bit of a stretch considering Texas and Missouri I would say.
One can like it or not, but at least the BCS is somewhat consistent concerning the championship game selection. But when we take a look at the other bowl the system really shows how broken it is. Let us take a look at Monday's final BCS ranking:
1 LSU
2 Alabama
3 Oklahoma State
4 Stanford
5 Oregon
6 Arkansas
7 Boise State
8 Kansas State
9 South Carolina
10 Wisconsin
11 Virginia Tech
12 Baylor
13 Michigan
14 Oklahoma
15 Clemson
16 Georgia
When we look at number 7 we see that Boise State is not playing in a BCS bowl. Boise State has a 11-1 record (note same as Alabama or Stanford who are both in a BCS bowl) and is selected into a small non-BCS bowl. West Virginia is not even ranked among the top 16 but is playing in the Orange bowl. Although it lost 3 times it is selected over Kansas State, Michigan State and South Carolina who are all ranked in the top ten. But that is the automatic qualification system. But why have a ranking then? To mock a somewhat fair system? The BCS has lost a lot of support among journalists, coaches, politicians and, most important, football fans. Those who give their time and passion to cheer their teams, those who love the game of football, should have seen by now that the BCS is all about one thing: money.
I think CBS's Tony Barnhart nails it when he writes:
BCS Title Game: No. 1 LSU (13-0) vs. No. 2 Alabama (11-1)
Orange Bowl: No. 15 Clemson (10-3) vs. No. 23 West Virginia (9-3)
Sugar Bowl: No. 13 Michigan (10-2) vs. No. 11 Virginia Tech (11-2)
Fiesta Bowl: No. 3 Oklahoma State (11-1) vs. No. 4 Stanford (11-1)
Rose Bowl: No. 5 Oregon (11-2) vs. No. 10 Wisconsin (11-2)
The champion will either be LSU or Alabama. The almighty Southeastern Conference (SEC) will get even more powerful and revenues will flow to the already rich universities. Both colleges are ranked 1 (LSU) and 2 (Alabama) and this will automatically select them into the BCS championship game. So the BCS champion is from the SEC, no matter who wins the game. Oklahoma State has an 11-1 record as well but they were selected into the Fiesta Bowl. Well, they are not from the SEC....
Now one can understand why Texas A&M and Missouri will join the SEC in 2012. The name SOUTHEASTERN Conference is a bit of a stretch considering Texas and Missouri I would say.
One can like it or not, but at least the BCS is somewhat consistent concerning the championship game selection. But when we take a look at the other bowl the system really shows how broken it is. Let us take a look at Monday's final BCS ranking:
1 LSU
2 Alabama
3 Oklahoma State
4 Stanford
5 Oregon
6 Arkansas
7 Boise State
8 Kansas State
9 South Carolina
10 Wisconsin
11 Virginia Tech
12 Baylor
13 Michigan
14 Oklahoma
15 Clemson
16 Georgia
When we look at number 7 we see that Boise State is not playing in a BCS bowl. Boise State has a 11-1 record (note same as Alabama or Stanford who are both in a BCS bowl) and is selected into a small non-BCS bowl. West Virginia is not even ranked among the top 16 but is playing in the Orange bowl. Although it lost 3 times it is selected over Kansas State, Michigan State and South Carolina who are all ranked in the top ten. But that is the automatic qualification system. But why have a ranking then? To mock a somewhat fair system? The BCS has lost a lot of support among journalists, coaches, politicians and, most important, football fans. Those who give their time and passion to cheer their teams, those who love the game of football, should have seen by now that the BCS is all about one thing: money.
I think CBS's Tony Barnhart nails it when he writes:
"Still, it was surprising the Sugar would take the Hokies over No. 7 Boise State (11-1) and No. 8 Kansas State (10-2). Actually, it wasn't surprising. It is a reminder that after the BCS Championship Game, it's really not about the most deserving teams. It's about putting fannies in the seats and drawing eyeballs to the TV in a down economy. That's simply the way it is."Amateur sports, right?
Donnerstag, 1. Dezember 2011
As the rich square off they get even richer.
Now that the College Football season is nearing bowl season and the BCS is once again showing how ridiculously it is violating the free market principle (more on that when the bowls are on), it is time to take a look at the salaries of the two coaches meeting in the BCS championship. I know that it is not certain, but believe me, those BCS officials will find a way to orchestrate the most profitable game: Alabama vs. LSU.
So let's talk about the coaches. By now it is well known that Nick Saban, headcoach of Alabama Football, is earning a annual basic salary of about $4.15 million. his counterpart at LSU, Les Miles, "only" earns $3.751 million. But that could change soon, as a contract clause in Miles' contract would see his basic salary increase to the highest paid headcoaches' salary (Saban's) $ +1,000. With these salary number (not including bonuses and non-financial compensation) they would be in the upper half of a ranking of all NFL coaches. In terms of salary over workload they would top the list (compare games, season length and regulation of training).
Are they worth it? As we assume that these salaries reflect an equilibrium of demand and supply we could say yeas. Even more so if we acknowledge that the BCS championship game is closing the gap on the Super Bowl as the biggest sports event in the US.
But is it really justifiable to spend that amount of money for coaches of "amateur" sport teams? Is this still on the grounds of idle NCAA regulations? Is it really the objective of Universities to put that much financial effort into competing in sports? Is it good for US education? Can a coach earn that much with all his players earning nothing at all? Can we really call it a free market as BCS conferences share their revenues like a classical cartel?
Collegiate sports certainly can be entertaining and beneficiary for students. And it can be amateur sports as it is meant to be. But if revenues, TV audiences and coaches salaries resemble those of professional sports leagues please stop pretending it is still amateur sports.
So let's talk about the coaches. By now it is well known that Nick Saban, headcoach of Alabama Football, is earning a annual basic salary of about $4.15 million. his counterpart at LSU, Les Miles, "only" earns $3.751 million. But that could change soon, as a contract clause in Miles' contract would see his basic salary increase to the highest paid headcoaches' salary (Saban's) $ +1,000. With these salary number (not including bonuses and non-financial compensation) they would be in the upper half of a ranking of all NFL coaches. In terms of salary over workload they would top the list (compare games, season length and regulation of training).
Are they worth it? As we assume that these salaries reflect an equilibrium of demand and supply we could say yeas. Even more so if we acknowledge that the BCS championship game is closing the gap on the Super Bowl as the biggest sports event in the US.
But is it really justifiable to spend that amount of money for coaches of "amateur" sport teams? Is this still on the grounds of idle NCAA regulations? Is it really the objective of Universities to put that much financial effort into competing in sports? Is it good for US education? Can a coach earn that much with all his players earning nothing at all? Can we really call it a free market as BCS conferences share their revenues like a classical cartel?
Collegiate sports certainly can be entertaining and beneficiary for students. And it can be amateur sports as it is meant to be. But if revenues, TV audiences and coaches salaries resemble those of professional sports leagues please stop pretending it is still amateur sports.
Mittwoch, 30. November 2011
A new season under the Christmas tree!
On 25th Dec. the shortened version of the 2011/12 NBA season will finally tip off. While outlooks were already very grim owners and players finally made a new deal. And the winners are: the owners! They managed to change their share of Basketball-Related Income from 43 percent in the previous labor deal to a 49 percent to 51 percent band in the new deal. This is a significant shift in power which earns the owners about 1 billion dollars. And this sum could increase up to 2 billion dollars if the deal holds the entire 10 years.
While the new Collective Bargaining Agreement (CBA) includes several changes on salary caps, free agency and player contracts, the new balance of power is the central feature of this deal. The owner clearly won the stare down and the players probably thought that they would lose more from a lost season. And that would probably be true. Not so much in primary indicators like salaries or sponsorship contract, but with all the intangible losses that would have come along with a lost season. All (aging) superstars like Lebron James, Kobe Bryant, Kevin Garnett or Tim Duncan would have lost stats, a chance to win a championship and a ton of prestige. One of the central figures in the talks, Derek Fisher (president of the players union National Basketball Players Association (NBPA)), is well beyond his prime and a canceled season could have been the end of his career.
So the players had the feeling that a continued lockout would cost them the most. The owners might be happy now, but I wonder what the longtime effects of the lockout will be. My perception is that the owners have not exactly improved their image and there is certainly a damaged good called NBA right now. Maybe the lockout is forgotten in 2 or 3 years, but in my opinion it will have longer lasting effects. A lot of small market teams could be in trouble soon.
So maybe the owner have won for now, but this win could come back to haunt them...
While the new Collective Bargaining Agreement (CBA) includes several changes on salary caps, free agency and player contracts, the new balance of power is the central feature of this deal. The owner clearly won the stare down and the players probably thought that they would lose more from a lost season. And that would probably be true. Not so much in primary indicators like salaries or sponsorship contract, but with all the intangible losses that would have come along with a lost season. All (aging) superstars like Lebron James, Kobe Bryant, Kevin Garnett or Tim Duncan would have lost stats, a chance to win a championship and a ton of prestige. One of the central figures in the talks, Derek Fisher (president of the players union National Basketball Players Association (NBPA)), is well beyond his prime and a canceled season could have been the end of his career.
So the players had the feeling that a continued lockout would cost them the most. The owners might be happy now, but I wonder what the longtime effects of the lockout will be. My perception is that the owners have not exactly improved their image and there is certainly a damaged good called NBA right now. Maybe the lockout is forgotten in 2 or 3 years, but in my opinion it will have longer lasting effects. A lot of small market teams could be in trouble soon.
So maybe the owner have won for now, but this win could come back to haunt them...
Donnerstag, 17. November 2011
Any improvement?
This week some reports on a possible BCS reform came out. Reportedly, some BCS decision makers along with BCS executive director Bill Hancock are leaning towards an expansion of the current series of BCS bowls by one game. This series of 5 bowls should then serve as a "small playoff" for a single BCS championship game.
The current realignment in top-tier NCAA football (FBS) formed some even more powerful conferences. The SEC and the PAC-12 (formerly known as the PAC-10) are more powerful than ever, while the BIG EAST's status is still undecided. The current discussions on the BCS reform also includes the possibility of allowing more than just two participants by conference in BCS bowls. So where is the reform? We could now get even more SEC or PAC-12 teams in the run for the championship and large revenues. So the rich are getting richer. Forming a pseudo-playoff, like the one currently discussed, would probably stop ongoing the antitrust discussion for a moment. But installing a true playoff system and sharing revenues with potential underdogs winning the tournament is something completely different. Sounds like a cover-up move which actually worsens the status quo.
Asked for a playoff system similar to NCAA basketball Bill Hancock is quoted saying: "I do not hear a groundswell of support". Well, what a surprise...
The current realignment in top-tier NCAA football (FBS) formed some even more powerful conferences. The SEC and the PAC-12 (formerly known as the PAC-10) are more powerful than ever, while the BIG EAST's status is still undecided. The current discussions on the BCS reform also includes the possibility of allowing more than just two participants by conference in BCS bowls. So where is the reform? We could now get even more SEC or PAC-12 teams in the run for the championship and large revenues. So the rich are getting richer. Forming a pseudo-playoff, like the one currently discussed, would probably stop ongoing the antitrust discussion for a moment. But installing a true playoff system and sharing revenues with potential underdogs winning the tournament is something completely different. Sounds like a cover-up move which actually worsens the status quo.
Asked for a playoff system similar to NCAA basketball Bill Hancock is quoted saying: "I do not hear a groundswell of support". Well, what a surprise...
Mittwoch, 16. November 2011
Will they play?
As of today it looks as if the "current" NBA season will never tip off. Players have recently turned down the 50:50 offer from NBA owners. This is no surprise, as they were favored in the previous labor deal. Owners even pressed for a 53-47 deal.
Now several sources (NBA.com is among them) report that all games until Dec. 15. are canceled. The NBA players union (NBPA) was dissolved and several players filed two antitrust lawsuits against the NBA. One suit was filed in California, with Carmelo Anthony and Kevin Durant among five plaintiffs. The second one was filed in Minnesota, naming four plaintiffs. They are seeking summary judgment and treble damages totaling three times the players' lost wages due to the lockout. While this might not be the end of the current mess, the damage could already amount up to an estimated $2.4 billion.
The outlook is already very bleak and my feeling is that we will not see a 2011/12 NBA season. Moreover, the rulings on the suits will have major implications on the future of professional basketball in the US. All players would lose a whole year of showing and improving their skills on the court. Aging superstars will suffer most from this. Rookies will be lost in a power-vacuum. Owners will miss their gate revenues and sponsorship deals. The value of the NBA brand will suffer considerably. Maybe beyond repair...
In the end the crucial question will still be: Who will lose more?
Now several sources (NBA.com is among them) report that all games until Dec. 15. are canceled. The NBA players union (NBPA) was dissolved and several players filed two antitrust lawsuits against the NBA. One suit was filed in California, with Carmelo Anthony and Kevin Durant among five plaintiffs. The second one was filed in Minnesota, naming four plaintiffs. They are seeking summary judgment and treble damages totaling three times the players' lost wages due to the lockout. While this might not be the end of the current mess, the damage could already amount up to an estimated $2.4 billion.
The outlook is already very bleak and my feeling is that we will not see a 2011/12 NBA season. Moreover, the rulings on the suits will have major implications on the future of professional basketball in the US. All players would lose a whole year of showing and improving their skills on the court. Aging superstars will suffer most from this. Rookies will be lost in a power-vacuum. Owners will miss their gate revenues and sponsorship deals. The value of the NBA brand will suffer considerably. Maybe beyond repair...
In the end the crucial question will still be: Who will lose more?
Mittwoch, 9. November 2011
From Paul to Saul
The current lockout situation in the NBA is heating up. While the regular season should already be in full gear the NBA is still amidst a deadlock between players and owners. Recently NBA commissioner David Stern made an offer of a 50-50 split of basketball-related income between teams and players. After a Tuesday meeting the president of the NBA players association (NBPA) Derek Fisher turned the offer down. So we might be in for a long, long time without NBA basketball...
One person and his (changed) role in the current talks is particularly interesting: Michael Jordan, owner of the Charlotte Bobcats. He once was a fierce competitor in the last NBA labor dispute in 1998/99, he has completely changed and is now in favor of a solution handing a larger share to team owners. Now that Jordan is a team owner himself, he made a u-turn and advocates a 53%-47% split (or even better) in favor of owners. Jordan has turned into a hardline owner and is far from being the same person who once advised Washington Wizards owner Abe Pollin to sell his team if he was not making profits. NBPA executive director Billy Hunter gave him the same advice now.
Jordan's stance on NBA labor talks tells a lot about his feeling towards the game of basketball. He is still applauded as the best player in NBA history. He was an icon for millions of kids and basketball fans all over the world. But now he has turned into an owner who has only one objective: to maximize his profits. Well, without his players Jordan won't make any profits. Even a third comeback would not attract much of an audience now that he is well over 45...
One person and his (changed) role in the current talks is particularly interesting: Michael Jordan, owner of the Charlotte Bobcats. He once was a fierce competitor in the last NBA labor dispute in 1998/99, he has completely changed and is now in favor of a solution handing a larger share to team owners. Now that Jordan is a team owner himself, he made a u-turn and advocates a 53%-47% split (or even better) in favor of owners. Jordan has turned into a hardline owner and is far from being the same person who once advised Washington Wizards owner Abe Pollin to sell his team if he was not making profits. NBPA executive director Billy Hunter gave him the same advice now.
Jordan's stance on NBA labor talks tells a lot about his feeling towards the game of basketball. He is still applauded as the best player in NBA history. He was an icon for millions of kids and basketball fans all over the world. But now he has turned into an owner who has only one objective: to maximize his profits. Well, without his players Jordan won't make any profits. Even a third comeback would not attract much of an audience now that he is well over 45...
Mittwoch, 2. November 2011
Some quick shots...
- In the latest realignment aftermath Illinois congressman Bobby Rush is quoted saying: "I think they're just one of the most vicious, most ruthless organizations ever created by mankind," He also said: "I think you would compare the NCAA to Al Capone and to the Mafia.". Yet another politician acknowledging the fact that something is wrong with America's collegiate sports system.
- Boise State was now officially invited to join the BIG EAST college Football conference. So the biggest "BCS Buster" in recent years is now open to enter a BCS conference ( automatic-qualifying conference) and some BCS officials will probably exhale in relieve. Boise State comes from the Mountain West Conference (MW), a non-automatic-qualifying conference, and was one of the most successful programs in NCAA football in recent years. As we know from Economics a cartel can become more powerful the more members join. In order to keep the BCS, and maybe the BIG EAST, alive the Boise States of FBS have to be in.
- Today the NBA should have the opening night of the 2011/12 season. It should have, but the strike is still on and labor talks are still intense and far from a solution. Now is the time when it starts hurting, as profits are left on the street. Which side will give in first?
- Can you buy success in sports? This is a good and important question. The latest World Series featured two teams ranked 11th (St. Louis Cardinals) and 13th (Texas Rangers). The heavy-spending New York Yankees fell short this year, although they have almost the same payroll as the Texas Rangers and Cardinals together. Let's see how Bayern Munich finishes in the German Bundesliga this year...
- Yes, money and success in sports are not always (closely) related. Chris Johnson, NFL Running Back for the Tennessee Titans, was awarded a $53.5 million (including $30 million guaranteed) contract extension with the Titans after holding out for an extended period and creating a big media drama. Now, 8 games into the NFL season, Johnson continues to struggle big time and he has to share carries with his backup Javon Ringer. Ringer, who is obviously playing much better right now, has a contract of only around 5 percent of Johnson's. The future will tell if Johnson is worth the money. Right now this investment is not paying the right dividends.
Freitag, 21. Oktober 2011
A hearing coming?
As AP reports, Rep. John Conyers (Michigan), the top Democrat on the House Judiciary Committee is urging the panel to hold hearings on antitrust in college sports. The hearing should also include other issues, such as the ongoing realignment chaos (sorry I could not avoid that word) in NCAA football.
Although this is not the first time, and I am afraid not the last time, politics have brought up the issue of collegiate sports, maybe now is the time we see some results. From a pure economic standpoint it is hard to find any arguments why the NCAA top-tier football system should comply with the Sherman Act. The latest realignment shows that amateurism is nowhere to be found in this system, as colleges are chasing money and move all across the country to change conferences.
John Conyers is quoted saying "It has become increasingly clear to me that the combination of issues and challenges facing intercollegiate sports have reached a tipping point calling for congressional attention [...]". Sounds true to me. There are simply too many issues to look away any longer: taxation of athletic departments, antitrust violations, pseudo amateurism on the back of uncompensated athletes...
NCAA Division I FBS football has turned into a professional sports league which is protected by the "amateur status". It is time to rethink it and (maybe) change as well as improve it.
Although this is not the first time, and I am afraid not the last time, politics have brought up the issue of collegiate sports, maybe now is the time we see some results. From a pure economic standpoint it is hard to find any arguments why the NCAA top-tier football system should comply with the Sherman Act. The latest realignment shows that amateurism is nowhere to be found in this system, as colleges are chasing money and move all across the country to change conferences.
John Conyers is quoted saying "It has become increasingly clear to me that the combination of issues and challenges facing intercollegiate sports have reached a tipping point calling for congressional attention [...]". Sounds true to me. There are simply too many issues to look away any longer: taxation of athletic departments, antitrust violations, pseudo amateurism on the back of uncompensated athletes...
NCAA Division I FBS football has turned into a professional sports league which is protected by the "amateur status". It is time to rethink it and (maybe) change as well as improve it.
Dienstag, 11. Oktober 2011
Canceled!
Now it is official. David Stern, Commissioner of the National Basketball Association has canceled the first two weeks of the upcoming (or probably not) NBA season. This is the first work-stoppage since the 1998-1999 season. Media sources indicate that the two sides, players and owners, are still far apart in terms of signing a new labor contract.
The recent NFL lockout ended just in time to save the current season. The NBA has not been able to finalize a deal and this will result in losses for players and owners. My bet is that the one side who will suffer the most will give in pretty soon. In the case of the NBA, I think this will be the players. Unlike in the NFL the cost of locking out players are probably lower in the NBA. We will see.
The recent NFL lockout ended just in time to save the current season. The NBA has not been able to finalize a deal and this will result in losses for players and owners. My bet is that the one side who will suffer the most will give in pretty soon. In the case of the NBA, I think this will be the players. Unlike in the NFL the cost of locking out players are probably lower in the NBA. We will see.
Montag, 10. Oktober 2011
Tax'em!
In a recent provocative article in Chicago a sin tax for collegiate athletics was proposed. Although the article was quite controversial, it may have been spot on. However, I do not think a sin tax on consuming collegiate sports would be that good an idea. Consumers cannot be blamed, as college sports in the US have a long tradition and consumer demand has attracted TV networks. Not the other way round. I would tax the NCAA directly, by imposing taxes at least on their cash-cows Basketball and Football.
Impose taxes? Yes, because NCAA athletics are exempted from federal income tax by section 501(c)(3) of the federal tax code. So they can generate their huge revenues (mostly from enormous TV contracts) and hand a substantial share right over to the basketball and football coaches. I would tax colleges on high contracts of coaches, on TV revenues and on all revenues they generate by not granting players right to market themselves. If NFL teams have to pay taxes it is simply not justifiable to let colleges get away. They are every bit as professional about their sporting operations as any professional league in the world. There is no trace of amateurism left in top-tier collegiate Football and Basketball these days.
Colleges often argue in favor of the current system by mentioning scholarships as the reward for players instead of monetary compensation according to the true value of athletes. Here is a recent (following Auburns loss to Arkansas on Saturday) cynical quote by Gene Chizik, head coach of Auburn, who had a total salary of over $ 2 million in 2009:
"Players on game day have to make plays," [...] "They're on scholarship, so they need to make plays."
So that is the ugly truth how coaches who earn enormous wages think about their "amateur" players. If players do not perform on the field why do they might soon be gone. No more "education for sports". And it is true: Any athlete's scholarship can be taken away by colleges. So they get a scholarship only if they bring the appropriate performance on gamedays. Sounds like the perfect description of a professional sports environment with 0 amateurism to me. Only that players have no players' union, no market wage, no job protection...
Just a word: Can the current realignment mess get any worse? More on that soon.
Impose taxes? Yes, because NCAA athletics are exempted from federal income tax by section 501(c)(3) of the federal tax code. So they can generate their huge revenues (mostly from enormous TV contracts) and hand a substantial share right over to the basketball and football coaches. I would tax colleges on high contracts of coaches, on TV revenues and on all revenues they generate by not granting players right to market themselves. If NFL teams have to pay taxes it is simply not justifiable to let colleges get away. They are every bit as professional about their sporting operations as any professional league in the world. There is no trace of amateurism left in top-tier collegiate Football and Basketball these days.
Colleges often argue in favor of the current system by mentioning scholarships as the reward for players instead of monetary compensation according to the true value of athletes. Here is a recent (following Auburns loss to Arkansas on Saturday) cynical quote by Gene Chizik, head coach of Auburn, who had a total salary of over $ 2 million in 2009:
"Players on game day have to make plays," [...] "They're on scholarship, so they need to make plays."
So that is the ugly truth how coaches who earn enormous wages think about their "amateur" players. If players do not perform on the field why do they might soon be gone. No more "education for sports". And it is true: Any athlete's scholarship can be taken away by colleges. So they get a scholarship only if they bring the appropriate performance on gamedays. Sounds like the perfect description of a professional sports environment with 0 amateurism to me. Only that players have no players' union, no market wage, no job protection...
Just a word: Can the current realignment mess get any worse? More on that soon.
Mittwoch, 5. Oktober 2011
Important decision!
Karen Murphy, the owner of the Red, White and Blue pub in Portsmouth, has recently been taken to court by Rupert Murdoch owned BSkyB network because she had purchased a Greek decoder to show English Premier League games at her pub. By doing so, she was able to save money, but it soon caused lots of troubles because BSkyB had the exclusive right for broadcasting Premier League matches in England.
Yesterday, however, the final ruling of the Court of Justice of the European Union on the cases Football Association Premier League and Others v QC Leisure and Others as well as Karen Murphy v Media Protection Services Ltd was issued (press note on the ruling to be found here). The crucial point of the ruling is that judges found that "national legislation which prohibits the import, sale or use of foreign decoder cards is contrary to the freedom to provide services and cannot be justified". The ruling even goes as far as stating that the Football Association Premier League could not claim copyright of Premier League matches as it is not "an author’s own intellectual creation". It was ruled that "a system of exclusive licences is also contrary to European Union competition law if the licence agreements prohibit the supply of decoder cards to television
viewers who wish to watch the broadcasts outside the Member State for which the licence is granted."
This ruling has two major implications:
In terms of Economics my expectation is that the ruling of the Court of Justice of the European Union will open up the market and generate a Europe-wide market for broadcasting of sports events. From what we know about opening up markets, and consequently increasing competition, we might see a sharp decrease in licence prices for broadcasters and consumers. This might go along with a move from several national monopolists towards a European market with a large number of suppliers. The fan at home, or in the pub of course, will be the winner.
Yesterday, however, the final ruling of the Court of Justice of the European Union on the cases Football Association Premier League and Others v QC Leisure and Others as well as Karen Murphy v Media Protection Services Ltd was issued (press note on the ruling to be found here). The crucial point of the ruling is that judges found that "national legislation which prohibits the import, sale or use of foreign decoder cards is contrary to the freedom to provide services and cannot be justified". The ruling even goes as far as stating that the Football Association Premier League could not claim copyright of Premier League matches as it is not "an author’s own intellectual creation". It was ruled that "a system of exclusive licences is also contrary to European Union competition law if the licence agreements prohibit the supply of decoder cards to television
viewers who wish to watch the broadcasts outside the Member State for which the licence is granted."
This ruling has two major implications:
- Leagues cannot claim copyrights for TV broadcasts of matches
- Cross-boarder transfer of broadcasts is allowed, i.e. breaking national monopolies like the one of BSkyB for the English Premier League
In terms of Economics my expectation is that the ruling of the Court of Justice of the European Union will open up the market and generate a Europe-wide market for broadcasting of sports events. From what we know about opening up markets, and consequently increasing competition, we might see a sharp decrease in licence prices for broadcasters and consumers. This might go along with a move from several national monopolists towards a European market with a large number of suppliers. The fan at home, or in the pub of course, will be the winner.
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.
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.
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.
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.
Montag, 29. August 2011
Some evidence...
In his forthcoming article E. Woodrow Eckard (University of Colorado, Denver) finds evidence that the Bowl Championship Series (BCS) in College Football is indeed a cartel. In my blog I discussed the matter as well.
Here is the link to the article (Journal of Sports Economics):
http://jse.sagepub.com/content/early/2011/07/15/1527002511414719.abstract
Mittwoch, 24. August 2011
Setting new standards
This week Arizona Cardinals Widereceiver Larry Fitzgerald signed a contract extension of 8 years worth $ 120 million. It was also reported that the contract consists of about $ 50 milllion in guarantees. Fitzgerald is now tied for the 5th in the current year-average and the top 4 on this list are all Quarterbacks. His contract volume even ranks among the top five concerning the overall volume in NFL history. He has distanced himself from all other current NFL WRs in terms of year-average, as the second on the list (not counting Steve Smith, Carolina Panthers) is Brandon Marshall at $ 10 million.
Maybe the focus has shifted from Quarterbacks to other playmakers. However, the last team that has won the Super Bowl without a potential superstar Quarterback were the Tampa Bay Buccaneers in 2002. Statistics show that the NFL is still a Quarterback-driven league. Maybe it is desperate spending by a single franchise in Arizona. Maybe it is a result from the new collective bargaining agreement and the ended lockout.
Whatever the reasons are it will certainly have the effect that Widereceivers, Runninbacks and other crucial positions will demand higher contracts relative to Quarterbacks. We already saw a long holdout from Vincent Jackson (San Diego Chargers) and Chris Johnson (Tennessee Titans) is currently holding out while demanding a huge contract. My guess is that at the end of the day it will become harder to sign highly productive skill-players in the future and the Larry Fitzgerald contract might have started this.
Maybe the focus has shifted from Quarterbacks to other playmakers. However, the last team that has won the Super Bowl without a potential superstar Quarterback were the Tampa Bay Buccaneers in 2002. Statistics show that the NFL is still a Quarterback-driven league. Maybe it is desperate spending by a single franchise in Arizona. Maybe it is a result from the new collective bargaining agreement and the ended lockout.
Whatever the reasons are it will certainly have the effect that Widereceivers, Runninbacks and other crucial positions will demand higher contracts relative to Quarterbacks. We already saw a long holdout from Vincent Jackson (San Diego Chargers) and Chris Johnson (Tennessee Titans) is currently holding out while demanding a huge contract. My guess is that at the end of the day it will become harder to sign highly productive skill-players in the future and the Larry Fitzgerald contract might have started this.
Mittwoch, 17. August 2011
NCAA - again
Sorry for coming back to NCAA football yet again, but the latest headlines dealing with the University of Miami scandal really deserves to be mentioned here. The dust has not yet settled on the Miami case, but there seems to be a lot going on behind the shining surface of the NCAA. And it is all about the fact that collegiate players do not get what they deserve. They have value, they generate revenues for their colleges and they are not even allowed to sell their trophies from championships or other memorabilia (see Ohio State case).
So the NCAA does not only restrict all internal compensation to regulated scholarships, it also deprives players of their right to turn their value into money. In short the NCAA also prohibits all external compensation. While this is against all principles of economics, it is also highly questionable in terms of constitutional rights of the players. The NCAA uses its monopoly power to negotiate sponsorship contracts, TV contracts and media relations. Colleges make a lot of money selling TV rights for their games. Top NCAA coaches can easily match with NFL coaches in terms of salaries. At whose cost? Yes, the players'.
In a recent panel discussion presented on ESPN, dealing with possible changes of the current collegiate athletics system (Blueprint of Change), Alabama coach Nick Saban stated that the NCAA "was no business" and nobody "was making money" as "no revenues were generated". I never heard something more cynical and false. Saban himself makes $4.1 million this season and his 8-year contract is worth $32 million. The contract of another discussant in the penal, Bob Stoops, who does not hesitate to emphasize the "value of education" is in the same area (see ESPN). Non-monetary compensation and bonuses not mentioned.
Universities reinvest their revenues generated from athletic programs. They do not make money, but they seek to improve their reputation and attract more students. Sounds like a business to me. Coaches are making big time money while arguing in favor of a strict zero compensation policy for players. Maybe the current NCAA system is collapsing in the wake of all the scandals. Players should be given their fair share and a change is needed.
So the NCAA does not only restrict all internal compensation to regulated scholarships, it also deprives players of their right to turn their value into money. In short the NCAA also prohibits all external compensation. While this is against all principles of economics, it is also highly questionable in terms of constitutional rights of the players. The NCAA uses its monopoly power to negotiate sponsorship contracts, TV contracts and media relations. Colleges make a lot of money selling TV rights for their games. Top NCAA coaches can easily match with NFL coaches in terms of salaries. At whose cost? Yes, the players'.
In a recent panel discussion presented on ESPN, dealing with possible changes of the current collegiate athletics system (Blueprint of Change), Alabama coach Nick Saban stated that the NCAA "was no business" and nobody "was making money" as "no revenues were generated". I never heard something more cynical and false. Saban himself makes $4.1 million this season and his 8-year contract is worth $32 million. The contract of another discussant in the penal, Bob Stoops, who does not hesitate to emphasize the "value of education" is in the same area (see ESPN). Non-monetary compensation and bonuses not mentioned.
Universities reinvest their revenues generated from athletic programs. They do not make money, but they seek to improve their reputation and attract more students. Sounds like a business to me. Coaches are making big time money while arguing in favor of a strict zero compensation policy for players. Maybe the current NCAA system is collapsing in the wake of all the scandals. Players should be given their fair share and a change is needed.
Dienstag, 9. August 2011
Doping? A problem of the past?
In this year's edition of the Tour de France only one cyclist (Alexander Kolobnew, RUS) was tested positive for doping, or rather a substance often used to camouflage performance enhancing drugs. So can we conclude from this that professional cycling is a clean sport?
My answer would be NO. The average speed of the Tour peaked at 41.654 km/h in 2005, during the reign of Lance Armstrong , who won the world's most famous bicycle race 7 times. In the wake of the Floyd Landis case in 2007 the average speed dipped to 38.98 km/h, the lowest value since 1991. One could easily attribute this to a more cautious approach towards the usage of performance enhancing drugs due to an increased intensity of testing. In recent years, however, the average speed has returned to the level of 2002/2003 and my intuition is that it will climb again. The graph to the left presents all average speed values since 2000.
While this might not be ultimately convincing that doping is still big in cycling, it provides some initial evidence. Even if one does not correct for difficulty of stages, weather or other influences, one can ask the following question: Why should todays athletes be able to ride as fast as their colleges were in a period which was known for widespread usage of doping (f.e. Team Telekom/T-Mobile, US Postal)?
So why do athletes dope? The answer of an economist is simple: They incur the risk of being caught and penalized in order to gain an illegal advantage over competitors and win a prize. Three factors are critical: The risk of being caught, the penalty and, of course, what is at stake. In the presence of ever increasing prizes at the Tour de France the two other factors also have to adjust in order to reduce the incentives to cheat, or at least keep it constant. If we notice the fact that "doping-hunters" are probably always one step behind a cheater, the most obvious measure would be to increase the penalties. My impression, however, is that this is still not being done. As long as it is possible to participate in the Tour while having tested positive (Alberto Contador) for performance enhancing drugs, few cyclist who are willing to win at any prize will shy away from doping. Even well known dopers of the past are welcomed at the Tours despite a dubious "zero-tolerance" stance of the Tour organizers.
There is probably still to much to gain and too little to lose at the world's most prestigious bicycle race.
While this might not be ultimately convincing that doping is still big in cycling, it provides some initial evidence. Even if one does not correct for difficulty of stages, weather or other influences, one can ask the following question: Why should todays athletes be able to ride as fast as their colleges were in a period which was known for widespread usage of doping (f.e. Team Telekom/T-Mobile, US Postal)?
So why do athletes dope? The answer of an economist is simple: They incur the risk of being caught and penalized in order to gain an illegal advantage over competitors and win a prize. Three factors are critical: The risk of being caught, the penalty and, of course, what is at stake. In the presence of ever increasing prizes at the Tour de France the two other factors also have to adjust in order to reduce the incentives to cheat, or at least keep it constant. If we notice the fact that "doping-hunters" are probably always one step behind a cheater, the most obvious measure would be to increase the penalties. My impression, however, is that this is still not being done. As long as it is possible to participate in the Tour while having tested positive (Alberto Contador) for performance enhancing drugs, few cyclist who are willing to win at any prize will shy away from doping. Even well known dopers of the past are welcomed at the Tours despite a dubious "zero-tolerance" stance of the Tour organizers.
There is probably still to much to gain and too little to lose at the world's most prestigious bicycle race.
Mittwoch, 6. Juli 2011
Bent or broken?
In yesterday's online edition of USA Today BIG Ten conference commissioner Dan Beebe said that: "There's a lot of motive to make some fundamental changes . . . more sweeping changes than we've probably seen in the past,", addressing the current NCAA scandals evolving in Football (f.e. Ohio State) or Basketball.
While this is certainly interesting, I wonder what he actually means by that. Are NCAA officials willing to finally change the rules or are they just going to make monitoring and sanctions even more powerful? As economists have pointed out (Brad Humphreys, University of Alberta), the NCAA might have been able to enforce their rules because there was whistleblowing going on among the member universities. If one university violated recruiting rules, a competitor who knew about the violation called NCAA officials. This maight have taken place in the case of USC, Boise State and Ohio State.
Now let us ask the following crucial question: Is it surprising that "scandals" like Ohio State emerge? From an economics point of view it clearly is not. Players will be willing to violate the rules because they know that scholarships are not even close to their marginal product where their salaries should be. Colleges, on the other hand, can raise revenues and success on the field of play by giving players illegal incentives to join their program. By not paying athletes colleges can extract rents and act like a monopoly. Is it really necessary do force players to sell championship memorabilia in order to get a fracture of what they actually deserve in terms of salaries? Is this really a violation worth prosecution?
The NCAA rulebook states that athletes are meant to be "amateurs". Anybody can seen that a collegiate football or basketball player is everything but an amateur. So why not rethink the approach and adjust the rules? It might be time to do so.
While this is certainly interesting, I wonder what he actually means by that. Are NCAA officials willing to finally change the rules or are they just going to make monitoring and sanctions even more powerful? As economists have pointed out (Brad Humphreys, University of Alberta), the NCAA might have been able to enforce their rules because there was whistleblowing going on among the member universities. If one university violated recruiting rules, a competitor who knew about the violation called NCAA officials. This maight have taken place in the case of USC, Boise State and Ohio State.
Now let us ask the following crucial question: Is it surprising that "scandals" like Ohio State emerge? From an economics point of view it clearly is not. Players will be willing to violate the rules because they know that scholarships are not even close to their marginal product where their salaries should be. Colleges, on the other hand, can raise revenues and success on the field of play by giving players illegal incentives to join their program. By not paying athletes colleges can extract rents and act like a monopoly. Is it really necessary do force players to sell championship memorabilia in order to get a fracture of what they actually deserve in terms of salaries? Is this really a violation worth prosecution?
The NCAA rulebook states that athletes are meant to be "amateurs". Anybody can seen that a collegiate football or basketball player is everything but an amateur. So why not rethink the approach and adjust the rules? It might be time to do so.
Freitag, 1. Juli 2011
BCS - does it comply with the law?
Yesterday's online edition of USA Today featured a short comment on BCS director Bill Hancock's meeting with officials from the Department of Justice on July 30. It quotes Hancock saying "I went into it confident that the BCS complies with the law, and I left the meeting even more confident". So what does that mean for the future of the BCS?
Obviously all major NCAA sports are somewhat suspicious to violate US antitrust law to some extent. The NCAA requirement for athletes to participate without any financial compensation exceeding regulated sports scholarships is a clear sign of a heavily regulated market. Men's Basketball, as well as College Football are huge sports industries generating substantial TV revenues without paying their athletes market wages. Now the Football is somewhat special: It has introduced the Bowl Championship Series (BCS) and the mechanism that determines each season's champion is somewhat unique. A computer calculated ranking selects the top teams into 5 BCS bowls. The top two teams compete in the BCS championship game. By determining Football conferences who automatically qualify for the BCS system a kind of two-class society of colleges was formed and some face a substantially lower probability to play in a BCS game and benefit from TV revenues because they are in the wrong conference. Put simple: the BCS could be seen as a cartel.
So far the current system has survived all allegations and criticism and pro and con lobbying is continuing. If Bill Hancock's optimism is justified the BCS might have won another battle. Economic theory would say that consumer welfare might have taken another hit.
Obviously all major NCAA sports are somewhat suspicious to violate US antitrust law to some extent. The NCAA requirement for athletes to participate without any financial compensation exceeding regulated sports scholarships is a clear sign of a heavily regulated market. Men's Basketball, as well as College Football are huge sports industries generating substantial TV revenues without paying their athletes market wages. Now the Football is somewhat special: It has introduced the Bowl Championship Series (BCS) and the mechanism that determines each season's champion is somewhat unique. A computer calculated ranking selects the top teams into 5 BCS bowls. The top two teams compete in the BCS championship game. By determining Football conferences who automatically qualify for the BCS system a kind of two-class society of colleges was formed and some face a substantially lower probability to play in a BCS game and benefit from TV revenues because they are in the wrong conference. Put simple: the BCS could be seen as a cartel.
So far the current system has survived all allegations and criticism and pro and con lobbying is continuing. If Bill Hancock's optimism is justified the BCS might have won another battle. Economic theory would say that consumer welfare might have taken another hit.
Welcome everybody!
I am an economist at the Department of Economics at the University of Linz, Austria. I have done research in welfare economics, empirical economics and economics of sports. This blog was created to discuss news from the world of sports in terms of economics and take a closer and critical look at recent events and developments. I will periodically pick out news bits and comment on them, using the tools of economics and relating day-to-day news to earlier research. There are countless issues in (professional) sports that are worth being discussed on the basis of scientific results and experience. And it does not just give further insights but is also a lot of fun to discuss this issues. The first topic is already on the way....
Feel free to discuss and bring up further topics!
Feel free to discuss and bring up further topics!
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