Posts tagged ‘Sports Economist’

Gun to the Head in Seattle

David Stern is putting a gun to the head of Seattle taxpayers:

NBA commissioner David Stern is putting the screws to Seattle
in his attempts to get the community to provide taxpayer subsidies that
are lucrative enough to keep the team from departing the "Emerald City"
to even greener fields in Oklahoma.

Stern blasts city officials
and the overwhelming majority of voters in the city for passing a law
requiring (gasp!) that any funds used to help build an arena earn the
same rate of return as a treasury bill. "That measure simply means
there is no way city money would ever be used on an arena project,"
Stern said. Effectively, Stern has just confirmed what sports
economists have known all along: taxpayer spending on sports
infrastructure is unlikely to provide significant returns on the

We went through the exact same thing here in Phoenix, with various outsiders and city politicians chiding the voters to voting down taxpayer funded palaces for the Cardinals and Coyotes  (eventually, they found a sucker in the local city of Glendale).  In the past, I have written about sports team and corporate relocations as a prisoners dilemma game.

To see this clearer, lets take the example of Major League Baseball
(MLB).  We all know that cities and states have been massively
subsidizing new baseball stadiums for billionaire team owners.  Lets
for a minute say this never happened - that somehow, the mayors of the
50 largest cities got together in 1960 and made a no-stadium-subsidy
pledge.  First, would MLB still exist?  Sure!  Teams like the Giants
have proven that baseball can work financially in a private park, and
baseball thrived for years with private parks.  OK, would baseball be
in the same cities?  Well, without subsidies, baseball would be in the
largest cities, like New York and LA and Chicago, which is exactly
where they are now.  The odd city here or there might be different,
e.g. Tampa Bay might never have gotten a team, but that would in
retrospect have been a good thing.

The net effect in baseball is the same as it is in every other
industry:  Relocation subsidies, when everyone is playing the game, do
nothing to substantially affect the location of jobs and businesses,
but rather just transfer taxpayer money to business owners and workers.


The Sports Economist writes about this move in the context of another economic game:

Indeed this is a classic example of the time inconsistency problem for
which Finn Kydland and Ed Prescott (my graduate school macro
professor!) won the Nobel Prize in 2004. Stern would like to threaten
Seattle with the permanent loss of their NBA team in order to secure
taxpayer concessions now. But should the team move, the NBA has every
reason to want to back off its previous threats and relocate a team
back into to the area due to the size, location, and income levels of
the city. Even having lost a team, Seattle will likely remain a better
candidate for a successful franchise than smaller and poorer cities
such as New Orleans or Memphis. Certainly Seattle should not fall for
Stern's bluster.

Ask a Question, Get an Answer

A while back, I wondered if the highest paid public employee of every state was a university men's football or basketball coach.  Well, its not exactly answering the same question, but via the Sports Economist comes this article that head coaches beat the governors 49-1 in the salary sweepstakes.  Only the Alaska governor makes more money than the state university head coaches (probably because there is no college football in Alaska).  Governors probably have more job security, though.

Unlike my question, the author considers coaches at any college, public or private.  For example, my readers found that NY is probably an exception -- there are public employees paid higher than public university coaches.  This article comes to the opposite conclusion, but only because they use Syracuse University, which is a private institution.

Pre-Season College Football Rankings are the Most Important

Yes, that's what I said.  The pre-season college football rankings are absolutely the most important poll of the year, at least if you think your school has a chance to be #1 at the end of the year.  That can't be right, you say -- surely a poll taken before anyone has played a game is the least important. Here is my reasoning:

In theory, voters in the college football polls each week come up with their current ranking of teams, which in theory could be very different from how they ranked things the previous week.  In practice, however, voters start with their rankings of the previous week and then make adjustments up and down for individual teams based on that week's game results.  The result is as I described in the comment thread of this post at the Sports Economist:

In effect, the college football rankings are a bit like a tennis ladder. Each
week, losers drop down 3-8 spots and all the winners and no-plays move up to
fill in the vacated spots. Sometimes a team will leapfrog another, but that is
rare and it is extremely rare to leapfrog more than 1 or 2 spots. In this sense, the
initial football poll is the most critical, since only those in the top 10-15
have any chance of moving up the ladder to #1.

In effect, the pre-season poll is the baseline off which all future polls start.  I haven't done the research, but you could probably refine my statement in last sentence above to a set of rules such as:

  • A three-loss team can never win the championship
  • A two-loss team can win but only if they start in the top 5 of the pre-season poll
  • A one-loss team can win but only if they start in the top 15
  • An undefeated team can win even if they were left out of the initial top 25, but only if they play in a major conference.  A minor conference team, even undefeated, will not ever end up #1 unless they started the season in the top 25.

Again, the numbers in these rules may not be exactly right, but I think they are directionally correct.  This is what I call my theory of College Football Calvinism (the religion, not the cartoon character) since one's ultimate fate is in large part pre-ordained by the polls even before the season is born.  So, if your alma mater has any shot at the title, you should hope your AD is out there in the summer lobbying the writers like hell to up their pre-season poll standings. Every spot you gain in the pre-season poll is one you don't have to win on the playing field.