Market Power

60 Most Influential People in the Sports Business

Street and Smith's Sports Business Journal has released their 50, er, 60 most influential people in the sports business.  Here is the list.

Via IJSF blog where Nick notes that the list is really more of a North American list.

Dildos and Rent Seekers

From the Globe and Mail:

When you're the young owners of a Toronto sex shop specializing in eco-friendly vibrators and other adult toys, getting the ear of a Member of Parliament can be a challenge.

So, entrepreneurs Kim and Amy Sedgwick started off slow. The self-branded “eco-sisters” wrote a letter outlining their concerns of a “dangerous” problem hidden away in Canadian bedrooms everywhere – chemicals used in the majority of Canadian sex toys that pose a potential health risk for women.

Never mind that the real (male) thing can also pose a health risk for women.  But I digress.

These women may not be rent seekers, but it's well-known that regulation is supported by those who will directly benefit from it.  Surely the eco-sisters sex shop will benefit from this type of regulation.

HT Doc.

Winners and Losers in College Bowl Games

It's well-known that in terms of accounting entries, many college athletic departments lose money. Some economists have questioned whether the expense and revenue entries are an accurate measure of the costs and benefits associated with athletic departments. One reason given is that athletics may benefit other parts of the school. Even if the athletic departments bleed money, other areas of the school may benefit.

A second argument given is that the revenue and expense entries are convoluted by the accounting conventions used by colleges. If athletic souvenir revenue is entered in the general university revenue account, then the athletic revenue accounts understate the "true" level of revenue. Similarly, it's not at all clear that the true cost of an athletic scholarship is as high as the posted tuition and room and board rate. If not, then athletic expenses as entered overstate "true" expenses.

In any case, the San Diego Union-Tribune has recently posted a couple of interesting stories about who benefits and who doesn't benefit from college bowl games. The answers may (or may not) surprise you. Here is one story. Here is the other story.

The DH and Broken Windows Fallacy

Frederic Bastiat's broken windows fallacy: if a window maker breaks windows to increase business, he certainly benefits (if he doesn't get busted, of course). But society is made worse off. Resources used to fix broken windows support window repair jobs, but would have been used in alternative ways and would have supported other types of jobs. Moreover, we'd expect that if fixing broken windows were optimal, people would have gone out and destroyed their own windows.

What the H-E-double toothpicks does this have to do with sports? This:

We've heard a lot over the past year about job creation. Everything is jobs, jobs, jobs. Such rhetoric is typically followed up by policy proposals (whether from right or left) that are nonsense, nonsense, nonsense. But since we're on the topic, the crack staff at the Tax Foundation has come up with one policy that would definitely create a lot of good-paying American jobs:

"The N.L. Should Be More Like the A.L. Act of 2009," which would "mandate that the National League enact a designated hitter rule or MLB lose its anti-trust exemption; and that the total number of roster spots increases by one. "

At first, this would create 16 new jobs (number of N.L. teams). But think of all the other jobs. There will likely need to be more balls and bats produced because a D.H. is more likely to break a bat or foul a ball off during a plate appearance than a pitcher batting. This will increase the demand for wood and forestry products. Think of all those jobs. We may even need another bat boy. Pitchers will wear out faster, thereby compounding this issue. And pitchers will probably be more likely to be hurt during the season due to more wear and tear (every 9th batter won't be essentially a free pass). Therefore, more replacement pitchers will be needed. Plus, this wear and tear will create more jobs for medical trainers. That can only be a good thing. More uniforms will need to be produced—more jobs! And Chuck Schumer will be sure that those uniforms are produced in America by a hard-working American as opposed to some "foreigner." The multiplier effects of this policy are just off the charts.

I realize this is sarcasm, but let me note that the broken windows fallacy applies. MLB roster spots are fixed in number. When a team places a DH on the roster, it comes at the expense of another player's roster spot, resulting in no new net jobs in MLB.

Moreover, the DH doesn't play in the field, so he doesn't need a glove. That means fewer jobs for the craftsmen and women who make baseball gloves. What will they do? They'll starve or be forced to eat their pets (ew!). Oh, the huge manatee!

HT to Kip via Doc.

Cross-posted at TSE

Two Observations on the Mark Mangino Settlement with KU

The University of Kansas has released the details of the settlement it reached with former football coach Mark Mangino.

In the afternoon, KU athletic director Lew Perkins released the details of the settlement agreement between the athletic department and Mangino that will pay Mangino $3 million as he exits. Mangino had four years remaining on his contract, which would have paid him $9.2 million ($2.3 million per year).

The settlement will be paid through private funds raised by Kansas Athletics; no state taxpayer funds will be used.

Here is the copy of the settlement.  Mangino will get the $3 million in a lump sum by Christmas eve. 

One thing this tells me is that Mangino and KU, by settling on 36.8% of his contracted salary ($8.16 million in present value assuming a 5% discount rate for both parties), were implicitly saying that the chances were about 63% (3/8.16) that he would have been found to have violated his contract.  Had the chances been 50-50, we'd expect Mangino to have gotten closer to $4.08 million.

Mangino and KU agreed that KU would pay Mangino's life and health insurance premiums for a few months, but these  premiums will likely be miniscule compared to the $3 million lump sum payment.  So it's safe to ignore them.

Of course, I have assumed that there are other things behind the scenes that could have driven the settlement away from the midpoint (differences in legal expenses, differences in underlying preferences for negotiation, different discount rates, etc).  Moreover, $3 million is a nice chunk of change... but it's not $8.16 million.

Secondly, where will this $3 million come from?  I assume that by "private funds" that KU is going to raise the funds through donors.  If so and given that donors have a fixed budget constraint of some sort, what will these "private funds" come at the expense of? 

There is an implicit assumption made by some people that donors have a fixed amount to donate to a given college.  If so, when an additional dollar is donated to athletics, it must come at the expense of academics.  There is some empirical evidence of this (I'm thinking of papers by Stinson and Howard (2004 and 2007).  But the same authors also have empirical evidence that they are not subsititutes (2008).

But it also possible that additional donor dollars come from budgets that would otherwise be allocated to other charities or to consumption.  It could also come from a fixed donor budget allocated towards athletics.  If so, the academic interests at KU have nothing to worry about.

Cross-posted at TSE.

Florida State and Academic Fraud

ESPN.com has an interesting piece on the academic fraud case that is hanging over Florida State's football program currently.  It focuses on players who can't even read but who were allowed into FSU's student body.  An excerpt:

As the learning specialist working with the most academically challenged athletes at Florida State, Brenda Monk was confronted each year with recruits who would seem to have little chance of surviving on a college campus. Their deficiencies were laid out in transcripts and psycho-educational reports submitted during the admissions process.

Sometimes, the athletes knew exactly what they were up against. She recalls a conversation with one such player in her office at Doak Campbell Stadium.

"You might as well know right off the bat, I can't read," he told her.

"Then how are we going to get through these college classes?" she asked.

"It's easy," he responded. "You get to read to me."

Maybe I'm old fashioned, but a person who cannot read, god help him, by the time he reaches adulthood should not be in university.   Reading is a skill that a person should have before they come to college, not to be taught or glossed over while in college.

Factors of Demand

In a typical Principles of Economics text, the factors of demand that are included in the introductory chapter on Demand and Supply are price, consumer preferences, the number of consumers, prices of related goods (complements and substitutes), average consumer income, price expectations, and miscellaneous factors.  Chalk this up as a miscellaneous factor:

But Ciudad Juarez and El Paso, separated only by the Rio Grande and a couple of border checkpoints, are worlds apart.

Despite its movie reputation, El Paso — home of the Sun Bowl where the University of Oklahoma will play Stanford on New Year’s Eve — remains one of the safest cities in the United States.

Just last month, one study declared El Paso the second-safest big city in the country, trailing only Honolulu, according to the El Paso Times.

Yet many Sooner fans who annually travel to OU’s bowl games are sitting this one out. And concerns about safety are playing a role.

On a NewsOK.com online poll, almost half of the more than 800 respondents who aren’t going to the Sun Bowl noted their reasoning was they don’t feel safe with all the violence happening across the border from El Paso.

"Juarez has the highest murder rate in the world,” said Edmond resident Craig Blankenship, who has traveled to the last 10 OU bowl games with a group of about 20 family and friends. "We’re not interested in El Paso. We will stay at home and watch it on the tube.”

OK, so it's a combination of miscellaneous factors and the price of substitute goods.  Still... HT Wiz of Odds

Division III Schools Look at the Academic Performance of Their Athletes

Here is my TSE post on Division III schools' look at academics and athletics.  Make sure you read the comments on the post.  While many commenters frequently provide useful comments, the ones on this post are particularly thoughtful and interesting.

Arn Tellem on the NCAA Ban on Advisors

Arn Tellem has an interesting piece in the Huffington Post on the NCAA's ban on player advisors (agents). Here are the first two paragraphs:

Of all the injustices heaped on college athletes, the most draconian may be the NCAA's ban on the use of attorneys during contract talks with professional teams. Athletes and their parents are allowed to get advice about proposed contracts only if their advisors don't represent them openly in negotiations. Athletes and their advisors can discuss the merits of a deal, but to maintain eligibility at NCAA schools, the advisors may not act as a go-between or be present during bargaining sessions or have any direct contact with the team on the athlete's behalf.

The rule is intended to keep agents away from amateur athletes. By rendering agents powerless, it effectively turns them into potted plants. But if you're hammering out a deal with someone, isn't it your prerogative to get professional advice? Absolutely, wrote an Ohio judge in a 2008 judgment against the NCAA. He likened the rule to "a patient hiring a doctor, but the doctor is told by the hospital board and the insurance company that the doctor cannot be present when the patient meets with a surgeon because the conference may improve his patient's decision-making power."

Arn Tellem is a sports agent and surely has a dog in the fight with the NCAA on this matter, but he makes some excellent points regarding the rights of athletes negotiating with pro teams. It's a bit like going to gun fight with a knife handle but no blade.

Cross-posted at TSE.

Non-Pecuniary Gifts in College Football Bowls

Here is another TSE post, a short one on gifts received by bowl-bound football players.  I agree with the commenters:  these gifts will appear on eBay shortly.  Cash payments would be a better idea... and welfare-enhancing (see The Deadweight Loss of Christmas).

Will the Big 10 Raid the Big XII? An Exercise in Club Theory

Here is a link to my most recent post, at TSE this one on the Big 10 expansion scenarios involving Big XII teams.

Paul Samuelson Dead at 94

Paul Samuelson, the great liberal economist and Nobel laureate, has passed away at the age of 94.

Economist Paul Samuelson, who won a Nobel prize for his effort to bring mathematical analysis into economics, helped shape tax policy in the Kennedy administration and wrote a textbook read by millions of college students, died Sunday. He was 94.

Samuelson, who taught for decades at Massachusetts Institute of Technology, died at his home in Belmont, Mass., the school said in a statement announcing his death.

I used his text with William Nordhaus in an honors-level Principles course at Mizzou the first year after I received my PhD.  I didn't use it for long, but it was a best selling text in its day.

Here's the Wall Street Journal with rememberances of Prof. Samuelson.  Here's the MIT news release on Prof. Samuelson's passing.

HT to King Banaian

Resources Tend to their Most Valued Use - The Notre Dame/Cincy Version

My latest at TSE is up.  In this post, I look at another way that the supposed not-for-profit amateur sport of college football looks like its professional brethren. 

Markets in Everything: The Square

The Square hopes to make taking payment cards easier.

Read payment cards from any device with an audio input jack, including your mobile phone. Accepting payments has never been faster or more convenient.

As always, kudos to Tyler Cowen at Marginal Revolution for introducing the phrase "markets in everything."  HT to Anthony Martin.

Tennessee Trouble

My latest post at The Sports Economist briefly discusses an NCAA investigation focusing on the use of hostesses in luring recruits to Tennessee.

Thinking at the Margin in College Athletics

That Alabama has decided to do this...

The University of Alabama announced this morning it will not hold classes Jan. 6-8 because of faculty, staff and students who want to make the trip to Pasadena, Calif., for the Crimson Tide's appearance in the BCS national championship game against Texas.

does not mean that it values athletics over academics in the aggregate.  It just values it at the margin (i.e. at this particular moment for this particular).

The school operates on a semester system and this period was the beginning of the spring semester.  While probably a time when canceling classes causes the least amount of trouble, it still forces faculty to cover the same amount of material in less time or, alternatively, to cover less material.  Moreover, even though the administration is thinking at the margin and not in the aggregate, what kind of signal does this send about the Crimson Tide's opinion of athletics vs. academics?

HT The Wiz of Odds.

North Korea's Fight Against Markets and Private Wealth

Remember that famous picture of North and South Korea at night?  

The darkness that is North Korea has, if it's possible, gotten darker.  From the Times Online:

In the capital, Pyongyang, yesterday only the few shops and restaurants permitted to trade in foreign currencies — patronised by the privileged elite and the city’s small foreign population — were open for business. All other enterprises and services based on cash, including markets, long-distance bus services, barbers’ shops, saunas and bath houses, were suspended until the revaluation of the won is completed next week.

There were reports of public outrage and confusion after the announcement of the measure, which requires North Koreans to swap existing won notes for new ones at an exchange rate of one to 100 — effectively knocking two zeroes off their value. Because of a cap of 100,000 won per family (£475 at the official exchange rate), anyone with significant holdings of cash will have their savings wiped out.

Meanwhile, ABC news reports:

One South Korean report says graffiti and leaflets criticising dictator Kim Jong-Il have surfaced.

In a bid to dissuade mass defections sparked by the revaluation, North Korean troops have been ordered to shoot to kill anyone trying to cross the border into China.

The Economist cautions at the use of the word "revalue" suggesting, instead, the term "confiscate."

WESTERN reports decribe North Korea's currency moves as a "revaluation". The word is pure Newspeak. When a government revalues its currency, citizens do not rush out to convert their cash into foreign notes, as North Koreans have done this week. Nor do they stand on the streets screaming at officials in anger and despair.

Rather, the moves represent confiscation on a massive scale. By this coming Sunday, the state says, all existing currency must be replaced by a brand new won, with old 10,000 won bills swapped for new 10 won bills. So far so fine. The state wants to fight inflation, and plenty of other countries have resorted to the expedient of a new currency.

But the state also wants to crack down further on North Korea's myriad private markets. The currency moves are all of a piece, for the maximum amount of old currency that may be converted into new is 100,000 won. For rich traders doing business with China, this matters little. Their wealth will already be in Chinese yuan or dollars. Ditto for the elite. For North Korea's poorest, the new currency is also neither here nor there, for they have no cash at all. But for the broad middle struggling to cope, this is a disaster. Responding to popular fury, North Korea appears to have raised the limit this week to 150,000 won.

Claudia Rosett and Daniel Drezner both comment (HT to Glenn Reynolds).  For those of us living in societies that are more or less free economically, it's a stark reminder of home inhumane men can be to one-another.

Competitive Imbalance

Perhaps you've already seen this, but Texas' Mack Brown is now reportedly a $5 million dollar man, approaching Bob Stoops compensation.

I've argued before that a salary cap will not drive competition to be more balanced.  Leaving aside the fact how important truly balanced competition is in the grand scheme of a sport, what really matters when it comes to determining competitive balance is fan interest.  Fan interest (i.e. demand) is the primary determinant of the ability for teams to generate revenue and, thus, to obtain resources.  Expenditures on coaches, players, facilities, etc. are little more than symptoms of that fan demand.

Demand, in turn, is a function of the usual suspects like the number of consumers, average income, availability of substitutes, etc.  When there is an imbalance in the overall level of fan interest, this leads to an imbalance in revenues which, in turn, leads to competitive imbalance.  Expenditure imbalance and competitive imbalance will be correlated, but they are both functions of an underlying cause:  an imbalance in fan interest.

Panning Congress's Involvement in a College Football Playoff

Both Don Boudreaux and Warren Meyer are rightfully panning a congressional committee's vote on forcing the NCAA to start a playoff in its Football Bowl Subdivision.  While congress's take on this case is silly and probably nothing more than a public relations ploy, the antitrust angle is an interesting one that deserves more attention.  Here's my recent piece on this angle.

You Cannot Stimulate an Economy By Discouraging Economic Activity

I tell my classes that to have a vibrant economy, people generally need to have the freedom to choose who to buy from and who to sell to.  Taxes, subsidies, price controls, and other things of that nature ultimately discourage economic activity because at some point they each take away the freedom for people to contract with whom they please.  This idea is behind Daniel Henninger's current column at WSJ.com.  An excerpt:

Barack Obama campaigned for a year against "the top 1%" and "the wealthiest." It sounded like more than economics to me. But a nation can't have entrepreneurs and eat them, too. Asia is overflowing with rich entrepreneurs. Google "China's auto industry." They have more new auto manufacturers than you can count. If the U.S. has any hope of competing long term with this rising force, it will have to let some Americans get as rich as nouveau riche Asians. This presidency won't do that.

At the jobs summit, Mr. Obama said "I want to hear from CEOs what's holding back our business investment." Really?

How about the world's highest corporate tax rate? How about the 5.4% health-care surtax on top of the expiring Bush tax cuts, which will push the top marginal individual rate, paid at the outset by many entrepreneurs, well over 40%?

Set aside income taxes as the unransomed hostages of progressive dogma. Justify this: The Senate health-reform bill imposes a $4 billion annual excise tax on medical devices and diagnostic equipment. In a slow-innovation economy, which is what we have now, medical and diagnostic miracles sit at the intersection of American science, technology, education and IQ. That stuff defines American entrepreneurship and ingenuity. If the Obama Democrats will tax these people, they'll tax anything that produces income, no matter how innovative or job-creating.

Texas's Experiment in Deregulation of the Electricity Market - Chalk One Up For the Market

From a new book by Lynne Kiesling and Andrew Kleit entitled Electricity Restructuring:  The Texas
Story.

In the early 1990s, the U.S. electricity industry was plagued by cost overruns and stagnant productivity. Many states turned to deregulation to promote innovation and cut costs, a strategy that had worked for the telecommunications, trucking, natural gas, and airline industries. Yet, after the California energy market's infamous meltdown in 2000-2001 triggered the recall election of Governor Gray Davis, deregulation lost popular and political support. Plans to introduce competition and retail choice in electricity markets were stalled or abandoned nationwide--in every state but Texas.

This volume explores how Texas's groundbreaking program of electricity restructuring has become a model for truly competitive energy markets in the United States. The authors contend that restructuring in Texas has been successful because the industry is free from federal oversight within the state; because new investments in electricity supply have been encouraged to insure that increased demand for power is met; because restructuring has spurred the growth of more efficient electricity technologies and business models; because the markets integrate wholesale and retail competition; and because the operation of the transmission grid has been changed to maximize its efficiency.

The success of electricity restructuring in Texas proves that deregulation is both feasible and potentially effective. State policymakers' commitment to competition, decentralized coordination, and ongoing market analysis have made Texas's electricity industry the most competitive in the country. Electricity Restructuring: The Texas Story offers a unique set of guidelines for deregulation done right.

One of the big problems with the California deregulation story is that California deregulated the wholesale market for electricity but kept a price cap on the retail side, which resulted in the wholesale price being higher than the retail price.  As we know, price ceilings discourage the sale of goods while they simultaneously encourage the consumption of goods, creating shortages.  That's no way to deregulate a market.

HT DOL

Fast Food Quality > School Lunch Quality

From USA Today:

In the past three years, the government has provided the nation's schools with millions of pounds of beef and chicken that wouldn't meet the quality or safety standards of many fast-food restaurants, from Jack in the Box and other burger places to chicken chains such as KFC, a USA TODAY investigation found.

The U.S. Department of Agriculture says the meat it buys for the National School Lunch Program "meets or exceeds standards in commercial products."

That isn't always the case. McDonald's, Burger King and Costco, for instance, are far more rigorous in checking for bacteria and dangerous pathogens. They test the ground beef they buy five to 10 times more often than the USDA tests beef made for schools during a typical production day.

Yet people want government-run health care/public options etc, but I'm far from convinced that government officials have the knowledge and incentives present in the competitive market place. 

In addition, companies that sell bottled water get the business from critics because they pull water from municipal water supplies.  But the companies further filter that water to get rid of medicines and other nasties in the water supplies.  After all, there's nothing like the discipline of a competitive marketplace to get you on the straight and narrow.

"Bowl Snub is a Holiday Tradition"

Joe Walljasper provides a voice of reason in the Big XII bowl selection process:

The Tigers — who are better than the Cyclones according to arcane measures such as records and head-to-head results — play the better opponent (Navy rather than Minnesota) and get better exposure (ESPN rather than The NFL Network) in a city they recruit (Houston vs. Tempe, Ariz.).

So getting upset about the Insight Bowl stiffing Missouri in favor of Iowa State is like getting mad when the person you want to dump dumps you first. The result is fine, but the process isn’t.

He also writes about the revenue sharing system in the Big XII that I discussed in this TSE post earlier today.  Read what he has to say

Hey Beer Drinkers: Next Time You Crack Open a Beer...

Remember that the EPA has designated the gas that makes the beer all bubbly as a pollutant.  Never mind the CO2 created during the brewing process.  That's why brewers have these things installed on their fermentation tanks.

How long before the alcohol abstinence folks jump on this little fact?

Brian Burwell on the BCS: Break Up the Cartel

From the Wall Street Journal:

Be honest: What would you actually do if you didn't have the ludicrous college-bowl system to complain about?

Brian Burwell of the St. Louis Post-Dispatch takes on the BCS does just that.

The nervous defenders of the Bowl Championship Series' bogus "national championship" think they have gotten it right this time. No muss, no fuss, no uncomfortably awkward idiocy like last year when the wrong team (Oklahoma) ended up in the title game.

Alabama vs. Texas.

...While I'm fairly confident that No. 1-ranked Alabama is the best team in the country, why not let a playoff format decide it, not a convoluted computer program? And while we're on the subject, who's to say Texas really is the second-best team in the country? That ugly struggle against a 9-4 Nebraska in the Big 12 championship game didn't inspire much confidence now, did it?

Why shouldn't 12-0 TCU, the third-ranked team in both polls, get a chance to prove its worth in the title picture, or 13-0 Boise State? I don't want to hear anyone say that they know for sure that Texas is the second-best team in the country. Why? Because the Longhorns didn't beat a single team that finished in the Top 20 until the Big 12 championship game.

Then he breaks out the antitrust language:

So until Congress can break up this power-conference cartel, I will not accept it as the national title game and neither should anyone else.

The BCS is and always will be about the business of preserving a monopoly of the power football conferences, which have little if any interest in sharing the wealth with everyone else. A true playoff system would certainly provide an opportunity for an enormous payoff for everyone, just like the NCAA basketball playoffs. But that would mean sharing all that cash on a more equitable basis with the entire upper tier of Division I football schools.

It won't be the first time that the NCAA has run afoul of antitrust laws.  Remember your monopoly theory from Principles of Micro.  Monopolies, because they face no competition by definition, restrict the access to a product and, in so doing, drives the price higher than otherwise. 

Similarly, cartels between businesses limit competition between themselves which results in higher prices for consumers. 

But without an effective enforcement mechanism, there is a strong incentive for members to cheat on the cartel agreement.  By cutting a side deal and, the cheater can capture a larger market share than agreed upon and, of course, higher profits.  Without a way to punish members for cheating, the cartel falls apart.

When it comes to college football telecasts, the league (or the teams, depending on the league agreement) is the supplier and the consumer are media providers.  Back in the 1970's and early 1980's, people would be lucky to find three games on television on a given Saturday. 

According to Rod Fort's Sports Economics text (second edition, chapter 13 table 13-10) there were 28 games on television in 1982 and in 1983.  The price paid for media rights per game in 1982 was $4.09 million (all prices quoted in this post are in real 2004 dollars). In 1983, that price was $4.3 million per game. 

Nowadays conferences such as the Big 10 and the Big XII have nearly every game televised.  What happened?

Back in the early 80's, Oklahoma and Georgia didn't feel their programs were on the telly enough.  Unable to convince other schools that they should have their games on the telly more often, they sued the NCAA, a suit that made it to SCOTUS.  In short, the NCAA lost in a landmark 1984 case. 

What happened in the market for media rights?  Almost immediately, the number of games on the telly increased and the price paid for media rights fell.  In 1984, there were a total of 36 games on television and the price per game paid by media providers fell by over $3 million per game to $1.1 million. 

One year later in 1985, there were 42 games on television and the price per game was at $1.12 million.  Ten years later in 1995, there were a total of 71 games on television and the price per game paid by the media was $1.07 million.

The NCAA television case was a textbook case not only of monopoly power but also of how individual interests tend to chip away at the power of cartels.  It's a classic prisoners' dilemma game.

Now, I'm not so sure that the federal government (i.e. congress or the executive branch) should busy itself with a playoff system.  Like they say, there's still no cure for cancer.  Instead, it seems that the judicial branch is the way to go given the antitrust laws already in place.

Then again, in order to run afoul of antitrust laws, the NCAA needs to be sued.  Which member school is up for that given what happens when a cartel gets broken up?

Markets in Everything: Doggie Day Care

We've got a doggie day care near my house here in the nort' lands, so this probably comes as no surprise to all y'all outside the sticks.

"She has always had an entrepreneurial spirit about her," says Ms. Nichols's husband, Mike Schlegel, who met her when they were both working in the telecommunications field. Today, Mr. Schlegel is the vice president of franchise development for Dogtopia. He says that one of the first things Ms. Nichols asked him when they met was where he saw himself in five to 10 years. He didn't have a good answer. But, he recalls that Ms. Nichols quickly "professed that she wanted to run her own business."

Getting there was no walk in the park for Ms. Nichols, who met with 12 landlords during the second half of 2001 before finding one who was willing to give her a lease. While she had an excellent work record and a 30-page business plan, she didn't have experience running her own business. Plus, she was a young, single woman. And the dog concept, virtually unheard of at the time, wasn't translating with property managers.

Ms. Nichols's luck turned when Net2000, one of the telecom companies that had tried to recruit her, went belly up in late 2001. She quickly secured a lease for the 8,775-square-foot building. "Their failure led [the landlord] to look outside that industry for the next tenant," she says.

But it wasn't just landlords who were skeptical of the dog-day-care concept. Ms. Nichols approached seven banks before securing a loan. Like the landlords, they all wanted to see a successful owner track record. It was a small women-owned bank, Southern Financial Bank, that finally gave her a $75,000 Small Business Administration-backed loan. She had also been saving her money for several years and she sold her house, which netted about $80,000. Everything went into the business, with a few thousand dollars going into marketing, says Ms. Nichols.

Read the whole thing.  It's an interesting story of the entrepreneurial spirit glossed over by so many formal economic models.

A Buddy Fight Goes Terribly, Terribly Wrong

A buddy fight is just what the name implies:  a fight between friends.  Most buddy fights start out with a little pushing, a little shoving.  It may come to blows, but if you know the type of fight I'm talking about, none of the punches seem to be thrown with much conviction.  Each person is mad enough to rumble, but he doesn't want to hurt his buddy too much.  This wasn't that type of buddy fight.

The argument started when Texas edged Nebraska on Saturday night and continued oh-so-typically when two buddies with two different favorite teams jawed after the game's final play.

But this college football fight ended very badly.

It ended with the Texas fan, Jonathan Clinton Rodriguez, dead of an apparent accidental gunshot wound to the chest. It ended with his friend, Florida football fan Lionel Loya, jailed and facing an involuntary manslaughter charge.

Neither man hails from Nebraska, and neither is a Nebraska football fan, said the police chief investigating the apparent accidental killing in Havelock, N.C.

...Their argument began after Texas kicked a field goal on the game's final play to beat Nebraska 13-12, a win that secured the Longhorns a spot in the national title game. Earlier in the day, the Florida Gators, Loya's favorite team, had fallen to Alabama in the Southeast Conference title game, a loss that dropped the Gators out of the national title race.

It's only sports, but sports can get us awfully worked up.

And, no, I'm not going to tag this one under "Economics, Sports, Economic Impact."

Revenue Sharing and Salary Caps: Will the NFL End Up Like the Big XII?

I've got another post up at The Sports Economist.  In this one I look at the NFL's decision to suspend part of its revenue sharing system and the impact of salary caps and revenue sharing on competitive balance.  I also look at Big 12 football as a reference point.

Danica Patrick to Join NASCAR

My latest post at The Sports Economist is up.  I post about Danica Patrick's move to NASCAR.

It's Starting to Look a Lot Like WInter - Plus A Little Vivaldi

Southern Minnesota, and the entire upper midwest for that matter, is under one sort of winter weather advisory or another.  We locally are under a blizzard warning for today and tonight.  The current forecast calls for nearly a foot of snow, light and fluffy snow, with winds whupping up to 30 mph.  Those winds are forecasted to drive the wind chil down in the 25 to 35 below range.  Ew.  So it seems appropriate for a little Vivaldi.

"California Nude Beaches Take Cover"

No nudies for you on some Callie beaches.

"Volunteers Log off as Wikipedia Ages"

Wikipedia was started by Jimbo Wales who was influenced by the writings of economist FA Hayek, specifically his paper "The Use of Knowledge in Society."  Hayek noted that knowledge in a society is not held by a few chosen ones, but is instead dispersed throughout society.  To solve societal problems, it is necessary to use as much knowledge as possible.  Wikipedia, by allowing volunteers rather than "experts" to create and edit entries, does just that.  With all its warts, Wikipedia brings together that dispersed information in millions of entries and has become one of the most popular encyclopedias. 

But as the WSJ reports, Wikipedia is finding some of its volunteers are logging off permanently.  An excerpt:

Volunteers have been departing the project that bills itself as "the free encyclopedia that anyone can edit" faster than new ones have been joining, and the net losses have accelerated over the past year. In the first three months of 2009, the English-language Wikipedia suffered a net loss of more than 49,000 editors, compared to a net loss of 4,900 during the same period a year earlier, according to Spanish researcher Felipe Ortega, who analyzed Wikipedia's data on the editing histories of its more than three million active contributors in 10 languages.

The Coaches' Rankings Are Out

Here at USA Today.  Dave Matter notes on Twitter that only two coaches have Mizzou ranked in their top 25.  One is Mizzou's Gary Pinkel and the other is Navy's Ken Niumatalolo.  Oh, and by the way, Mizzou plays Navy in the Texas bowl.  I'd like to think there is a little game theoretic strategizing going on, but no-one voted Navy in the top 25 except for Niumatalolo.

Frustrated With the Big XII Bowl Selection Process?

My latest at The Sports Economist is up.  In it I look at the Big XII's bowl selection process.

By the way, two years ago the Orange Bowl said it picked KU over MU even though Mizzou had beaten the Beakers head to head and even though Mizzou was ranked above KU in the BCS rankings.  The primary consideration, officials said, was that MU had two losses but KU only had one.

Of course KU never got the chance to lose that second game because of its loss to MU.  Had the Beaks won, they would have had the honor of facing a loaded OU team in the Big XII championship game.

Fast forward to this year.  The Orange Bowl picked Iowa as an at-large team over conference mate Penn State.  The biggest consideration, according to the same official, was that Iowa had beaten Penn State head-to-head and that Iowa was ranked higher in the BCS rankings.  Unlike the KU-MU situation in 2007, both teams have two losses.

HT to Dave Matter.

Houston Nutt to KU?

The Kansas City Star is reporting that Houston Nutt, the former Arkansas and current Ole Miss head coach, is interested in the open Kansas job.  This would be a great hire for KU.

Quality Cameras for $200-$300

I was in the market for a new point-and-shoot camera.  That was until my old tube telly crapped out on me.  If you are in the market for such a camera and have a budget less than $300, check out these suggestions by USA Today.

Do You Have the Traits of a Psychopath?

A scientist named Jim Fallon in researching traits of psychopathic killers found out that he himself has some of the traits.  

Jim Fallon recently made a disquieting discovery: A member of his family has some of the biological traits of a psychopathic killer.

"These results will cause some problems at the next family party," he said, reviewing the data on his laptop in his backyard. Meanwhile, his wife, Diane, stood in the kitchen, using a knife to slice through a blood-red pepper.

I don't know if revealing this would be guaranteed to break the ice at parties.  But I wonder which is more likely to get the conversation going:  "Hi, I'm xxxx and I have some traits of a psychopath" or "Hi, I'm xxxx and I'm an economist."

The Music of Star Wars in Concert

From the Detroit Free Press:

You might not know the name Anthony Daniels, and you very likely have no clue what he looks like in real life -- but you certainly know his voice. The gold-plated robot of the "Star Wars" saga is taking on a new role as the live narrator for "Star Wars": In Concert, a symphonic extravaganza with an 86-piece orchestra, large choir and accompanying memorabilia exhibit that visits the Palace of Auburn Hills on Saturday for two performances. Call him Emcee 3PO, even if it makes you cringe.

One of my favorite record albums of my youth was the Star Wars soundtrack.  I used to listen to it for hours on end and the music still ranks up there as some of my favorite orchestral pieces. 

In many instances, incidental music is pretentious.  But you can reasonably argue that the John Williams masterpiece is a big reason why the movie so successful. 

Congress Contemplates Legislation to Increase the Supply of Doctors

Rather than let the market work its magic, Congress feels that it needs to craft legislation that supposedly will help increase the supply of primary care doctors.

A handful of Democratic senators are pushing to change pending health-care legislation so that it would help increase the country's stock of primary-care doctors, heeding warnings that the bill may exacerbate the difficulty some Americans already have in finding a doctor.

More than 30 million Americans would get health insurance under the health-care overhaul that passed through the House and a similar bill moving forward in the Senate. If that does indeed happen, many previously uninsured people who haven't had a regular doctor before will need a primary-care physician. Demand would also likely increase for nurse practitioners and general surgeons.

Here's a thought:  how about getting their mitts out of the healthcare industry?  I realize that's a pipe dream, but its a pipe dream that needs to be noted.

Score Another One for Wal Mart in Its Fight Against Unions

From the WSJ:

Canada's top court has ruled in favor of Wal-Mart Stores Inc.'s Canadian unit regarding the closure of a unionized store in Quebec four years ago.

The Supreme Court of Canada, which heard the case in January, voted 6-3 for Wal-Mart Canada.

The store, located in the town of Jonquiere, made headlines in 2004 when it was unionized without a vote. But after nine contract-bargaining sessions, Wal-Mart decided to shut the store the following year, saying the store wasn't making money and the union's demands, which required hiring an additional 30 employees, would have kept it from ever being profitable.

"An Economist's Invisible Hand"

Professor Pigou:  he isn't just for understanding (Pigovian) taxes and subsidies anymore.

The winner's name, however, turns out to be much less familiar: Arthur Cecil Pigou (pronounced "Arthur See-sil Pig-oo"). Stepping from the wings, a strapping Englishman with fair, wavy hair and a luxuriant moustache, smiles awkwardly and accepts his prize. A contemporary of Mr. Keynes at Cambridge University, Mr. Pigou was, for a long time, the forgotten man of economics. In the years leading up to his death, in 1959, he was a reclusive figure, rarely venturing from his rooms at King's College. His novel ideas on taxing polluters and making health insurance compulsory were met with indifference: Keynesianism was all the rage.

Today Mr. Pigou's intellectual legacy is being rediscovered, and, unlike those of Messrs. Keynes and Friedman, it enjoys bipartisan appeal. Leading Republican-leaning economists such as Greg Mankiw and Gary Becker have joined Democrats such as Paul Krugman and Amartya Sen in recommending a Pigovian approach to policy. Much of President Barack Obama's agenda—financial regulation, cap and trade, health care reform—is an application of Mr. Pigou's principles. Whether the president knows it or not, he is a Pigovian.

Ethanol is Such a Great Product that Congress has to Mandate Its Use

From the Des Moines Register on Dec. 1, 2009:

The Environmental Protection Agency is expected to rule this week whether more ethanol can go into the gasoline used for everything from automobiles to boats and snowblowers. But that doesn't mean higher-proof gasoline is headed for service stations any time soon. Even if the agency agrees to allow higher levels of ethanol in gas - and that is no given - it's not clear when the higher-proof fuel would reach the market. Refiners are saying they won't put more ethanol into their gasoline unless Congress gives them protection from potential lawsuits from motorists or consumers who claim the ethanol hurt their engines.

I love that last sentence.  It's such a great fuel that producers need protection from us big-bad consumers who find their product ain't all that it's cracked up to be.

Don't forget that there are recent reports stating that  the "U.S. is unlikely to need all the ethanol congress ordered."

Minnesota mandates a 10% ethanol blend, probably to appease the farm lobby and other ethanol interests.  Whenever I have a choice (which almost always means when I'm in another state) I always choose a no-ethanol blend when I fill up.

The NHL's "Trade Imbalance"

From the New York Times:

The decline of the American dollar has led to a trade imbalance north of the border, on the rinks of the National Hockey League.

Over the past two decades, the Canadian teams in the N.H.L. were considered poor cousins of their colleagues in the United States. Some floundered financially, others packed up and moved south. The league even created the Canadian Assistance Program to subsidize the country's struggling teams.

But the landscape in Canada has changed drastically, because of a rise of more than 50 percent in the Canadian dollar since 2002. A stronger currency has made it cheaper for the six Canadian teams to pay their players in United States dollars and to reduce debts. It has also inflated the revenue of the six Canadian franchises and, in turn, the league's revenue. That has hurt some of the weaker teams in the United States by pushing up the minimum amount teams must spend on payroll.

"The Canadian teams went from being very weak to the crown jewel in a short period," said Rob Tilliss, the founder of Inner Circle Sports, which advises owners and teams. "There are cycles, of course, but there's enough interest and enthusiasm in Canada that this isn't going to reverse" anytime soon.

Which probably partly explains why Jim Balsillie wanted to buy the Phoenix Coyotes and move them to Hamilton, Ontario.

"Why Have College Completion Rates Declined?"

NBER paper by Bound, Lovenheim, and Turner (2009).

Partly as a consequence of the substantial increase in the college wage premium since 1980, a much higher fraction of high school graduates enter college today than they did a quarter century ago. However, the rise in the fraction of high school graduates attending college has not been met by a proportional increase in the fraction who finish. Comparing two cohorts from the high school classes of 1972 and 1992, we show eight-year college completion rates declined nationally, and this decline is most pronounced amongst men beginning college at less-selective public 4-year schools and amongst students starting at community colleges. We decompose the observed changes in completion rates into the component due to changes in the preparedness of entering students and the component due to collegiate characteristics, including type of institution and resources per student. We find that, while both factors play a role, it is the collegiate characteristics that are more important. A central contribution of this analysis is to show the importance of the supply-side of the higher education in explaining changes in college completion.

The emphasis is mine.  Not only are men a minority on many college campuses, many aren't finishing when they do start.

Bowl = Benjamins for Coaches

USA Today has a list of bonuses to be earned by college coaches when their teams reach certain heights.

Links on Racial/Ethnic/Nationality Differences in College Athletics

Are there enough white kids playing tailback in football?

USC vs. 'Bama:  "The game that changed Alabama."

Who needs signals when you can communicate with your teammates in a language few other players understand?  Haitian kids become big-time players in college football.