“When a key responsibility of a manager is to allocate more or less attractive tasks, subordinates have an incentive to work hard and demonstrate their talents. As a new manager is less well informed, management dismissals reinvigorate this tournament competition—but only in sufficiently homogeneous teams. We investigate this hypothesis using a large dataset on dismissals of soccer coaches, whose main task is indeed the selection of players. We find that dismissals enhance performance (only) in homogeneous teams. Moreover, we show that there is typically a negative selection bias when evaluating succession effects, which reconciles previous contradictory findings. (JELD22, J44, J63)”
Brad Humphreys sent along a call for papers for North America Association of Sports Economists sessions at this year's SEA meetings in Atlanta Nov. 22-24. Note that a session on the teaching of sports econ is of particular interest. Here's the CFP
The North American Association of Sports Economists (NAASE) is again organizing sports economics sessions at the Southern Economic Association (SEA) conference. The conference will be held November 22-24, 2014 in Atlanta, Georgia. The basic format of the NAASE sessions will be the same as in the past. I hope to have several complete sessions to take to the SEA organizers to assure us of a good room and good session times.
*Deadline for submissions is April 1.*
We are trying to put together a session on teaching sports economics. Anyone with a paper idea that would fit a session on teaching sports economics is especially encouraged to submit their paper.
If you have a sports economics paper you would like to present in Atlanta, please email Dennis Coates (see below for contact information) a title and full contact information including post and email addresses. Your submission must contain full contact information for all co-authors.
Here is the contact information for the session organizer:
If you aren't already aware, there is an interesting legal battle going on at Wrigley Field. The Cubs ownership wants to install a video board, but this board would block the view from the neighboring rooftops. The interesting economic question to me involves both externalities. As it is right now, the Cubs generate a positive externality in the form of games being viewable from neighboring rooftops. Putting a large video board along the outfield wall would block this view to some extent.
Do sports league policies sometimes result in perverse incentives? In a 2002 Journal of Labor Economics paper, Beck Taylor and Justin Trogdon examined if changes in the draft sturcutre in the NBA generated the incentive to intentionally lose games. They collected data on three different seasons with different draft structures and examined what factors determine whether a particular team wins a game. Not surprisingly, playing at home or on a neutral court improves the odds of winning, as does having a higher win percent coming into the game. Playing a better opponent, also not surprisingly, hurts.
Interestingly, though, they found that when there was either a strict reverse-order draft or a weighted lottery system, non-playoff teams were more likely to lose than playoff teams. However, when the NBA had a lottery system to determine draft position, playoff status had no impact on winning.
So there is some evidence out there in the academic Econ literature that league policies can lead to perverse incentives.
All that being said, allegations of intentionally playing to lose had been levied against an Australia Rules Football League team, the Melbourne Demons. An "independent report" cleared the Demons of these charges, but what surprises me is that the AFL itself and some of its member teams have a financial interest in sports gambling. For example, the Demons owns the Bentleigh Club and the Leighoak Hotel which, together, own 172 gaming machines. From the operations of these machines, the Demons recieve about $5 million in revenue (source).
That's unusual to me since American sports leagues have gone through great pains over their histories to keep gambling at bay, lest it threatens the integrity of competition.
The NBA's salary cap for next year has been set at $58,679,000. The minimum payroll is 90% of the cap, meaning it will be $52,811,000 (rounded). The luxury tax for next season was also set and will be $71,748,000. See here and here for details.
The luxury tax this year will be a graduated tax, meaning the penalty for payrolls over the tax level will increases as a payroll increases beyond various step levels. Previously, a team that exceeded the tax level paid a $1 tax for each $1 payroll exceeded the tax level. Here are the details (source).
Portion of team salary $0-$4.99 million over tax level: $1.50 for $1
Portion of team salary $5-$9.99 million over tax level: $1.75 for $1
Portion of team salary $10-$14.99 million over tax level: $2.50 for $1
Portion of team salary $15-$19.99 million over tax level: $3.25 for $1
Rates increase by $0.50 for each additional $5 million of team salary above the tax level.
When it comes to tickets to LSU football, freshmen students get the scraps. Upperclassmen and the public get the first crack, forcing freshmen to sometimes resort to scalping tickets to get entry to Tiger Stadium. A Louisiana state representative is not a fan of the current system, calling it a “crime” that freshmen students pay as much as $300 for scalped tickets.
Story here. To the extent that the Invariance Hypothesis Coase Theorem holds, this proposed change in property rights wouldn't put more freshman fannies in the seats at Tiger Stadium. But it would put more cash in their pockets when they turn around and resell their tickets.
And with jock taxes, cities and states can generate revenue without taxing their electorate. The Pittsburgh usage fee does not apply to any full-time city resident.
I think this is right. Because player salaries are fixed with respect to attendance, sports economists argue that ticket prices don't depend on the salaries paid to athletes. This is especially true of visiting player salaries. If so, then these taxes won't get passed on to fans via ticket prices.
The historical record on the economic impact of mega events never, ever (and I mean ever) lives up up to the before-the-fact claims of consultants and the events' cheerleading squads. Why wouldn't, say, a Super Bowl have a massive effect on, say, San Francisco? Because San Francisco is already a vacation and convention destination. Having a Super Bowl in San Francisco will attract visitors, but it will also drive others to vacation elsewhere. The economic impact, however you want to measure it, is the net impact, not the gross impact.
But how can legions of football fans descend upon a region and not make a dent, economically? One reason is that measuring the number of people who head to a Super Bowl city for the game is a straightforward endeavor. Measuring the number of people who stay away from an overpriced, tourist-infested zoo is not. Especially in a year-round tourist destination like the Bay Area, Super Bowl visitors aren't flocking to hotels that would otherwise be empty; they're displacing would-be visitors. What's more, hotels in many Super Bowl cities triple their rates and insist on multiday packages. This drives away non-Super Bowl visitors and also leads to fans booking rooms for more days than they'll actually use — meaning those rooms aren't being occupied by actual people who could be spending actual money.
To claim an economic windfall based on visitor numbers without factoring in those who avoid the area or are pushed out "is like going to the hen-house, counting all the foxes, and saying 'Look at the economic impact of all these foxes here eating!'" Porter says. "You're not counting all the hens who are gone."
The economic impact of sports is usually framed in terms of how many jobs it generates and how much spending it generates. But this misses the point. Here's commenter bobby over at my most recent post (on jobs and income creation with sports!) at The Sports Economist:
i find it mildly distressing that almost all of the discussion about economic impacts of sporting events is about rectangles with rarely if ever a discussion of triangles. i was always trained that welfare was measured by consumer and producer surplus, not expenditures, but then what do i know?
and, to make matters worse, i was always taught that if bundle B was chosen when bundle A was available that it could be concluded that A was better than B. i guess i’ll have to go back and study some more, someday.
i guess the idea that people are happier with a baseball game than a movie doesn’t mean much anymore, and its downright silly to suggest that a baseball game makes a place better off because people could have gone to a movie instead.
i think i’ll go drink a beer, eat a hot dog, and polish it off with some apple pie, now that i realize how silly i was to believe in revealed preference, consumer surplus, and consumer choice. oh well.
He's exactly right. Any discussion of the ultimate economic impact of sports, government policy, whatever should not be about how many jobs are created, how much people spend, etc. It should be on the overall well-being that activity generates in terms of producer and consumer surplus. That is the ultimate economic impact. Jobs and spending numbers do little more than obscure that fact.
The only thing I can see keeping the Big XII in tact is Texas giving up a lot of its political power in the conference and agreeing to more equitable revenue sharing, which may include revenue generated from the Longhorn Network.