Leagues are cooperatives and when a cooperative works well, according to game theory, the members act to improve their joint welfare (the ol' Nash Solution). But cooperatives are inherently unstable because of the incentive to cheat on the cooperative, and there needs to be some kind of enforcement mechanism to keep the cheating from happening. If there is no mechanism, the situation falls into a prisoners' dilemma type of game. That seems to be where we are at now, and all signs point to Texas being the one that cheated.
Maybe, just maybe, everything that's going on in the Big XII right now will encourage Texas to work together with the other schools to bring stability back to the Big 12, and maybe encourage Texas A&M to stay. Texas will not have the power in a conference like the SEC, Big 10, or Pac 12 that it has in the Big 12. It may have to share pooled media revenues equally with all other conference members and have equal say in political matters. It may not be able to have its Longhorn Network, the cancer that threatens the entire conference, or it may be forced to strip down the content that can be shown on the LHN. Or, horrors, it might be forced to share revenue generated by the LHN.
And maybe conference middleweights like Texas Tech, Oklahoma State, Missouri, and Kansas have been diligently working behind the scenes to improve their options so they will have something to fall back on if the Texas and Oklahoma bolt. Tech and OSU probably have the best options since most observers are predicting them to join OU, and maybe Texas, to the Pac 12. Better options give strength in negotiations.
It's a long shot, I know. But I'm trying to be positive here.
Gabe DeArmond of Powermizzou.com tweets some interesting quotes from Mizzou football coach Gary Pinkel. Pinkel was being interviewed by Tim Brando this morning. Unfortunately I don't have a link to the interview itself. Here's what Gabe (@GabeDeArmond) tweeted in three separate tweets:
#Mizzou coach Gary Pinkel with Tim Brando this morning: "Obviously we've got some issues in our league...You don't hear anything...
"About any other league in the country having these problems. And we all know where it starts."
Pinkel: "It's really a shame because the potential of the league is just so tremendous. I have no control over it."
I presume Pinkel means Texas. I've had thoughts here and here at The Sports Economist over what's going on within the Big XII.
Economically speaking, when it comes to "producing competition" as we sports economist like to say, the "firm" as understood in economic theory is the league itself. A league, like any firm at its heart, is a cooperative. A little bit of pure self-interest is supposed to be expected, but once the cooperative is formed, we expect, well, cooperation between the members to make it work.
That's not what we've seen with the Big XII. Whether it's the Longhorn Network or the concentration of conference political power, Texas holds the best hand and is not afraid to play that hand even if it means destabilizing the whole conference. That's why Nebraska left despite the fact that the conference's revenue-sharing system favored it. That's why Texas A&M left.
It's sad because the Big XII as it existed from the time it was a 12-team conference was an excellent sports conference. Not just an excellent football conference, but an excellent sports conference. But its existence seems to be falling apart daily.
Here in the States, the major sports leagues (MLB, the NBA, NFL, and NHL) are all closed leagues. League membership is determined by league membership. If a league is to expand, it has to be voted on by the incumbent members. It has been argued that because of this closed format, leagues limit the number of cities that have teams and limit the number of teams in cities.
The theory of monopoly leagues says leagues will limit output (i.e. the number of cities with teams and teams within cities) in order to maximize the local market power held by each team. This allows the teams to charge higher ticket prices/fees*, obtain higher local media rights fees, and to extract higher subsidies from willing pols. Those pols, playing with other people's money, are afraid of their appearances to voters if a team leaves or if they fail to obtain a team. Teams, knowing this full well, milk it for all it's worth. They then engage in a prisoners' dilemma game to try to try to get/keep from losing teams. From NPR:
It's a story that could have been told in almost any American city over the past two decades. Owners of teams in the "big four" sports leagues — the NFL, MLB, NBA and NHL — have reaped nearly $20 billion in taxpayer subsidies for new homes since 1990. And for just as long, fans, urban planners and economists have argued that building facilities for private sports teams is a massive waste of public money. As University of Chicago economist Allen Sanderson memorably put it, "If you want to inject money into the local economy, it would be better to drop it from a helicopter than invest it in a new ballpark."
Studies demonstrating pro sports stadiums' slight economic impact go back to 1984, the year Lake Forest College economist Robert Baade examined thirty cities that had recently constructed new facilities. His finding: in twenty-seven of them, there had been no measurable economic impact; in the other three, economic activity appeared to have decreased. Dozens of economists have replicated Baade's findings, and revealed similar results for what the sports industry calls "mega-events": Olympics, Super Bowls, NCAA tournaments and the like. (In one study of six Super Bowls, University of South Florida economist Phil Porter found "no measurable impact on spending," which he attributed to the "crowding out" effect of nonfootball tourists steering clear of town during game week.)
Meanwhile, numerous cities are littered with "downtown catalysts" that have failed to catalyze, from the St. Louis "Ballpark Village," which was left a muddy vacant lot for years after the neighboring ballpark opened, to the Newark hockey arena sited in the midst of a wasteland of half-shuttered stores.
And why do teams ask for subsidies? Because they can.
Jim Nagourney, who spent three decades negotiating stadium deals on behalf of government agencies and team owners, describes how he helped snooker city officials as a consultant to the Los Angeles Rams, who were then negotiating a move to a new stadium in St. Louis. "We had a whiteboard, and we're putting stuff down" to demand in a stadium lease, he recalls. "I said, 'Guys, some of this is crazy.' And John Shaw, who was president of the Rams at the time — brilliant, brilliant guy — said, 'They can always say no. Let's ask for it.'" The result, which Nagourney calls "probably the most scandalous deal in the country," included a clause requiring the new stadium to remain "state-of-the-art," or else the team could break its lease and leave. "The city was poorly represented — the city is always poorly represented.... We put in all of these ridiculous things, and the city didn't have the sense to say no to any of them."
There is no mention of job creation or wage improvement in the article. Instead the article sums up the decision to subsidize construction of the Edward Jones Dome ($280 million from 1993-1995) in St. Louis thusly: 1. Professional sports brings prestige to a community; 2. The people in the community felt like losers when other professional sports teams left the area; 3. It's government's job to do things to make life a complete and fulfilling experience; 4. We were jealous some other community was going to get a team and their officials were going to gloat.
Economists are still studying the value-of-civic-pride-angle regarding sports teams, and there's still some economic analysis being done on the jobs/income angle. But even though there is still some research being done on the economic development angle, there's a strong consensus amongst sports economists that throwing money at sports teams is a terrible economic growth policy. As Allen Sanderson of the University of Chicago once said (paraphrased) "The biggest wastes of land are graveyards and sports stadiums." At least the St. Louis pols noted in that post didn't mention the jobs and income angle as a motivator for public funding.
*Earlier this summer, my wife and I took our kids to a Milwaukee Brewers game (and, later, to Chicago) for a trip to celebrate Eldest's birthday. After splurging on nice tickets, I was given an option to print my tickets at home and another to pick them up at will call. I don't remember the exact amount, but the Brewers charged me around $2 - $2.50 for the print-at-home option and $4 or so to use the will call window. I can understand why will call would cost more than print-at-home, but why would print-at-home cost more than X→$0?
The highest paid player on Jack McKeon's '73 team (Lou Piniella) made an inflation adjusted $254K (via @swood40)
<sarcasm>Ah, the good old days when players stayed with their teams and kids could always follow their favorite players on their favorite teams. </sarcasm> There was a reason players stayed with their teams back in the day. It was the reserve clause.
Albert Pujols has been diagnosed with a small fracture in his left wrist and will miss 4-6 weeks.
That's from RotoWorld. This episode will give the baseball world a chance to gauge the marginal product of Pujols. Will the Cards fall apart without arguably the best position player in the game today? Will they tread water? Will they get better?
The spike in salaries for assistant coaches comes at a time when money in college athletics is getting more attention, from rising television contracts to talk of paying athletes a stipend above the value of their scholarships.
The SEC paid its assistant coaches an average of $276,122 in 2010, according to figures compiled by St. Louis attorney and agent Bob Lattinville of the firm Stinson Morrison Hecker.
The Big 12 was second at $232,685 and the Big Ten a distant fourth, behind the Atlantic Coast Conference, at $187,055. In each instance, the averages do not include salaries at private schools such as Baylor, Penn State and Vanderbilt.
"We've gone over a million (for an assistant) and I think that will be a trend,'' said Lattinville, who provides research for various USA Today salary studies. "Everyone recognizes the marquee value of pulling in an SEC assistant. Week in and week out they're facing the best opponents. That's why they'll pay more to keep them."
Some will undoubtedly think that this is a bad thing. The economy remains weak and colleges and university budgets have followed the economic trend. Besides, the business of higher education is teaching and research, not sports. Why spend more on athletics when academic budgets have been weak?
Whether colleges should reduce their emphasis on athletics is an important question, especially in these days of the higher education bubble. But regardless of what higher education should be about, the reality is that schools have chosen the athletic route and if they want to remain competitive on the field, they have to be competitive in the market for coaching talent.
The income from all of its TV contracts plus other sources of revenue such as bowl games and the NCAA basketball tournament will result in about 76 percent distributed equally.
Previously, about 57 percent was shared equally and the rest went to schools based on television appearances. The more a team was on TV, the more money it received.
This won't necessarily improve competitive balance, but it should improve the political climate within the conference. Nebraska didn't leave because didn't leave the conference because of economic inequalities. NU left because it didn't like the Texas-centricity of the Big XII.
A group of economics and law professors has urged the Justice Department to investigate whether the Bowl Championship Series violates federal antitrust law, The Wall Street Journal reported. The letter to the department's antitrust division, which was signed by 21 professors and lawyers, asks the agency to find college football's current mechanism for determining a national champion to be a cartel that favors BCS members over other college teams.
The NCAA has already been shown to be bound by US antitrust law when it comes to the negotiation of media rights (the NCAA v. the Board of Regents of the University of Oklahoma). But this is a different animal: the determination of a champion. A league needs to determine rules that define the champion and this must be done collectively. Moreover, defining thiese rules is not in and of itself a restriction of competition. I am not a lawyer, but it seems the single entity defense may apply.
But if the league - in this case the NCAA - is restricting access to the championship, then my untrained legal mind suggests that the single entity defense is not a sufficient defense in this case. Yes, collective action is needed to set championship rules, but those rules should apply to all league members, not just the most popular one.
The increase should be expected if we assume the economy has sufficiently rebounded. But if baseball teams systematically overcharge for tickets for whatever reason - a fluky possibility - that would hurt the chances of seeing attendance grow. I doubt that happens because my sense is that the folks who set ticket prices have a pretty good handle on demand conditions in their local markets.