Market Power

For political (or history) junkies, the entire C-Span video archive is online

You probably already have heard this, but on the off chance that you might not have, the entire video archive of C-Span is online.

Here is one with a sports angle:  a hearing about funding the construction of the new Yankee Stadium using federally tax-exempt bonds.

"And They Were Concerned About Beer and Cigars"

So, the IOC got their underwear in a knot because the Candian women's hockey team celebrated their gold medal with adult beverages and cigars.  From John Palmer who emailed me this link and wrote "and they were concerned about beer and cigars."  Apparently there was a concern about other adult activities:

Rowdy curling crowds; spontaneous street parties; public drunkeness. You don't have to look far for evidence that the crowds at Winter Games in Vancouver know how to have a good time.

And, as if anymore proof is needed that a wild Olympic atmosphere permeates B.C.'s largest city, now there's an apparent condom shortage.

That's right. As you read this, an emergency shipment of condoms is desperately making its way across Canada to the West Coast city.

Health officials in Vancouver have already provided 100,000 free condoms to the roughly 7,000 ahtletes and officials at the Games. That's about 14 condoms per person. But as of Wednesday, those supplies started running dangerously low.

14 per person?  They ain't married!  That's all I can say.

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?

The Governator on the NFL in LA

The Governator has a sense of humor and it showed when he made a public statement regarding the potential for an NFL team to come back to Los Angeles.

Gov. Arnold Schwarzenegger, who in an interview in November noted he is "from Los Angeles" and the Coliseum is a "great state property," suggested there was "enough room" in Southern California for two teams.

...Schwarzenegger, in a light-hearted comment, underscored the ongoing drama since 1994. Referring to his movie roles, he said his four children — ages 16, 14, 12 and 8 and eager for NFL football — "think that I can do anything, that I would just come here and make this happen.

"Because they've seen the movies, blowing up buildings and wiping out armies and conquering witches and even the devil and they think Daddy is going to just go there and ... bring some teams back."

Of course we're not talking about witches, devils, or an army of devils and witches.  We are talking about a monopoly league with huge barriers to entry into the club.

Abajo Fidel!

What do George Steinbrenner and the Cuban baseball team have in common?  Neither George nor the Cubans care much for the World Baseball Classic.  Not only are the Cubans getting their clocks cleaned, they have to listen to protected political speech:

Since then (the beginning of competition in the WBC) they have drawn protests, nearly sparked a brawl, suffered their most lopsided loss in 23 years and blown off the mandatory interview sessions with the media three times in five days.

This behavior makes Barry Bonds appear like Mother Theresa.  If this behavior came from Major League ballplayers, there is no doubt we'd be hearing about spoiled, rich players.  But my guess is that there ain't exactly free agency in Cuba and the Cuban players ain't exactly rich.

Yet that (David Ortiz's monster shot) was nearly overshadowed by what happened off the field, where anti-Castro protesters flocked to Hiram Bithorn Stadium by land and by air, causing the Cuban team to sneak out of the ballpark in a huff and angering tournament officials whose patience with Cuba's antics ran out long ago.

...But the turning point -- on the field and in the stands -- came six innings earlier (3rd inning) when the Dominicans scored four third-inning runs on two hits, two walks, a hit batter, a balk and a Cuban error.

Shortly afterward, a single-engine Cessna made two passes over the stadium trailing a banner reading Abajo Fidel (Down with Fidel).

Things were just starting to heat up, though, because in the bottom of the inning a group of 10 protesters sitting in the second level behind home plate stood and removed their shirts to reveal T-shirts, each printed with one letter, that spelled out the same slogan.

''This is a good opportunity to show the world that we want free elections in Cuba, the same thing as in the U.S.,'' said protester and Cuban exile Carlos Leal.

...It was the second time in Cuba's five games that anti-Castro demonstrators have protested inside the ballpark, but the first since Major League Baseball and San Juan promoters established a ''code of conduct'' prohibiting political protest in an attempt to placate the Cuban delegation.

Last Thursday a Cuban exile named Jose Garcia held up a sign reading Abajo Fidel during Cuba's second WBC game, sparking an emotional response from the Cubans who threatened to pull out of the tournament without a ban on anti-Castro signs.

Apparently the protesters didn't have much support from the crowd, but you can't blame those in attendance.  They came to watch a baseball game, not a political rally.  That reminds me of a Ted Nugent concert I saw in Columbia, Mo. a few years ago.  I went to a concert and a political rally broke out 

Anyways, the Cubans may not have a choice:

At least Cuba didn't threaten to pull out of the tournament again. But then it might not have to. If it loses its Wednesday game to Puerto Rico -- which beat the Cubans 12-2 in a first-round game stopped after seven innings by international baseball's mercy rule -- their WBC stay is likely over.

I had yesterday's (March 13th, 2006) WBC between Cuba and the Dominican on yesterday and saw Albert Pujols get grazed on the left tricep by a pitch.  I could feel Cardinal fans' hearts jump at that.  Apparently this sort of competition should not surprise anyone:

Yet even then the Cubans might not go quietly. In that first-round game Cuban pitchers, who have a reputation as head-hunters, fired fastballs over the heads of Puerto Rico's Pudge Rodriguez and Ricky Ledee, drawing angry stares from both. Puerto Rico's Jose Santiago responded by hitting Cuba's Juan Moreno, earning an ejection for himself and manager Jose Oquendo.

It would be a shame to see a player get DL'd because of some sort of political statement made by an opposing player via an inside fastball.

Did anyone bother to get a focus group together to ask Cubans how they feel about the protests? We certainly don't want to hurt anyone's feelings.

For more on the incentives of hit by pitches, see this by JC at Sabernomics.

HT to Sports Business Daily