Category: Other sports

Me on the Twitter: New schools getting into this football business. Does it make sense?

Earlier this week, I was involved in a conversation about the economic value of football to colleges, and UNC-Charlotte’s decision to field a football team. After CBS/SI guy Seth Davis mocked Joe Nocera’s latest NCAA column for being disappointed that more schools aren’t dropping football, someone cited UNC-Charlotte as an example of an ambitious school looking to add football to its menu of attractions.

Andy Schwarz, a California sports economist, was in this fray, too. I’ve tweet-versed with Andy a few times—he and I broadly agree on the need for the NCAA to operate like a normal (and legal) business. Here’s a typical post from his blog, Sportsgeekonomics.

More pertinently, here’s his Dec. 8 piece for VICE Sports about the decision by the University of Alabama at Birmingham to cease its football operations. Some of the disagreement I had with him over that piece spilled into this Twitter-stream about UNC-Charlotte and the economics of college football.

Here’s the Twitter conversation, which started after this Davis tweet:

Here’s Schwarz a little later:

Then two other people led the conversation to UNC-Charlotte:

Here’s me:

Then Jay Smith, a UNC history professor known for his criticisms of big-time sports on campus (and who is writing a book with whistle-blower Mary Willingham), jumped in:

Whatever may be terrible about Twitter, it’s a great space for a few obsessives to find each other.

Sports pages: Peculiar economics of losing teams and ripping off cheerleaders

Luke DeCock’s column in today’s News & Observer is a neat illustration of one of the strange, unintended consequences of North America’s model of sports ownership.

This isn’t the point DeCock intended, exactly. His column concerns what is now obvious: The Carolina Hurricanes hockey team is terrible, and it won’t get better. The team is dead-last in the Eastern Conference and a tiebreaker away from being the worst team in the league.

While the Hurricanes have kept it close lately, there just isn’t enough talent here to beat better teams – a pathetic seven goals over the past five games drives the point home nicely – and while Peters and general manager Ron Francis would never admit it publicly, because they have players to motivate and tickets to sell, the future of the Hurricanes is now better served by losing games than winning them.

What he means, of course, is that the Hurricanes should focus on coming in last place, or near to last, in order to get the top draft pick next year. While it’s debatable whether one carefully selected young player would appreciably improve the team, DeCock’s argument reveals a fundamental oddity in North American pro sports: Sometimes it’s better to lose.

As far as I know, there’s no other economic system in the world where a failing company can get better by getting worse. What distinguishes North American pro sports is that the team owners have agreed to set prices, salary caps and share revenue. This system ensures that everyone who is a member will be taken care of.

In short, it’s a cartel.

“Cartel” is a scary word, and in most contexts these arrangements are illegal. But pro sports leagues in North America have long enjoyed de jure and de facto antitrust protection.

Fifty years ago, an economist named Walter C. Neale wrote a classic account of this arrangement in a cheeky paper called “The Peculiar Economics of Professional Sports.” Writing as an unabashed supporter of antitrust exemptions for sports leagues, Neale nonetheless explained the inherent paradox: Sports teams strive to win, but they also must have viable opponents to play. In other words, unlike a real-world business environment in which successful companies chase unsuccessful ones from the market, sports teams have to all be viable and (theoretically) competitive.¹ (I’ll be studying this paper more closely as I prepare for the course I’m teaching this spring.)

So, the Carolina Hurricanes have hit the skids and the lead sports columnist for the local paper is calling for them to tank the season. But there’s little at stake, and no danger they’ll go bust: The Canes are protected by being in the fellowship of NHL owners.

Meanwhile, Hurricanes attendance is embarrassingly poor, with PNC Arena often just half-full. It’s unclear how hard the team’s office staff is trying to sell tickets. As Chip Alexander reported last month, the team has only 11 full-time sales staff, the lowest in the league (although they vowed to beef it up). No doubt other owners would be annoyed that an underperforming member of the cartel is intentionally losing games and not trying hard to sell tickets, but if it’s only a one-year slack-off, there’s probably no hard feelings.

In other sports stories, the NY Times’ Michael Powell published a fine piece about former Buffalo Bills cheerleaders filing a lawsuit alleging that they haven’t been paid for hundreds of hours of work and side commitments that often consisted of being paraded in front of wealthy men. The big point of contention in the comments section is whether the women are entitled to damages if they voluntarily entered into a position for which they would not be paid.

¹ In soccer leagues in Europe and elsewhere, there is a system of promotion and relegation between leagues. Therefore, teams would never intentionally lose games, because to finish at or near the bottom would mean being relegated into the next lower league. Imagine if the worst major league baseball team had to play the next season in Triple A. That’s what happens in soccer leagues around the world (but not in the US).

Hurricanes watch Pt. 1

Yesterday, I opened the sports section to the News & Observer and found two Chip Alexander stories concerning the Carolina Hurricanes. More to the point, they were both business stories.

I’m not a hockey fan, but I did write about the Hurricanes and PNC Arena in a N&O opinion piece in October. My argument was that with the news that team owner Peter Karmanos has put the team on the market, we should be prepared for a shakedown of local taxpayers. Given the team’s poor performance on and off the ice, it would make sense for a buyer to want to try his or her luck in a different market. The shakedown part comes when said buyer demands arena improvements as a condition of staying put.

The first of today’s stories, which was placed below the fold on the front page, concerned the declining attendance at PNC Arena thus far this season (the Canes are presently 29th in the NHL). I have some detailed thoughts on the story below, but the important takeaway for me is that Hurricanes were unusually generous with financial information in Alexander’s story, as well as telling him some of the reasons season-ticket holders have declined to renew their subscriptions.

Alexander’s second story concerned an announcement by the Centennial Authority, the quasi-public body that owns PNC Arena, that they are drawing up plans for a hoped-for makeover to the facility, which opened in 1999. While it seems unrelated to the story about the Canes’ ticket woes, there’s a long-established playbook for teams that want an improved business environment—either in the form of a new stadium or a new city: pull out the pants pockets and say, “See? I got nothing!”

If and when a buyer for the Canes starts making noise about relocating, the Centennial Authority surely wants to have plans in place for an arena makeover in order to keep its anchor tenant from flying the coop.

At any rate, Centennial seems to be moving quickly to come up with a proposal. From Alexander’s story:

[Centennial president Jeff] Merritt said a construction price for the expansion – and a funding source – still was to be determined. The design firms’ plans will be presented to authority members at the Dec. 4 meeting, Merritt said.

“Right now we haven’t funded anything other than just vision,” Merritt said. “As far as a master-plan phase, we’re months away from that.”

One initial estimate for a north-end expansion was $15 million to $20 million. Merritt said a “ballpark price” for the new concept could be presented to the authority in January.

This story was buried on page 6, seemingly unrelated to Alexander’s page 1 story. I tried giving him and his fellow Canes reporter/columnist Luke DeCock a gentle poke over Twitter but got no response:

Some thoughts on the page 1 story after the jump. Continue reading