Category: Teaching

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).

History of Soccer Week 6: Readings and videos on the World Cup, old stadiums and modern soccer

A few short readings in advance of our final class. Not compulsory, of course!

First, George Vecsey of The New York Times was covering international soccer long before it became cool in this country. He’s sort of a columnist emeritus now, and he recently wrote a nice reminiscence of attending his first World Cup in 1982, which was won by Italy but is best remembered for the brilliant Brazil squad led by a midfielder called Sócrates.

The World Cup should be a blast this summer, but as you’ve no doubt heard, they are behind schedule on stadium construction, and there have been many public protests. Even Péle is getting angry.

A third column, also from the Times, prompts me to put down some thoughts about stadium safety and how it relates to the changing demographics of soccer fan base. This is a guest column by a Italian journalist named Beppe Severgnini, in which the Corriere della Sera columnist describes and condemns the hooliganism that plagues Italian football matches today. Hooliganism is unquestionably a problem there, and I’m in agreement with Severgnini’s prescription to rid stadiums of riot police and barbed wire.

However, I’m struck by several things about his argument. First of all, there’s his sniffy description of “Genny the Swine,” the leader of the Napoli ultras, complete with an unsubstantiated allegation of mob ties (I mean, come on… you can say that about almost anyone in public life in Naples).

Second, notice this passage:

It’s madness, and it’s been going on for 30 years. In 1985, just before the beginning of the European Cup final between Italy’s Juventus and Britain’s Liverpool at the Heysel stadium in Belgium, 39 fans were crushed to death during a stampede. In 1989, 93 fans were killed at Hillsborough stadium in Sheffield, England. The British government decided it was time to step in with seating-only stadiums and zero tolerance for hooligans. It worked, and the Premier League is now a major money-spinning machine watched all over the world.

The author’s linkage of these two stadium disasters is blithely misleading. The first disaster, at Heysel, was first and foremost an atrocity of fan misbehavior, as well as of operational incompetence. Liverpool’s supporters shouldered most of the blame, and as a result, English clubs were banned from European competition for five years (and Liverpool was banned for six). Here’s videoContinue reading

History of Soccer, Week 6: The modern game and Zlatan Ibrahimovic

In our final class, we will look at several of the great teams, games and controversies since the 1970s, and we’ll also look at the complexities of the modern game en route to previewing this summer’s World Cup.

In anticipation of that, I want to devote this post to the best player in the world that will NOT be playing at the World Cup this summer: Zlatan Ibrahimovic.

Known to his fans and enemies alike as “Zlatan” or “Ibra,” he is in many ways characteristic of the modern soccer star. The first thing to know about him is that he is a Swede, born of a Bosnian Muslim father and a Croat Catholic mother, both of whom immigrated from Yugoslavia before it completely dissolved into civil war. Ibrahimovic won’t be playing in Brazil this summer because Sweden narrowly missed out on qualifying. *

Ibrahimovic grew up in underdog circumstances, in a scruffy immigrant neighborhood in Malmö where he spent a lot of time outdoors—away from his cramped apartment—playing soccer on the streets and in playgrounds. In his early adolescence, he began playing for the youth teams of the local club, Malmö FF, traditionally one of the top clubs in Sweden. By his late teens, it was clear to the club that he had the potential to become the best player in the history of Sweden.

After two seasons with Malmö’s senior team, when he was 19 years old, the club sold him to Ajax Amsterdam for about $12 million. It was by far the most money ever paid for a Swedish player, and the deal continues to be good for Malmö FF: The contract had what is known as a “sell-on” clause, meaning that every time Ibrahimovic changes clubs, Malmö FF gets a piece of the transfer fee. (This practice is intended to reward clubs for developing players.)

His star just kept rising. He was still very raw when he arrived at Ajax, but he received exceptional training at a club that is renowned for its tutelage of young players. After three seasons at Ajax, he was a bona fide star. In one of his last games for them, he scored what is still one of his most famous goals (and he has scored *many* spectacular goals).

Shortly afterward, he was sold to Juventus of Turin, Italy for about $22 million (with Malmö FF getting a cut). More successes followed as he went to Internazionale of Milan (“Inter”), then Barcelona, then AC Milan, and now Paris St. Germain. This last transfer cost PSG approximately $31 million (with Malmö FF getting a cut), and Ibrahimovic’s salary, including bonuses, is now supposed to be about $19 million a year. This doesn’t include his endorsement deals with Nike and other sponsors.

Now 32 years old and in his absolute prime, he’s been fortunate in avoiding major injuries, and he takes exceptional care of himself. Ibrahimovic can be unbearably obnoxious, egotistical and piggish, but he’s also funny, self-aware, and extremely intelligent (despite his rough upbringing, he was admitted to the most academically competitive high school in Malmö, although he ultimately dropped out to focus on football). He has the focus and discipline to make the most of his physical gifts, as well as the business savvy to ensure that he is paid what he is worth.

He’s a quintessential modern footballer in that he moves easily between countries and has a worldwide following. He speaks five languages fluently. He continues to score spectacular goals, too: Here’s a very famous one from late 2012, the fourth of four goals he scored against England in a comeback from 0-4.

There’s a wonderful documentary from 2000 called The Road Back, which I included in the syllabus. In 1999, Malmö FF was relegated to the second division, an unthinkable humiliation for such a proud club. The filmmakers decided to follow the team through its 2000 season in the second division as it worked to regain its place in the top flight. But the film’s focus soon turns to the teenage prodigy on the team, the mercurial but erratic Ibrahimovic. It’s a fascinating look at the culture of a storied club, first of all, and it’s an intimate portrait of a future superstar who is still living at home in a small apartment and struggling to live up to the expectations people have for him.

Here’s the link. It’s about 50 minutes long.

You may also be interested in this eloquent interview he gave to BBC last year.

* Sweden came close to qualifying for the World Cup, but lost in a two-legged playoff series that must have been wrenching for marketing executives: the opponent was another smallish country, Portugal, with a singular superstar, Cristiano Ronaldo. Portugal won the first game at home in Lisbon, 1-0, setting up an exciting return game in Stockholm. Despite Ibrahimovic’s two second-half goals, Portugal clinched the last berth with three second-half goals by Ronaldo. The aggregate score was 4-2. Highlights of the second game.