Market Power

Musings by an academic economist on the power of markets and the power over markets.

Saturday, December 25, 2004

Value of College Sport Media Rights

At least at the University of Missouri, it's no less than $32.5 million over 11 years.


Friday, December 24, 2004

Happy Holidays!

I doubt if I will do much posting over the next two-three days as I spend some time with my family. I hope each of you has a happy and safe weekend.


Thursday, December 23, 2004

The BCS, the AP, and a Div I Playoff

Yesterday I wrote this blurb on the AP's decision to not allow the Bowl Championship Series to use its poll in determining who gets into the 4 major bowl games.

I've read a couple of places where fans have thought that this is the first step towards a Div I playoff. In order for this to pave the way for a playoff, this decision by the AP would have to alter the marginal benefits or the marginal costs to make it optimal for the NCAA to have a playoff system. It seems that this decision forces the NCAA to find an alternate way to determine who gets to determine the national championship, and it may alter the marginal costs of doing so, but it's hardly going to tip the balance towards a playoff.


Telescope Images

Wednesday's Wall Street Journal hasan article about telescopes. I haven't been able to access the online version of the article so I don't have an address for you. Anyways, the moral of the story is as follows: caveat emptor. The telescope that you are getting in that box will help you see that object colorfully depicted on that box, but it will not help you see it with the colors and the clarity that you see on the box.

For example, M42, the great nebula in Orion, is visible to the naked eye. Here's a picture of it from the Astronomy Picture of the Day from September 27th, 2004:

Colorful pictures like this are composites of several different time-exposures taken through color filters to highlight different elements, such as hydrogen, that exist in the cloud. The images are also very purty. The images are then put together, these days with programs such as Adobe Photoshop, into striking images. But through many telescopes, it looks like mostly like a white, whispy, featureless cloud, and will be a disappointing view to many.

Unfortunately, some people have sued telescope makers for false advertising.


Wednesday, December 22, 2004

The AP Wants out of the BCS Formula

Here's the Washington Post Article (free registration required). The main problem is that we know who votes for whom in the AP poll. This creates some big problems, and conflicst of interest, for the voters. Two quotes:

"Three AP voters from newspapers in Texas were criticized for moving the Longhorns ahead of California. In another incident, a sports columnist in Alabama was criticized in a story on the front page of his own newspaper for voting the Trojans and Sooners ahead of Auburn."

"The AP had to do this and the BCS should have seen it coming," said Jerry Palm, who publishes projections of the BCS standings on his Web site, "It was obvious to me that it was an ethical dilemma for the writers. It could have come down to one guy deciding who will get $14.4 million. It's a real problem for the sportswriters. They shouldn't be deciding this and coaches shouldn't be deciding it, either. Coaches have a clear-cut conflict of interest and secret voting, so there's no accountability."

According to the article, BCA officials are considering using a committee to choose who gets into the BCS bowl games.


Private Financing for the NY Football Giants?

This article (registration required) in the NY Times describes the latest proposal made by the owners of the New York Football Giants regarding the construction of a new stadium at the Meadowlands. The owners have offered to foot the entire bill (estimated at $700 million) of constructing the new stadium. What's the catch? The stadium would be built on land own by the state (New Jersey) and the team would pay no rent and it would have control of all events that go on at the stadium. Yes Virginia, there is a public subsidy here. It amounts to New Jersey's opportunity cost of using the land where the stadium is to be built. In short, the team pays for the stadium construction on land that it gets from the state at no cost.


Tuesday, December 21, 2004

Wal-Mart and Computers

Wal-Mart now offers a laptop computer for less than $500. How did Wal-Mart cut the costs of this computer? The computer uses a Linux-based operating system instead of Windows. See this St. Louis Post-Dispatch article.


The Google "Online Reading Room"

The Minneapolis Star-Tribune had this AP article on Google's quest to scan collections of documents from some of the best research institutions. Of course, there's the obligatory concern about the dreaded "p" word:

"Google's ambitious effort could herald the beginning of the commercialization of libraries, which long have been trusted as an independent resource for books and knowledge without the obvious trappings of marketing or goals of profit {emphasis by Phil}.

"For the sake of wider public access, librarians and archivists are grateful and excited about Google's underwriting of the otherwise cost-prohibitive effort to scan millions of books and research materials."

"Yet they also know that Google, the world's leading Internet search engine, relies on revenue from advertisements that often are related to the search topic at hand."

It's the existence of those revenues that allows Google to do this "cost-prohibitive effort." Profits aren't bad things. They are good things that allows for this to be done in the first place!

I was puzzled by this concern:

"And the agreements that Google worked out with the research institutions are nonexclusive, which means Google's rivals, such as Yahoo or [link in the original article], might try to get access to the same material Google digitizes and use it for their own purposes.

In other words, even if Google remains true to its word to "do no evil," another search engine without the same ethics might come along."

This isn't a bad thing. Suppose some other search engine without the same ethics appears in the marketplace. If consumers care about the ethics of Google, the competitor won't be successful unless it can offer something of value in return that Google doesn't. In other words, if consumers care about ethics, then ethics are what they shall have.

Count me as another one of those excited to hear about Google's efforts.


Tony Kornheiser is Back on the Radio

The day that Tony Kornheiser left the ESPN airwaves was a bummer of a day. I've had worse days, but I enjoyed listening to TK's particular brand of humor and I was disappointed that his show was taken off the radio. But hallelujah! TK is back on the Radio at Sports Talk 980 out of the DC area.

Thanks to Sparky for the heads up.


I Don't Think We're in El Paso Anymore

A Mexican immigrant in California thought he had jumped a train heading to El Paso, Texas. He ended up in Mankato, Mn. See here (pay registration required). A quote from Blue Earth COunty Sherriff Brad Peterson:

"He hopped the train and ended up somewhere else, so he asked someone else and got on another train, then on another. Somehow he ended up in Mankato..."


Monday, December 20, 2004

A Minimum Wage by Any Other Name...

would still create unemployment. First it was the minimum wage, then a living wage, now we have advocates for a "housing wage."


The Exploding Zambonis

One doesn't often here about zambonis exploding, but that's exactly what happened this weekend in a Duluth hockey arena.

The Exploding Zambonis would be a great name for a ska band.


I Voleked Somone!

King at SCSU Scholars is in the dumps because his fantasy football team lost to an opponent who had picked up Billy Volek for his/her team. Not to toot my horn (I'd rather prefer to it as blasting my own tuba), but I made a good move in my fantasy football league that put me in the Super Bowl. I had to play the number one team in my league, the powerful Vicodin Addicts whose coach, through many shrewd moves, went 12-1 in the league. I didn't have a good feeling about my regular QB, Brett Favre, mainly because of the weather that was expected in Green Bay. Favre performed admirably, and would have given me 30 points, but instead I picked up Billy Volek off the scrap heap and he went out and got me 58 points, more than enough for me to taste sweet victory. Without Billy, I'd be playing for third place.

Thanks, Billy. The ice cream's on me.

Now, should I play Volek or Favre this weekend????? Minnesota's defensive backfield isn't exactly playing real well this year and the game is indoors at the Dome. Whoever wins this game wins the NFC North. Volek and the Titans play the Broncos. Decisions, decisions, decisions.


Not Everyone is Convinced

Some folks in Indy believe that the Colts bring economic development to Indianapolis. See here. A quote:

"Brent Compton, 34, Terre Haute, said the impact of the team reaches far beyond Central Indiana. Heading to Sunday's game with several other season-ticket holders from the Terre Haute area, Compton said the firm he works for, Pacesetter Sports, is a good example.
"We do a lot of business with the Colts, and we also sell a lot of team merchandise," he said. "When they are winning, it is even better. That just creates more demand.""

I have no doubt that having the Colts in Indianapolis creates demand for a team that sells sportswear, but where does that demand come from? It doesn't just materialize from out of nowhere. When someone buys a Colts sweatshirt, that's a sweater not bought from the Gap.

Another quote:

""I'm a fan, even though I've never been to a game," said Williams, executive director of the Christamore House community center on the Westside.
"I believe there is a lot of value in attracting people and businesses. And they do create some jobs," he said."

What type of jobs are created? What types of jobs are displaced?

If you haven't read John Palmer's piece on why professional sports are not a catalyst for economic development, here's the link to his paper.


How to Catch a Crook

Springfield, Mo. police lured 118 suspects wanted for various crimes by tricking them into thinking they were going to get unclaimed money.

Two things to learn. 1. If it seems too good to be true, it probably is. 2. Don't do it. Sooner or later, you're going to get caught.


New College Basketball Arenas

The University of Missouri's basketball programs are playing this season's games in the brand new $75 million Mizzou Arena (formerly knows as Paige Sports Arena). Today's St. Louis Post-Dispatch has this interesting article about new basketball arenas on college campuses.

Proponents often point to positional externalities as a reason for the construction of a new facility or the renovation of an old arena: Our school needs one because the schools we compete with have them – kind of like why steroids permeate sports. A quote:

“"It's obviously a big boost for us, something we needed to do to stay competitive," said Tim Hickman, MU's associate athletics director of operations.”

The University of Illinois is looking to get a new basketball arena. Why, because ol’ Mizzou got one:

“’In the long run, I think it would be for the best (for Illinois to build a new facility)," Illini basketball coach Bruce Weber said. "The big thing is to not get left behind, because now you do have Missouri getting one, they're obviously one of our rivals. If we wait two or three years and nothing happens, then I think we're doing ourselves a disservice’."

One angle is that new and renovated facilities can help bring in good recruits:

“Why are universities so willing to roll the dice? One reason is that the newness of the facilities and their high visibility can lure top recruits to campus.”

I’d bet that the existence of a new building would not be a big reason why most players choose a particular school. New arenas might make the difference in some particular cases. But most mens' players have dreams of playing in the NBA and the building in which they play, old or new, isn’t going to give them the necessary training to make it to the next level.

Luring top coaches is another matter.

“It's difficult to quantify how many recruits actually base their college choice on a building. But at least one coach took a job based partly on having a new arena.”

That would be Bobby Knight of the Texas Tech Red Raiders.

The new arenas, and their new sources of revenue, allow schools to compete for the better coaches who can then lure in the top recruits. Think of two of the top NCAA Division I programs: Kansas, and Duke. Both programs play in an old building (the Post-Dispatch says here that their arenas are two of the top 5 old barns still in use). But year in and year out, these schools are consistently in the top echelon. The difference makers are the coaches that prowl the sidelines.

Mizzou’s arena is a beautiful facility and it is going to generate a lot of new revenue for the athletic department. There are massive restrictions on compensating players, but not so when it comes to compensating coaches or the athletic department bureaucracy. I wonder how its officials will spend the new cash.