Market Power

If You Build It, They Will Come

Maybe.

If they are subsidized.

The Minnesota Ballpark Authority is expected to announce today a $1 million fund to enhance the area around the Twins new ballpark.

Maybe.

Cross-posted at TSE

A New Stadium and a Bargaining Chip for the NFL?

Cross-posted at TSE

Edward Roski Jr. has unveiled plans to build a new stadium in the Los Angeles metro area to entice a team to move to the nation's second-largest market.

The proposed 600-acre site, near the southern intersection of the 57 and 60 freeways about 20 miles east of Los Angeles, would be surrounded by a shopping mall, and located on a vacant property which Roski already owns. Roski said around 12 million people live within 25 miles of the site.

“We are aware of it and are monitoring all stadium-related developments in southern California,” NFL spokesman Brian McCarthy said from his New York office.

Roski said the cost would be around $800 million, adding the stadium will be built into a hillside meaning far less steel will be required. And that, he said will result in a cost of about $400 million less than it might be otherwise.

Roski notes that there will be no public money involved in the construction of the stadium. The LA market that has been without a team since 1995, probably in part because it is such a lucrative threat point for teams seeking public funding for new stadiums in their current cities.

So, how does this announcement change the stadium game being played by the Minnesota Vikings, who have been trying for years to replace the Metrodome, and the other three teams mentioned in the article as possible tenants (the Saints, the Jaguars, and the Chargers)?

Art Diamond's Blog

One of my old professors from my Nebraska-Omaha days, Art Diamond, has a blog that I was not aware of. 

Making the World a Better Place by *Not* Being Politically Active

A few weeks ago I wrote a piece responding to my college's Community Service Awards, an award given to students who, among other things, "transform the social world."  The utopian nonsense of that last term notwithstanding, a recent column by Cafe Hayek's Don Boudreaux on how to get involved in society made a similar point.  At one point I wrote in my post:

I see a lot of students and former students working around town.  Many have, in the process of their jobs, served me very well and have thus provided me with value.  Since I am a part of the social world, they have, by definition, changed the "social world" for the better.  If I choose to nominate someone who has provided me with exemplary service in the performance of their jobs, do they get considered?

My point was that providing community service is not the domain of the "not for profit"  world.  In the for-profit world people profit by providing things of value, goods and services, at low cost to other people that those people voluntarily choose to acquire.  The fact that things get provided "for profit" does not disqualify the providers from having given "community service."  It's not the motivation that matters.  It's the outcome.

Similarly, I often hear how important it is to get involved in politics.  But Boudreaux notes in his column that every action has a cost:

So it is with time devoted to politics. The person who, say, volunteers to work for a political campaign necessarily takes time away from activities such as studying, working for a private employer or helping parents out around the house. As with baking bread, it might be true that spending time on politics is the best use of someone's time -- but it is far from being necessarily true.

And he notes that it is delusional to think that being involved in politics is always the optimal use of one's time:

It's a mistake to applaud greater involvement in politics as if such involvement is by its very nature the best use of people's time and effort. A more serious delusion is that politics is the only -- or, at least, the most noble -- venue for each of us to get "involved" with our fellow humans.

And the value that someone working in the for-profit world is likely to be larger than the value the person would generate in the political world:

Acting privately, none of us intrudes without invitation into other people's affairs. I might volunteer my opinion to my friend that he drinks too much but my friend can ignore me if he chooses. I have no way to force him to live as I believe he should live. For me, then, to become as involved as possible with my friend, I must strive to share my concerns with him in ways most likely to resonate with him.

...Similarly in our commercial relationships. The manager of the local Wal-Mart might not know you personally (which makes him, in this regard, no different from your state's governor or the president). But he plays a role in your life only if you personally (rather than "you" as a citizen of a political jurisdiction) explicitly choose.

If he stocks his store's shelves with products that appeal to you and prices them reasonably, he involves himself with you in a way that is mutually advantageous. If he fails to offer bargains that attract you, you need not be involved with him -- and he cannot force himself to be involved with you.

So by telling someone to be more involved in politics, you may actually be telling them to make society worse off, not better off.

Use Less Water, Pay More for It

The law of demand.  Yur doin it rong!

Even utility officials concede it seems unfair to penalize customers for conserving water during the lingering drought.

Yet, Atlanta and Fulton County are asking to do just that. Both have proposed 15 percent rate increases to offset losses to conservation.

Thankfully for the good folks of Atlanta and Fulton County, it's being held up:

So far, Atlanta city council members are blocking Mayor Shirley Franklin's request for a 15 percent conservation penalty. The fee increase would apply to anyone who uses more than about 2,250 gallons of water a month. That would affect most water users since 6,000 gallon is considered standard use.

The request, proposed in February, is languishing in the city council's utilities committee and not likely to move anytime soon.

"I've got it held," said Councilwoman Carla Smith, chairwoman of the utilities committee. "I'm struggling with it.

I don't want to have to pay an extra 15 percent just because I'm conserving. It seems unfair."

Emphasis mine.  I don't think "unfair" is the right word.  What they should have done is raised water rates in the first place in order to promote conservation.  If tap water demand is inelastic, they could have A. raised more revenue and B. gotten people to use less water.  Both problems solved.  But alas, politicians aren't required to have basic knowledge of economic principles.

Brand valuation in Baseball

Ironman had an interesting post at Political Calculations awhile back.  He wondered about measuring the value of a Major League Baseball team and wrote:

We finally hit on the idea of using the ultimate expression of fan loyalty: the authentic home jersey. Here, if we consider those jerseys that have not been customized in any way, to remove vanity and star player effects upon their value, we might reasonably get a measure of each team's value with respect to one another, simply by comparing the price of each. The cool part of this approach is that the price of a non-customized authentic home jersey would provide a fairly solid representation of the value of a team's brand - their value would purely be determined by the value that those teams biggest fans place upon their teams!

This is intriguing.   Majestic Athletics is the exclusive maker of the jersey, so I think you can safely assume that the marginal costs are the same across companies.  Differences in prices between teams will be due demand factors across teams (the number of fans, team quality, etc.).  We could also estimate the effect that a new jersey has on prices (see the Tampa Bay Rays, who changed their name by dropping the Devil (perhaps the Rays are born again?).

In a perfect world, it would be nice to know how many shirts were sold and, better yet, by geographic location, say by state.  That way we could look at fans apart from those living in the local area.  How national is the Cubs brand?  How local are the Rays?  But Ironman tried to get this data and was not successful.

Lastly, Ironman notes that there was not much of a relationship between jersey prices and team performance as measured by 2007 win percent.  I calculated a correlation of 0.0098 between these two values and I calculated a Spearman's rank correlation of 0.0539.  In neither case can I rule out no relationship between the two variables.  But with only 30 observations and with so many uncontrolled-for factors (new jerseys, championship effects, commemorative patches), it's hard to rule out team quality as a factor based on simple correlatons.

"Technological Doping"?

Cross-posted at TSE

Swimming has its version of the aluminum bat, an improvement in capital design that makes "labor" very productive, at least in an absolute sense.  Maybe too much so:

Since its debut at the Missouri Grand Prix in February, the new Speedo LZR swimsuit has made nearly as many waves out of the pool as it has in it. With 18 of 19 record-setting, long-course swims – the same pool format of the Olympics – and 17 of 18 record-setting short course swims for the LZR dating back to its inception, Speedo has had to withstand charges of “technological doping” from those in the swimming community and beyond.

FINA, the international governing body for swimming, met with the world’s top swimsuit manufacturers in an emergency meeting Saturday to determine whether the suit and others like it were giving certain athletes an unfair competitive advantage. Though FINA endorsed the suit for a second time and decided to allow other suit makers to copy the design, some in the swimming community have begun to take the matter into their own hands.

The NCAA men’s National Championships, the Italian Olympic Trials and the Canadian Olympic Trials are among meets that have banned the LZR – as well as TYR’s new swimsuit, dubbed the Tracer – from competition.

Given the discussion on this post and this post recently, I looked to see if there was anything regarding the official Olympic (i.e. event organizer position) on this swimsuit.  Perhaps readers have seen something, but I couldn't find anything in a quick GIS.  But it wouldn't surprise me if Olympic officials would like to see its use.

X Beers

One place is the domain of "extreme beer." Like genius, extreme beers defy easy classification, but you know them when you see them: barley wines ranging above 10 percent alcohol by volume, ultra-hopped ales and wood-aged beers — the traditional turf of wine and whiskey. Although "extreme" beers often have been linked to strong alcohol content, brewers say the label also applies to offbeat ingredients and zany brewing and aging processes.

Extreme beers can raise credibility and boost a little brewery's cachet among serious craft beer drinkers, those hard-to-impress folks who can casually discuss a brew's "balance," "gravity" and "hoppiness." But to see the beers as sales-boosters would miss the main point, brewers say. Mostly, the creative beers are just fun to make, offering the chance to heed their creative Muse.

Here's more  I think the Hop Head Double IPA would classify as extreme at nearly 10% alcohol.  I've also got several X beers at home including Avery's Reverend beer and their Imperial Stout. 

The Nets Net Private Land in a Kelo Land Grab

Story here by Tom Kirkendall.  The kicker:

The private property owners sued and argued that the state's claim of public benefit is a facade, as the Second Circuit puts it, "to benefit Bruce Ratner, the man whose company first proposed it and who serves as the Project’s primary developer. Ratner is also the principal owner of the New Jersey Nets. In short, the plaintiffs argue that all of the 'public uses' the defendants have advanced for the Project are pretexts for a private taking that violates the Fifth Amendment."

The Second Circuit upheld U.S. District Court dismissal of the property owners' claims, explaining that the massive private benefits to Ratner do not trump the state's judgment that the project will also benefit the public. Moreover, even though the costs to the property owners may far outweigh the public benefits, the Second Circuit concludes that type of cost/benefit analysis is irrelevant under Kelo

At the end of the day, we are left with the distinct impression that the lawsuit is animated by concerns about the wisdom of the Atlantic Yards Project and its effect on the community. While we can well understand why the affected property owners would take this opportunity to air their complaints, such matters of policy are the province of the elected branches, not this Court.

This sounds like what Congress and SCOTUS did with basbeall's antitrust exemption throughout the middle part of the last century.  Back then, the exemption became more and more of an oddity as other sports were held to fall under US antitrust law.  But whether baseball's antitrust exemption would be revoked became something of a tennis match.  Congress basically told the Supreme Court that it was their mess to begin with and that they should fix it and SCOTUS basically responded "Nuh uh.  You guys started it with your Sherman Act.  It's yours to fix." 

"Is not." 

"Is too!"

So let's see what congress does.  Will they fix this obtuse definition of public use or will they hit a volley back to SCOTUS?

 

Time For the Cubs to Collect from the Rooftops

From Yahoo! Sports:

Nothing obstructed the view of Wrigley Field on Monday from a pair of rooftop clubs whose owner has refused to share 17 percent of his profits with the team.

But if Tom Gramatis hasn’t paid up by the time the Cubs return home April 15, team officials said obstructions will be installed.

Cubs vice president Mike Lufrano said the team hopes it won’t have to do that, but that it’s unfair to other rooftop partners to let one rooftop get away without paying.

Whether it's fair - a term which is probably more of a public relations term - is largely irrelevant.  If Gramatis hasn't paid up (I haven't checked if he has yet) and isn't blocked, then in future iterations, the threat of blocking loses credibility.

I've often wondered why the Cubs haven't completely obstructed the view from the rooftops.  There are a couple of reasons I can think of:

1. The rooftop views are part of the unique allure of Wrigley.  It looks cool from the stands and it looks cool on TV.  Where else in MLB can you see people watching the games from beyond the confines of the stadium?
2. Construction costs, of course

Some may claim that the Cubs are wealthy enough not to have to do this.  But it's not a question of affordability.  It's a question of property rights and the freedom to exchange them as the Cubs see fit. The neighbors are profiting from the use of another private entity's product.  If it were only a few people watching from the neighboring windows, then the Cubs probably wouldn't bother.  But since the rooftop views are so popular that bleachers have been installed on the neighboring rooftops, it makes sense to try and get some of the profits.  After all, the Cubs own the right to display their games as they see fit.