Market Power

Troubles for North Carolina Football

If this "money trail" is found out to be what some are implying, then file it under "non-price rationing."

Since the NCAA and state of North Carolina probes began in July, UNC also began its own investigation into potential academic fraud involving a tutor. Multiple Tar Heels football players have been suspended from games and practices this season, and Blake resigned on Sept. 5, less than one month after a Yahoo! Sports report revealed his former position as an employee of Pro Tect. In a statement, Blake stated that he decided to step down because his presence was becoming a distraction to the football team.

I've said it before and I'll say it again.  The problem with corruption in the NCAA is not the fault of agents.  It's the NCAA's own steadfast sticking to the "amateur" status of athletes in football and men's basketball while their member schools rake in millions of dollars.  As long as player are not compensated by an amount less than they generate in terms of revenue and donations for NCAA member schools, we will continue to see these stories pop up in the press.

Damn Right It's Good to be the Cupcake

The demand for cupcakes - typically lower-level college football teams that will travel to an established program and offer up their hides in exchange for a big payday - has soared over the past few years, especially with the addition of the 12th game in the regular season schedule.  The results are expected:  the price of cupcakes has exploded.

On the other hand, SDSU officials say the revenue from such games is needed. Which is a big reason SDSU agreed to play another power-league team Saturday at Missouri. For playing the game, Missouri will pay SDSU $800,000. Same goes for next year, when SDSU has agreed to play at traditional powerhouse Michigan for $1,016,800.

I'm not convinced that SDSU is that much of a cupcake.  But maybe that's just the pregame jitters for me.

There's a paper in here for an entrepreneurial person willing and able to dig around for cupcake prices.  The prices of cupcake games should depend on the number of regular season games, the demand for the home team's games (which partly if not completely explains the $200,000 between the Michigan and Missouri payouts), and other factors.

Rivalries in the Big 10

I like the way that the Big 10 made maintaining most of its rivalries a priority.  Save for the Iowa-Wisconsin series, they were able to keep the rivalries a part of the overall landscape in college football.

Commissioner Jim Delany stated repeatedly the past several months that the Big Ten would prioritize competitive balance and protecting rivalries in forming its as-of-yet unnamed divisions, and I'd argue the league successfully achieved that. Each side has two of the four "glamour" programs (Ohio State and Penn State in one, Michigan and Nebraska in the other) and one semi-regular title contender (Wisconsin in the former, Iowa in the latter). And nearly every important rivalry will still be played annually, with the notable exception of Wisconsin-Iowa. (The Badgers are the one team with a legitimate gripe about their placement.)

Meanwhile, Nebraska's impact will be felt almost immediately upon its arrival. When the Huskers' 2011 schedule scrolled across the Big Ten Network ticker, the first two games to show up were "at Wisconsin" and "vs. Ohio State." They'll spend their first November playing at Penn State, at Michigan and vs. Iowa. Think those games might get some eyeballs?

As far as new rivalries go, I think that the Iowa-Nebraska series has all the makings of a natural rivalry.  By that I mean that it derives up from the fanbases of both schools, not down from some Bill McCartney-esque intelligent designer.  

You have neighboring states that have flagship football programs that have been very good at the same time.  Of course Nebraska has the overall edge on success, having won five national championships.  But I recall when I lived in Omaha back in the late 80's and early 90's that fans from each side were chomping at the bit for their teams to play.  The Iowa fans wanted the Hawks to show that they could beat the Bugeaters and Cornhusker fans wanted the Huskers to put the Hawks back in their place.  

Time will tell if this is a good rivalry or not.  One or both teams could go into the dustbin of college football and the series will become an afterthought.  But if I were a bettin' man, I'd bet this becomes a nice rivalry.

Three on College Conference Reallignments

The speculation started by the announcement that the Big 10 is going to look seriously at expanding has the college football world in a tizzy.  Here are three articles looking at some of the issues surrounding potentially-affected leagues and teams.

"Notre Dame:  Conference realignment could force Irish to join one" by Ralph Russo of the AP.

Kansas City Star:  "TV is the key to future for the Big 12" by Sam Mellinger.

"If invitation sent, Buffs can't turn down Pac-10" by Neill Woelk.

What Determines Bowl Ticket Sales at the Institution Level?

Todd McCubbin, the executive director of the University of Missouri Alumni Association, writes a short piece on the number of tickets sold by Mizzou to this year's Texas Bowl.  His short essay is located on page 47 of the spring 2010 issue of the Mizzou alumni magazine (I don't have a link to the piece, but here's a general link to the alumni magazine).

"The mystery of the Big 12 bowl selection process still casts a shadow on the 2009 campaign.  For the third consecutive year, teams the Tigers defeated were selected ahead of them.  Our e-mail and phone lines were busy as many of you voiced concerns about the process.

The media shed light:  The bottom line seems to be that, unless a team is conference champion, wins and losses mean little.  Instead, bowl organizations make selections based partly on television ratings but mosly on how many fans travel to watch the game in person.  It can be tough to swallow that a team's performance on the field can count for so little."

McCubbin goes on to say that about 10,000 Mizzou fans made the trip to Houston, but that was short of the school's 11,000 ticket allotment.

As part of my sabbatical research, I have been working on examining the ticket sales made at the institutional level for the 2008-2009 bowl season.  My source for tickets sold is this post at the Wiz of Odds.   The results are preliminary and, as such, have not been peer-reviewed yet.  So take this for what it's worth.

Here are some results from a preliminary STATA analysis on my data.  The numbers are the result of an OLS regression.

Variable	Parameter	Standard Err	t-statistic	p-value
Tradition	264.3157	45.48273	5.81	0
Years Since Last Bowl	618.8521	112.5678	5.5	0
Dist from Nearest NFL Stadium	17.07413	2.621021	6.51	0
Distance from Bowl Location	-2.229766	1.103187	-2.02	0.048
BCS Dummy	3382.728	2124.074	1.59	0.117
Local Population	0.0006327	0.0003135	2.02	0.048
Private School Dummy	-4206.533	1783.724	-2.36	0.022
Intercept	1474.826	1355.562	1.09	0.281
N = 64
F(7, 56) = 0
R-Sq = 0.6700
Root MSE = 4785.7

I defined Tradition as the number of Division/FCS level bowls the program has been to in its history.  Local population is the local population of the university's city.  I tried controlling for university enrollment and bowl city average temperature during the month of the bowl but neither added anything to the results.  I didn't have any information on ticket prices.

The regression explains about two-thirds of the variation in ticket sales.  Not too bad.  The analysis tells me that teams that have more tradition sell more tickets.  For every bowl game the team has been to in the past, about 264 more tickets are sold.  Teams that haven't been to a bowl in awhile sell more tickets (this tells me that winning is subject to diminishing marginal utility).  For every year it's been since the last bowl appearance, the university sells about 619 more tickets.  The farther a university is from an NFL stadium, the more tickets sold (about 17 more tickets for every mile in distance away from the NFL stadium).  The farther the university is from the bowl location, the fewer tickets sold (about 2 fewer for every mile in distance).  Playing in a BCS game doesn't statistically explain the variability of ticket sales.  The bigger the local city's population in which the university sits, the more tickets that are sold.  Lastly, private schools on average sell about 4,207 fewer tickets to their games.

So, if bowl executives do pay attention to expected ticket sales and to the extent my analysis captures what they do, they pay attention to tradition, how long it's been since the team last went to a bowl, how far a team is from an NFL stadium, the distance to the bowl, the university city's population, and whether the school is public or private.

So how did Mizzou perform in terms of the number of tickets sold through the athletic ticket office to the Alamo Bowl game the football team played in?  According to my calculations, Mizzou should have sold about 8,817 tickets.  They actually sold 6,050.  Part of the difference can probably be attributed to randomness inherent in the data.  But part of it could be that there may be some reason for fan disinterest at Mizzou that I don't capture with my regression.  If it's the latter, what could it be?

Cross posted at The Sports Economist

Bye Bye, Big XII?

The Big 10 has been considering expansion to add a 12th team that would allow it to add a championship game in football.  Missouri has been rumored forever (I doubt it will happen), while the internet buzzed about a supposed announcement declaring Pittsburgh the winner of the Big 10 Entry Sweepstakes.  Neither situation has panned out yet.

However, Tom Keegan at the Lawrence Journal World is reporting that Texas and the Big 10 are talking. 

In addition, the Pac 10 has also apparently gotten in on the expansion talk.  The hot rumor right now is that Colorado and Utah are the most-likely candidates to join the Pac 10.  Here's a link to the Wiz of Odds that has a bunch of other links on this particular expansion talk.

Update:  I see Frank the Tank also has a post up about the Big 10 and Texas.

Lane Kiffin and Coach Pay

So, Lane Kiffin bolts Tennessee for glitzy LA, pissing off his players and legions of Volunteer fans and earning the scorn of sports writers.  Sally Jenkins writes:

Kiffin is merely a product of the soured professional environment in which he came up. The BCS culture itself is fundamentally dishonest, a cartel of six major conferences and Notre Dame, ungoverned by the NCAA, that seeks to hoard $1 billion in bowl profits. How can we expect the competitors to be ethical? Or sensible?

HT Stephen Karlson.  Let's not forget something else about the "professional environment" facing coaches.  They don't have tenure and can be fired seemingly on the whim of administrators.  Just this year, two more-or-less successful Big XII coaches, Mike Leach and Mark Mangino, were recently fired after having signed contract extensions.  A third, Jim Leavitt was also fired.  It's hardly unreasonable to expect a coach to look after his own interests. 

Jenkins also quotes Minnesota AD Joel Maturi:

Recently, Minnesota Athletic Director Joel Maturi made a startlingly explicit statement to the Sports Business Journal about the nature of the BCS and what it's done to administrators. "The BCS doesn't want to share the money" he said. "Let's be honest. We bring in the money, Why should we share it? We need the money desperately because we're paying coaches millions of dollars."

This is the same excuse that MLB owners trot out during labor negotiations when they are trying to get the public on their side, and it's no less silly when applied to the supposedly amateur college sports.  Revenues don't depend upon salaries.  Salaries depend upon revenues.  The reason the coaches are getting paid the big bucks in the first place is because of all the revenues that teams generate, including BCS moneys. 

Winners and Losers in College Bowl Games

It's well-known that in terms of accounting entries, many college athletic departments lose money. Some economists have questioned whether the expense and revenue entries are an accurate measure of the costs and benefits associated with athletic departments. One reason given is that athletics may benefit other parts of the school. Even if the athletic departments bleed money, other areas of the school may benefit.

A second argument given is that the revenue and expense entries are convoluted by the accounting conventions used by colleges. If athletic souvenir revenue is entered in the general university revenue account, then the athletic revenue accounts understate the "true" level of revenue. Similarly, it's not at all clear that the true cost of an athletic scholarship is as high as the posted tuition and room and board rate. If not, then athletic expenses as entered overstate "true" expenses.

In any case, the San Diego Union-Tribune has recently posted a couple of interesting stories about who benefits and who doesn't benefit from college bowl games. The answers may (or may not) surprise you. Here is one story. Here is the other story.

Florida State and Academic Fraud

ESPN.com has an interesting piece on the academic fraud case that is hanging over Florida State's football program currently.  It focuses on players who can't even read but who were allowed into FSU's student body.  An excerpt:

As the learning specialist working with the most academically challenged athletes at Florida State, Brenda Monk was confronted each year with recruits who would seem to have little chance of surviving on a college campus. Their deficiencies were laid out in transcripts and psycho-educational reports submitted during the admissions process.

Sometimes, the athletes knew exactly what they were up against. She recalls a conversation with one such player in her office at Doak Campbell Stadium.

"You might as well know right off the bat, I can't read," he told her.

"Then how are we going to get through these college classes?" she asked.

"It's easy," he responded. "You get to read to me."

Maybe I'm old fashioned, but a person who cannot read, god help him, by the time he reaches adulthood should not be in university.   Reading is a skill that a person should have before they come to college, not to be taught or glossed over while in college.

Factors of Demand

In a typical Principles of Economics text, the factors of demand that are included in the introductory chapter on Demand and Supply are price, consumer preferences, the number of consumers, prices of related goods (complements and substitutes), average consumer income, price expectations, and miscellaneous factors.  Chalk this up as a miscellaneous factor:

But Ciudad Juarez and El Paso, separated only by the Rio Grande and a couple of border checkpoints, are worlds apart.

Despite its movie reputation, El Paso — home of the Sun Bowl where the University of Oklahoma will play Stanford on New Year’s Eve — remains one of the safest cities in the United States.

Just last month, one study declared El Paso the second-safest big city in the country, trailing only Honolulu, according to the El Paso Times.

Yet many Sooner fans who annually travel to OU’s bowl games are sitting this one out. And concerns about safety are playing a role.

On a NewsOK.com online poll, almost half of the more than 800 respondents who aren’t going to the Sun Bowl noted their reasoning was they don’t feel safe with all the violence happening across the border from El Paso.

"Juarez has the highest murder rate in the world,” said Edmond resident Craig Blankenship, who has traveled to the last 10 OU bowl games with a group of about 20 family and friends. "We’re not interested in El Paso. We will stay at home and watch it on the tube.”

OK, so it's a combination of miscellaneous factors and the price of substitute goods.  Still... HT Wiz of Odds