Market Power

Why Are College Football Programs Willingly Moving Their Home Games to Pro Stadiums?

In my sports economics classes, I characterize college athletic departments as profit-seeking firms, despite their non-profit status.  The non-profit status doesn't preclude profit-seeking as an objective,.  Being non-profit means that a department can't disperse profits to "owners."  Recently I ran across three articles that have done nothing to shake that assumption.

Joseph Duarte of the Houston Chronicle writes about some of the reasons that major college football programs are giving up home games to play in NFL stadiums.

Harvey Araton in the New York Times has a similar story but with an east-coast flavor.  But I'm not convinced that the search for revenues is cost driven.  Rather, the costs are driven by the revenues.  HT Wiz of Odds.

Stu Durando of the St. Louis Post-Dispatch discusses why the Mizzou-Illinois Arch Rivalry game won't be continuing after this year.  The game, which has been played annually in the Edward Jones Dome in St. Louis has been profitable for Missouri, but not so profitable for the Illini compared to the profits they expect to make from their home games.  It takes two to tango and the Illini don't want to dance anymore.  The article is an excellent look inside the business side of college football.

Government Pay Links - Including Sources to Obtain Coach and Athletic Administrator Data

Via NCSU's Craig Newmark.

Here is a directory of federal, state, and local government employee salary databases with lots of details.  Since public university coaches and athletic department administrators are public employees, this is a good source to look up their salaries.  Here's Mizzou's Mike Alden.  Here is former MU linebacker and current assistant football coach Barry Odom.  He makes almost as much as Alden, which surprised me.  I searched here for Minnesota State University's head football coach, Todd Hoffner, and his salary from 2008 was in there.  This could be a very valuable tool for sports economists interested in examining the salaries of coaches and athletic administrators at the big school and little school level.

Here is a searchable database of college and university employee salaries.  The list is incomplete (I didn't see a link to Minnesota colleges and universities although the above link has this data in it).

Lastly, the incomparable Ironman has three links - here, here, and here - relating to analysis of federal employee pay.

Markets in Everything: Athlete Labor Market Edition - But Not What You Think

From Alan Scher Zagier at the St. Louis Post-Dispatch:

Career placement for athletes has even become a cottage industry, with schools such as Clemson, Kentucky, Ohio State and Oregon hiring private companies such as CareerAthletes.com that specialize in connecting athletes with job leads.

Here's the story.  The problem facing any college graduate is giving off the "right" signals to prospective employers, signals that tell the employers what type of employee the graduate can become.  Zaiger notes that job recruiters are looking for people who have time management skills, a willingness and ability to sacrifice and to take criticism, and leadership skills.  The typical non-athlete will hold down jobs, get involved in departmental clubs and organizations, and get internships in order to send the appropriate signal to recruiters.  

But what can athletes do?  There are NCAA rules that restrict the ability of players to hold down jobs, but any college athlete will tell you that her sport is her job.  It takes a lot of hard work and determination to even make it to the second or third string on a team, let alone what it takes to be a starter or the first player off the bench.  The sport is so time-intensive that the opportunity cost of interning and being involved in campus organizations is very high.  Surely this is one reason why, as Zaiger notes,  former college athletes often have a name-recognition edge on the job market.

What about other signals, like GPA?  A GPA can tell you a lot about a person's time management skills, willingness and ability to sacrifice, etc, especially in disciplines like economics, engineering, and math.  But the signal sent by GPA's in majors like education, sociology, social work, and the various "studies" majors, where how you feel is held in higher esteem than in fields like math, is more muddled.  Moreover, you don't see many players, especially in the revenue sports, majoring in difficult fields like economics, chemistry, chemistry, and math for the same reason they don't participate in campus organizations:  the opportunity cost of these programs is too high from their point of view.  

Lastly, the biggest criticism often levied on the revenue college sports is that the players receive no monetary compensation for their time and effort.  While this is true, they do receive non-pecuniary benefits that at least partially offset the lack of money income, and this placement service is one of them.

The roughly 500 Missouri athletes receive far more individualized care than the 8,000 students who visit the campus career center in person or online each year, acknowledged the center's assistant director Craig Benson. 

But given their service to the school, that extra attention is deserved, he said.

HT to Marginal Revolution, as always, for the MIE title tag.

Why Did Mike Anderson Flirt with Oregon So Publicly?

So, coach Mike Anderson, aka CMA, the Missouri men's basketball coach, has chosen to remain at Missouri rather than go to Oregon.  Joe Walljasper has an amusing take on what he would have liked to have seen in terms of an announcement.

"Here was my vision for today’s Missouri basketball postseason banquet: Coach Mike Anderson takes a seat behind a microphone and places hats from Missouri and Oregon in front of him. After explaining that there are many things to recommend about both schools, he declares his allegiance by donning the appropriate headgear."

I would rather have seen him don the head of the team's mascot, ala College Gameday on ESPN.

But why would CMA have flirted so publicly with the Ducks in the first place, especially given what he's building at Mizzou and the fact that two sons of one of his best friends are members of CMA's highly-ranked 2010 recruiting class?   Bryan Burwell has an interesting take:

"Two words: Phil Knight.

Knight, Nike's chairman of the board, is one of the most powerful forces in the business of sports and he essentially runs the Oregon sports program with his limitless checkbook. He also carries so much clout in college basketball because of those lucrative shoe and apparel deals schools like Missouri sign with Nike. And if you weren't aware of it before, Mizzou is considered one of Nike's favorite high-profile clients (remember the special uniforms Nike designed for Mizzou football for the Kansas game last year? They don't give that star treatment to every program).

The most popular theory in college basketball circles is that when the Nike chairman beckons — particularly if you are working at a Nike school — you are obliged to listen.

So it wouldn't be unreasonable to assume that even if Anderson wasn't truly interested in the Oregon gig, he had to at least go through the motions in deference to Knight."

I think that's the right take.  I would have been disappointed to see CMA take the Duck's job, but I wouldn't have held it against him if he had. Reports suggested he may have made at least $500,000 more per year at OU.  Because of the toxic political cesspool that is academia, it doesn't take much for the winds of change to start blowing against you, so you have to do what's best for you and yours.  If that means taking the money and running, then so be it.  Besides, I doubt he really had much interest in the Oregon job (see the next-to-last paragraph here).

The State of The College Basketball Sausage Factory: Two Links

One not so serious on this April Fool's Day (via Phil Porter).

Cornell's run to the Sweet 16 as a No. 12 seed may be tarnished after reports surfaced today that all 13 players on the roster have been given elite educations that all but guarantee high-paying jobs after they leave the school.

"It's important to remember that right now these are only allegations -- allegations that we are looking into," said NCAA president James Isch. "But, obviously, if true, this would be very disappointing. The NCAA has certain expectations and standards. It's not fair for players at one school to be given expensive educations while athletes at other member schools receive basic, remedial instruction that is worth essentially nothing."

One more serious and the reason for why I used the sausage analogy:

Three years ago, when Royce Waltman was fired as the coach at Indiana State, he gave a memorable and prophetic news conference at the Missouri Valley Conference tournament.

He opened by thanking the university administration for handling his dismissal with "the deft touch of a 20-mule team." He continued with a statement so honest and salient that it resonated deeply as the college coaching carousel spun again this week.

"If you get fired for cheating, you can get hired right back again," he said. "If you get fired for losing, it's like you've got leprosy, so young coaches need to bear that in mind. Cheating and not graduating players will not get you in trouble, but that damn losing. ..."

Being a college sports fan seems a guilty pleasure when I read these kids of articles.

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

Should the NCAA Expand Its Men's Tourney?

My latest at The Sports Economist, a short post about the potential of a larger MBB tourney in the NCAA, is up. 

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. 

Four on Facilities in Major College Football

I've got another post up at The Sports Economist, this one on facilities in major college sports.

USC, Mayo, Price Ceilings, and Third Party Punishments

My latest post is up at The Sports Economist.  I write about the recent announcement that USC has self-imposed some harsh penalties for the O.J. Mayo side payments flap.