The World Cup Fiasco

It’s been building for a while, and last night what everyone already knew was made open: The BBC had more dirt to dish out on FIFA’s World Cup decision committee.  It turns out three more members of the decision committee took bribes in the 1990s.  This is in addition to the two members offered bribes by a Sunday Times sting just a few weeks ago.

Cue all sorts of outbursts from people across the board.  In the above-linked BBC article, FIFA is said to have “dismissed” the allegations, although the IOC (Olympic committee on which one of the implicated men also has been involved) has said it will investigate.  This probably sums up the difference between the IOC and FIFA in terms of rooting out corruption, a common complaint of Declan Hill, the excellent investigative journalist banging the drum for rooting out corruption in sport.  He’s written once again incisively on the FIFA World Cup vote, the winner of which is to be announced on Thursday (for 2018 and 2022).

The BBC has had to defend itself from incredible attacks from all sides relating to this; most pertinently and hard to fathom is the England bid team’s outburst.  Apparently “are relevant to the current bidding process”.  What?!?!  Evidence that another 4 of the members who vote, on top of the 2 previously suspended ones from the Sunday Times sting, are corrupt means that a quarter of the 24 (now 22) man committee is corrupt.  How on earth is that not relevant?!?!  There are times when people say things that beggar belief, and this is one.

What is clearly required is a substantial reform of the bidding process for World Cups in the light of all this.  Why should a select band of clearly corruptible men make decisions that are worth billions to countries?  Why shouldn’t all FIFA members vote, an alternative structure that would make corruption much more costly (if not impossible)?

Stupid Rules and Incentives?

Scottish referees are causing controversy currently with their plans to strike this weekend over the abuse they are suffering North of the Border, and on Wednesday one particular Scottish referee was party to another controversy, this time in a European tie between Ajax (of Amsterdam) and Real Madrid.  Cruising to a 4-0 victory, Real had two players sent off in the last few minutes in somewhat comedy fashion.

It turns out these two players, Xabi Alonso and Sergio Ramos, were a yellow card from suspension.  Real, with a win last night, qualified with a game to spare for the knock-out stages of the Champions League – the premier European football competition.  Thus instead of risking that these players get another yellow in their next competitive match in the competition which would lead to their suspension for the next match, coach Jose Mourinho appears to have instructed both players to get sent off because a sending off leads to a one-game suspension and the slate wiped clean.  So the two players miss the meaningless final match against Auxerre and are free to play in the all-important knock-out stages.

This is the kind of managerial genius Mourinho is famed for from his times in charge of Porto, Chelsea and Inter Milan.  Of course though, UEFA aren’t so happy about it, and are mooting the possibility of taking some action.  This would of course be a sad mistake – but UEFA are very good at making such mistakes.  The Guardian has written that UEFA would be better placed to ignore the incident.  As they say: It’s a ridiculous loophole created by UEFA’s own disciplinary system, and it’s hardly the worst example of poor sportsmanship ever witnessed in football or elsewhere.

It neatly epitomises the sometimes perverse incentives that institutional structures set in place and so the response, if any, should not be to create more rules on top of the existing seemingly ill-conceived rules.  The Guardian has some suggestions, such as making dead rubbers meaningless for cards, or doubling cards up if they are spotted to be deliberately induced.  These though seem to work within the existing flawed system.  Why not make the disciplinary system progressive in the sense that the slate isn’t wiped clean if a player gets a red card – why reward bad behaviour in such a way?

An IJSF Editorial Meeting

I was recently in Eugene, Oregon, at the University of Oregon-University of Washington football game.  My host was IJSF founder and first editor-in-chief, Professor Dennis Howard.  I’m on the left, in the University of Alberta Pandas hat; Denny is on the right in the Ducks hat.

Denny recently finished a two year term as Dean of the Lundquist College of Business at the University of Oregon.  He has returned to his faculty position at the Warsaw Sports Marketing Center Center.  As you can easily tell from the picture, we have clearly been involved in deep scholarly conversation about the IJSF at the Lundquist tailgate party outside Autzen Stadium before the Oregon-U Dub game.  I can attest to the fact that Lundquist Dean “Kees” de Kluyve knows how to host a tailgate.

For our readers outside North America, a “tailgate party” is a typical social event that takes place prior to a sporting event, traditionally a football game, involving food and liquid refreshments. Since many football stadiums in North America are surrounded by parking lots, this is where many pre-game festivities take place.

Dr. Howard was instrumental in founding the IJSF, and without his efforts, there would be no journal.  He also set the standard for the journal during the first few critical years of operation, and provided the current editorial team with a great foundation for moving the journal forward.

Profits and Losses in the WNBA

There was a curious article in the Washington Post this week about the financial condition of the Washington Mystics and the WNBA. I’ve read the article a couple of times and still can’t make heads or tails of the conflicting signals it contains.  The Washington Mystics, the WNBA franchise in DC, are owned by Ted Leonsis, who also owns the Wizards of the NBA and Capitals of the NHL.  Leonsis says of the Mystics:

“The franchise is losing money,” he said. “It’s lost money every year that it’s been in existence, but that doesn’t mean it is in dire straits.

“We’ve continued to invest in the business, and we believe in the WNBA. We believe in the franchise. We believe in the fan base. To be frank about it, our expenses have been increasing faster than our revenues so we’ve been losing more money year over year, and that is troublesome for any business.”

So the investment appears to be part of a long run plan to eventually generate profits even though short run losses are generated, right?  Why else would a profit maximizing firm continue to invest in an asset that generates operating losses?  However, the article also points out that the Mystics led the WNBA in attendance for six of its first seven seasons, yet average attendance has declined since 2002, when the team drew more than 16,000 fans per game until last season, when they drew 9,500 fans per game.  Note I’m not referring to tickets sold, because, according to Leonsis, many of the tickets to games in the early days were given away.

Even though attendance has declined, the Mystics last two seasons were the two most successful in franchise history on the court.  How did Lenosis respond to this success?  The team fired the GM and the coach in a move to cut costs.  When asked why this personnel decision was made, Leonsis replied

“I’ve outsourced the leadership and management to the Mystics to Sheila Johnson and Sheila’s acting as the owner and governor,” he said. “This was the decision that she thought best.”

Huh?  That doesn’t sound like an owner who is investing in the team.  Sheila Johnson is the Mystics “managing partner,” so Leonsis is claiming that he is was not involved in key personnel decisions made by the team he owns.

Things are not so bad in other parts of the WNBA.   League-wide attendance has increased steadily over the past four years, and the Connecticut Sun became the first team to turn a profit in league history last season.  The Sun use novel, cutting edge business practices like selling tickets instead of giving them away, and making sensible front office decisions like expanding their ticket sales force.

Ted Leonsis made his fortune at AOL, which could be described as being at the right place at the right time, rather than being a sharp business owner.  Or perhaps running an internet service provider in the dial-up days may not prepare a person to run three professional sports teams.  Or maybe Lenosis has a savvy long-term plan for the Mystics that differs from the rest of the league.  Only time will tell in DC.

A Bad Way to End a Season?

That’s what is being asked over at the Reuters Soccer Blog on the back of the MLS Cup Final last night, where Colorado beat Dallas in a snowy Toronto.  For those uninitiated and used to a diet of European or South American football (soccer – like the Reuters blogger I’m English and hence snobbish about the name of our sport!), most American sports leagues end with a play-off tournament as opposed to the highest finishing team (which would have been David Beckham’s LA Galaxy) walking away with the honours.

There has to be multiple layers to this complaint; the English writer is used to a “European”, non-play-off system, but is also open to reforming the playoffs for the MLS Cup – the  game was played infront of a half-empty stadium in a chilly Toronto, thousands of miles from either of the competing teams’s homes.  Why not having something akin to a series of games, a-la Stanley Cup instead so that the fans of these two teams get to see their team’s moment of glory?

But the blogger at Reuters is also asking why the MLS doesn’t just crown the top team, as is common practice across the football world.  It gives some of the reasons, notably maximising TV revenue (but then they scheduled this game at the same time as a rather tasty NFL game by all accounts), and also adding that extra bit of excitement – it is true that having the top team win the whole thing means there is no guarantee of a winner-takes-all game (I can think of only one such thing in England and that came back in the late 1980s when Arsenal went to Liverpool needing to win by two clear goals to deny their hosts the Championship, and duly did so.

The question would seem to boil down to what the fee-paying spectators want at the end of the day: They are the life and death of a sport, and particularly in North America where sporting culture is somewhat different to elsewhere in the world, the playoff would seem the natural way to end a tournament, whereas it would seem entirely unnatural elsewhere and hence would be unlikely to work.

International Friendlies and Injuries

Ignoring the FIFA World Cup fiasco for the moment, there’s been another furore keeping the press busy in England.  On Wednesday evening an experimental England side was comprehensively beaten at home by France in an international friendly.  Cue naturally laments of how depressing the future of English football is looking (on the back of 90 minutes), but the funny undertone of the entire thing was how seemingly pointless such friendlies are.  This has been an attitude growing over the years as club teams play more and more important fixtures in Europe and domestically, and so some of the less events (the League Cup and international friendlies) have lost their importance.  It’s funny then that there was so much soul searching for a defeat in a pointless game – where most of the usual England team didn’t play.  But I guess it gets readers on to your website…

Moreover though, as hinted by the BBC blog linked earlier, an additional controversial aspect of the friendly was that Steven Gerrard of Liverpool was played for a devastating 85 of the 90 minutes, instead of the reportedly agreed 60 minutes.  The Liverpool staff apparently weren’t too impressed.  So there have been mootings from others, including Tony Pulis, manager of unfashionable Stoke, that the FA should be liable for the injuries to players when playing in international friendlies.

Now that’s all well and good; it may be an effective and sensible system: After all, the players are contracted to their clubs and their clubs pay their wages.  But of course it’s all part of a power struggle in English football between the clubs and the Premiership and the national team, one that seems to be increasingly won by the Premiership, usually at the expense of the national team.  Perhaps we must just accept this; we love the way the Premiership is, apparently, and wouldn’t miss it for the world.  But perhaps that Premiership doesn’t allow for a successful national team because that national team is pushed to the margins.

The implication of making the FA liable in friendlies is basically that friendlies will stop happening: Why would the FA even bother to play these games if an injury means that it will be liable for hundreds of thousands of pounds, maybe millions?  And of course, if we pander to the brigade who tell us that all international friendlies are now pointless, then we end up that the only games the national team plays are meaningful and hence there is no time for the international-level players to gel into playing together via some less high-pressure games – the standard way in which any team prepares for a new season.  It strikes me those proposing to abandon all international friendlies haven’t really thought this through, and the implications of it.

Investing in MLB Player Futures?

Old fashioned financial instruments like stocks and bonds aren’t paying the rate of return they used to, I guess.  The New York Times reports on an emerging investment trend: aspiring MLB players in Latin America.  Some US “investors” with ties to sports agents (shocking!) are setting up baseball “training academies” in the Dominican Republic.  These academies enroll kids as young as 13 who aspire to a professional baseball career and provide them with a place to live and baseball training.  If/when the kid signs a contract with a MLB team, the investors take a cut of the signing bonus.  The fraction of the signing bonus taken by the investors can be as high as 50%.  The trainees don’t attend school – they spend 100% of their time in baseball training.  One owner claimed that his operation will generate $1 million in profits this year on a $400,000 initial investment.  Not a bad rate of return in the current financial environment.

The article suggests an unsavory element to the process, hinting that the academies exploit the trainees.  The training facilities could be charitably described as “spartan.”   One is surrounded by a barbed wire fence and “contains one large bedroom with bunk beds and a small bathroom with two showers” for 30 trainees.  I have no idea about the state of primary and secondary education in the Dominican Republic, or what sort of job prospects these kids face there.  The article does not describe the quality of training they receive. I have no idea what fraction of the trainees sign major league contracts.  If these young men sign major league contracts that they would not be able to sign without attending the academies, then they are getting a significant benefit from attending the academy.

The driving force behind this investment vehicle is the fact that the MLB draft covers only players in the US and Canada.  Prospective baseball players from the rest of the world are not subject to the MLB draft, and can be signed by MLB teams as free agents.  Hence the significant signing bonuses and the young age of many of the players.  If these prospects were subject tot he MLB draft, the signing bonuses would be reduced because of the monoposony power generated by the draft mechanism.  Of course these academies would not exist if not for the potential profit to be made from these signing bonus.

NCAA Football Finances

Fanhouse has an interesting point summarizing some recently released data on spending by NCAA Division I-A football programs (sorry – I refuse to adopt the FBS/FCS terminology)  in the 2009-2010 season. The data source is the US Department of Education’s EADA data base.  The top five football spenders are

1. Ohio State ($31.76 million)
2. Alabama ($31.11 million)
3. Notre Dame ($29.49 million)
4. Auburn ($27.91 million)
5. Texas ($25.11)

The bottom of the Division I-A list is Louisiana-Monroe with $2.98 million spent on football. When I look at lists like this, I always wonder if that is a lot of spending or a little.  Ohio State clearly spends a lot more on football than Louisiana-Monroe, but Ohio State probably spends a lot more on everything than Louisiana-Monroe.

As a simple comparison, I got data on FY 08-09 spending on student services at each university from the IPEDS data set.  One way to place the football spending at each university in context is to compare football spending to spending on student services.  I don’t know what the best comparator for football spending is, but IPEDS defines student service spending consistently across institutions and student service spending is some indicator of the quality of student life at a school, as is the football program.   Here’s how the Top 5, and cellar dweller Louisiana-Monroe compare by the ratio of student services spending to football spending

• Louisiana-Monroe 2.7
• Ohio State 2.6
• Texas 2.0
• Notre Dame 1.0
• Alabama 0.9
• Auburn 0.7

Louisiana-Monroe spent $8 million on student services and 43 million on football, or roughly $2.7 dollars of student service spending for every dollar of  football spending.  Auburn spent seventy cents on student services for every dollar spent on football.  Ohio State’s football spending is actually not that big when compared to student service spending.  I hope that students at Alabama and Auburn get a lot of benefit out of football, because they are not getting nearly the student services that students at, say, Louisiana-Monroe are getting.

 

 

 

College Athletics Success

Last night was the start of another college basketball season but people still talk about the run of the Butler Bulldogs to last year’s championship game. USA Today reported on the benefits Butler is receiving from playing in last year’s final. Among them are new sponsorship agreements, increased enrollment and opportunities to attract better basketball recruits.   Some of these benefits have been studied exclusively in the literature.

What I found interesting  was a quote by Coach K.

After the championship game, he said, “Everything that’s good about Butler, which are so many things, will now have a chance to be seen in many areas, not just basketball. So what can that do for a school that’s really good? I just think it’s scary good.”

This speaks to more of a dramatic change for Butler. The question is can and how does the university sustain its momentum.  In a similar context, schools such as Boise State and TCU that are having success  in this year’s college football season are/will face the same challenges.