Is the NCAA in danger?

January 30, 2013

The NCAA attempted to have a court case filed by former players thrown out in court.  The former players led by Ed O’Bannon want to recoup some of the broadcast right fee revenue that has only been shared by the NCAA and member institutions.  This initially focused on re-broadcasts of games, but now a new ruling from Judge Claudia Wilken is signaling that players (former and current) can go ahead with their antitrust lawsuit against the NCAA.  So what does this mean exactly?  If, and that is still a big if, but if the NCAA loses this lawsuit, it could mean that the face of collegiate sport as we know it could change forever.  It would also mean that the NCAA could be held liable for hundreds of millions (or even billions) of dollars in revenue to be paid back to former student-athletes.  That would be in addition to having to potentially split some of the broadcast revenues from here on out with student-athletes in those events.  If such events were to transpire, this could mean that many programs which need their current level of revenue from broadcast right revenue would find themselves short of money, and that they would probably find themselves in the red.  I would anticipate athletic departments either going into the red, or making cuts to many programs on campus in an attempt to stay financially stable.

What would all of this mean?  It would be a major sweeping change in athletics, and the financial and economic structure of how the NCAA and member athletic departments do business.  It would also make things more interesting as it would push forward the discussion of whether a student-athlete is an employee or not.  Many argue both sides of this, with discussion of whether the National Letter of Intent which all student-athletes sign is a contract or not.

This is still in its early stages, and is sure to be battled in court for quite some time.  With that said, I’m sure many in the NCAA and athletics are probably sweating a bit after today’s ruling.


If you are going to price gouge, do it to the other team’s fans!

January 11, 2013

The media has been abuzz this week with discussion over the price of tickets for the away section at the Arsenal vs Manchester City match in London this weekend.  Arsenal, decided to raise the price of the tickets in the away section to £62 (about $99 U.S.), which has made many supporters of Man City and the media very angry.  Manchester City actually returned 900 tickets to Arsenal of the several thousand that they were given for their fan section, as supporters of Man City have refused to pay so much to go travel to London to watch the game.

Which might have been a smart thing, as I believe it is now 35 years since Man City has beaten Arsenal at Highbury or the Emirates. (Yes, I’m an Arsenal supporter, and I keep track of these things…)

Notably, Arsenal and other teams in England have begun using multi-tiered pricing where different games are priced differently based on the opponents and other factors.  This practice means big games like Man City vs Arsenal will garner a high price, while QPR vs Norwich will be rather cheap.  It is also a practice which is not new to fans in North America, where many of the sport leagues use variable ticket pricing to try and capture greater consumer surplus.  Economists have begun to examine this practice of price dispersion, and research studies looking at similar practices in Theaters have found that it has boosted revenue for organizations.  Which means it seems only natural for sport organizations to copy this behavior.

But Arsenal fans are also unhappy, and have complained to the club this week because of the high prices.  They noted that in other countries across Europe, tickets often run between ten to twenty Euros.  I think with the growing nature of the business that is the Premier League, fans will only be disappointed in the future as ticket prices continue to soar, especially for matches with top tier opponents.

 


Economic impact of the Hall of Fame vote?

January 9, 2013

Across the country there are people who are holding their breath waiting to see what happens with this year’s Hall of Fame vote.  Many believe that this may be the first time that no players who currently eligible under normal standards will be elected (others could still be elected such as broadcasters, owners, older players who are no longer eligible).  If no players are elected, this could mean that there is not as much interest in the Hall of Fame this year, and could lead to decreased attendance at the induction ceremonies which occur in the summer.

Already many articles are pointing at the potential economic impact that this may have for Cooperstown, where the Hall of Fame is located.  The LA Times notes that some stores do about 15% of their annual sales during the induction weekend.  Professor McDonnell in this article of Forbes discusses the tie between Cooperstown and the Hall of Fame:

The village of Cooperstown is just as anxious to hear the Hall of Fame results as the candidates themselves. Cooperstown’s hospitality and tourism industries are inextricably tied to the Hall of Fame’s fortunes. They can ill afford to have a half empty dais on Hall of Fame weekend due in part to protest or lack of interest. Likewise, they need Main Street to be bustling with visitors who are spending their disposable income at the local restaurants, shops, motels and inns. A summer without a single living member of the Class of 2013 or a boycott of any kind by fans or current Hall of Famers could be detrimental to business owners that rely heavily on the allure of baseball’s history.

I understand that there is a good deal of business in hospitality and tourism that revolves around the Hall of Fame, but the Hall of Fame itself has been losing money over the last several years.  While it is a big deal for many local businesses, I begin to wonder how much we should be worried about the economic impact of the Hall of Fame vote.  Yes, some individuals and businesses will be affected, but at the same time, one has to question whether Cooperstown has literally put all of its eggs into one basket.  Furthermore, if we are talking about the vote mattering for the economy, then will not some writers feel more pressured to vote yes for individuals they think shouldn’t be in the HoF, all for the sake of propping up some businesses that have a great dependence on a event for a few days every year.

I hate to sound like I am not sympathetic, but at the same time I have to shake my head when I hear all this talk of the economic impact of the Hall of Fame vote.  It wasn’t like people knew this problem, I think better business planning and strategies needed to be created to try and offset some of these issues.


It’s Over! NHL/NHLPA Reach Tentative Agreement

January 6, 2013

The NHL and the Players Association reached a tentative agreement.  While there are still details to hammer out, it looks like hockey fans will get a 48-50 game season starting in mid January.  The deal comes after a 16 hour mediation session where the two sides finally came to terms on the core items.  It is a ten year deal with a opt out option after eight.

Scott Burnside from ESPN has a great article on the damage done by the lockout.  I am not sure the “Bad News Bears Breaking Training” philosophy of “Let them play” is the best course of action, but that does seem to be the logical marketing strategy for a league that cannot seem to get out of its own way. Fans are very upset, I am not sure you can just drop the puck and let it be. Will the hardcore fans flock back to the game? Of course. The NHL has a lot of work to do in the coming months and years.


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