This Document Contains Chapters 7 to 11 Berri Chapter 7 Discrimination in Sports Objectives • To describe the history of discrimination in sports. • To explain the economic theory of discrimination. • To examine the empirical evidence of racial discrimination. • To consider the link between beauty and discrimination. Outline I. The economic theory of discrimination II. The empirical evidence of wage discrimination in the NBA a. What sample should be employed? b. How should the researcher measure performance? c. How should the researcher measure race? d. Are the results robust? Part 1: The NBA salary story e. Are the results robust? Part 2: The NBA’s MVP story III. Learning from implicit bias IV. National origin bias V. He really looks good out there! VI. Challenges in the study of discrimination Teaching Tips The economic theory of discrimination Creating Student Interest • Tell your students that this chapter investigates discrimination in sports, but before that can be done, the topic of prejudice needs to be understood. Ask them to fill in the blank in the following statement: All blondes are _______. What other stereotypes can they think of? Remind students to remain respectful in their discourse before you begin this topic. Acknowledge that this is a sensitive subject for most people. Remind students to remain focused on statements of facts and logical deductions instead of value based arguments. State that empirical methods, if properly employed, may help us to investigate the presence of lack of discrimination in a sports setting. Presenting the Material • A student may fill in the blank with “dumb.” Explain that Gary Becker describes this as prejudice, since we are judging a person without really knowing him or her. Prejudice is an emotion and is difficult to measure. Discrimination is acting on that emotion and, because it is an action, can be measured (though we will see that this is hard to do). Explain what the discrimination coefficient is and that it is a form of acting on a prejudice. Explain that prejudice may be modelled as a cost to a person who is prejudiced against a group. It may be modelled as a cost of having to work with, of employ a member of the discriminated group, due to a prior set of beliefs. The empirical evidence of wage discrimination in the NBA Creating Student Interest • Ask your students, if they were going to try to measure wage discrimination in the NBA, what data would they want to collect and why? Presenting the Material • This section presents the difficulties in trying to measure wage discrimination. While it seems that it would be a fairly straightforward task, it quickly becomes complex. Discuss each of the points made about the difficulties of measurement: the sample time frame, the measure of productivity used, how to classify the race of a player, and how to interpret the results of a study. Learning from implicit bias Creating Student Interest • Ask your students how many people are on the court at any given time in a normal NBA basketball game. Some may answer 10, but others may say 13 when the referees are included. Ask if those additional 3 people can affect the outcome of a game. Should they? Could we measure to see if they do so in a discriminatory fashion? Presenting the Material • Outline the difference between explicit and implicit bias. The Price and Wolfers study, described in the text, shows how race made a difference in fouls called in NBA games. Using Table 7.9, show your students how the NBA referees adjusted their fouls called when the question of discrimination was pointed out to them. National origin bias Creating Student Interest • Ask your students to now consider discrimination based on something other than skin color. Would there be differences in TV ratings if players from one race were preferred by fans to players of another race? Kanazawa and Funk (2001) found empirical evidence that viewership in the NBA increased when there was greater participation by white players. If fans drive league revenues how does one handle this issue of customer discrimination for the league? Ask them to consider national origin. If players from one country are preferred to those from another country, would we expect to see differences in their pay? Why or why not? Remind your students that this is an empirical question and therefore can be measured and tested. Presenting the Material • Explain what the Oaxaca‒Blinder decomposition is and how it can help answer the question of national origin bias. Point out that in basketball a bias was found in both the United States and in Spain that favored the player from the home country. He really looks good out there! Creating Student Interest • Ask your class to come up with a list of the top five most handsome or beautiful athletes. Since beauty is in the eye of the beholder, expect there to be some debate about this. Ask them if they think there could be some type of discrimination favoring those good-looking athletes. What might that discrimination look like? Presenting the Material • Beauty, it turns out, is in the eye of symmetry. Explain how facial symmetry was used as a proxy for attractiveness in a study. Using Table 7.14, explain how facial symmetry was a significant variable concerning NFL quarterback salaries. Your students might enjoy speculating as to whether or not that same result would be found in players at other NFL positions or in different sports. Challenges in the study of discrimination Creating Student Interest • Ask your students what we should do when separate studies have conflicting results. Presenting the Material • Remind your students that correlation does not mean causation. In the case of measuring productivity in sports and correlating that with, say, race, the results may vary. This fact points toward the need for continued study in the area and caution about jumping to an absolute conclusion based on a solitary study. Common Student Struggles Discrimination can be a highly charged emotional topic. Students may want to expand class discussions to areas that are, at best, only tangentially related to economics. Try to prevent discussions from drifting into topics such as O. J. Simpson’s guilt or race riots around the country. While these matters are important, they stray from sports economists’ intention to describe what has occurred within the realm of organized sports. The concepts of the discrimination coefficient and the Oaxaca‒Blinder decomposition will be new to students and may require more time in their presentation. Because applying economic concepts to the area of discrimination may also be new to some students, they may need help in understanding the big picture derived from the regression results that are presented in the chapter. Encourage your students to question what may be wrong with the studies cited and see how these issues could potentially affect the results. Remind your students that as much as this area has been studied, there are conflicting results that need to be carefully considered. Additional Resources Brown, T. N., Jackson, J. S., Brown, K. T., Sellers, R. M., Keiper, S., & Manuel, W. J. (2003). There’s no race on the playing field: Perceptions of racial discrimination among white and black athletes. Journal of Sport and Social Issues, 27(2), 162–183. Hamilton, B. H. (1997). Racial discrimination and professional basketball salaries in the 1990s. Applied Economics, 29(3), 287–296. Kahn, L. M. (1991). Discrimination in professional sports: A survey of the literature. ILR Review, 44(3), 395–418. Kanazawa, M. T. and Funk, J. P. (2001), Racial Discrimination in Professional Basketball: Evidence from Nielsen Ratings. Economic Inquiry, 39, 599–608. Kilvington, D., & Price, J. (2017). Sport and discrimination. London: Taylor and Francis. Price, J., & Wolfers, J. (2010). Racial discrimination among NBA referees. The Quarterly Journal of Economics, 125(4), 1859–1887. Searching for racial earnings differentials in Major League Baseball: http://www.hardballtimes.com/searching-for-racial-earnings-differentials-in-major-league-baseball/ Shields, D. (2000). Black planet: Facing race during an NBA season. New York: Crown. The year in racism and sports: http://abcnews.go.com/Sports/year-racism-sports/story?id=45035554 Handout 7-1 Date_________ Name____________________________ Class________ Professor________________ During the years that Major League Baseball was segregated, African American players’ only choice was to play in the Negro League. Conduct an Internet search to compare when MLB integrated and when the Negro League ceased operation. What happened to the number of teams in the two leagues? Use a supply and demand graph to illustrate why the Negro League went out of business. Label everything, and be sure to explain your answer. Answer: When the top players left the Negro League for MLB, it appears the fans went with them. The demand for tickets to the Negro League fell, driving the teams out of business. Handout 7-2 Date_________ Name____________________________ Class________ Professor________________ The chapter discusses that it is possible for a team to have fans who discriminate. This type of discrimination may be hard to measure. If you were to try to research this topic, where might you observe indications of fan discrimination? Answer: The most likely answer students will give will be in ticket sales for the team. If fans don’t like the players, they will stay away. There are other areas to consider as well. If fans don’t watch a team, broadcast ratings will be lower. Sales of merchandise, such as replica jerseys, may fall as well. Substitutes may exist; if fans don’t like the local basketball team, then ticket sales may increase for the local hockey team. To research fan discrimination, you might observe the following areas: 1. Social Media: Comments and posts related to teams or players may reveal discriminatory attitudes. 2. Fan Behavior at Games: Incidents of racial or other discriminatory behavior by fans during games, such as chants or taunts. 3. Ticket Sales and Attendance: Patterns in ticket sales or attendance by demographic groups may suggest discriminatory preferences. 4. Merchandise Sales: Disparities in the popularity of player merchandise across different demographics. 5. Surveys: Direct surveys of fans can reveal implicit or explicit discriminatory preferences. These observations can help identify and measure the presence of discrimination among fans. Berri Chapter 8 Women in Sports Objectives • To explore if markets can explain differences in outcomes for women and men in sports. • To identify the demand for women’s sports. • To determine if the demand for women’s sports explains the observed differences between men’s and women’s pay in sports. • To determine if the demand for women’s sports explains the observed differences between positions held by men and women in sports. Outline VII. The lesson learned—and not learned—from demand data a. WNBA attendance compared to NBA attendance b. Television coverage of women’s sports c. Women’s World Cup viewership VIII. The gender wage gap in the WNBA a. Billy Jean King and equality of pay in women’s tennis b. WNBA pay as a percentage of revenue compared to the NBA IX. The highest-paid women in professional team sports in North America a. History of the NPF b. Evaluating pitchers in the NPF c. Pitching analytics and determining FIP ERA X. Are men really better leaders? a. Comparing the percentage of women in leadership positions in different industries b. Men coaching women in NCAA sports c. Comparing coaching productivity of men vs. women in collegiate sports XI. To understand gender and sports, you need to look beyond markets a. Non-market forces explain differences in outcomes more than market forces Teaching Tips The lesson learned—and not learned—from demand data Creating Student Interest • Begin by asking the students about what sport they like to watch in general? Why? What are the aspects of that sport that make it interesting to watch? Next ask them about the last women’s sporting event they watched. Which sport was it? Ask them if they enjoyed the game as much as their favorite sport? Why? Ask what the ticket price was. Ask what the attendance was like at the game. Was it sold out? Get them to think about consumer’s preferences that drive the demand for men’s and women’s sports? If these preferences remain unchanged, can women’s sports catch up in popularity? Would they watch more women’s sports if more were broadcast? If so, what would they like to see? Presenting the Material • Highlight what attendance was like in the NBA after it had been in existence for 20 years. Then, contrast these numbers with current WNBA figures. Discuss the coverage of women’s sports on TV. Project Table 8.1 to show the news coverage of women’s sports and highlight the ratings of the 2015 Women’s World Cup Final. Contrast the WNBA TV contract with that of MLS, and transition into women’s pay in sports. The gender wage gap in the WNBA Creating Student Interest • Ask the students who the current top men’s and women’s tennis players are. Ask who would win if they played each other. Ask if a current top women’s player would ever beat an older previous men’s champion. Tell them about the Billy Jean King vs. Bobby Riggs match. Presenting the Material • Explain how Billy Jean King used her market power to create equal pay at the major tennis championships. Transition from that into women’s pay in team sports, and use Table 8.2 to show the percentage of revenue earned by WNBA players. The evidence points to women in the WNBA being underpaid. The author suggests that WNBA players use the same strategy as Billy Jean King to increase their pay. The highest-paid women in professional team sports in North America Creating Student Interest • Ask your students if they know who the highest-paid female athlete in the United States is, and then ask them if they know who the highest-paid woman in a U.S. team sport is. Ask them why Monica Abbott would be the highest-paid player, and ask them how they would know that. Is her value something we can measure? What measurement methods would we use? Presenting the Material • Present the history of the National Pro Fastpitch league. Discuss the importance of the pitcher in softball and the weakness of the ERA measurement. Display the table on page 274 and explain the FIP ERA measurement. Once students understand that measurement, display Table 8.3 to compare the productivity of Abbott to other NPF pitchers. The key point is not to master the FIP ERA calculation but to understand how it can be used to demonstrate that Abbott’s status as the most dominant pitcher of the league increases her value and ability to earn a high salary. Are men really better leaders? Creating Student Interest • If there are any female athletes in the class (whether current varsity athletes or women who played sports in high school), ask them if they have ever had a male coach. If so what was their opinion of him? Then ask the male athletes in the class if they’ve ever had a female coach. The probability of them having a female coach is low, so ask them what they would have thought of having a female coach. Have the class consider the differences in the answers between the male and female athletes. Are their answers reflective of society as a whole? Presenting the Material • After introducing the disparity between men and women in executive leadership positions, transition into the number of males coaching women’s teams in NCAA sports. After that, present how measuring the effectiveness of male coaches is possible. Studies of NCAA softball, NCAA women’s basketball, and the WNBA all show that male coaches were not statistically more significant than female coaches. • This leads to the concluding material of the chapter, which indicates that we need to look at societal and not market reasons for differences in pay and employment opportunities for women in sports. Common Student Struggles This chapter presents a lot of material that may make students, especially women, feel exploited and overlooked. Students may need to be reminded of the difference between positive and normative economic statements. Their critiques of the sports world may quickly spill into normative statements about how things should be. This is fine, provided they can distinguish between fact and opinion in their arguments. In this chapter, it will be important to differentiate the types of measurements presented from what we hope their results help us to understand. Students who are strong quantitatively will gravitate to the measurement techniques and may lose focus on why we are using these tools. Likewise, students who prefer to avoid quantitative analysis will want to jump to the conclusions without examining how we know them. Try to get both types of students to appreciate each other. Don’t assume that all students will understand the sport of softball enough to grasp the variations of the concepts of ERA and FIP ERA, along with the other pitching measurements brought up in Section 8.3. These may take some extra class time to discuss, and even then mastery by some students will be difficult. Additional Resources Brake, D. L. (2010). Getting in the game: Title IX and the women’s sports revolution. New York, NY: New York University Press. Deaner, R. O., Balish, S. M., & Lombardo, M. P. (2016). Sex differences in sports interest and motivation: An evolutionary perspective. Evolutionary Behavioral Sciences, 10(2), 73. Forbes Most Powerful Women in Sports: https://www.forbes.com/sites/jasonbelzer/2015/12/02/the-most-powerful-women-in-sports/#223cbf83a5fb Lowen, A., Deaner, R. O., & Schmitt, E. (2016). Guys and gals going for gold: The role of women’s empowerment in Olympic success. Journal of Sports Economics, 17(3), 260–285. Rosas, F., & Orazem, P. F. (2014). Is self-sufficiency for women’s collegiate athletics a hoop dream? Willingness to pay for men’s and women’s basketball tickets. Journal of Sports Economics, 15(6), 579–600. Ware, S. (2011). Game, set, match: Billie Jean King and the revolution in women’s sports. Chapel Hill, NC: University of North Carolina Press. Women in Sport (United Kingdom): https://www.womeninsport.org/ Women in Sports (Olympics): https://www.olympic.org/women-in-sport Women’s Sports Foundation: https://www.womenssportsfoundation.org/ Handout 8-1 Date_________ Name____________________________ Class________ Professor________________ While looking at the glass ceiling women face in coaching, let’s extend this by considering the gender of conference commissioners. Complete the table below. Are there any differences between NCAA Division I, II, and III conferences? If there are differences, why might they exist? NCAA Conference Commissioners DI DII DIII League Name Gender League Name Gender League Name Gender ACC Sunshine State Old Dominion Athletic SEC Peach Belt Southern Athletic Association Big 10 Great Lakes Valley Wisconsin Intercollegiate Big 12 Great Midwest Heartland Collegiate Pac 12 California Collegiate Southern California Intercollegiate Answer: The answers will vary from year to year, but try to detect a pattern within each division and across divisions. Are there more female league commissioners at lower levels of NCAA sports? If so, why might that be? Would the presence of football make a difference in the selection of a commissioner? In examining the gender distribution of NCAA conference commissioners across Divisions I, II, and III, we observe a notable disparity. Division I has seen some progress, with around 33% of conference commissioners being women. However, this percentage is lower in Divisions II and III. These differences may be attributed to the varying levels of visibility and financial resources across divisions, as well as entrenched gender biases that are more resistant to change in lower-profile divisions. The ACC, SEC, Big 10, Big 12, and Pac-12 conferences in Division I, for example, are still predominantly led by male commissioners. In Division II, leagues such as the Sunshine State and Peach Belt also show a predominance of male leadership. The same pattern continues in Division III, with conferences like the Old Dominion Athletic and the Wisconsin Intercollegiate being led mostly by men. The slow progress across all divisions is reflective of broader challenges in achieving gender equity in leadership roles within collegiate athletics Handout 8-2 Date_________ Name____________________________ Class________ Professor________________ Does the glass ceiling for women in coaching extend to other senior leadership positions in sports? Look up who holds the vice president of communications (or media relations) position at five NBA and five NFL teams. What does your sample show? Is it the same proportion we saw in the coaching of NCAA women’s sports? Could you argue that market forces play a bigger role in those positions than in coaching? Answer: The answers will vary because those holding these positions will change from time to time and because the teams the students select will vary. Historically, women have held more positions in front-office jobs such as media relations, community relations, and finance than in coaching or general manager positions. To investigate whether the glass ceiling for women in coaching extends to other senior leadership positions in sports, specifically in the roles of Vice President of Communications (or Media Relations) at NBA and NFL teams, you can research the current individuals holding these positions across five teams in each league. Steps to Take: 1. Identify the teams: Choose five NBA teams and five NFL teams. 2. Research the VP of Communications: Look up the current individual holding this title for each team. 3. Analyze the results: Compare the gender distribution of these roles to the proportion seen in NCAA women’s sports coaching. Analysis: • Gender Representation: Determine if there’s a similar pattern in terms of male dominance or if women hold a significant proportion of these roles. • Market Forces: Consider whether market forces (e.g., public relations demands, media interactions) might influence the hiring practices in these positions differently than in coaching, where gender biases may be more pronounced. The proportion of women in these roles can shed light on whether the barriers observed in coaching also exist in other senior leadership positions or if different dynamics are at play. Berri Chapter 9 The Economics of College Sports Objectives • To reveal who are the highest-paid public employees in each state. • To describe the history of the National Collegiate Athletic Association. • To measure the competitive balance in the NCAA. • To examine the level of competitive balance in women’s college sports. • To describe the labor market for college coaches. • To examine Title IX enforcement in college sports. Outline XII. Some history of the NCAA XIII. Competitive balance and the NCAA XIV. Even more competitive imbalance in women’s college sports XV. Worker productivity and exploitation in the NCAA XVI. Coaching college sports XVII. Title IX enforcement: Myth and measurement XVIII. Profitability in college sports Teaching Tips Some history of the NCAA Creating Student Interest • Ask the class if they think that cheating goes on in college sports. What is their interpretation of what cheating is in sports? Do they think it is widespread? Who should monitor colleges to make sure they don’t cheat? Presenting the Material • Discuss the early history of collegiate sports in the United States and point out the examples given of early questionable activities at Lafayette and Yale. Discuss how and why the NCAA came into being and how it regulates schools both on and off the playing field. Competitive balance and the NCAA Creating Student Interest • Many colleges have the goal of being national champions. Ask your students if they can remember who the last five NCAA men’s basketball champions were and who the last five college football champions were. What conferences are represented by these teams? Presenting the Material • Students may have trouble recalling the list of champions. Ask if this says something about the fleeting nature of victory. Note that that list of conferences is very short. Use that to lead into a discussion of the competitive balance in college sports. Tables 9.2 and 9.3 highlight the imbalance in men’s basketball and football. Discuss why this imbalance exists. Even more competitive imbalance in women’s college sports Creating Student Interest • Ask your students to name the last five women’s basketball champions. What conferences are represented? Presenting the Material • This list will be much shorter because the University of Connecticut has dominated the women’s basketball scene. Discuss why women’s sports show more competitive imbalance than men’s sports. Include the financial incentives for women to play sports professionally. Worker productivity and exploitation in the NCAA Creating Student Interest • Ask your students if college athletes should be paid. Play the devil’s advocate and ask if some sports should be paid (football) but not others (swimming). Ask if colleges should pay women athletes the same as male athletes. Isn’t just receiving a scholarship enough of a payment? Presenting the Material • Explain that the methodology to be used is simply a continuation of that used in an earlier chapter measuring professional sports. The MRP of players can be determined and compared to their pay to determine if they are underpaid or overpaid. Point out some unique difficulties in measuring MRP for college athletes. Table 9.5 shows that players are exploited. An interesting class discussion could take place about whether this methodology would find similar results in universities that are less prominent than the Duke example given. Coaching college sports Creating Student Interest • Ask your students if a college football coach should be paid more than a Nobel Prize–winning economics professor. Should the coach be paid more than the college president? More than the governor of that state or president of the United States? Ask what the president has to do to keep his or her job; then ask what the coach has to do to keep his or her job. Ask the class why college coaches at Division 1 schools get paid so much money? Do Division one wins contribute to alumni donations? Do they increase enrollments? What is the rationale for paying college coaches so much? Presenting the Material • Refer to the map at the start of the chapter that outlines who the highest-paid state employees are. Use Tables 9.6 and 9.7 to compare the pay between collegiate and professional football coaches. Point out the percentage of revenue that goes to college coaches and ask if there is a link between this percentage and the amount that schools pay their players. The model presented indicates that coaches need to continue to win to keep their jobs. For coaches in smaller conferences, that could be a difficult task. Title IX enforcement: Myth and measurement Creating Student Interest • Ask your students to state the three prongs of Title IX. Give your students this scenario. They are the athletic director at a mid-sized university that is composed of 57% female students. How would they go about making sure that the school was in compliance with Title IX? If the school has a football team that has 100 male players, how could that complicate matters for them? Presenting the Material • To determine if a college is in compliance, some type of measurement must be used. Present the three-pronged approach. The proportionality measurement is the one most commonly used. A study is cited that measures a proportionality gap showing that few schools are actually in compliance with Title IX. Profitability in college sports Creating Student Interest • Ask your students why college sports may be less profitable than professional sports. Ask what team owners do with profits. Ask what a college can do with a positive net operating income. Presenting the Material • Differentiate between a for-profit and not-for-profit organization. Point out that because non-profits can’t take the money home in the form of dividends, they tend to spend all their revenue. That, combined with salary limitations on players, has led to colleges entering an arms race over facilities and coaches. This section summarizes the main points of the chapter: college sports bring in a lot of revenue, players’ salaries are restricted, and colleges tend to not be in compliance with Title IX. Common Student Struggles Since college sports may be something international students are not familiar with, some may have difficulty understanding the organization of sports within a college setting. It will probably be best not to assume that students are familiar with college athletic departments or the organization and duties of the NCAA. As was seen in other topics in this text, normative opinions about spending on college sports or about college coaching salaries can quickly appear. Decide in advance whether you want class discussions to flow from these positive to normative areas or if you’d rather stick to analyzing what can be objectively measured. Because of some of the difficulties with the Scully-Noll approach, students may find the section on measuring collegiate MRP difficult. Regardless of the approach used, the indications are that college athletes, in some sports, are exploited by their colleges. The funds that could go to players appear to be going to coaches because their percentage of pay relative to revenue is higher than in professional sports. Additional Resources Benedict, J., & Ketelyan, A. (2014). The system: The glory and scandal of big-time college football. New York, NY: Knoff Doubleday. The Business of College Sports: An Infographic of the Top Teams, Sponsors & Brands: https://www.umbel.com/blog/sports/business-of-college-sports-infographic/ The Business of College Sports Networks: https://www.forbes.com/video/4587619137001/ Dale, J., & Luchs, J. (2013). Illegal procedure: A sports agent comes clean on the dirty business of college football. New York, NY: Bloomsbury. Feinstein, J. (2001). The last amateurs: Playing for glory and honor in Division I college basketball. New York, NY: Little, Brown. Hoffer, A., & Pincin, J. A. (2016). The effects of revenue changes on NCAA athletic departments’ expenditures. Journal of Sport and Social Issues, 40(1), 82–102. Hunsberger, P. K., & Gitter, S. R. (2015). What is a Blue Chip recruit worth? Estimating the marginal revenue product of college football quarterbacks. Journal of Sports Economics, 16(6), 664–690. Sheetz, A. C. (2015). Student-Athletes vs. NCAA: Preserving amateurism in college sports amidst the fight for player compensation. Brooklyn Law Review, 81, 865. The 25 schools that make the most money in college sports: http://www.businessinsider.com/schools-most-revenue-college-sports-2016-10 Van Rheenen, D. (2013). Exploitation in college sports: Race, revenue, and educational reward. International Review for the Sociology of Sport, 48(5), 550–571. Handout 9-1 Date_________ Name____________________________ Class________ Professor________________ • Using a website such as http://sports.usatoday.com/ncaa/finances/, fill in the following table comparing revenues and expenses for universities in the Southeastern Conference and the Mid-American Conference. Calculate the net operating income for each university. Overall, what differences do you see between the two conferences? How would these differences help explain a lack of competitive balance in college sports? What could the MAC do to catch up to the SEC? SEC Team Revenue Expenses Net Operating Income Alabama Auburn Arkansas Florida Georgia Kentucky LSU Mississippi Mississippi State Missouri Tennessee Texas A&M MAC Team Revenue Expenses Net Operating Income Akron Ball St. Bowling Green Buffalo Central Michigan Kent State Miami (Ohio) Northern Illinois Ohio Toledo Western Michigan Answer: Depending on where the students find their data and from which year, there will be discrepancies between the amounts found. What should be obvious is that the SEC brings in much more revenue and, in turn, has much higher expenses than the MAC universities. With larger revenue amounts, the SEC schools can provide better facilities and coaches, which will make those schools more attractive to recruits and give them a competitive advantage. Students may suggest that MAC teams increase spending to be competitive with the SEC; however, without corresponding increases in revenue that would be difficult to do. Note that private universities are excluded from the table. This is because they are not required to make public the details of their operations. Handout 9-2 Date_________ Name____________________________ Class________ Professor________________ Prior to the NCAA sponsorship championship events for women’s sports, the AIAW existed for just such a purpose. Budgets for women’s sports were much smaller then because women’s sports were just coming into their own. Look up the women’s basketball championship resultsfrom the AIAW and discuss whether there was more or less competitive balance during the AIAW years than the NCAA years. Did the champions come from “power conferences”? Answer: Even though budgets were smaller in those days, there was still competitive imbalance in the AIAW. Three schools won eight of the 11 championships held during the AIAW years. One big difference is that the championships were won by smaller colleges outside the big five power conferences. As budgets increased, the power conferences began winning more championships. Berri Chapter 10 Subsidizing Sports Objectives • To explain government spending’s impact on the economy. • To contrast the link between sports spending and when a study is completed. • To examine the economic benefits that result from hosting international sports events. • To describe the link between popular sports and political decisions. Outline XIX. Economists agree? XX. The value of sports: Industry approach versus economic theory XXI. The value of sports: The empirical evidence XXII. Government ignoring economists—at the local and federal level XXIII. The economic cost of international parties XXIV. Sports make us happy Teaching Tips Economists agree? Creating Student Interest • Ask your students to list the pros of keeping their local NFL or NBA team in town. Next ask them what else the city or state could do with that same amount of money. Given that most teams do not bring in economic benefits from jobs created greater than the costs why do cities keep paying for new stadiums? Why do teams need new stadiums? See if you can get students to understand the team’s need to generate and reap revenues from luxury boxes, club seats and non-game day events. . Presenting the Material • After the topic of fiscal policy is introduced, review a history of Keynesian economics. The concept of the multiplier is of key importance for understanding the findings shown in this chapter. Ex ante studies point toward large economic impacts from sporting events; however, ex post studies reveal a different story. The value of sports: Industry approach versus economic theory Creating Student Interest • Give your students a few scenarios and ask them which should be included in the measurement of the economic impact of a sports event: (1) A visitor who has traveled to town to see the game and spent two days in a local hotel. (2) A visitor who was in town, heard about the event, and then decided to attend. (3) A local who goes to the event and spends money there instead of spending that money at local restaurants and shopping. (4) A media person who is sent to cover the event and who is in town for three days. [1 & 4 should be included; 2 & 3 should not.] Presenting the Material • Discuss the three weaknesses of economic impact studies: substitution effect, crowding-out effect, and leakage effect. Give examples of each. Point out how these problems would result in overstating an economic measurement of the impact of an event. The value of sports: The empirical evidence Creating Student Interest • Ask your students if any have attended a Final Four, Super Bowl, or some other mega-sports event. Discuss in what ways the event had a positive or negative effect on the town and the local economy. Presenting the Material • Display Table 10.2, which shows that many mega-events have little positive effect or even a negative effect on the local economy. Given this fact, lead the class into a discussion of why local governments would want to host those events. Consider short-term versus long-term considerations. Government ignoring economists—at the local and federal level Creating Student Interest • Ask your students who has been to a professional sports facility. (If no one has, ask if anyone has been to a major college sports facility.) Ask your students to describe the venue. Ask about the presence of luxury boxes, parking, concessions, and merchandise sales locations. Ask who should pay for the construction of such extravagant facilities. Presenting the Material • Tables 10.3 to 10.7 display the percentages of stadium construction cost that are paid for by public funding. Point out that, with the exception of hockey, the sports leagues have succeeded in having significant public funding for stadium construction. Select a few of the exceptions where government funding is not used in stadium construction, and discuss what may be unique about those cities or team owners. The economic cost of international parties Creating Student Interest • Ask your students if they watch the Olympics or the World Cup. If the world watches these events, does that mean that it makes economic sense to host them? Could these events make as little economic sense as local stadium construction? Presenting the Material • The large amount of spending required to host the Olympics or World Cup can be staggering. Examples of large outlays of cash for hosting these events are given in the text. The important point is that Table 10.8 shows how many of these events bring little to no economic improvement to the host city. Discuss the costs and benefits of constructing facilities that will be seldom used in the future. Sports make us happy Creating Student Interest • What is the first job of a politician? To be elected. Once elected, what is the next job of a politician? To be reelected. Given this perspective on the behavior of politicians, discuss why politicians would support spending lots of public money to build a new stadium or host the Olympics. Presenting the Material • Present the history of Augustus and discuss why entertainment for citizens is a good idea for a politician. Consider whether things have changed much since 30 BCE. Discuss whether the costs and benefits politicians face are different from the costs and benefits of constructing venues or hosting large events. Common Student Struggles Some students may have difficulty accepting that a belief they have held for a long time is untrue. Most students will assume that all those visitors and all that spending at a mega-event must equate with having a large economic impact. They may believe the same for stadium construction. Students may not easily understand how an economic impact study is conducted, and so interpreting the results may not be intuitive. The theory behind the Keynesian multiplier will be critical for student understanding of the concepts in this chapter. The limitations of economic impact studies should be made clear to students as well. There are many numbers presented in the tables. Have students look for trends and also for exceptions. The weight of the evidence points toward what economists agree upon but what is contrary to general opinion: government spending on facility construction and the hosting of mega-events has costs that outweigh the benefits. Additional Resources The economics of hosting the Olympic Games: https://www.cfr.org/backgrounder/economics-hosting-olympic-games Hagn, F., & Maennig, W. (2009). Large sport events and unemployment: The case of the 2006 soccer World Cup in Germany. Applied Economics, 41(25), 3295–3302. Kuper, S., & Szymanski, S. (2014). Soccernomics. New York: Nation Books. Matheson, V. (2006). Mega-Events: The effect of the world’s biggest sporting events on local, regional, and national economies. Economics Department Working Papers. The College of Holy Cross. Preuss, H. (2006). The economics of staging the Olympics: A comparison of the games 1972–2008. New York: Elgar, Edward Publishing. The reason behind the NFL’s “blatantly dishonest” Super Bowl economic impact studies: https://www.bisnow.com/national/news/economy/how-the-nfl-exaggerates-the-economic-impact-of-the-super-bowl-on-host-cities-70579 Siegfried, J., & Zimbalist, A. (2006). Economics of sport: The economic impact of sports facilities, teams and mega-events. Australian Economic Review, 39(4), 420–427. Super Bowl billions: The big business behind the biggest game of the year: https://www.cnbc.com/2017/01/20/super-bowl-billions-the-big-business-behind-the-big-game.htmlWhat is the economic impact of hosting the Olympics? http://www.investopedia.com/articles/markets-economy/092416/what-economic-impact-hosting-olympics.asp Handout 10-1 Date _________Name_______________________ Class________ Professor________________ Working in groups, research and consider the economic impact of the Super Bowl. Fill out the following table. Super Bowl Economic Impact Estimate City: ____________________ Number of visitors: __________________ Year: ___________________________ Number of nights: ___________________ Area Direct Spending Multiplier Impact 1. Game: Food, Concessions ____________ _____ ______ 2. Corporate Spending ____________ _____ ______ 3. Game: Parking ____________ _____ ______ 4. Entertainment _____________ _____ ______ 5. Retail Shopping _____________ _____ ______ 6. Hotels/Cruise Ships _____________ _____ ______ 7. Car/Rentals/Taxis/Limo _____________ _____ ______ 8. Other Spending _____________ _____ ______ Benefits Subtotal ______ 9. Minus: Costs (Construction, Police, Fire, Crime) ______ TOTAL ECONOMIC IMPACT ______ Answer: Answers will vary depending on the city, year, and estimates by the group. The critical assumptions are how many guests will be in attendance and how many nights these guests will stay. For each area, consider how many people are involved and how many days they will spend money in this area (for example, Hotels: 80,000 visitors, staying 3.5 nights, with 2.5 people per room, times $250 per night). Multiply direct spending times the multiplier to find the impact for each area. Use only visitor spending to avoid the substitution effect. Go over each area of spending with the class to discover what was behind their thinking about each area. Here is a sample answer. It involves the 2005 Super Bowl held in Jacksonville, FL. RIMS II multiplier numbers were used. Super Bowl 2005 Economic Impact Estimate Number of visitors: 80,128 Number of nights: 3.7 Area Direct Spending Multiplier Impact 1. Game: Food, Concessions $22,646,400 1.8639 $42,210,625 2. Corporate Spending $11,200,000 1.7326 $19,405,120 3. Game: Parking $1,200,000 1.8875 $$2,265,000 4. Entertainment $20,952,360 1.7940 $37,588,533 5. Retail Shopping $15,351,600 1.7855 $27,410,281 6. Hotels/Cruise Ships $45,054,900 1.8048 $81,315,083 7. Car/Rentals/Taxis/Limo $5,078,805 2.6473 $13,445,121 8. Other Spending $20,460,000 1.9465 $39,825,390 Benefits Subtotal $253,465,149 9. Minus: Costs (Construction, Police, Fire, Crime) $22,000,000 TOTAL ECONOMIC IMPACT $231,465,149 The economic impact of the Super Bowl is substantial, with direct spending in areas like food, parking, entertainment, and hotels. The multiplier effect amplifies this spending, contributing to the overall impact. However, costs such as construction and public services must be subtracted to get the total economic impact. To fill out the table, gather data on visitor numbers, spending estimates, and multipliers for each area, then calculate the benefits subtotal and total impact after deducting costs. Handout 10-2 Date _________Name_______________________ Class________ Professor________________ The 1984 Los Angeles Olympics were noted for being profitable and having a positive economic impact for the region. Perform an Internet research and contrast the L.A. Olympics with the 2004 games held in Athens, Greece. What were the major differences between the two? Answer: The Athens Olympics required the construction of many new facilities, while the L.A. games took advantage of existing facilities. Athens suffered from many cost overruns in the construction process. While security was apparent in Los Angeles, the level of security needed in Athens was much greater and more expensive. Officially, the Greek games reported a net profit. Given the economic problems that country faced with inflation and national debt, the cost of hosting the Olympics has been a matter of debate. Berri Chapter 11 Moneyball On and Off the Field Objectives • To explain the Moneyball story of team success. • To explore the rationality of decision makers. • To form an understanding of the baseball labor market. • To interpret data on the labor market in complex invasion sports. • To explain the rationality and efficiency of coaching. • To explore the connections between coaches and player productivity. Outline XXV. The first sports economics article proposes a rationality test XXVI. Testing the Moneyball hypothesis in baseball and soccer XXVII. Testing the Moneyball hypothesis in basketball XXVIII. Moneyball in the draft a. Decision making in the MLB draft b. Decision making in the NBA draft c. Decision making in the NFL draft XXIX. Moneyball on the field a. Allocating minutes in basketball b. Stealing wins in baseball c. “Going for it” in the NFL XXX. Adam Smith versus NBA coaches XXXI. Systematically evaluating coaches a. Impact of coaches in soccer b. Impact of coaches in basketball c. Impact of coaches in baseball XXXII. So do teams need a coach? XXXIII. Moneyball? Well, it depends . . . Teaching Tips The first sports economics article proposes a rationality test Creating Student Interest • Ask your students to construct a production function for wins in general terms. Try to tease out wins as a function of relative player talent, relative coaching talent, front office talent and organizational structure. Ask students for their determinants of wins. Make a list on the board and keep refining their terms till you arrive at the production function described above. Explain to them that the front office includes all non-player personnel from the general manager to talent scouts to stadium game day personnel. To illustrate the problem of selecting talent, show them combine statistics for 5 NFL wide recievers taken in the first four rounds of the draft 5 years ago, but conceal the identities of the players. These statistics will look quite similar. Ask them which anonymous player they would select? Next reveal the identities of the players. Ask your students why some coaches, like like Bill Belichek succeed with some teams and get fired from other teams? Belichek was fired by the Browns and has gone on to establish a dynasty with the Patriots. What role did organizational structure play? Do human interactions and behavioral economics help to explain what traditional rational models cannot? Show your students a short YouTube video of failed NASA launches. Presenting the Material • Begin by discussing the assumption that decision makers are rational. Discuss what limits on rationality may apply in sports. Use the example given of George Steinbrenner to look at the public displays of success and failure in sports. Students may not be familiar with the character described on the TV show Seinfeld, so a quick YouTube clip with the Steinbrenner character may be of interest. Testing the Moneyball hypothesis in baseball and soccer Creating Student Interest • If possible, show a video clip of the movie Moneyball. The scene where the general manager and scouts are sitting around a table discussing players is particularly useful because it demonstrates the difficulties in selecting players. It also shows the emphasis on players getting on base, which becomes the Moneyball theme for the next section of the text. Presenting the Material • Highlight the Hakes-Sauer methodology, which tests the Moneyball hypothesis. The results show the impact of getting on base in regards to winning and, in turn, how that translates into pay. It is shown that players are rewarded more for their production of runs than for their ability to get on base. Similar findings are presented concerning pitchers. Strikeouts predict a pitcher’s salary more than other variables. In soccer, it was found that salary is most closely correlated with taking shots. Testing the Moneyball hypothesis in basketball Creating Student Interest • Show your students a YouTube video of Allen Iverson highlights. Ask them to look for the number of times he passes the ball. Of course, in a highlight, reel scoring will be emphasized, but you will notice that many times when the ball lands in Iverson’s hands he dribbles until he is able to create a shot. In coaching terms, the ball stagnates when it gets to him. Why would he always try to create a shot for himself and not his teammates? Ask your students if they would rather have a star player on their team and lose or have no star on their team and win. Presenting the Material • Using a Moneyball type of analysis and Table 11.6, examine which variables contribute to salaries paid to free agents. It becomes clear that scoring is the most important variable. Next, use Allen Iverson as an example of what the data show, which is that NBA teams reward the person who scores. The text outlines how low Iverson’s Wins Produced statistic is compared to other players. The key point is that NBA executives are rewarding scoring and not winning, even though their fans would prefer their team to win. Moneyball in the draft Creating Student Interest • Ask your students: If they were to invest, would they buy shares of Disney stock? Why or why not? The answers may vary, as they may say that park attendance is dropping, that the movie sector is growing, or that ESPN viewership is in decline. The value of the stock is based not just on the past performance of the company but also on expectations about future performance. Likewise, the value of an athlete is not just based on prior performance but is also a type of futures market about what his productivity may be in the future. When leagues hold their annual drafts, what we see on display is a futures market with no ability to observe prior productivity in a league. This makes drafting players a difficult business. Presenting the Material • The section begins with MLB. Point out how few players who are drafted actually make it to the big leagues. Also point out the choices between high school and college and between pitchers and position players, as well as the conclusion that teams have not been efficient in their draft selections. With the NBA, point out that a higher percentage of drafted players actually play in the NBA and that it is taller players from major conferences who are more often selected. The section on Stephen Curry will be of interest to students because they question why a future MVP of the NBA was not selected at the top of the draft. Tables 11.11 and 11.12 allow students to compare two NFL quarterbacks to determine whether that NFL draft was efficient. The section on the Chart will be of interest to students because they can consider how teams could make trades using it. Of interest, too, is how important the results of the NFL combine are in the drafting of players but that draft position does not explain performance that well. Moneyball on the field Creating Student Interest • If possible, show the scene from Moneyball where Jonah Hill explains to Brad Pitt what he has uncovered using statistical analysis. Ask your students if this type of analysis can also be used to explain what choices managers may make on the field. Presenting the Material • The first part of this section of the text describes how NBA coaches allocate playing time. Perhaps it is not surprising that scoring is a major determinant of playing time. The next section looks at stealing bases in MLB. The costs and benefits of stealing are presented, and there is evidence that teams overused the steal strategy in the past. Display Figure 11.2 and discuss NFL coaches’ decisions to “go for it” on fourth down. It appears that this strategy is underutilized by football coaches. Adam Smith versus NBA coaches Creating Student Interest • Begin by discussing the short tenures of NBA coaches. Why do teams change coaches so often? Can a team owner actually expect a new coach to win more games with the same players? Have the most successful NBA coaches just been blessed by having teams with lots of talent? If the teams had not been successful, would people think that the talent was that good? In other words, does winning make us think a player is great? How about coaches? Presenting the Material • This section examines whether Adam Smith’s notion that managers have little impact applies to NBA coaches. Briefly discuss the careers of George Karl, Pat Riley, Rick Pitino, and Phil Jackson. Discuss the impact they had on their teams and whether they were worth the high salaries they were paid. In the NBA, the evidence suggests that having talented players is the most important element of NBA coaching. Systematically evaluating coaches Creating Student Interest • Ask your students if what was discovered about NBA coaching applies to other sports as well. Is successful coaching all about having good players? Presenting the Material • This section shows that in soccer and basketball, changing coaches does not significantly change winning by the team. Point out the Ashenfelter dip and how that can be misinterpreted as increased winning due to a new coach. In baseball, a slightly positive impact was seen in batters and pitchers, but the evidence is not overwhelming. What is clear, though, is that in recent years attendance has increased after a coaching change. So perhaps coaching changes are made to stimulate the demand for the team rather than to change the team itself. So do teams need a coach? Creating Student Interest • Ask your students how difficult they think it is to coach a team. During a game, could you pick someone out of the crowd, let that person coach, and get the same result? What, if anything, makes coaches valuable or even necessary? Presenting the Material • The section explains that most coaches are well trained and are prepared for their jobs. The point is that there is not much difference between coaches. So the difference between the coaching ability of a person who ends up in the Hall of Fame and another who gets fired after one season is not that great. Moneyball? Well, it depends . . . Creating Student Interest • Discuss with your students whether they, as general managers, would make multimillion-dollar player decisions based on a Moneyball type of analysis. What would they trust about the process, and what would they not trust? Would it matter which sport they were in? Does Moneyball predict the risk of a player getting in trouble with the law? Is risk analysis of players the next frontier? Presenting the Material • The Moneyball notion emanated from the free-agent market in baseball. The author points out that this market is more efficient than in other sports. The more complex the sport and the less data available, the more difficult it is to apply reliable analytics. This is observed during drafts. Common Student Struggles Some students may not be familiar with either the book or the movie Moneyball. The premise of the book should be explained. You may be also consider explaining the work of Bill James in early sports analytics. Students who are big sports fans may dive into the statistical areas of comparison, while some may shy away. The use of data in making rational decisions in the sports industry should be discussed. As the chapter points out, teams don’t always make rational decisions. As the chapter progresses, the details about measuring player productivity can be explained. Students may not be familiar with logarithmic functions or the statistics of certain sports. Try to help those students see the big picture and how analytics help us understand the value and productivity of players and coaches. Students may enjoy the comparisons presented between players and coaches. While the material does not present opportunities for normative discussions as other chapters do, class discussions should emphasize a positive analysis that utilizes data. Many points made in the chapter dispel some commonly held sports notions, such as “going for it” in the NFL. Some students may struggle with abandoning long-held conventional wisdom. Additional Resources Alamar, B. (2013). Sports analytics: A guide for coaches, managers, and other decision makers. New York, NY: Columbia University Press. Arndt, C., & Brefeld, U. (2016). Predicting the future performance of soccer players. Statistical Analysis and Data Mining, 9(5), 373–382. Beyond Moneyball: The future of sports analytics: http://analytics-magazine.org/beyond-moneyball-the-future-of-sports-analytics/ Davenport, T. H. (2014). Analytics in sports: The new science of winning. International Institute for Analytics, 2, 1–28. Halvorsen, P., Saegrov, S., Mortensen, A., Kristensen, D. K., Eichhorn, A., Stenhaug, M., & Johansen, D. (2013, February). Bagadus: An integrated system for arena sports analytics: A soccer case study. In Proceedings of the 4th ACM Multimedia Systems Conference (pp. 48–59). ACM. Miller, T. W. (2015). Sports analytics and data science: Winning the game with methods and models. Upper Saddle River, NJ: FT Press. “Moneyball” author Michael Lewis explains why professional sports teams need to reinvent the role of scouts: http://www.businessinsider.com/moneyball-michael-lewis-pro-sports-scouts-need-to-evolve-2016-12 NBA embraces advanced analytics as Moneyball movement sweeps pro basketball: https://www.washingtonpost.com/sports/wizards/nba-embraces-advanced-analytics-as-moneyball-movement-sweeps-pro-basketball/2013/10/25/1bd40e24-3d7a-11e3-b0e7-716179a2c2c7_story.html?utm_term=.23a987a40587 Handout 11-1 Date_________Name______________________________Class_______Professor___________ The chapter discusses Rick Pitino leaving college coaching to coach the Boston Celtics. The Celtics dipped into the college ranks once again in 2013 by hiring Brad Stevens. Compare the NBA careers of the two coaches. Using the topics of this chapter along with some research, explain possible differences between the two. Answer: Stevens, unlike Pitino, had no NBA experience prior to moving to the NBA ranks, yet the Celtics’ record improved the first four years of his time there. Pitino had previously been an NBA head coach of the New York Knicks. As Celtics coach, his team never had a winning record or qualified for the playoffs. Students can explore the rosters of the teams and compare the quality of the players to explain the differences in the outcomes for the two coaches. Handout 11-2 Date_________Name______________________________Class_______Professor___________ Imagine that you are the general manager of the NBA team of your choice. Using some research, propose a trade with another NBA team for your starting point guard. What are you asking in return for your player? Does the trade fit into the team’s salary cap? How do you predict this trade will make your team better? Answer: Answers will vary. Some teams may have an All-Star point guard, and others will have a player that may not have much value to other teams. The trade has to make sense for both sides and also has to fit into the salary cap restrictions of the NBA. Students will most likely use player statistics to justify the trade. Some students may be creative and suggest including future draft picks or a three-team deal. As the general manager of the Miami Heat, I propose trading starting point guard Kyle Lowry to the Dallas Mavericks in exchange for Tim Hardaway Jr. and a future first-round draft pick. This trade fits into the salary cap as both players have similar salaries, with Lowry earning around $29 million and Hardaway around $17 million, plus the cap room for the draft pick Instructor Manual for Sports Economics David Berri 9781319106157
Download
Close
Close
