Recently in Professional sports Category

Lynne Kiesling

I have one comment for today:

That is all.

Lynne Kiesling

Early in third period, Penguins 6, Flyers 0. Marian Hossa has 1 goal and 3 assists. He is my new BFF.

UPDATE: On to the finals! This is the first time since 1992, which is a series I remember fondly (and for which I still have a t-shirt!). Woo hoo!

Technology and the Internet are beautiful things; the Pittsburgh Penguins Eastern Conference champions shop was online 10 minutes after the end of the game. Love it.

Lynne Kiesling

Long-time KP readers know that I am from Pittsburgh and I am a hockey fan. Newer readers may not realize that, because I don't write as much about hockey here as I used to. In part that's the disillusion and ennui that set in during and after the lockout. In part it's been the light TV coverage, even though Versus has a contract with the NHL; they don't show that many games. Once the late season kicks in and NBC starts showing some Sunday afternoon games, then I'm more likely to catch one. But I'm not likely to go out of my way to watch a game any more.

But the economics of technological change is reviving my love of hockey. When we moved back into our renovated house at the end of March, we also bought ... a 40" LCD 1080p high-definition TV. We hooked it up on a Sunday, and what was the first thing we saw when we turned it on? A Penguins-Rangers game. In Pittsburgh. And the Pens won.

All I can say is this: woof. Hockey is fabulous in HD. Of course I'm watching my Penguins (and I got home from my woolly weekend in enough time yesterday to see them win the series against the Rangers in overtime, yay!), but I'm also watching the other series. Because it just looks so freaking awesome in HD.

The increasing image quality of television, and the Moore's Law-like continuous increase in value-for-money as the technology gets cheaper, has reinvigorated my lifelong love of hockey. If this is the perennial gale of creative destruction, bring it on, baby!

Lynne Kiesling

There is no economic model that can support the state buying Wrigley Field. The sports economists have to pay some attention to this one. It all stinks to me of political gambit. Heck, Wrigley sells out most games, and that's even when the team's having a crappy year. I am not persuaded by the argument that Wrigley's renovation requires so much capital that it exceeds the levels of private investment that a private owner can undertake.

Disgusting.

Michael Giberson

One month ago, you could have bought a ticket to see the Giants in Super Bowl XLII for $86, says The Arizona Republic. Given that prices for Sunday's game on secondary market Stubhub are offered at $1900 and higher, that $86 sounds like a pretty good deal.

More precisely, one month ago you could have bought an option at Yoonew.com that paid off in a Super Bowl ticket only if the Giants made it to the NFL's big game, otherwise the option would have been worthless. Obviously, a month ago few people expected the Giants to make it to the Super Bowl. The Arizona Republic reports:

The company behind the Web site is in New York, but the idea behind the business came from two professors at Arizona State University.

Stephen Happel and Marianne Jennings wrote about their idea in the Cato Journal, which promotes free markets.

Two MBA students from the Massachusetts Institute of Technology saw the paper, liked the concepts detailed in it, and created Yoonew.com.

An article by the Arizona State University business school provides more detail about ASU professors Stephen Happel and Marianne Jennings, their research into and advocacy of secondary markets in tickets, and Yoonew, which Happel has advised: From Pork Bellies to Pigskin: An Online Futures Market for Sports Tickets.

(The Patriots have long been expected to have a good chance to make the game, and the Yoonew prices reflected that expectation, too. This post mentions that a Patriots fan paid $2000 apiece for options after the Patriots beat the Colts during the season.)

Michael Giberson

The NCAA basketball season is well underway, and soon enough March Madness will be here. Do you have your brackets worked out yet?

Last year while working out a few thoughts on arbitrage opportunities in basketball tournament prediction markets at Inkling, it occurred to me that the Inkling pricing mechanism was just a little bit off for such applications. The question is whether something better can be done. An answer comes from the folks at Yahoo Research: yes.

This is a long post likely only of interest to prediction market geeks, a few computational theorists and some mechanism design people. You have been notified.

Lynne Kiesling

Any of you planning to watch the Penguins/Sabres NHL Winter Classic game today? Here's ESPN's Scott Burnside on some of the possible pitfalls of an outdoor hockey game in the snow belt of New York on New Year's Day. Here's the weather forecast:

Periods of snow, mainly before 10am. High near 36. Southeast wind 8 to 16 mph becoming west. Winds could gust as high as 33 mph. Chance of precipitation is 90%. New snow accumulation of 3 to 5 inches possible.

Sounds idyllic, except for the wind. Brrrr!

Go Penguins!

Michael Giberson

Today, December 10, 2007, StubHub announced that the ten millionth ticket was recently exchanged through the site. The company said that the exchange involved a pair of tickets to next Sunday’s game between the Green Bay Packers-St. Louis Rams in St. Louis. In a pattern perhaps typical of many exchanges on StubHub, a fan of the visiting Green Bay Packers acquired the ticket from a St. Louis fan/season ticket holder who faced a conflict preventing his use of the tickets.

The ticket resale market has motivated a few theoretical economics papers, but usually very little data is thrown into the mix. Now that is changing. A couple of Stanford economists, Alan Sorensen and Phillip Leslie, have developed a great dataset on ticket resale based on data from Ticketmaster, StubHub, and eBay for a sample of more than 100 concerts during the summer of 2004. Overall they have records for over 1.7 million tickets sold or comped in the primary market – data from Ticketmaster – and almost 69 thousand tickets resold via eBay and StubHub (data provided by StubHub; eBay data scraped from the site – aren’t research assistants great? StubHub was acquired by eBay in February 2007). The economists speculate that about half of ticket resale occurs through one of those two sites, so perhaps a total of 140 thousand out of the 1.7 million tickets were resold in the secondary market.

The data is described in an unfinished paper, “The Welfare Effects of Ticket Resale.” While the analysis is incomplete, some interesting preliminary results emerge from their data:

• Total revenue received by resellers at eBay and StubHub is averaged 6% of the primary market revenue; the maximum for any single event in their dataset is 37%.

• Resellers are obtained an average markup of 40% over the face value, and a quarter of resold tickets obtained markups above 66% - but 28% of tickets were resold below face value.

• Resold tickets were more likely to be tickets with higher face value, and more generally high quality seats were more likely to be resold than lower quality seats (even for tickets of the same face value).

• Indeed, the authors conclude that unpriced seat quality was a significant driver of ticket resale activity.

• Total profit (markup) obtained from ticket resale in our data is slightly over $1.5 million, or about 1.14% of total revenue in the primary market. Given that they observed an estimated half of resale activity, the actual values for their sample of concerts was probably closer to $3 million and 2.3% of the total.

A useful point for promoters and venues that want to discourage resale: price tickets better in the first place. Typically a particular concert will offer a variety of price points; the concerts ranged from 1 to 12 price levels in the Leslie and Sorensen dataset. With sometimes thousands of seats offered at a single price point, the authors observe that the variation in seat quality at a particular price can be dramatic. With variation in quality and a fixed price, an economist would expect relatively higher excess demand for the higher quality seat. Professional ticket resellers rely upon these high quality underpriced tickets to obtain their significant markups.

If primary ticket sellers were better at pricing tickets in the first place, they could squeeze most of the professional resellers out of business. (This is my conjecture, not that of Leslie and Sorensen.) No doubt an analysis of data from Ticketmaster and StubHub could help venues identify underpriced seats, and help them redraw their pricing regions.

I have no particular interest in driving professional ticket brokers out of business, but it seems to me that consumers don’t gain a lot in the long run from the economic surplus that flows into brokers' hands. As a consumer, I benefit more in the long run when profits are captured by suppliers, motivating supply-side competition among musical acts and concert venues to serve me, rather than when profits are captured by ticket brokers, which motivates an ‘arms race’ competition to obtain the best tickets first.

But lest this last argument be taken as an anti-scalping position, I hasten to add that I have a stronger short run interest in easy-to-access resale opportunities when a conflict arises and I can’t use a ticket. (Or, for example, when my team was leading the league at the end of the MLS season, so I bought MLS Cup tickets, then they didn’t make it through the post-season tournament, so I resold the tickets via StubHub rather than witness the Houston Dynamo repeat against the New England Revolution.)

My mantra remains: Online Secondary Ticket Markets can be Good for Teams and Fans (and musicians and venues).

NOTES: My most recent previous post on ticket resales is: NFL wants to support secondary market for tickets, New England Patriots want to punish ticket resellers.

(By the way, StubHub reports that Miley Cyrus was the highest grossing concert on the site this year based on StubHub volumes and exchange prices. Cyrus tix averaged a resale price of $258; only Celine Dion and Elton John tickets saw higher resale values, while resale prices for Eric Clapton, Bon Jovi, Bruce Springsteen, and The Police, among many others, fell below the Cyrus ticket average.)

See a related story on online ticket resale from The Economist: If you can't beat 'em, join 'em.

Michael Giberson

How many times do we have to say it? Online secondary ticket markets can be good for teams and fans. Fans can buy tickets earlier, knowing if they have a conflict, there is an easy way to recoup at least some of their price. Teams can therefore sell more tickets to fans earlier, shifting a bit of risk onto fans now more willing to take it, and the teams are likely to see a few more seats filled with fans eating $8 hot dogs.

In late October, the NFL decided it was going to select a single secondary ticket market to become the sole official source of ticket resales for the league. Many teams already have their own deal with companies like TicketMaster, StubHub, and TicketsNow, so adopting a league-wide deal will require working out some team-level kinks.

Which brings us to the sad case of the New England Patriots, which sued StubHub to obtain the names of 13,000 customers who bought or sold tickets through the site. On October 19, 2007 the Boston Globe reported:

The Patriots obtained the list last week as part of a legal dispute with StubHub, an online marketplace for individual buyers and sellers of tickets, over who can resell Patriots tickets and how. The team, which has taken an unusually strong stance against scalping, has indicated in court that it may revoke the tickets of people who resold on StubHub.

In granting the team’s request, Superior Court Judge Allan van Gestel gave the Patriots “wide latitude in using the names of StubHub customers”:

"The Patriots have said that they intend to use the identities of the purchasers and sellers not only for this case, but also for its own other allegedly legitimate uses, such as canceling season tickets of 'violators' or reporting to authorities those customers that they deem to be in violation of the Massachusetts antiscalping law," van Gestel wrote.

…The Patriots allow season ticket holders to resell their tickets at face value on the team's website, but prohibit all other resales.

Current Massachusetts state law limits resales to $2 over face value, a limit which appears not to be respected on online markets. A proposed bill under consideration in the Massachusetts state legislature would eliminate the $2 cap, allowing licensed ticket brokers and fans to sell tickets for any price.

One provision in the bill would bar a team that gets into the business of reselling tickets above face value from restricting where its season ticket holders can resell tickets. The provision is designed to prevent sports teams from monopolizing resale of tickets.

But a team that does not get into the business of reselling above face value would be allowed to restrict what its customers do with their tickets, according to the provision in the bill.

Senator Michael Morrissey, a Quincy Democrat who is the point person in the Senate on ticket issues, said the Patriots have indicated to him they would not facilitate the resale of tickets above face value and would continue to enforce the team's no-resale policy.

"That's what their position is," Morrissey said. "I find it a bit refreshing."

The Globe article doesn’t indicate what Morrissey finds so refreshing, but frankly, I’m not opposed to the Patriots abusing fan goodwill in this way. Let them experiment with patron-alienating tactics and see what works best. With a 50,000 person waiting list for season tickets, I guess the Patriots feel like they have goodwill to burn.

The NFL’s selection of a league-wide “official resale site” can promote fan welfare by focusing buyers and sellers in a single market, which will improve liquidity of the secondary market and promote price discovery. These advantages don’t mean that the league should prohibit or discourage resale through other means, however. Some ticket holders will have reasons to trade elsewhere, and the possibility of trading elsewhere will help keep the fees and services of the official site competitive. Fans will benefit from both having the centralized site and alternatives.

Maybe I’m crazy, but I think in the long run teams should benefit most from rules that allow fans to benefit.

[Somehow I got through this post without mentioning the Miley Cyrus/Hannah Montana ticket resale flap or the fan lawsuit against the Miley Cyrus Fan Club. But, all things considered, these things should be mentioned. Good, now I’ve done it.

The main unaddressed issue above is the role played by ticket brokers, and especially use of automated programs (called "bots") to rapidly acquire online tickets when they are sold. Not now. Maybe later.]

Michael Giberson

Yesterday, NPR's All Things Considered ran a story on the Jordan Furniture Red Sox promotion that we discussed here earlier. An excerpt:

So with the Red Sox and the Colorado Rockies now facing off in the World Series, some of the couch potatoes watching from home are rooting to win the very couches they're sitting on.

Nate McKinnon is one of them. The decor in his bedroom says "Red Sox fan." The furniture says "25-year-old bachelor on a budget." With one exception.

After years of sleeping on futons and second-hand beds, McKinnon now owns a quality mattress – with a pillow top.

"Each of the springs is in its own pocket," McKinnon says. "It makes it supposedly so that you don't disturb your sleep partner. I don't have a sleep partner, but if I did they wouldn't be disturbed."

McKinnon paid $508 for the mattress, but if the Red Sox win the fall classic, he'll get the money back. He bought it in April as part of the Jordan's Furniture promotion.

Michael Giberson

At Midas Oracle, Eric Zitzewitz asks, "Is sports betting legal if you bundle it with furniture?"

A furniture retailer in Boston offered furniture that would be free to customers purchasing a mattress, dining table, sofa, or bed between March 7 and April 16, if it turned out that the Red Sox won the 2007 World Series. According to the Boston Globe, one customer spent $40,000 during the promotion, and will get it all back if the Red Sox win. A total of 30,000 bets -- er, orders -- were placed during the promotion.

Zitzewitz's question led me to wonder whether, for example, If I bought a sofa from a customer who bought it from the store during the promotion, and the Red Sox win, could I claim the payout?

Or how about a purely financial derivative — I buy the payout option from the sofa owner, but not the sofa. (I have plenty of sofas already, thanks.) The option is worth either $0 or the price of the sofa, depending upon whether the Sox win.

Given 30,000 orders and assuming an average order value of $1,200 each, that is $36,000,000 in potential claims. If the claims were tradable, seems like you could have a pretty liquid little prediction market.

Tradesport prediction market prices suggest a 67 percent likelihood that the Sox will win, so a reasonable price for the payout option attached to the $599 sofa pictured would be about $401.

Michael Giberson

I just set up a market for predicting the winner of the Women's World Cup 2007 tournament, which is kicking off in China this weekend and wrapping up on September 30. (Women's football/soccer.)

Took me about 45 or 50 minutes, start to finish. A lot of it was just cut-and-paste team names and info. Sixteen teams, each with a name, abbreviation, description, and starting price. A bit of general market information, an image uploaded. The market even includes a link to the official FIFA RSS feed that puts news headlines right on the market page! It was easy to manage.

Check it out!

If you are curious about how prediction markets work, Inkling makes it easy to get started.

(Still haven't figured out how to embed the Inkling chart widget into a blog post, so the above chart is a static image that links to the market page at Inkling. You'll have to click through to see the latest prices.

By the way, I also have an MLS Cup market running at Inkling too!)

Michael Giberson

Major League Baseball has entered into a revenue-sharing agreement with StubHub, an online ticket resale marketplace now owned by eBay. Radio news program Marketplace had a brief story that was far too breezy in the introduction for my tastes:

Scott Jagow: In pro sports, ticket scalping is — let's face it — part of the game. So much so that a lot of teams have set up Websites where fans can re-sell the seats they aren't using.

The New York Times story was more accurate in the lede:

Major League Baseball once frowned on scalping, the resale of tickets among fans and sidewalk entrepreneurs. On Thursday, professional baseball will announce plans to get into the business.

Although here, too, the phrase "once frowned on scalping" is a little weak, as is suggested by this paragraph a little deeper into the Times article:

Last season, the New York Yankees revoked season tickets of fans who used StubHub, saying it violated the contract that the ticket holders had with the team. The Yankees even went so far as to ask its flagship radio station, WCBS, to turn down ads from StubHub, and security guards at Yankee Stadium regularly questioned fans arriving with StubHub envelopes.

Not to mention the pro-sports teams that have lobbied for anti-scalping laws, sued StubHub and other resellers, and called the cops to prevent fans from reselling tickets.

Various news stories characterize this deal in slightly different words, so I am not sure how MLB's arrangement with StubHub is going to bump up against the arrangements that some baseball teams have with TicketMaster or other resellers. TicketMaster hasn't been shy about going to court to sort things out, so I'm sure things will get cleared up eventually.

As has been argued on this site many times before, secondary ticket markets can be good for fans and for teams. Having a single "official" secondary market, too, can be a good thing for fans and teams: it will bring more buyers and sellers into one market, ensuring more efficient pricing, and can help protect buyers from fraud.

In this case it looks like StubHub isn't trying to act like a monopolist (yet) - they're proposing customer-friendly innovations like linking the resale market to team box offices so that tickets resold during the last 72 hours before a game can be picked up at the stadium. Let's hope that the fan-service-orientation continues through the full five years of the deal.

Michael Giberson

If my post of last week didn't sate your interest in economic commentary on secondary ticket markets, here is a much longer piece put out by the Arizona State University business school: "Scalping goes upscale: The secondary ticket market's online revolution."

A sample:

Software upgrades have taken much of the back-alley risk out of these transactions, and have encouraged more season ticket sales not only to corporations, but also to entrepreneurial types, who can effortlessly sell off tickets for popular entertainment and professional and collegiate sporting events. Savvy individual season ticket holders can defray the cost of season tickets, even make money on it, by selling off some choice events at a higher price, notes James Ward, a marketing professor at the W. P. Carey School. "Some do it for a living," adds economics Professor Stephen Happel, an authority on the secondary ticket market who, with [law professor Marianne] Jennings, has written in the Wall Street Journal on the subject.

Ray Artique, another ASU marketing professor, notes how the secondary market can produce benefits for both team and season ticket holders. Having people in the seats generates additional revenue for the venue and teams. Artique notes that when teams can track how frequently a season ticket holder's tickets are used, the team can reward ticket holders that show up more often with discounts and other incentives. While bar-coding tickets is sufficient to allow teams to track ticket usage, an easy-to-access (i.e. online) secondary market makes it easier for season ticket holders to help the team keep the stadium full.

The article gives a few moments to Ticketmaster, and the company assures us that while it "believes in a free market economy... for any free market to function fairly there need to be rules that protect consumers against fraud and that safeguard the legitimate rights of those who make live entertainment events possible." What Ticketmaster wishes to safeguard, of course, is its ability to gain exclusive rights to manage resale of tickets.

"These ticketing companies and team ticket exchanges are basically trying to squeeze out the competitive nature of the secondary market under the guise that they are doing it for the safety and convenience of the consumer," says Happel. "That's a crock."

Michael Giberson

The secondary market for tickets to sports events is hot. Once upon a time the market was a bunch of guys standing curbside waving tickets in the air. Or, depending on local antiscalping laws, making furtive eye contact and calling in a low voices. There were brokers, too, for the more upscale crowd.

Then came eBay and Craigslist, then StubHub and others, and even Ticketmaster is in the resale business. A New York Times story provides an update, reporting on Flash Seats, an online ticketing company purchased last year by Cleveland Cavaliers owner Dan Gilbert:

Flash Seats allows sports teams to exert total control over who fills their seats, and to fight back against sites like Craigslist, eBay, TicketsNow and StubHub, which have transformed the shady world of ticket scalping into a $3-billion-a-year business.

Those sites have pushed ticket reselling far beyond the reach of professional sports teams, entertainment arenas and the local police as they try to enforce state antiscalping laws. Now teams like the Cavaliers have conceded the inevitability of ticket exchanges and are creating their own — and, in some cases, taking a lucrative piece of the pie.

In general, this competitive frenzy is good for sports fans and good for the teams. We've blogged about secondary markets for tickets before, and I stand by our earlier points:

From "I, For One, Welcome Our New Ticket Overlords": "Having 'officially sanctioned' secondary markets can be a good thing ... The designation of a particular secondary market will help coordinate buyers and sellers who would otherwise more likely be dispersed over multiple marketplaces. Bringing them to one place should facilitate trading and reduce the bid-ask spread. Such a market can be more efficient."

From "Secondary Markets for Tickets": "Increased liquidity in the secondary market reduces risks to season ticket holders and will increase the demand for such packages."

Also from "Secondary Markets...": "Of course the ready availability of a secondary market is going to dampen the supply for one of the perks of working in a large office: the Friday afternoon email from the VP with tickets to the weekend's game that he can't use. Now he'll just resell them on Stubhub."

Also still interesting to me is that this online retail space remains contested. In "Ticketmaster Ticket Auctions, The Competition, Prices," I wrote:

The main difference between the stories [one in USA Today and an older one in the New York Times] seems to be that, in the older article the 'other guy' was eBay, while in the newer article the 'other guys' are StubHub and RazorGator. This is a difference that I find interesting. In the heavily networked world of online commerce, I thought first movers were supposed to be big favorites. In any case, shouldn't we see one market emerge, not two? But here we have Ticketmaster, no stranger to stitching together various interests and putting itself at the indispensable center of things, fighting alongside eBay against a couple of ticket market upstarts.

EBay decided the best way to fight StubHub was to buy them, consummating the deal in January of this year. Ticketmaster has pursued another tactic: in April it sued StubHub for "interfering with [Ticketmaster's] agreements with clients"

A key factor in keeping this space contested has been the sports teams control over terms and conditions of initial ticket sales and performance venues, which allows them to muscle into the market once they decide to do it. As long as teams don't insist upon being the sole controller of the secondary market, the development can be good for fans.

Again from "I, For One, Welcome...": "It is one thing to observe that having a dominant place to trade can be a good thing for consumers and quite another to assert that, therefore, it should be illegal to trade on any site not officially sanctioned. Stamping out the competition will clearly benefit the secondary market operator -- increasingly this is Ticketmaster -- but likely at the expense of consumers and not to their benefit."

On these grounds I'd be reluctant to support the New York Yankees, the New England Patriots, or the Denver Broncos, all of whom seek to prevent fans from reselling through any other means than the team-sanctioned site. According to the Times, "The Patriots ... revoked the tickets of 52 season-ticket holders who sold their seats on StubHub." And they, too, sued StubHub. These are not fan-friendly actions.

(See also Lynne's post, "Moving from Posted Price to Auction," in which she wonders why tickets even have a face value printed on them anymore.)

Lynne Kiesling

I'm not being as productive this week as I could be, because I am trying to keep up with the Floyd Landis doping trial/arbitration taking place this week at Pepperdine University. I've been silent on this topic since October, when I wrote about Floyd's "wikipedia defense" and the wisdom of crowds (back in July 2006 I wrote about public and media innumeracy and lack of understanding of statistics here and here).

Since I last broached the subject in October, events have been a combination of fiasco, farce, and soap opera. The French lab that did the testing, Laboratoire National du Dépistage du Dopage (LNDD), has a substantially higher rate of positive results than the other 29 labs certified by the World Anti-Doping Agency (WADA) to perform such tests, but they claim strongly that this rate is not because of false positives. LNDD was running the tests using software on an old OS-2 computer that did not keep good log files, and the lab techs were in the habit of overwriting trial run files instead of saving every single run as a separate file. Then the hard disk on which some of the data were saved was mysteriously wiped clean of all files. Then the Landis legal team asks for more complete, electronic, data on the mass spectrometry tests on the urine samples, and the WADA/US Anti-Doping Association refuses to give them the higher-resolution electronic versions because they were concerned that the Landis team would tamper with the data (even though they were just a graph, not the underlying data). The LNDD logs demonstrate a shoddy chain-of-control protocol. WADA may be trying to use a test threshold that differs from the international standard and does not take into account experimental error in determining the positive/negative ranges. The USADA offered Landis a reduced suspension if he dished them dirt on Lance Armstrong and what he put in his body when he was still racing.

And yet, there is still a suspicion that the fix is in. No athlete has ever successfully defended against accusation in a USADA arbitration procedure, and the process for choosing the panel of arbiters and the arbitration procedure itself (a process that did not allow the parties a discovery process) is consistent with the hypothesis that this proceeding is really a kangaroo court. US and world anti-doping governance is, in my opinion, horribly opaque and unfair to athletes, in part because of its dismissal of the probability of false positives and its wilingness to ruin careers by committing Type I errors (rejecting when you should fail to reject). I'm suspicious that this is the case, although the first three days of testimony have shown that if the arbiters are indeed interested in scientifically-supportable conclusions, they should be skeptical about the WADA/USADA accusation and the LNDD testing procedures (however, in athlete doping cases, there is no presumption of innocence as there would be in a typical legal proceeding). In brief, I'm pretty convinced by now, after following this story for nine months, that the world anti-doping organizations and labs are emperors without clothes, and that Floyd is right (and courageous) to call BS on them.

One other really remarkable aspect of the "wikipedia defense" and the role of the Internet in creating community and information is the wonderful role that Trust But Verify is playing in disseminating information about the trial. Neither a journalist nor a scientist, Mr. Brower has been an enormously valuable information repository since the fall; TBV is the Floyd Landis doping allegation portal, with his own informative analyses, links to media articles and to the discussions at the Daily Peloton Forums and elsewhere. Other contributors have joined TBV to comment on specific legal and scientific aspects of the case. When all is said and done here, TBV will be a crucial chronological record of this case, and may be an important source of information in what I hope will be a dramatic overhaul of the governance of athletic doping regulation, enforcement, and testing.

TBV has taken vacation this week to spend long days in the press room at Pepperdine, providing "play-by-play" on the hearing as it evolves. This is a labor of love, of the sport, of the scientific method, and of a quest for truth. He is joined by Bill Hue, a trial court judge (and cyclist) in Wisconsin, who has also taken the week off of work to observe this proceeding; Mr. Hue is providing "color commentary" and offering key insights into legal procedure. This is my public shout-out of gratitude to them; without their efforts, this process would be much less transparent (regardless of who did what). Their dedication has provided a forum for analysis and discussion that reduces the innumeracy and opacity that allows bad governance institutions to persist, and I am truly grateful to them.

Michael Giberson

As Lynne noted a few days back, we share a love for soccer. In addition to Man City, she roots for her home team, the Chicago Fire. I have the honor of being a fan of my own home team, DC United.

As the MLS season starts this weekend, it is a natural time to look forward and look back. The best blog on American soccer for that kind of looking is Climbing the Ladder, which has recently concluded that MLS is finally growing up - or at least is reaching puberty. (It's kind of complicated, involving reference to a Simpson's episode and comparing David Beckham to Fluffy Bunny, but actually Climbing the Ladder makes sense of it all.)

One small sign of the progress has been the performance of the two MLS teams in the CONCACAF Champions' Cup. DC and Houston both advanced to the second round in the tournament. DC was eliminated on Tuesday by Chivas; Houston takes a 2-0 aggregate lead into tonight's game against Pachuca.

BTW, if you like a pretty soccer goal, you may enjoy watching Jaime Moreno backwards chip shot from the Tuesday night game.

It will be a few years yet before MLS teams will become comparable to some of the better teams in Europe, and perhaps a while longer before any can aspire to move among Europe's elite squads, but the notion that one day an American soccer team will be good by European standards is not so laughable as it once was.

Lynne Kiesling

While we're on the subject, I was fishing around about soccer and found the EPL Talk blog, where there's a neat post about musicians who are mad about soccer. A disproportionate share of those listed are Manchester City fans (as am I), including:

Johnny Marr (Manchester City). The former guitarist of The Smiths had trials at Manchester City and was approached by Nottingham Forest to play football.

One of my favorite bands, one of my favorite teams, one of my favorite places. Yes, I like Manchester very much.

I think the disproportionate Man City representation reflects the hotbed of musical creativity that Manchester is.

Lynne Kiesling

I don't share Mike's interest in basketball, so the NCAA tournament frenzy doesn't do a whole lot for me. However, he and I both love soccer, and I've commented on the upcoming Beckham infestation of SoCal here and here.

Today's Wall Street Journal has an article that discusses the MLS growth strategy to build on the existing base and this new global visibility (subscription required). What I find most economically interesting is the pursuit of what amounts to development joint ventures with other leagues:

But in the wake of Mr. Beckham's signing, a number of developments point up U.S. soccer's rising profile at home and overseas. Earlier this month, MLS announced a partnership with the Bundesliga, Germany's top circuit, that calls for the leagues to establish closer promotional links and share expertise in areas like stadium construction, TV production and youth marketing. The German league has the highest average attendance in Europe, but its foreign TV revenue lags behind that of England's Premier League and Spain's La Liga.

In a statement, Bundesliga CEO Christian Seifert said the league has spent the past 18 months studying the American soccer market and was impressed with U.S. TV ratings for last year's World Cup, which attracted an average of three million total American viewers on English and Spanish channels. (The final between France and Italy was watched by about 17 million U.S. viewers, outdrawing the final game of the 2006 World Series.) ...

Arsenal, the 121-year-old London soccer franchise that inspired the best-selling book "Fever Pitch," is also angling for a toehold in the U.S. Last month, the club announced an alliance with MLS's Colorado Rapids, which is operated by Stan Kroenke, owner of the NBA's Denver Nuggets and the NHL's Colorado Avalanche. As part of the "strategic relationship," the British team will establish a youth training center at the Rapids' new facility in suburban Denver, send coaches to the U.S. to supervise clinics, and develop an Arsenal-branded youth tournament.

Up to now, attempts to expand the domestic market through foreign collaborations have been, well, lame:

The Arsenal and Bundesliga deals are in sharp contrast to past U.S. efforts by foreign teams, which often tried to drum up interest with haphazard summer tours, says Paul Swangard, executive director of the University of Oregon's Warsaw Sports Marketing Center. Now, "there's a recognition that MLS is a viable piece of the global soccer business," he says. "It's a credibility statement for American soccer."

Thinking about these transactions as development joint ventures provides some insights into profit-maximizing strategies for these leagues. At one level, they compete for labor inputs (players) and for consumers. So why would they want to collaborate through such development joint ventures? Because they realize that they will be competing for a larger pie if they can increase global demand for soccer. They also realize that if they all have more quality players from whom to choose, the quality of the game will go up in general, and they will all benefit.

Michael Giberson

Coyote Blog asks, "Where is Cinderella?"

The first two rounds of the NCAA basketball championship have been played (round three is underway as I type), and nowhere to be seen is a surprise team like last year's George Mason University.

The best answer I have seen is that of Phil Sheridan, in The Philadelphia Inquirer: Mid-majors that roar are winnowed out. While normally I'm not much for conspiracy theories, when the conspiracy fits with the interests of television and the dominant sports conferences ... well, that's a powerful aligning of interests.

Want to know what happened to Cinderella? I'd put the wicked stepsisters at the top of the list of suspects.

Lynne Kiesling

While we're in the "how cool is this?" department, pro cycling team CSC has announced that we'll be able to track all of their riders on the upcoming Tour de California using GSM cellular technology and Google Earth:

During this year's edition of the pro cycling race, the Computer Sciences Corporation, or CSC, will outfit seven contenders with specially designed tracking devices. Information about the riders' locations and relative positions in the race will be made available as a map mashup during each of the tour's eight daylong stages. ...

"This is more than just GPS," says CSC's Identity Labs chief technologist Dan Munyan. "This is object field tracking. We want to be able to focus on a field of objects in motion, looking not only at where they are on the route, but also where they are relative to each other.

Yay, a whole new way to cheer on Zabriskie and Julich! How cool is this? Amazingly cool. And it helps the riders to prep for the race:

Julich says the devices will also help the riders study the route more closely and better prepare for the race. But after rolling across the start line, turning in a winning performance is totally up to the rider.

Lynne Kiesling

As a Liverpool FC fan (or, more accurately, a Xabi Alonso fan), I have been watching the impending sale of the team with great interest. The back-and-forth over the holidays between the current owners and the Dubai investment club that had an offer on the table, and the interjection of the interest of Americans George Gillett and Tom Hicks, has been fascinating. Last week the team announced that they had accepted the Gillett/Hicks bid.

Over at the Sports Economists Skip Sauer quite rightly talks about the capitalists being ahead of popular opinion, and the growth of soccer's popularity in the U.S. [certainly if he were with us at the Globe Pub on any given Saturday morning watching EPL, he would be even more convinced by the number of Americans in attendance. -ed.] The Sports Illustrated article on the acquisition makes the same point:

If you ask me, it means that some Americans, such as Gillett, Hicks and Kroenke, finally get it. They understand the global reach of soccer, that it's really the world's game. After all, it's not just a sport. It's the largest collective phenomenon on the planet, with billions playing it, watching it and discussing it every day. ...

That's what this buying spree is about. The massive network of soccer fans around the world, united by satellite TV that lets Malaysians become huge Manchester United fans and China become crazy for Real Madrid. These American businessmen want to tap into that network, and they can't do it with traditional American sports.

The potential of soccer's globalized nature, from a business standpoint, is bigger than the hype surrounding the Super Bowl each year. And Gillett, Hicks and Kroenke are all good businessmen -- each one reportedly worth hundreds of millions, if not billions -- who have had success with other teams they've owned.

This is all very interesting, but there is one aspect of this capital flow that intrigues me: Gillett and Hicks have just bought in to Liverpool on the verge of their construction of a new stadium. From the Bloomberg article linked above:

Liverpool's proposed move from the 45,000-capacity Anfield to a new 60,000-seat arena in Stanley Park, where work is due to start next month, is an attempt to close the gap. United this season extended the capacity of Old Trafford to 76,000, while Arsenal relocated to a new arena costing 357 million pounds.

"The shovels need to be in the ground in the next 60 days or so,'' Gillett said of a stadium costing 215 million pounds.

So G&H spent $343 million on a large ownership stake in a club that has a lot of debt and is about to embark on a $400 million construction project. Here's my question: can you think of any U.S. sporting team that would have the same happen to them? More often than not, our team owners try to throw their weight around as political entrepreneurs and get taxpayers to pay for at least part of their new stadiums, even though no economic analysis has ever shown such expenditure to be worth it. Sadly, my beloved Penguins in my beloved Pittsburgh are in precisely that negotiation right now, arguing that the hockey team should get the same cushy deal that the football and baseball teams got when they built new stadiums.

So ... if you can offload some of the capital expenditure on taxpayers that should increase your return on investment, right? If you can do that in the U.S. but you can't do that in England, why is the capital flowing there? The best answer I can come up with is the extent of the market. Globalization and technology have increased the extent of the market for sports, and soccer's universal global popularity gives it a head start in competing for global eyeballs (and expenditures on jerseys and scarves).

If that's what's driving it, is there a way to capture that extent of the market on behalf of smaller sports in smaller cities? Here's my recommendation: restructure hockey so it's like European soccer leagues, with promotion and relegation and simultaneous play in multiple cup competitions.

Think about it. Take the NHL, the AHL, the ECHL, etc., and structure them in the same way as the EPL/Champions League/League 1/League 2. They each play most of their games in their home leagues, but they also have some competitions across leagues (like the FA Cup and the Carling Cup in England). The top teams in each league get promotion for the next season, and the bottom teams get relegation.

Doing something like that would have interesting ripple implications for things like sportswear IP ownership rights. If you have teams going in and out of the NHL, they can't have the NHL be the primary owner for the purpose of producing sportswear. I would bet that they would form some promotional goods revenue sharing agreement between league and team, and that those agreements would be pretty pro-forma and that teams would have to agree to them in both promotion and relegation.

Would that help to increase the extent of the market for hockey games? If so, would it help capital flow to the industry for the construction of arenas? Honestly, I'm not optimistic, because the lure of being able to offload the cost on taxpayers has a heroin-like magnetism. But it's about time that people start thinking creatively about the investment and finance aspects of smaller sports, learning lessons from the global appeal of the beautiful game.

Lynne Kiesling

He is going to the LA Galaxy, just like I said yesterday. I knew it!

Lynne Kiesling

BBC Sport reports that David Beckham will not renew his contract at Real Madrid. What probability do you assign to his playing in the MLS next season? I assign a very high probability. Several European stars have ended their careers in the MLS (I think of it as a combination of level of play, media attention, and quality of life in the US).

I can just imagine him playing on the Los Angeles Galaxy, receiving passes from Cobi Jones, then going out on the super-stylin' town.

Michael Giberson

A game for fans is finding new fans for the game of football. A Washington Post story reports that the realism packed into EA Sports' Madden NFL games has helped recruit a new wave of fans. I was going to make some observation about unintended consequences, but the article beat me to it:

No one could have expected that it would come to educate a generation of fans on football the way it has.

"I don't want to say it was a surprise," said Chris Erb, director of marketing for EA Sports. "When you have something that authentic you expect it will have success. But it was never an intended effect."

Here is EA Sports' own look back on the "15-Year Phenomenon" of Madden NFL Football, written up a few years ago.

(Personally, I play EA Sports' FIFA 07 Soccer, but I appreciate a good news story, even when it is about American-style football.)

Lynne Kiesling

Here's one for the "markets in everything" file: you can buy a contract at TradeSports with your prediction of Lance Armstrong's NY Marathon time. Lance's time, his training, etc. have been a topic of much discussion in some of the online places I frequent. Now all of us chatterati can put our money where our mouth is.

How cool is that?

Lynne Kiesling

As KP readers know, I am a cyclist and commented on the innumerate media debacle surrounding the Floyd Landis drug test here and here in July. Between the histrionics of the media, the history of bad behavior on the part of at least one testing lab, and the sheer ignorance of science and statistics, the whole episode leaves a bad taste in my mouth, regardless of Landis' actions. Nonetheless, I have been keeping up over the past couple of months as a lurker at Trust But Verify (TBV for short) and the Daily Peleton Doping Discussion Forum (DP for short).

On the TBV, there have recently been some extremely knowledgeable and telling forwarding of documents from "Ferret" (all of the support for my brief narrative here is catalogued at TBV). He knew enough, and said stuff in ways that indicated that he might be one F. Landis of Murietta, California. Then over last weekend transparency kicked in, and a new user on the DP Forum called Floyd said that he was indeed Floyd Landis. Independent users have verified the identity of Ferret/Floyd. [Note: edited to correct errors noted by TBV, thanks!]

Furthermore the TBV blogger had done such an outstanding job of evaluating evidence in a balanced way, keeping the information flow large and clear, and stimulating constructive conversation on Floyd's case that Ferret/Floyd has sent case documents to TBV to archive and make available to all. In addition to the archive.org site where Mr. TBV has put the documents in the case, the case files are available at FloydLandis.com.

Stephen Dubner at Freakonomics also noted the 21st-century independent media aspects of this decision.

But the real story here isn't just in Floyd posting the files on his website. The real story is the conversation that's been going on in the DP forum and at TBV for the past several weeks, and how Floyd is going to use this community to implement a "wisdom of crowds" approach to their defense files. Floyd's defense is an open-source project, and is likely to be much better because of the cumulative knowledge of the cycling community. And it's not just cycling knowledge; it's chromatography, forensic chemistry, law, statistics, etc.

Floyd and "one-mint-julich" put it succinctly in a couple of posts:

[one-mint-julich] "This is definitely one of the waves of the future, actually of the present. It is getting harder and harder for any one person to know anything that a large number of other people, combined, don't know better."

[Floyd] "You called it. Will and I have been reading these from the begining and while you guys are opinionated (as am I) we decided that, if given the info, you would be constructive. We'll call it the Wikipedia defense, and I would have given everything to you sooner but had a very hard time selling the idea to the lawyers."

The open source, wisdom of crowds, Wikipedia defense. Bravo. The DP forum and TBV are not necessarily Landis supporters; you have a spectrum of folks in the range of being convinced (or not) by the argument. The wisdom of crowds works best when there's a diversity of opinion and expertise, buttressed by the ready availability of data that is pervasive in the Internet and in these documents. This process wouldn't necessarily get us closer to the truth if it were at a fan site; you need the potential for true analysis and criticism. You also need a way to diffuse the fan and the dismissive harsh critic. This distributed intelligence is the key to what makes markets work, and hopefully will make this process converge on truth.

Michael Giberson

I'm not much of a baseball fan, but I am fascinated by the Moneyball story. On a simple level, it is the story of competition and the discovery and use of knowledge in baseball management. But rather than diving into a rhapsodic soliloquy about economics and the use of knowledge in society, let me get to the heart of the matter: the big-payroll New York Yankees are out, and middling to low payroll teams like the Detroit Tigers and Moneyball's-own Oakland As are still in.

For commentary, see blogs The Sports Economist, Wages of Wins, and The Volokh Conspiracy.

Michael Giberson

Steven Pearlstein's column in the business pages of today's Washington Post takes note of Ticketmaster's growing efforts to become the officially-sanctioned secondary market for an increasing number of teams, venues, and performers. As we have mentioned here before, active secondary markets for tickets can be a good thing for consumers as well as sellers.

Having "officially sanctioned" secondary markets can be a good thing too. The designation of a particular secondary market will help coordinate buyers and sellers who would otherwise more likely be dispersed over multiple marketplaces. Bringing them to one place should facilitate trading and reduce the bid-ask spread. Such a market can be more efficient.

However, it is one thing to observe that having a dominant place to trade can be a good thing for consumers and quite another to assert that, therefore, it should be illegal to trade on any site not officially sanctioned. Stamping out the competition will clearly benefit the secondary market operator -- increasingly this is Ticketmaster -- but likely at the expense of consumers and not to their benefit.

Not surprisingly, Ticketmaster is lobbying for the change. (See the Wall Street Journal, listen to NPR or read the NPR story transcript.) Ticketmaster, which once was all in favor of laws against resales (i.e. sometimes called "scalping"), now has the more refined position that an officially sanctioned company should be allowed to resell tickets, but the law should prevent anyone else from doing so.

As Ticketmaster's president says in the NPR story:

Whoever is putting on the event fundamentally has the right to have certain conditions that have to be accepted by the buyer of the ticket. And a ticket, in most cases, is actually a revocable license and always has been. It’s got privileges and terms of use associated with it.

I agree. If performer or athletic team wants to collaborate in squeezing cash out of their fans to the benefit of Ticketmaster, they should be free to do so.

But fans should be reluctant to support performers or teams that favor calling the cops to prosecute fans that trade tickets. An active secondary market is good for fans and can be good for performers, too. I'm more likely to become a season ticket holder if I can readily unload tickets I am unable to use. Having an officially-sanctioned secondary market may make it easier for me to readily unload tickets. However, if you are going to sic the cops on me if I resell to my co-worker down the hall rather than pay another service charge to Ticketmaster, maybe I'll pass on those season tickets.

Michael Giberson

At The Sports Economist, David Berri uses the occasion of a brief Business Week piece, "Freakonomics vs. Moneyball" to draw further attention to an article by Jahn K. Hakes and (Sports Economist blog-founder) Skip Sauer that appeared in this summer's edition of the Journal of Economic Perspectives. In the article, Hakes and Sauer find econometric support for a bit of analysis key to the Moneyball story: that a batter's "on base percentage" was undervalued in baseball labor market. Hakes and Sauer also conclude that the undervaluation of OBP diminished after the book was published.

As Berri notes, this isn't just an article about sports, or a sports book, but about labor markets and economics, too.

The on-line Business Week story is limited to subscribers, as is the JEP article. You can find earlier versions of the Hakes and Sauer article online by searching for "An Economic Evaluation of the Moneyball Hypothesis."

Michael Giberson

In a follow-up to my World Cup posting comparing hype and data on the new Adidas Teamgeist soccer ball design, I've taken another look at the Major League Soccer data. You may recall that the new ball was supposed to be a striker's dream and a goalkeeper's nightmare. In fact, the Washington Post had quoted DC United goalkeeper Troy Perkins saying exactly that about the new ball: "a nightmare, an absolute nightmare."

The World Cup data didn’t reveal a scoring boom. I wrote in July:

But the numbers generated by the 62 games played so far suggest little effect on overall performance. There have been 1458 shots taken in the 2006 tournament so far, of which 674 have been on target (46.2 percent). Goalkeepers have recorded 474 saves, amounting to just over 70 percent of shots on target.

Compare those numbers to the results through the 64 games of the 2002 World Cup: a total of 1423 shots, of which 689 were on target (48.4 percent). Goalkeepers made 451 saves, which constitutes about 65 percent of shots on target.

Average goals per game are down as well, dropping to