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Super Bowl price gouging complaints

February 5, 2012

Michael Giberson

If you follow price gouging headlines, you become accustomed to seeing price gouging stories around big sports events: the Rugby World Cup, NASCAR races, NCAA basketball finals, and always the Olympics (a selection: Barcelona 1992, Atlanta 1996, Sydney 2000, Salt Lake City 2002, Athens 2004, Vancouver 2010, London 2012, and finally this extreme example).

All of which serves as context to reports of Super Bowl price gouging.

Super Bowls usually produce price gouging complaints. But, as a story about today’s Super Bowl reports, rates in Indianapolis may have a particularly strong mark-up because of the relatively small host city. “This is what happens when the NFL books the nation’s largest sporting event in a city with only 6,000 hotel rooms. … By population, Indianapolis is the smallest Super Bowl city since Jacksonville, Fla., which hosted a disastrous game in 2005.”

Rooms are not in perfectly inelastic supply, non-traditional spaces from spare bedrooms to whole houses are being rented out for the week. Nonetheless, supply is relatively inelastic, and it is only the relatively high prices visitors are willing to pay that brings many of these spaces into the market. A surge in demand and relatively inelastic supply: elementary economics predicts a substantial increase in price.

Host city officials, league officials, and fans often lament price gouging, but it is easy enough to predict the effect of any law or custom that prevented it: more people renting rooms one, two, or more hours away, fewer people at game weekend events and pre-game events, and more people stuck in worse traffic before and after the game. (Or, perhaps in a language more relevant to host city officials, an effective anti-price gouging campaign would mean a smaller bump tax in local tax receipts from folks attending the game.)

The fundamental issue is the relative scarcity of rooms during the game weekend, and the question is how to match fans and rooms. Letting prices work earns price gouging complaints, but failing to let prices work would surely create worse problems.

Posted in Economics, Professional sports, Regulation | Tagged | 3 Comments »

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StubHub and Major League Baseball

November 10, 2011

Michael Giberson

It’s been a while since we’ve commented on the secondary market for sports event tickets. Partly, I think, the practice has become legal and common in most circumstances and the on-line markets make the practice more transparent. What was once a seemingly repugnant transaction has been normalized. Or, at least, it is becoming normalized.

At the same time, the expansion of the ticket resale market does have some effect on the one issue at the heart of the sports business: revenue. If you want to get up-to-date on ticket resales and baseball, Dennis Coates at The Sports Economist points to a story from the Sports Business Journal about StubHub, MLB, and other resellers.

Posted in Economics, Professional sports | Tagged , | 1 Comment »

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Great sports journalism: Jason Gay on Jens Voigt

July 21, 2011

Lynne Kiesling

I’ll spare you my observations on this year’s Tour de France, which I am enjoying mightily. Today, with three huge Alpine climbs, features both grueling riding and gorgeous scenery; I’m watching a descent through a series of steep hairpin turns as we speak. But I will share one thing, because Jason Gay’s recent article, Nobody Suffers Like Jens Voigt, in the Wall Street Journal is an excellent example of sports journalism. Gay writes about everybody’s favorite member of the peloton with the same energy, joy, and wit that Voigt brings to cycling:

But Voigt is cycling’s beloved superfreak, a cult object on two wheels. Cycling fans can be combative—they will argue about riders, teams, doping charges, seat angles, handlebar tape, frame materials, the coffee, and then the handlebar tape some more—but Jens is a rare point of agreement. Everybody loves Jens.

Voigt is adored because he rides a bike like it’s his last day on it. He is full gas, always. A race like the Tour de France can be maddeningly conservative—riders at the top of the standings watch each other, cover attacks, avoid risks, do just enough to cling to their position.

But Jens? Jens pummels the race. He rides like he’s fleeing a bank heist. He rides like he’s got a paper route with 100,000 papers. Voigt on a bike is a boxing match—relentless, confrontational, jabbing, punching, attacking.

Over his long career, Voigt has won big races, including Tour stages. But that’s not why he recently got 40,000 followers in a couple days after opening his Twitter account, or why there’s a jensvoigtfacts.com website with Chuck Norris-type tributes. (“Sharks have a Jens Voigt Week.”)

Jens Voigt’s energy, enthusiasm, joy, and endurance reflect his passion and sense of life and good-natured wit, and Gay has captured that well with excellent, lively writing.

Posted in Professional sports | Tagged , , | 1 Comment »

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Fiesta Bowl wants money back from politicians

June 29, 2011

Michael Giberson

In an actual episode of journalism, the Arizona Republic has been digging into the operations of the Fiesta Bowl, including, among other things, its lavish spending on state and local politicians. The Fiesta Bowl, which is negotiating with the Internal Revenue Service in an attempt to preserve its non-profit status, has concluded that much of its spending on trips and tickets for politicians may not have been consistent with “the Fiesta Bowl’s tax exempt purposes.” And so, as part of an effort to clean up its act, the Bowl has decided to ask for the money back.

This is awesome.

Here is a bit from the Arizona Republic‘s report:

After years of attempting to curry favor with elected officials by lavishing them with expensive gifts including out-of-state trips and tickets to sporting events, the Fiesta Bowl now indicates it wants the money back.

The bowl, which is negotiating with the Internal Revenue Service to preserve its non-profit status, is asking 31 politicians to help it determine whether trips and gifts they received “serve the Fiesta Bowl’s tax-exempt purposes.”

If they cannot, the bowl says, it may ask the politicians to reimburse it for the trips and gifts, an amount that could exceed $154,000.

…

Until late last year, the bowl had made it a practice of spending on politicians in an effort to lobby for help landing subsidies or legislation to benefit the non-profit organization. The bowl changed course after The Arizona Republic in December 2009 first reported that current and former bowl employees said they were reimbursed for making campaign contributions, which is illegal, and cited questionable business practices.

The bowl’s later internal investigation found excessive spending by employees and confirmation of the campaign-contribution reimbursement scheme. The bowl fired John Junker, its longtime chief executive, who has been replaced by outgoing University of Arizona President Robert Shelton.

In some cases the politicians have paid a bit back to the Fiesta Bowl and in other cases the politicians have argued they were traveling on Fiesta Bowl related business trips, and therefore ought not to be presented with a bill for the travel months or years after the fact. Among the items paid for by the Fiesta Bowl were trips and tickets that allowed state and local politicians to attend events like the 2009 Super Bowl, the Big 12 Championship game (Texas-Nebraska) in 2009, the Texas-Oklahoma football game in Dallas, and the Auburn-Alabama football game in 2006.

Perhaps some of the public officials were doing real and legitimate work for the Fiesta Bowl during their trips, but it looks like petty corruption. (One might wonder why these multi-million dollar entertainment extravaganzas are tax exempt in the first place – is the story that they further the education of thousands of student-athletes? Are they huge charity events?) In any case, I wouldn’t be surprised if other big college football bowls were discovered to engage in similar practices. Let the journalism continue!

Posted in Politics, Professional sports | Comments Off

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Iran cuts fuel subsidies and other energy and economics links

December 20, 2010

Michael Giberson

A couple of interesting readings:

Posted in Economics, Electricity, Energy markets, Professional sports | Comments Off

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Uncapping prices in secondary ticket markets

October 7, 2010

Michael Giberson

David Harrington has an article in the new issue of Regulation on the consequences of state repeal of laws that put caps on ticket resale prices: “Uncapping Ticket Markets.” Harrington used StubHub data to compare NHL ticket resale prices in states that repealed price caps on resales to prices in states that hadn’t changed laws. As the article subhead puts it: “In hockey at least, liberalizing scalping laws has benefited fans.”

Posted in Economics, Professional sports | Tagged , | Comments Off

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NHL’s experiments in hockey

September 23, 2010

Michael Giberson

Stephen Dubner at Freakonomics points to a Macleans story on some wild experimentation going on in the National Hockey League: shallower nets, moving the second referee off the ice, moving the face-off circles, three-on-three and two-on-two shootouts, and more. The article said:

The unusual nature of some items tested at the camp reminded Simon Fraser University business professor Lindsay Meredith of the freewheeling “skunk works” divisions that tech companies create to investigate advanced projects. “Any major corporation should have some kind of skunk works—a bank, a university, whatever,” he says. “An enterprise of that size and sophistication would be foolish not to.”

FIFA, you listening?

(Related: an April 2009 story in the Financial Times about an “experiments in business” course taught by Freakonomics co-author Steve Leavitt and John List at the University of Chicago.)

Posted in Complexity, Professional sports | Tagged , | 2 Comments »

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More rule/market design recommendations for international football-soccer

June 27, 2010

Lynne Kiesling

Like Mike the other day, I have been thinking about possibly Pareto-improving rule changes in international soccer; like Richard Epstein I have always thought about sports rules (and league organization and market structure) as interesting market design issues. Take, for example, the unintended changes in ice hockey and American football after the introduction of a mandatory helmet rule — an increase in the force and violence of body contact. This is as good an example of moral hazard as you can find outside of Fannie Mae and Freddie Mac.

After the two ludicrous incorrect calls in today’s matches — not calling Frank Lampard’s goal a goal in the England-Germany game, and allowing Carlos Tevez’s goal even though he was ridiculously offside in the Argentina-Mexico game — FIFA’s hidebound refusal to use any sort of technology to review plays and calls is leading to even more anger, acrimony, and charges of unfair outcomes.

I separate the rules issues into two categories: issues affecting the run of play and issues with goals. Epstein’s recommendations that Mike summarized in his earlier post mostly pertain to fouls, diving, and other behavior in the run of play, but I think that the easiest and most beneficial rules changes to implement pertain to goals, not the run of play. A lot of these bad goal calls, one of which we have seen in almost every game thus far in this World Cup, could be corrected with two fairly simple and low-tech rule changes that are cross-pollination from American football:

  • Simple real-time video review of all goals, with the reviewer able to radio down to the referee to tell him that he made the incorrect call. Since the review is in real time, in most cases it should not slow down the pace too much, and you can have a standard rule that if a goal is disallowed the defending team gets a goal kick.
  • From the NFL: A set number of challenges (say 2), restricted to goal-related plays only that will trigger an off-field review and/or referee video review on the field. Somewhat redundant if you have video review, but it gives the teams a clean procedural opportunity to register a disagreement productively, which is impossible given the existing rule structure. As in the NFL, if you register a challenge and your challenge is denied, then there should be some kind of payment, like you lose a substitute or something.

FIFA contends that they do not want video review because it will slow down the pace of “the beautiful game”, and I agree that slowing down the pace is a bad idea. But I think implementing these two rules with respect to goals will reduce the acrimony and ire resulting from bad calls without meaningfully slowing down the game. The existing rules make the game less fun to watch and generate ill will because they lead to unjust outcomes.

UPDATE: Here’s Ross at The Science of Sport making my essential point in more detail. Here’s the money quote:

About two weeks ago, Sepp Blatter was quoted as saying that the introduction of technology into football would detract from the fervour of the sport. He said “Then the science is coming in the game, no discussions, we don’t want that. We want to have these emotions, and then a little bit more than emotions, passion”.  Sepp and FIFA want human error, and so human error they get!

Posted in Economics, Professional sports | Tagged , , , , | 1 Comment »

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Soccer rules as a market design problem

June 21, 2010

Michael Giberson

Hadn’t actually thought of the rules of professional sports leagues as a market design issue before, but Richard Epstein’s column in Forbes proposing rule changes for soccer suggests the idea.  Epstein suggests a couple of changes, drawing on basketball and hockey for inspiration:

  • First, he says goals scored in the run of play be granted two points, like a basketball shot, while penalty kicks remain worth a single point.
  • Second, yellow card and red card infractions should be penalized with time in a hockey-like penalty box.

With soccer the most popular sport in the world, it isn’t immediately obvious that it is in need of reform. Why tamper with all that success?  Yet, Epstein has some good points.  Sometimes a minor foul in the 18-yard box results in a game-winning penalty kick, while a much more serious foul just outside the box leads to a mere free kick.  A red card near the beginning of a match is a much harsher penalty than a red card near the end of the match.

One argument for reform is fairness-based: penalties should be proportionate to the foul committed.  A better line of argument (at least to my way of thinking) comes from market design thinking: what incentives do the rules create, and does the resulting behavior add to or detract from the game?  Consider a striker heading to goal and making slight contact with a defender in the 18-yard box: does the striker take a dive in hopes of gaining the all-but-certain penalty kick goal or shake it off and take a shot in the run of play?  Epstein’s rule change would offer an incentive to the striker to choose athleticism over a theatrical dive, surely an improvement.

Epstein’s proposals may not be the best, but they are worth exploring.  I join him in calling for experiments on the topic!  Let’s see if the rule changes would bring about desirable changes in performance.

Posted in Economics, Professional sports | Tagged , | 9 Comments »

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Rejoice: another World Cup, another ball controversy

June 16, 2010

Michael Giberson

The World Cup is well underway, and with it another controversy over the new ball designed by Adidas for the tournament.  The Wikipedia page on the ball documents some of the complaints, as usual most of them from goalkeepers:

As with the Adidas Fevernova and Adidas Teamgeist at the two previous tournaments, the ball has received pre-tournament criticism, primarily from goalkeepers. Brazil goalkeeper Júlio César compared it to a “supermarket” ball that favored strikers and worked against goalkeepers. Other similar complaints came from Giampaolo Pazzini, Claudio Bravo and Iker Casillas. Italian keeper Gianluigi Buffon said, “it is very sad that a competition so important as the world championship will be played with such an inadequate ball.” whilst Brazilian striker Luís Fabiano called the ball “supernatural”, as it unpredictably changed direction when travelling through the air.

The TeamGeist ball developed for the 2006 tournament was similarly criticized, mostly by goalies.  As it turned out, though, average goals score per match in the 2006 World Cup were down slightly compared to most previous World Cups.

It may be too early in the tournament to jump to conclusions, but across the first 15 games just 24 goals have been scored.  That pace averages to 1.6 goals per game so far, compared to 2.3 during the 2006 tournament, 2.51 in 2002, and the current record low of 2.21 goals per game in the 1990 World Cup tournament.  Again, it may be too early, but it certainly suggests the ball is no nightmare for goalkeepers.

For another data point, the MLS has been using the ball all season with little effect on goal scoring.  (Well, my favored DC United has seen it’s average goals per match drop from last season’s 1.43 to this season’s embarrassing 0.83, but I don’t think the ball is at fault.)  So far this year the MLS has seen an average of 2.5376 goals per match (93 games played), almost exactly equal to last season’s average of 2.5378 goals per match (225 games played).

RELATED LINKS:

Posted in Professional sports | Tagged , | 5 Comments »

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