Archive for the ‘Professional sports’ Category

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NHL suspends Torres for Hossa hit; have we achieved incentive compatibility?

April 22, 2012

Lynne Kiesling

This year’s NHL Stanley Cup playoffs are in the first round, and so far the violence has been horrific:

“The most vicious and, perhaps, disgraceful first round of the Stanley Cup playoffs” was the verdict of Stu Hackel, the former director of broadcasting for the N.H.L., and this is now close to a universal view—if you except Don Cherry and Mike Milbury, who may not actually live in this universe, but rather in some other, remote dimension, where it is forever 1959. The list of uglinesses allowed is too long and depressing to entirely enumerate, but it runs from Nashville’s Shea Weber’s slamming the head of Detroit’s brilliant Swede, Henrik Zetterberg, against the glass—not once, but twice—in what was clearly a deliberate attempt to injure, and could easily have ended with a concussion, not to mention a broken neck; to our own Rangers’ Carl Hagelin elbowing the Senators’ highly skilled captain, Daniel Alfredsson (good trade for the Rangers); to the assault of the Coyotes’ Raffi Torres on the Blackhawks’ Marian Hossa.

Adam Gopnik mentions it only generally, but I am angry and disappointed that some of my Pittsburgh Penguins belong on that list of ugliness too. In fact, last Saturday’s Penguins-Flyers game and its 160-plus penalty minutes was so vile that it doesn’t even deserve to be called hockey. Yes, it’s a physical game, yes, you have to be tough and to expect physical play, but the brutality of the past couple of weeks that includes elbows up, leaving the feet, aiming for the heads of opponents, and slamming heads into glass is not simply physical. It’s barbaric.

It’s also not in the long-run interest of the sport, either as a sport or as a business, as Sidney Crosby’s long, long concussion and TBI recovery attests to. Injuries that reduce the productivity of the athletes and shorten their careers are not long-run profit maximizing, despite the troglodytic protestations of the retrograde few who claim that fighting is the reason they watch and attend games.

In a post I wrote on moral hazard and protective gear and rules in hockey seven years ago, I suggested a rule that the KP Spouse and I have discussed for a long time that could induce better long-run incentive compatibility in the violence in the NHL: if you injure another player and he misses a number of games, you must sit out that same number of games, without pay.

Since that time the NHL has instituted coach fines as well as player fines for injury-producing violence; sometimes those fines are laughable, such as the $2500 fine levied against Weber for the double-whammy Zetterberg hit. They also do suspend players, but there’s a lot of tension and disagreement about how long is too long; GMs don’t want their aggressive players out of commission for too long, but the NHL recognizes the long-run negative consequences of head injuries. But what I don’t understand is why the team GMs think in such a static manner that they object to long suspensions for violence — they object to the short-run loss of the use of the athlete, but they fail to internalize the longer term negative effects. If their enforcers dial it back and still play physically but within the rules, all teams will benefit from the productivity and the longevity, particularly of the star players that are frequent targets of less-skilled hit-oriented players. Those star players are the ones that most people pay to see play, and the GMs thinking statically are putting themselves in a low-payoff outcome of a repeated Prisoner’s Dilemma.

Fines and suspensions for head-targeted injury-producing hits have been an issue all year, as newly-appointed NHL head disciplinarian Brendan Shanahan has tried to balance these competing perspectives on injury-producing violence. Yesterday he announced the terms of the suspension that Raffi Torres will serve for his horrific, late, calculating hit on Marian Hossa on Tuesday night: a 25-game suspension, the third-longest suspension ever in the NHL.

But it’s not just the long suspension; because Torres has a history of such violations he’s classified as a repeat offender, so he will forfeit $21,341 in salary per regular season game that he misses next season. That rule has some of the incentive effects of what I’ll call “the KP rule” that you sit out without pay for as long as the person you injured is out. His penalty does not tie the duration of his suspension without pay to the duration of Hossa’s injuries, but I agree with Isaac Smith at the Bleacher Report that Shanahan’s decision is a good one, for two reasons — it punishes Torres for his vicious behavior, and it also indicates that Shanahan is willing to set a precedent and make an example of chronic violators to reduce the career-ending head injuries that threaten the game, as a sport and as a business.

Adam Gopnik makes the important general point:

The supposedly self-policing ethic points to the real problem: games are played by rules, and we enjoy them because they involve wild improvised action in a context of rules. Without them, the game can’t count as one of our pleasures. … The rules are the game. The Sedins are skill players playing within the rules, and the other guy is playing outside of them, and [by not penalizing Brad Marchand for his vicious hit on Daniel Sedin last fall] the league effectively sides with the guy who doesn’t want to play by the rules.

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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 2004Vancouver 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.

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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.

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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.

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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!

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Iran cuts fuel subsidies and other energy and economics links

December 20, 2010

Michael Giberson

A couple of interesting readings:

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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.”

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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.)

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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!

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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.

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