Lessons from Lance

Lynne Kiesling

So now we at least know something direct from the horse’s mouth about Lance Armstrong’s use of performance-enhancing drugs before and during his long run of commanding Tour de France performances. In addition to the interview with Oprah Winfrey, this CBS 60 Minutes segment and this Cycling News interview with Armstrong provide fuller details. If you do not follow cycling or have not been following these events, Juliet Macur’s New York Times story from January 6 provides a good summary. (By the way, Juliet Macur, ESPN’s Bonnie Ford, and WSJ’s Jason Gay (here and here recently) are outstanding journalists and writers whose insights and knowledge have been essential reading on cycling for years, not just in dissecting l’affaire Armstrong).

Having followed cycling since the mid-1980s, my sense is that Armstrong is right that PED use is endemic in quite a few sports, including cycling. But it’s not universal. I also think that Armstrong is choosing his words carefully, and in a very calculated manner is trying to walk the fine line between saying enough to get some reputation capital back and be readmitted to professional racing (in triathlon this time, as in his early career) and saying so much that he re-triggers the federal lawsuit about his alleged conspiracy to distribute and use illegal substances, which would land him in jail.

What I find the most personally disturbing is his callous willingness to treat other people as means to an end, one end, his winning the Tour as many times as possible. The bullying and the backing of young, eager, naive athletes into Faustian corners is unforgivable. For that alone I’d deny him a USA Triathlon license. But I’m a very strong believer in private ordering through reputation and strong social norms, probably a stronger believer in them than the general population.

Some observers, including my good friends at Reason, argue that we should allow PED use in professional sports. I disagree, for two reasons, one physiological and one moral. In sports like cycling, the blood doping is intended to increase the oxygen content of the blood and to accelerate recovery from endurance activity. It does that, but it does that differently for each person, because each person has a different baseline blood oxygen content (hematocrit) and each person responds differently to augmentation. It’s not just a parallel shift that “raises all boats” equivalently. So if you are a rider with a low hematocrit who responds well to doping and you beat a rider with a higher hematocrit who responds less to doping, what have you achieved? Who’s the better cyclist on that day?

And that gets to the moral reason why I think we should continue to have sanctions against PED use in sports. Sports, whether professional or recreational, are meaningless unless they are grounded in the deeply human institutions of fair play. We have evolved a sense of fair play for a reason. Abandoning that institution with respect to PED use in professional sports would abandon fair play, would turn sports into nothing more than a “bread and circus” spectacle to entertain the masses in the manner of the Roman gladiators, and would feed back into youth sports with very perverse and negative incentives that would undermine the physical, psychological, and moral benefits we derive from participating in sports. If we relinquish fair play in sports we relegate sports to meaningless decadence. I can’t support that. Nor does the evolution of our institutions through human history match with that decision.

Which gets me to Roger Pielke Jr.’s very insightful post in which he argues that sports need stronger institutions. I really encourage you to read his post, because he does a very good job of summarizing the complicated institutional framework in which many sports operate. Cycling is an Olympic sport, and it also involves competitions (like the Tour de France and the Giro d’Italia) run by international organizations. It also has a governance organization, the UCI, which has come in for a lot of justifiable criticism regarding its transparency and its enforcement of its private rules against doping (in fact, I think it hasn’t come in for enough criticism and that lots of heads need to roll, but that’s for another post). Roger’s post also highlights the awkward nexus of the International Olympic Committee (and the USOC) and its private sanctions against doping, the non-governmental organization that is charged with monitoring and enforcing these sanctions (WADA, and in the US, USADA), and the treatment of PED use in sports by various international governments. In particular, in many other countries enforcement does involve governments and PED use violations are subject to criminal prosecution, while under US law they are treated as private matters as long as the substances are not themselves illegal. Of course, this line gets crossed all the time, as we see when Congress gets a burr under its saddle and hauls ex-baseball players up to testify about PED use.

And that’s where I think l’affaire Armstrong and the US government’s pursuit of him and how USADA plays into that should make us all pause and consider the implications of this government power more broadly. Last week in Wired, Brian Alexander wrote that the Armstrong case and USADA’s role in it should make you, and me, and each of us worry:

So here’s the thing you need to know: The USADA takedown of Armstrong matters, and it could effect everybody. Because it will enhance the power and reach of a private, non-profit business that has managed to harness the power of the federal government in what’s quickly becoming a brand new war on drugs … with all the same pitfalls brought to you by the first war on drugs.

The USADA is a private outfit. Yet it gets taxpayer money. And it has existed in this weird legal nether world since its creation in 1999 at the instigation of the International Olympic Committee, United States Olympic Committee, and President Clinton’s White House Office of National Drug Control Policy. The USADA is designated by the U.S. Congress as the company that handles anti-doping for this country, because the World Anti-Doping Treaty — a UNESCO-promulgated document that the U.S. signed with almost no discussion – obligates the U.S. to do a number of things, which includes conforming our laws to the international anti-doping code. …

The USADA has wanted Armstrong for years. To it, and to the World Anti-Doping Agency (WADA), Armstrong was Moby Dick: If they could kill the whale – and do it without a raft of positive tests to show Armstrong doped – a new model of anti-doping would be enshrined into practice. And that’s just what happened.

Piggy-backing on a federal investigation, the USADA was able to pressure Armstrong teammates to confess to doping and implicate Armstrong … with no positive test results. It was an FBI-style investigation spanning multiple countries, but there was no “smoking syringe” found stuck in Armstrong’s arm. …

So while you might wish athletes didn’t dope — I do, too — and want action taken to combat doping, you might also want to be careful about what you’re wishing for. Especially since sports is taking on a broader definition that includes amateurs, low-level marathon runners, and even your kid’s high school football team.

I’ve excerpted Alexander’s argument, but I do encourage you to read it fully for a better understanding of exactly how sobering the implications are.

That’s what I think there are a lot of disturbing lessons from Lance, and from the USADA’s pursuit of him. Both his craven conduct and lack of character and the sinister implications of his prosecution bode ill in ways that will diminish sports that we love, as spectators and as participants. And they increase the authority of the state in ways that we’ve already seen are destructive.

An economic analysis of governance in cycling

Over the past week professional cycling has been thrown topsy-turvy by the fallout from the US Anti-Doping Agency’s report on their investigation into performance-enhancing drug (PED) use in the U.S. Postal Service team, 1998-2006. The focus of the dossier is, of course, Lance Armstrong, and the eyewitness testimony is extensive and not very surprising to those of us who have been following the sport for a long time (since 1985, in my case). Based on those affidavits, Armstrong has lost sponsorship contracts this week with Nike, Trek, and other companies, and has stepped down as the chairman of the cancer charity he founded, Livestrong (although he remains a member of its board). Friday the Dutch bank Rabobank announced the end of its sponsorship of both its men’s and women’s professional team (leaving World Champion and Olympic gold medalist Marianne Vos on a team without a name sponsor), giving as its reason that “[w]e are no longer convinced that the international professional world of cycling can make this a clean and fair sport. We are not confident that this will change for the better in the foreseeable future.” This statement suggests an economic hypothesis: doping in sport is a problem of perverse incentives and poor governance institutions, and poor governance in cycling undermines the credibility and profitability of the sport.

Professional cycling has a governing organization, the Union Cycliste International. As currently constituted, UCI decision-making is hierarchical, and riders, team directors, sponsors, and the cycling industry have little input into rulemaking. UCI’s mission is, in part, to establish rules ranging from the minimum allowed weight of a bicycle for competition to anti-doping rules and penalties. But part of its mission is also the promotion of the professional sport of cycling through its sponsored events, and increasing the size and popularity of the sport. These missions come into conflict in situations where, say, a popular athlete who brings a lot of revenue into the sport may be using PEDs — do they enforce the rules and risk the revenue hit? (Note also that this conflict of interest pervades the NFL, MLB, and other sports and sporting organizations) Their revenue mission may undermine their self-governing regulatory mission, and they thus have perverse incentives that can lead them to overlook, or try to cover up, high-profile violations of the anti-doping rules. Both the current and former UCI presidents have come under criticism for their faulty stewardship of the sport, because their past actions indicate that they associated complacency in the face of doping with more revenue and a higher profile for the sport. At best, UCI has looked the other way; at worst, it may have been complicit in concealing high-profile violations.

Another organization that plays a regulatory role in conjunction with UCI is the World Anti-Doping Agency, WADA. The infamous Festina affair at the 1998 Tour de France led to the formation of WADA in 1999, as a joint initiative of the International Olympic Committee and national governments. USADA, the U.S. member of WADA, was founded in 2000. In the current case, USADA has presented its documentation to UCI, which will state on Monday the actions it will take in response.

But WADA/USADA also have perverse incentives. Economist Roger Noll has done extensive research on the political economy of sports, and recently did an excellent EconTalk podcast with Russ Roberts (it’s long, but the doping discussion is at 46:45-57:45). Noll argues that WADA/USADA have perverse incentives because their fees are proportional to the number of infractions they catch and punish. Thus WADA earns its keep by expanding the list of prohibited items, setting unreasonably stringent thresholds for them, testing for them, and punishing their use. Rather, athletes should be able to make the rules by which they commit to abide, constrained by not engaging in illegal activities (this is complicated in the countries in Europe that have made doping a criminal offense). In other words, the sport should be self-governing in terms of determining its own rules. In WADA, athletes have almost no role in defining standards and thresholds, although there is an athlete committee.

I agree with Noll that effective self-governance is an important bulwark against WADA’s perverse incentives and the problems arising from external legal encroachment (and further government involvement) in sport. Had the UCI been effective and transparent in promoting and enforcing anti-doping policies, they might have prevented the Festina affair, or penalized it ex post effectively enough that an external public-private organization would not have been created.

But I think the institutional design issue is trickier than that. An organization like UCI would still have conflicting incentives as long as it is responsible both for the determination of rules/penalties and the testing and enforcement of those rules. Suppose the UCI implements a “good” set of rules  What incentive would the UCI have to enforce such rules?  As long as one organization is responsible for both rulemaking and enforcement this tension is inherent, and detrimental to the credibility, the popularity, and the profitability of the sport.

I’m suggesting a more collaborative, networked (dare I say stakeholder) organization for cycling governance. In this model the riders, team directors, sponsors, and industry have a voting role in decision-making, on matters from bicycle weight to banned substances and thresholds. Those rules should be transparent and allow riders due process (including no immediate public announcement except for in competition when it’s obvious) and a right of appeal (which is currently lacking). If UCI is determining those substances and thresholds, and penalties, they should not be involved in testing for enforcement, which should be administered by an independent third party. WADA/USADA as currently constituted do not meet a reasonable definition of independence, though, which is one reason why this is so tricky to change from its current dysfunctional institutional design.

Is there a way out? I think the way out is to follow the money, and that’s where the Rabobank sponsorship departure is painful in the short run but may help to realign these perverse incentives at UCI in the longer run. The way out has to be through cultural change from fans and sponsors to agitate for change at the UCI. Their leadership is no longer credible; they have lost the trust of many fans, team directors, athletes, sponsors (as reflected in Rabobank’s comments), and industry members. That lost trust now means lost revenue, and that changes the equation for UCI — losing sponsors because “the international professional world of cycling [cannot] make this a clean and fair sport” may prompt some rethinking, change in leadership, institutional change within UCI. And it should. One suggestion moving in that direction comes from Doug Ellis, co-owner of Slipstream Sports, who suggested on Twitter that “Maybe it’s time for a sponsor summit. If the people putting money into the sport demand change, there must be change.

Why do we ignore women’s sports?

Lynne Kiesling

I’ve scheduled this to post while I’m out on one of my long rides … this interesting Outside magazine article explores why women’s sports attract so little attention. The article focuses on cycling:

The Giro d’Italia Femminile is the biggest race you’ve never heard of. Covering 961.4 kilometers of Italian countryside over nine days, 127 athletes compete for one of the sport’s biggest prizes—the pink jersey. And in 2010, an American won it all. But as is usual for women’s cycling, the coverage was muted.

Again in 2012, American cyclists should be in the news: Evelyn Stevens became only the second American—after Lance Armstrong—to win the spring classic Fleche Wallone. She also recently won a stage at the Giro d’Italia Femminile. And Kristin Armstrong is a favorite to defend her gold medal in the time trial at the London Olympics. There’s even a new race on the map: The Exergy Tour, a women’s only stage race with $100,000 on the line. But for some reason, nobody seems to notice.

Some women’s sports have had some success — tennis is popular, and even though soccer and basketball are both popular and have spawned professional leagues, those leagues have struggled to maintain enough teams and enough profit.

As with most human phenomena, I think the reasons here are economic, cultural, and psychological, and the article explores all of them. First, the economic: sponsors and media, and the connection between them, which has a chicken-and-egg tension to it. Sponsors want media coverage, but which comes first — does media coverage attract sponsorship, or does sponsorship attract media attention? Or is the relationship among sport, sponsorship, and media more complex than that? And what constitutes media in such a decentralized technology environment as we inhabit and create? In women’s cycling, for example, two big team sponsors are Luna (part of Clif) and Lululemon; it’s a good bet that the athletes present role models to recreational athletes who can look at them and see something of themselves and their own athletic aspirations in them. Those women may turn that association into transactions.

That’s where I think the cultural and psychological intersect with the economic. Should sponsors expect that women’s sports will increase spending/transactions primarily from women? Speaking personally, I know I consciously direct my spending toward products that are thoughtful in their production of products for women athletes. Women account for the majority of consumer spending, but is the pool of women athletes too small a share? Do sponsors of women’s sports deliver meaningful commercial messages and aspirations to men, in ways that at the margin affect their spending decisions? Does media have to “use sex” to sell women’s sports to male spectators? Should it?

And how will social media affect that revenue model? Will the ability to generate social media attention for sports that are out of the mainstream, including women’s sports, increase the value that sponsors attach to sponsorship? I think we’re seeing that with men’s cycling, and given how strong the US women cyclists are for this year’s Olympics, I think women’s cycling may be able to leverage some of that combination of strength and social media into more awareness and media opportunities and revenue and sponsorship.

What do you think? Why do women’s sports attract less fandom, sponsorship, and media?

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

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.

Super Bowl price gouging complaints

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.

StubHub and Major League Baseball

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.

Great sports journalism: Jason Gay on Jens Voigt

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.