Category Archives: David Berri

How to Choose a Market in Sports

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A few weeks ago, Arturo and Devin – in two separate posts – wrote about which markets deserve and don’t deserve an NBA franchise.   These posts considered a few objective factors about a market in ascertaining where the NBA should locate its teams.

Today at Freakonomics, I took a very different approach.  Currently in North American sports leagues, the existing owners in each league determine whether or not the league should enter a new market.  In contrast, European sports leagues – like the English Premier League – rely upon market forces to make this decision.

Although individuals – like Arturo, Devin, and the owners – can consider a variety of factors in making this decision, I do not think (echoing the arguments of Friedrich Hayek) that an individual – or a committee – can do this job as well as a market.  For example, I think it is entirely possible that a smaller market could support a team if the people in this market are especially interested in NBA basketball.  In contrast, a team in a larger market might struggle to find success if the people in the market are not generally enthusiastic and/or the ownership of the team does a poor job of selling the team.  The latter appears to be the case in New Orleans, where ticket sales seemed to improve when the NBA assumed ownership of the team.  In other words, one of the problems in New Orleans might have been incompetent owners (a problem we also see historically with the LA Clippers).

Beyond invoking Hayek (not one of my favorite economists of all-time, but someone who certainly understood the problems of central planning), my post also links how teams are allocated to the history of labor disputes in North American sports.  And although I have little hope that what I suggest will ever be adopted, hopefully it does give people something to think about.

Let me close by thanking Matthew Phillips.  Matthew is an editor at Freakonomics, and he is the person who makes my recent posts in that forum look (and read) so good.  Today, unfortunately, is Matthew’s last day at Freakonomics and I would just like to thank him in this forum for all his help.

- DJ

Freaky Thoughts on Baseball

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My latest for the Freakonomics blog — Labor Peace in Baseball May Not Last Forever — looks at the recent labor agreement in baseball.  Yes, baseball (I hope to get to basketball later in the week). 

I should add two more notes on the post.   First, predictions about events that take place five years from now are great.   The odds that anyone will remember I said this (including me) is fairly low. 

Beyond that point, I should emphasize that contrary to the claims of owners in professional sports, competitive balance in professional sports isn’t really about institutions like revenue sharing, luxury taxes, and salary caps.  Of course, the empirical evidence on this subject doesn’t stop owners from bringing up competitive balance whenever owners would like more money.

One last note …for those who want a prediction that we can check out very soon, I actually told Ron Dicker of Huffington Post that I expect that NBA’s television ratings this Christmas to be higher than the ratings for NBA games last Christmas.  I guess that means I better spend my Christmas just watching all the NBA games.

- DJ

A Free Market for College Athletes

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My latest for the Huffington Post — What Sports Illustrated Didn’t Tell You About Paying College Athletes – is obviously a response to a recent article from Sports Illustrated.   In the article I advocate a free market for college athletes.

Last August, Robert McCormick and Robert Tollison offered another alternative. In Subversion of the Academy by the NCAA, these two economists noted that the problem in college sports is that the coaches and administrators participate in a free (although quite distorted) market while the labor is treated as amateurs.  If one doesn’t like letting the players participate in a free market, why not have everyone go back to being amateurs?  In other words, let’s return college sports to what it was before people realized money could be made.

Whether one wishes to see a completely free market for everyone or everyone be treated like the players (i.e. everyone is an amateur), it does seem clear that having one institution for the players and another for the coaches seems to be a big part of the problem.  And until that disconnect is resolved, so-called “scandels” will continue to be a part of college sports.

- DJ

Dave Berri on the Hayes Advantage

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Berri Discusses NBA Player Lockout

In case you missed it last week our own radio personality Dr. David Berri was on the Hays Advantage discussing none other than his own Detroit Lions! He also may have brought up something about economics and the NBA lockout. It’s a nice quick listen if you’re looking for some midday sports relief.

Podcast – Dave Berri Talks the Lockout and More

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Wages of Wins Podcast 10/2/2011 – Dave Berri hops on the Wages of Wins Podcast to discuss the NFL, the lockout and more!

Notes:

  • Dave says Tony Romo has an issue in that he plays in a city that believes every year they should win a Superbowl
  • Dave explains how having a winning team is actually a curse when it comes to the Detroit Lions
  • In the Wages of Wins Dave and Martin discussed how labor stoppages don’t impact fan attendance.
  • The owners are greedy and have a sense of entitlement.
  • Dave Berri actually credits David Stern with helping the NBA become big in the 80s!
  • In 1999 the NBA had a lockout and the players caved vs. in 1995 MLB was a strike where the players won.
  • Why aren’t owners in the NBA doing more things to raise revenue? In fact their current solutions will stop revenue from rising.
  • The international popularity of the NBA has spread to Wages of Wins. Dave is huge in Russia!
  • Dave points out things like the Melo rule may not help the NBA be more profitable. In fact more player movement ala NFL and MLB could help.
  • Dave says for work stoppages that players should strike right before the playoffs and owners should lockout right before the season starts.
  • The players make money off the regular season. The owners make their money off the playoffs.
  • Dave agrees that Dwyane Wade is worth $50 Million – or at least close.
  • Dave points out that the rookies pretty much always get screwed in labor negotiations.
  • To make the playoffs more random the NBA should decrease series length BUT
  • To make the most money the NBA needs to increase the length of the playoffs.
  • Alex at Sport’s Skeptic made a great point. In the hard cap will increase NBA revenue then why should the players get a pay cut, shouldn’t they get a raise?
  • If the owners win this lockout and get more money they’ll probably keep asking for more later.