Wednesday, July 26, 2017

Did MLS Really Reject a $4 Billion TV Deal?

I see many headlines on my Twitter feed.  One that drew notice was a report that MLS rejected a $4 billion TV contract because it did not want to agree to having a construct that called for promotion and relegation.  The tree for that decision must have been interesting. 

One branch might have suggested taking the contract, agreeing to the construct, and using the $4 billion to buttress all teams in MLS.  $4 billion?  Wow, that would be an amazing contract for a league whose best teams would not be in the English Premier League but probably somewhere in the lower half of the Championship League in England (an improvement over, say, five years ago).  Imagine what MLS and its teams could do with that money.  Sounds like an easy decision -- just agree to promotion and relegation, right?

Wrong.  MLS is run in an American way.  Owners put up big money for a franchise, and, when doing so, put up money for a franchise in a certain league, not a certain universe.  So, for example, the owners of the Red Bulls bought an MLS franchise, not a franchise in a potential sub-league.  The consequences of relegation of big-city teams in MLS could shake MLS to its core, at least right now.  Imagine if in the same season franchises in New York, Los Angeles and Chicago got relegated.  What would happen?  Those franchises would not draw any fans playing the likes of current second- and even third-tier teams in stadiums meant for the big time.  The would go broke and spiral into a precipitous decline.  Precedent for this abounds in England.  So, MLS rejected the potential for $4 billion out of a lack of confidence that U.S. soccer could absorb the downside to relegation as opposed to benefit from the upside of promotion.

Right now, the decision makes sense on its face.  U.S. soccer still has a ways to go to match the overall (if not top-to-bottom) strength of the top 5 or 6 leagues in Europe.  Until the U.S. is certain that the franchises in the major cities will become as robust as say the likes of Manchester United, Chelsea, Liverpool, Manchester City, Tottenham and Arsenal, who are all but assured of remaining in the Premier League each and every year, MLS does not want to take the risk.  Because should one of the big-city franchises plummet, that franchise could take the entire league down -- at least right now.  I don't know whether that's true, by the way or what MLS has modeled, but it stands to reason right now that MLS wants to strengthen its core a little more before agreeing to a big TV contract with that type of requirement in it. 

All that glitters is not gold, even if it has many, many zeroes after a crooked number.  The powers that be in MLS must think that a bigger and better contract will come in the near future.  They could be right.

Wednesday, July 19, 2017

Are Spectator Sports Doomed?

I read an interesting blurb in Sports Illustrated about the average age of TV viewers for all sports.  Not surprisingly, the "youngest" average viewer watches soccer -- and s/he is 39.  The oldest?  Baseball, at a whopping 62 years of age. 

Of course, data without context is dangerous.  Because of the large number of people in the front end of the Baby Boom, there stand to be more people pushing up the average because there are more front-end Boomers than say Millenials.  Second, many more of those who are front-end Boomers and older are bound to be retired and have more time on their hands to watch the old idiot box than those who are younger, who presumably are working, recovering from a hard day at work, or doing the pediatric thing and tending to kids' basics needs, taking them to lessons or games or helping them with homework.  Somehow I don't think the blurb offered that type of insight.  Instead, it just boldly and baldly recites the average age of viewers. 

Does it mean that younger people are not interesting in American football?  How could that be, as it seems to be the most popular sport in the country (despite the guilt that some feel for watching it because players can end up with long-term health issues, many of them too awful to witness or bear)?  They have to be watching it; the NFL enjoys good ratings even if the games can take forever, hitting isn't what it used to be and of the hours it takes to play a game there really isn't even 60 minutes of action, but a fraction thereof because of all the time that runs while the players are coming back from a play or getting ready for the next one.  To me, the number is skewed because there just are more people above the age of 55 right now, and that is the reason why the averages are so high.

Then again, are we seeing a population/demographic problem in the country or a separate problem for spectator sports.  If the experts in healthcare are to be believed -- and they are credible -- the budget for Medicare in say 2030 will be what the entire U.S. budget is now.  Translated, we have a lot of people born before 1964 and not enough born after to support the entitlement.  If that's the case, then the sports world's problem is not unique to it.

Or is it?  After all, if there are fewer people coming up behind the Boomers, then there is a smaller denominator of people who might be willing to buy tickets or watch on TV.  And that means that the average age of a fan is high, and that the population that might be available to support teams will be smaller for a while, even as the country's population grows.  But if it grows, is it because of birth rates or immigration or both?  As you can see, there are many variables that can affect these averages and this number.

The one thing that I did glean from the data is the popularity of soccer and the good future it seems to have in the United States.  It seems well-situated to benefit from the lowest average.  Then again, the sports with the highest averages have a good opportunity to draw in more young fans.  They just need to figure out what they are not watching as much as they used to.

So, spectator sports are not doomed.  It is just that the preferences of those spectators might be changing.  Remember, about 45 years ago boxing and horse racing were among the top 5 in popular sports.  The former got hurt by the boycott of the 1980 Olympics, the retirements of Muhammad Ali and Joe Frazier (and then the attrition of welter- and middleweights such as Marvin Hagler, Thomas Hearns, Ray Leonard, Roberto Duran and the likes, as well as some questionable decisions and characters (including the robbery of Roy Jones, Jr. in the 1988 Olympics in Seoul).  The latter got decimated by the legalization of lotteries and casinos; at one time, a horse race was the only place one could go to place a legal bet.  Not anymore.  Atop that, rumors ran rampant that there was funny business going on with the trotters and the pacers.

Times and preferences change.  No, baseball is not dead, but baseball and football have things to worry about, namely the slowness of the former and the injuries in the latter.  Somehow, they should evolve, but the powers that be should remember how baseball once was the national pastime and how popular boxing and horse racing were and adjust accordingly.

Thursday, July 13, 2017

NBA Summer League

It is fun to watch first- and second-year players show their stuff.  It's great to see the high draft picks, the international players and the guys with good stories, including some who were unfortunate enough to stay in college for four years and then have doubts cast about them precisely because they might not have had the confidence to leave school earlier or were deemed not good enough to be drafted.  The ingredients to this cocktail are intriguing and provide some very interesting opportunities and views.

But let's not get ahead of our skis -- you have young players guarding young players, and players who are not used to playing together, all the while trying to excel.  Can we draw meaning from any of it?  Perhaps yes, perhaps no.  Did Lonzo Ball show off a good passing vision?  Absolutely.  He has a gift there.  Did Jayson Tatum show off some good offensive moves?  Yes, he did, with the important caveat that it was not Kawhi Leonard who was guarding him.  Not, of course, that you have a Kawhi Leonard guard you on most nights.  You do not.  Has Caleb Swanigan made a statement by putting up double doubles every night?  Yes and no.  Yes, because he comes in as underrated or dismissed as Carlos Boozer did years ago, and my tea leaves say he is a second-round bargain.  But it isn't as though he has had Paul Millsap or Al Jefferson or Al Horford banging on him every night.  He has not. 

We balance, of course, the concept of "you play who you play" with "you aren't playing against all-stars."  The summer league is exciting because the teams get to show off their new players, and players who might have been overlooked get to surprise the onlookers with skills that they have honed in the off-season.  While the first-round picks are playing to get in better playing shape and adjust to a faster speed, most players in these games are playing for the scouts of every team in the NBA and the top teams in Europe.  Fare well, and you might make your NBA team, get picked up by another NBA team, earn a spot in the now G-League or get offered a contract for an overseas team. 

It depends on who you are.  Lonzo, well, he's already a Laker legend and he has yet to play in a game.  Alex Poythress?  He's an interesting one.  He gave the 76ers some good minutes at the end of last season and looks to be an NBA player.  Can he force the 76ers to make a tough decision because they now have a crowded roster, or can the 76ers use him to get another 2nd round pick in a trade?  He is ready for the league.  How about Larry Drew II?  Could he displace one of the 76ers' point guards, or is he playing for the GM in another city? 

We don't see how the sausage is made, how the teams put together their rosters or how front offices scout players, inventory their reports and try to fill holes in their rosters.  Suffice it to say that many sets of eyes -- multiple sets from each team -- watch these games and watch films of these games.  For the average fan like me, it's basketball in July, and that's all I need, a little fix, something to carry me over until NFL camps begin, baseball pennant races heat up, the English Premier League begins.  But for those in the business, their season starts now, and there are gems to mine and polish. 

And they are right in front of everyone's eyes.

Wednesday, July 05, 2017

Taxation (and Regulatory Schemes) Affect Behavior

No,  I am not a policy wonk, and, similarly, this is not a policy post or rant or anything political, except insofar as to offer  that if you put a luxury tax in place or a salary cap,  well, you are trying to affect behavior.  History is full of stories about unintended consequences of tax and regulatory schemes, and, of course, advocates for both side of an argument will debate even whether the consequences are even the consequences.  This result, of course, derives from an era where compromise is considered to be akin to graphic pornography.  Winning isn't the only thing, apparently, it is the only possibility to remain relevant.  (I'll put aside erudite and articulate arguments to trust the Philadelphia 76ers' process for a moment). 

So that's my introduction for an essay on the NBA's salary cap and luxury tax, which has had the following consequences -- an arms'  race in the Western Conference, stars trying to align with one another literally to create a dynasty on one team, certain key players over the years who take less to perpetuate excellence (and, pray tell, they even let themselves be coached), other teams depleting their rosters in order to re-build through the draft, and a competitive landscape that is worse that conforms to Pareto -- 80% of the teams are not relevant, and about 20% of the teams are.  There are, of course, teams that will approach either end of the continuum, but by and large there are about two teams in the East and say 6 in the West that could contend for the title, and you have to reduce the West's number because of the brutal attrition that the playoffs enforce.  The question then becomes -- is this what the NBA wanted when it put this system in place and does it get to the parity that the NFL has (which, depending on who you are, has created excitement or mediocrity generally in the NFL).

The behavior is worth watching and interesting and, quite frankly, creates a compelling off-season as the league approaches July 1 each year.  Sadly, though, this drama frequently eclipses the drama that should occur two thirds of the way into the season, but usually does not, as the teams that make the playoffs usually consist of those who would have made the playoffs had the season ended,  say, on March 15.  Which means that the NBA isn't always selling elite competition -- it is selling a form of entertainment.  And that form of entertainment get diluted when the good teams start to rest their stars and the up-and-coming if a few years away teams don't rush their injured youngsters back from injuries for two good reasons -- 1) they don't want to see those folks exacerbate their injuries and 2) there is no point in winning at some point in the season when winning means you'll get a worse draft pick than you would if you were to lose games.  Does that mean that teams intentionally lose games?  Hardly, but it does mean that they can suit up teams that do not have the talent to compete.  Let's face it, for much of the past three or so years the 76ers were suiting up players who wouldn't have cracked the rotation on most teams and who were barely a few steps ahead of returning to the D-League.

What's worse is that the NBA rewards the top teams (they have the talent and depth to make a deep run into the playoffs) and the bottom ones (who, if crafty, can rebuild through the draft and become elite).  Those  who make a game of it, so to speak, who try to field the best team better but are stuck in the vortex that is the middle of the draft every year, can face a fate of finishing annually a few games above or below .500.  And what is the fun in that? e

I happen to like the NBA -- it has great players, it offers a great atmosphere and the best teams are truly great.  But for the rest of the fans who commit to a team and even to paying for tickets, well, the league has to do a better job of creating parity and giving each team a decent chance of winning a championship.  True, some teams have been grossly mismanaged.  But many have not been.  Sure, they might have missed on drafting Kawhi Leonard or Isaiah Thomas when they had the chance, and that sometimes happened.  But they do their homework and scouting and aren't just bad enough to draft a league-changing player or good enough to draw a free agent who can make a real difference.  Until that changes, the NBA will be an oligarchy of sorts, and that will not be sustainable.