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August 31, 2011

Value for Vick?

On Monday, the Eagles signed Michael Vick to what was initially reported as a six-year, $100 million contract extension with $40 million guaranteed but later revealed to actually “only” be a five-year, $80 million extension with $35.5 million guaranteed.

Even when ignoring off-field risk, which is quite substantial given Vick’s past amorality (I think he fails to consciously grasp the differences between right and wrong as opposed to having acted in ways he understood to be wrong), is this a sound investment for the Eagles on the field?

Yesterday, The Big Lead’s Jason Lisk made a table which documented the successes and failures of relevant running quarterbacks once they hit age 30 (I highly recommend clicking through–Lisk does great research). Lisk concluded:

Obviously, including Elway and Favre will shoot up the averages. If we still include them, but instead look at medians, the median number of remaining starts for the above group was 50.5 games. If we’re looking at it from the team perspective, most of those quarterbacks got starts with organizations other than the one they were starring for at age 30 also. The median age the last time the quarterbacks were able to start at least 8 games in a year was 34.

If you gave me the option, given Michael Vick’s build, his injury history, how much he still ran at age 30 compared to these other guys, I would take the under on that 50.5 starts with the Eagles, and overall.

Lisk’s educated estimate, therefore, is that the Eagles will not get full value out of this deal because Vick will not stay healthy for its duration. Injury risk, however, must also be weighed with the chance that Vick is ineffective. With numbers this large, Vick does not have to be dismal to underperform expectations. If he is anything but elite, this deal will be judged harshly.

In the first half of last season, Vick performed better and more accurately than he had ever done previously in his career. Through Week 13 (in nine appearances), Vick completed 63.8% of his passes, throwing 15 touchdowns and two interceptions. In Vick’s final four games, including the playoff loss to the Packers, he completed 58.6% of his passes, throwing seven touchdowns and five interceptions. Part of this performance dip could plausibly be attributed to his being banged up but there was also chatter that opposing defenses had figured him out.

My buddy Dean, a die hard Eagles fan, doesn’t necessarily disagree with the decision to pay Vick, but he questions the timing. “I don’t understand why they had to do this now instead of waiting until, say, Week 6. At that point they could have better seen if his greatness is sustainable, if he got better at avoiding hits, and if defenses had figured him out.” At this point, the Eagles probably would not have had to pay Vick that much more than they just did but would have been more educated in what they were investing in.

There is something to be said for paying Vick now; he is the unquestioned leader of the team and there will be an unquantifiable effect that stems from the franchise’s extending its loyalty and support before it really had to. Inside the Eagles locker room and around the NFL, Vick is almost a deity. He is viewed as someone who was a victim of a media witch hunt that has rebounded and re-captured his former glory. His teammates will rally around him and if he stays healthy and effective, the Eagles have as good of a chance as any team to win the Super Bowl in the next two or three seasons.

That being said, I think the Eagles would have been wise to wait on Vick’s extension until the middle of this season. As Dean pointed out, in doing so the Eagles would have more effectively maximized their upside and limited their downside in this deal.


August 30, 2011

American Way to Fix NCAA

At this point, we are all aware that the current NCAA system for basketball and football is a travishamockery. There is no need to re-hash all of the money scandals that have happened over the past weeks, months, years and decades, of which there have been quite a few of varying degrees of seriousness. They all follow a common theme which is that the rules are broken because NOBODY has any respect for them. At this point, NCAA powerhouses are like heavy home run hitters in the 1990s: whether they have been explicitly caught or not, I suspect them of cheating. It was so endemic to the culture that I just assume that anybody who hasn’t been caught has just been better at hiding it from Charles Robinson and Dan Wetzel.

If somebody wants to play basketball professionally at age 18, he can only get paid for it right now by going overseas. Hopeful professional football players have no option to make money from playing football until they are three years out of high school. There is nowhere in the world where they can play professional football so if they aspire to play in the NFL they have no choice but to play in the NCAA.

For a vast majority of Division I players, this is actually a very good thing for their personal development. There are 345 Division 1 basketball programs and 119 Division 1a football programs. Estimating that on average 6 players per D1 basketball team and 35 per D1A football program would want to play professionally if given the chance at age 18 would mean that there are 2,070 basketball players and 4,165 football players for what is currently 60 NBA and 224 NFL draft slots per year. Later round draft picks in both leagues are far from guaranteed roster spots.

Even though these athletes generate ungodly amounts of money for their collegiate institutions, most would unlikely be able to have sustainable careers if the NCAA did not exist. You could argue that because the money is generated off of their backs that they deserve a cut and this is true but for the most part college fans root for laundry and there would be lots of people lining up to take these players’ places. Unfortunately, because this is the case, they are treated as commodities and the spoils of the system go to coaches, athletic directors, television producers, and postseason facilitators.

Given what they see going on around them, it is impossible to blame 18-22 year olds for accepting “illegal” (it’s only illegal because the NCAA says it is) benefits but it is also not as though these players are getting NOTHING of value in the transaction. They may not care about the education but most of them are WRONG in not caring. The true value of their four-year degrees is most likely greater than that of their salaries if they were able to play professionally at the corresponding ages. I was raised in as stable an environment as exists in the world and I was an IDIOT at age 18 (I imagine I will also one day feel that way about the person who is writing today); if permitted to play professionally many of these athletes would make decisions at odds with their long-term self interest.

Learning at college does not only take place in the classroom. College is an environment that is specifically designed to foster intellectual as well as emotional development. You learn how to survive independently for four years in a controlled environment. Further, at their best, the coaches serve as tremendous mentors. Wisconsin basketball coach Bo Ryan, for example, turns his players from boys to men.

I have seen the argument that because baseball has minor leagues that pay players and allow them to skip college that football should. Do we really think that it is a better system to have most players serve as interchangeable cogs in a farm system than for them to attend academic institutions where they are stewarded by professionals who are uniquely experienced to deal with boys that age?

The current system is generally unfair for all of the players but only extremely unfair for the select gifted few. I was listening to a 710 ESPN Max and Marcellus podcast last week and Max Kellerman had the best, most American, solution to this issue that I have heard. Paraphrasing, he said that D1 football and basketball players should follow the Olympics model and receive a modest stipend but be allowed to personally benefit from their likenesses. This means they would be allowed to promote products, sell their autographs, and work at sham jobs that they are paid a lot for but at which do not actually do anything. This would lead to uneven but meritocratic compensation for players, preserve the NCAA as the de facto minor leagues, not come at a shockingly high cost to the current benefactors of the system and not cheat other Division 1 athletes out of the ability to play their sports.

Would schools whose boosters spent the most money (why in the world someone would want to be a booster is a separate full column) have a leg up on others? Yes, but it appears that has already been the case for quite some time. Would there have to be some sacrifice by those who currently benefit most from the system? Hopefully.

It is abundantly clear that the NCAA needs reform. The most American way is to provide some reward for all of the athletes who generate the revenue but allow the elite athletes to truly cash in on their talents.


August 26, 2011

Pros and Cons of Our Brave New Technological World

Yesterday, SI.com’s Adrian Dater wrote an interesting piece about how technology is adversely affecting team bonding. Dater starts:

Teammates in pro sports today are talking more than ever, just not as much to each other.

Ask many coaches, general managers and older players and you’ll hear a common gripe: chemistry on teams has been altered because of modern technology, and not for the better. The rise of smartphones, with all their instant-communication and entertainment options, have created insular worlds into which distracted players too often retreat instead of bonding with teammates.

As this relates to sports, I am sure that those who have been around since before we had the internet and comprehensive music libraries in the palms of our hands are correct that technology has had a noticeable effect on team chemistry. This issue, however, probably does not impact wins and losses because it is universal and therefore presumably affects all teams equally. It is not as if one team has succumbed to its iPhones but its opponent has the camaraderie of a team from 1985.

Obviously, the insane technological advances of the last 15 years or so affect interpersonal communication in broader society as well as sports. We walk around tuned into headphones and tuned out to those around us. In pauses of conversation we use our smart phones as a crutch to stay stimulated at the expense of fighting through awkward moments. As my dad always points out, when one person at the table pulls out his Blackberry it has a domino effect until everyone is stealing glances at their phones. It is now common at restaurants to see little kids tapping away incessantly on iPads, completely ignoring the world around them.

However, just because face-to-face communication is inhibited does not mean that technology is destroying interpersonal relationships. Through Facebook, GMail, GChat, and texting, I have been able to maintain close friendships with people whom I would have almost certainly completely lost touch with. When I travel to cities, I can easily contact people I haven’t seen in YEARS to meet up in person for a meal or drinks. Until the proliferation of cell phones, long distance phone calls were prohibitively expensive and old acquaintances often communicated by mailing handwritten letters. These could take weeks to be delivered and twice as long to hear back from. As annoying as it is when a phone call, email, or text goes un-returned, I cannot even fathom how taken aback I would be if I took the time to HANDWRITE and MAIL a letter and never heard back.

What did people do when they were bored at work before the internet opened up boundless entertainment options? Actual work? Just the thought of trying to figure out what in the world I would do if I were stuck in a cubicle with no Twitter, Facebook, or GChat makes me fully understand why Don Draper got hammered every day.

The SI.com column does acknowledge the advantages that technology can have on players’ performance: ”Before I even go hit, I’ve seen the [opposing pitcher's] last 10 starts on my iPad,” 40-year old Jason Giambi told Dater. “It’s pretty amazing. The scouting and information you can get right away today is unbelievable.”

Ways that technology enhances bonding among teammates, though, go ignored. In discussing this column, my friend Brad pointed out that Deron Williams, for example, spoke in the past about playing online video games with his teammates late into the night: ”We come home from road games and we get in at 2 in the morning and can’t go to sleep, so we all go online and play ‘Call of Duty’ and talk crap. We’ve played until like 5 in the morning before.” Not that video games are the paragon of productivity but is there anything safer that a basketball team could be doing to bond from 2-5 am?

As with the rest of the world, though, technology affects interpersonal chemistry in sports. The trade-off  of our instant stimulation is that face-to-face communication is in danger of becoming obsolete and we should be taking conscious steps in our daily lives to ensure that this is not the case. However, we don’t want to be like Glenn Beck and idealize the 1950s but ignore how great we have it today. Would any of us really want to give up everything that humans have created over the past 50 years and go back to an era where we MIGHT have had a black and white TV with three channels? It is understandable that some are worried that we are going to devolve into a world of screens and never actually talk to each other. We must continue to embrace new technology but be aware of the effects it has on us, seeking to maximize the benefits but work to maintain some semblance of face-to-face conversation so it does not become extinct.


August 24, 2011

Jerry Richardson Likes Cam Newton’s Haircut

Last night, Panthers owner and known curmudgeon Jerry Richardson appeared as a guest on PBS’s Charlie Rose. ProFootballTalk’s Mike Florio highlighted some of the discussion:

Richardson, who said that Newton “was dressed perfectly” for their meeting, was blunt.  “I said, ‘Do you have any tattoos?’” Richardson told Rose.  “He said, ‘No, sir.  I don’t have any.’  I said, ‘Do you have any piercings?’  He said, ‘No, sir.  I don’t have any.’  I said, ‘We want to keep it that way.’ . . . .

“We want to keep no tattoos, no piercings, and I think you’ve got a very nice haircut.”

Interjected the host:  “You sound like a Lombardi.”

Said Richardson, “No, I just sound reasonable to me.”

 At first glance, this sounded very old fashioned and out of touch to me. From following the NFL Lockout a little bit (OK, a lot bit) too closely, I developed a loathing for Richardson. To the extent that you can hate a public figure who you do not actually know, I hated Jerry Richardson this offseason. In the CBA negotiations, Richardson, who made a fortune in the fast food industry, took the hardest line. At one point, he insulted Peyton Manning and Drew Brees: “[Richardson] was extremely condescending to them, especially toward Peyton,” a source told Yahoo!’s Jason Cole. “[Richardson] was the only person on either side who was contentious. Everybody else was respectful. They might have said, ‘I disagree with your point,’ but at least they were respectful. [Richardson] was not.”

In February, Yahoo!’s Mike Silver, called for Richardson to be removed from negotiations because he was so disruptive and abrasive. Silver noted that is curious that Richardson, who has amassed a fortune few of us could ever dream of and received a second chance at life after a heart transplant, would be so miserable:

What I can’t understand is why a man who should be so happy to be among us would resist the compulsion to behave like Jimmy Stewart at the climax of “It’s A Wonderful Life” and instead act like the salty neighbor who screams at kids for allowing their football to bounce upon his lawn.

It was therefore with prior bias that I was initially dismissive of Richardson’s comments about Newton, thinking that this was just another case of Richardson being a dick. I then thought about it more and realized that Richardson was about to make Newton the face of his organization and as such wanted Newton to have the best face possible.

I personally do not have any tattoos but do not really have an issue with them as long as they aren’t absurd like the pair of lips on Kenyon Martin’s neck. That I don’t have any issue with tattoos may be purely generational, though. My brother, sister, and I have been told by our usually socially liberal father that we would be out of the will if we ever got a tattoo. While I’m 95% sure that is an idle threat and that he was referring to tattoos like Martin’s as opposed to ones that are meaningful and inconspicuous, I don’t think I’d risk it even if I did want a tattoo. His former boss used to say that he “roots for the team with the least tattoos” in basketball.

However, it is not just older white men that have an issue with tattoos. During the 2008 NBA Playoffs, FoxSports’s Jason Whitlock wrote (original link no longer available) that there was one major reason why ratings were up:

Tattoos. Or rather the lack of tattoos in the conference finals.

Part of the reason more people are watching these playoffs is because the average fan isn’t constantly repulsed by the appearance of most of the players on the court. Most of the key players left in the playoffs don’t look like recent prison parolees.

The only accurate way to describe Garnett, Pierce, Duncan, Allen, Manu, Parker and even Kobe is “clean cut.” Yeah, there are a couple of tattoos in that group — Duncan has something on his back, Kobe still has his post-rape-allegation tat — but the Lakers, Spurs and Celtics have far less ink on average than your typical NBA franchise.

Football is a little bit different than basketball because the players wear pads and helmets instead of shorts and tank tops but it is at least a little understandable that Richardson would prefer Newton to be well-kept and marketable to the establishment. That he lacked tact in expressing this opinion is unsurprising. I’m sure that Richardson would also prefer that Newton plays quarterback for the Panthers as cleanly as he looks.


Will He or Won’t He: The Peyton Manning Edition

Anyone who watches enough ESPN or NFL Network has probably already grown tired of the speculation as to whether Peyton Manning will or won’t be ready for the Colts opening day match-up versus the Texans in a little bit over two weeks. Spoiler alert: whether he or the Colts actually know it now or not, he will play. We all know this right now but that won’t stop us from hearing about it incessantly possibly all the way up until 90 minutes before the game.

“The lockout didn’t allow me to work my (Colts) therapist, Erin Barill, and I’m just not comfortable taking any chances with this thing,” Manning told ESPN’s Chris Mortensen. ”Erin knows me. He’s rehabbed me through two other surgeries (neck and knee) and I think most people understand that once you build up a trust with your therapist, that’s the guy you want and need to work with.” Since entering the league in 1998, Manning has started every game for the Colts, all 208 of them. Are we really supposed to believe that Manning, who could have had instant access to any number of the BEST DOCTORS IN THE WORLD, would have chosen to delay rehab at the possible expense of missing a start? If this was a legitimate danger, he could have hired Barill away from the Colts and paid him personally.

Are we also to believe that Manning’s not being ready is even more possible because the Colts signed corpse statue veteran Kerry Collins today as an insurance policy? Insuring Peyton Manning with Kerry Collins is like taking out a policy on a Bentley that covers $100 of damage. Collins is better than what he have seen of Curtis Painter but is not the solution the Colts would look for if Manning really was not going to be ready to play.

Whether or not the Colts beat Texans (who are my sleeper), I think Manning will go on to have a great year. He has been too methodical and too consistently great for me to think otherwise before a season until he is not.

Two things in this situation are certain: Peyton Manning will play and we will grow so exasperated with the Will He or Won’t He speculation that we will somehow grow even more excited for football to finally start.


Losing the Battle to Win the War

Yesterday, the Oakland Raiders gave up a 2012 3rd round pick in order to acquire Terrelle Pryor in the supplemental draft. I can’t imagine that he will ever be a viable NFL quarterback but he runs fast in a straight line and that has always been something that, for whatever reason, Al Davis values above all else. Given that the Raiders made this move and have been habitually making disastrous personnel decisions since Al Davis died losing Super Bowl XXXVII to the Buccaneers in 2003, I would venture to guess that they got poor value.

Throughout the past few weeks, Pryor’s agent Drew Rosenhaus has unsurprisingly been publicly at Pryor’s side at every step. Were all this work and all these expenses worth it for a 3rd round pick who probably deserved to go even lower? CNBC’s Darren Rovell tweeted, “The commission for @RosenhausSports on Terrelle Pryor will be around $17K. Have to think expenses on Pryor cost more than that.”

While Drew Rosenhaus probably did lose money on this individual transaction, his commission from Pryor was definitely not his motivation in representing the beleaguered former Ohio State quarterback. The publicity he received from this supplemental draft process will be invaluable in courting future clients. It is not of any concern to these future NFL stars that Pryor probably isn’t going to be very good at the next level and if it is of their concern then they will realize that Rosenhaus got Pryor paid more than he deserves. Rosenhaus gains significant exposure and will be identified by future clients as someone who sticks with his clients through thick and thin.

Rosenhaus’s current NFL client list is already quite substantial. In taking on Pryor as a client, he knew that he would lose money in the short term (there is no way he believed Pryor could be picked anywhere earlier than the 3rd round and therefore knew what his commission would be) but also knew that in a year he can point to the dedication and support he gave and should be able to gain several extra players on the margins who empathize with Pryor’s plight. Rosenhaus strategically lost a battle to win the war in the long run.

 


August 23, 2011

How to Make Stadiums Safer

This past weekend, we were offered a sobering reminder that sports, our oasis from the real world, are not immune to the darker aspects of our society. At the annual preseason rivalry game between the San Francisco 49ers and Oakland Raiders, two men were shot in the parking lot and a third man was found beaten to the point of unconsciousness in a restroom. These incidents come approximately five months after Brian Stow, a 42-year old San Francisco Giants fan, was beaten nearly to death at Dodger Stadium during an opening day match-up between the Giants and Dodgers.

While the extent of this violence is quite high and so far isolated, boorish behavior has unfortunately become a generally accepted negative externality of the sports spectating experience. I am not old enough to really know whether or not this has always been the case but there are a small percentage of fans who consume an excessive amount of alcohol before and during games, aggressively look for fights, and make the ballpark experience worse for those around them and sometimes completely unsuitable for children.

As mentioned in the opening, sports are our oasis from the real world. A vast majority of adults who consume alcohol before and during games are able to do so responsibly and without incident. Getting rid of alcohol entirely would not be a fair solution to these fans and would be a systemic shock to the whole sports infrastructure which sees teams generate money hand over fist from alcohol sales and sponsorships.

That being said, alcohol abuse at sporting events has entered into the realm of the freedom to/freedom from debate. One of the basic tenets of American society is that we have a greater degree of freedom to pursue happiness than almost anywhere else in the world. We have a democratic system which gives everyone an equal vote, freedom of speech, and freedom of the press amongst many more. Freedom to approaches its boundary, though, when actions affect innocent others. For example, we are not permitted to drive drunk because in addition to risking our own lives we could kill somebody else.

Unfortunately, the unconditional freedom for adults to consume mass amounts of alcohol has presented a danger and annoyance to fans who deserve freedom from these nuisances. As sports become increasingly vivid and comfortable to watch on television, leagues need to address this behavior immediately or its customers will stay home. In a USA Today poll (at 818 votes at time of this writing) asking whether recent violence will keep you from attending a sporting event, 38% said, “Yes. Live events no longer family fun,” 24% responded, “Yes. Watch game and be safe at home,” and 14% said, “No. But I wouldn’t bring children.” Just 24% responded that they don’t give the violence any thought.

The following are steps that sports leagues should consider mandating in order to limit violence and preserve the integrity of the gameday experience:

1. Establish a Legal Limit

Just as there is a legal limit in determining whether you are able to safely operate a motor vehicle, there should be a blood/alcohol level at which you are no longer allowed to be at a stadium or arena. This legal limit would be a bit higher than the driving limit of .08 at a level that researchers show to constitute excessive intoxication. I would imagine that most fan violence occurs at BAC levels that are above and beyond what responsible drinkers reach. If a fan is causing trouble and there is reason to suspect that he/she is above this limit, security should use a breathalyzer to determine if the level has been violated.

2. Ban Repeat Offenders

I would venture to say that this intolerable behavior is a habit for fans in most cases as opposed to a result of an isolated mistake. As we move further and further into an era where all information is stored digitally, it will only become easier to track troublemakers.

There should be a multi-tiered violations system (kind of like yellow and red cards in soccer) that extends across the NFL, MLB, NBA, NHL, and NCAA where fans can lose the privilege to either attend games at all or drink at them. This would ideally be implemented on some sort of strikes system, a framework of which is as follows:

  • Physical fight – 2 strikes (There would need to be some nuance here where someone who gets instigated and defends himself is blamed less than the aggressor. Usually when there is a fight, all the fans in the immediate area are not shy about saying if someone was blatantly right or blatantly in the wrong).
  • Physical fight where a victim ends up in serious condition – 5 strikes
  • Verbal abuse – 1 strike base, 2 strikes if it is deemed to be extreme
  • Running onto the field – 2 strikes
  • DUI returning from a game – 2 strikes
  • Over the stadium limit but without any incident – .5 strikes

Off the bat, I would say that after two strikes you should receive a one-year ban from consuming alcohol before or during sporting events. My alma mater, the University of Wisconsin, has a little bit of a framework for this. When a student gets kicked out of a game for an alcohol-related offense, he/she gets put into the show and blow program where the ticket is programmed to show that this is the case and its holder must be breathalyzed before the game. If underage, the student may not enter the game with any alcohol in his/her system and if 21 or above the student must blow under .08.

Three strikes would result in a one-year ban from attending any sporting event across the spectrum while five strikes would yield a lifelong ban. Analogizing this to a Bill Maher stand-up routine about airport security, all of this sounds very comprehensive and difficult to enforce until we remember how effective casinos are with their security. If cheaters and troublemakers can be systematically limited at casinos through the use of meticulous data and advanced technology, the major sports leagues which combine to generate approximately $100 trillion per year in revenue* should be able to do the same.

*Figure is slightly exaggerated

3. Consider Separating Rival Fans

A few years ago, when I was studying abroad in London, I attended an English Premiership League match between West Ham United and Fulham. I was stunned to see that there was a specific section in Fulham’s stadium for West Ham fans, almost mirroring a college football game except for the fact that fans in the rest of the stadium were not allowed to wear West Ham apparel or even cheer for the team. My friend James says that this is also the case at many football (the soccer kind) matches in Australia.

Of my three suggestions, this is actually the one I am least comfortable with implementing. I love supporting my teams on the road and try to make friends with fans of opposing teams sitting around me. I would hope that it would never reach a point in America where the threat of violence is so great that I am scared or segregated in rooting for my teams at other stadiums. That being said, if violence continues to escalate and the events recently become a trend instead of being exceptions, sports leagues may have to take drastic measures to prevent violence.


August 22, 2011

Responding to Gladwell

As I try to build a career in writing, I am especially careful not to go out of my way to belittle that of others. I understand how agonizing the process of creating ideas and crafting a column can be and the last thing that I want to do is knock somebody else’s hustle (especially when I have not yet accomplished anything in my own). That being said, I agree with the premise of today’s Malcolm Gladwell column on Grantland but could not disagree more with some of his individual arguments. To fully grasp my issues with Gladwell’s column, I recommend reading the whole thing and then coming back to this.

The general thesis of Gladwell’s column is that professional sports franchises should be viewed by owners more as toys or art than as businesses to be judged on profits and losses. There are psychic benefits to owning these teams that Gladwell argues are not being properly valued. Gladwell’s first example of Tom Yawkey’s refusing to sign black players at the expense of profits and wins as well as his final analogy relating to high priced art are well-reasoned. He is correct that sports owners are afforded with tax benefits that border on absurdity.

That being said, while I have been far from sympathetic with the plight of the NBA owners in this lockout, some of Gladwell’s arguments are not logical. About Washington Redskins owner Daniel Snyder, Gladwell writes, “Snyder was a brilliant entrepreneur, who at the age of 36 sold Snyder Communications — the marketing company he built from scratch — for an estimated $2 billion. He has subsequently run the Redskins like a petulant 14-year-old fantasy owner. Snyder Communications was a business. The Redskins are a toy. The former he ran to solely maximize profit. The latter he runs for his psychic benefit — as a reward for all the years he spent being disciplined and rational.”

However, Snyder operates the Redskins as a pure business more than almost any other owner does in professional sports. Snyder bought the Redskins for $800 million in 1999 and the franchise was valued at $1.55 billion last August by Forbes. Also according to Forbes, the Redskins’ operating income was $103.7 million, the 2nd highest total in the NFL behind the Dallas Cowboys ($143.3 million) and $37.2 million more than the 3rd place Patriots. If anything, I would argue that although Snyder derives great financial benefits from owning the Redskins, they come at substantial psychic costs from the Redskins’ perpetually awful on-field performances of which Snyder deserves a lion’s share of the blame.

Later, Gladwell writes:

Forbes magazine annually estimates the value of every professional franchise, based on standard financial metrics like operating expenses, ticket sales, revenue, and physical assets like stadiums. When sports teams change hands, however, the actual sales price is invariably higher. Forbes valued the Detroit Pistons at $360 million. They just sold for $420 million. Forbes valued the Wizards at $322 million. They just sold for $551 million. Forbes said that the Warriors were worth $363 million. They just sold for $450 million. There are a number of reasons why the Forbes number is consistently too low. The simplest is that Forbes is evaluating franchises strictly as businesses. But they are being bought by people who care passionately about sports — and the $90 million premium that the Warriors’ new owners were willing to pay represents the psychic benefit of owning a sports team. If that seems like a lot, it shouldn’t. There aren’t many NBA franchises out there, and they are very beautiful.

This argument is precarious for many reasons. First, I would argue that the expectation for the value of franchises to appreciate over time is a hybrid between financial and psychic benefits as opposed to being purely psychic. When you buy an asset expecting it to go up in value, this is a financial decision even if it is somewhat based on expectations of a later buyer’s psychic benefits. Further, it is dangerous to assume that just because an asset class has always appreciated that this will be the case for perpetuity. As we have seen with houses, internet stocks, and tulips, when assets are valued more psychically than by intrinsic value of profits and losses, bubbles can burst swiftly and mercilessly.

Put another way, I was lucky enough to see Warren Buffett speak at his annual Shareholders’ meeting with my father and some friends in Omaha this past Spring. When the topic of gold came up, he said that the entire world’s supply of gold would measure out to be a 64 X 64 X 64 Ft cube and would be valued the same as all the farmland in America plus 10 Exxon/Mobils (the whole company, not gas stations). The gold cube would be shiny and stuff but which would you rather own? Gold has gone up quite substantially recently and may well continue to do so but it is dangerous to invest in something based more on what you think somebody else will pay for it later rather than the value it generates. Gladwell also does not mention that the NBA had to take over the New Orleans Hornets because owner George Shinn wanted to sell but could not find a high enough bidder.

While I do think the NBA is exaggerating the extent of its losses, it should not expect its franchise values to keep going up if it does not adjust its cost structure. As currently constituted, small market teams can be really savvy/lucky and compete on the floor like the Spurs and Thunder but are handicapped financially.

Profits and valuation gains should not be the primary reasons why people buy sports teams. The psychic benefits of owning a professional team are unimaginable and those lucky enough to do so should wake up every morning and feel blessed for being lucky and/or talented enough to reach such an enviable position in life. They should not, however, be expected to be completely carefree about profits and losses, especially if the system is broken for most of the owners as is the case in the NBA.

 

 


August 16, 2011

Stern on BS Report

This past Friday, NBA commissioner David Stern went on Bill Simmons’s BS Report podcast, speaking for an hour primarily about the NBA Lockout (side note: I am not sure why this had to go up on Friday afternoon instead of being held for Monday morning. Grantland has not been optimizing the release time of its content the last few weeks).

In Stern’s past appearances on the BS Report, Simmons has played the role of mildly annoying but genuinely curious instigator, gleaning whatever information Stern decides to give but knowingly setting himself up to be spoken to patronizingly and dismissingly. The tone of the conversations was generally jovial and light as the two engaged in banter and played off each others’ characters.

Friday’s podcast, however, took a decidedly different tone as Simmons opened by flatly telling Stern, “I’ve got to be honest with you. This is the maddest I’ve ever been at you…where is the urgency right now?” When Simmons started this way, I was expecting a much more combative conversation than what ultimately ended up occurring. Usually, Stern speaks caustically and acerbically, conveying his message in such a compelling manner that you momentarily forget that what he says and the truth are not necessarily always congruent. This happens even when he is not on the defensive so I thought that during the course of this conversation he might get truly angry and have one of his fabled temper tantrums.

Where I was expecting Stern to be a pugnacious bully, though, he was even-tempered. “We need a reset in the amount of compensation. We need shorter contracts so we can align pay with performance, and we need to get a little bit more competitive. It’s not brain surgery,” Stern said in a matter-of-fact tone. He added very specifically that the NBA expects the players to take an 8% pay cut, reducing their total share of revenue from $2.2 billion to $2 billion (my math shows that to actually be 9%).

Stern cited the NFL’s revenue sharing as something to aspire to so that franchises aren’t inhibited from competing for championships solely because of the markets they play in, surprising Simmons by noting that the Lakers, Bulls, and Knicks “fundamentally say that we depend on other teams to come into our building and we are prepared to share revenue.” Stern admitted that in this arrangement contraction would be a realistic route, shockingly saying that the union would potentially be on board despite the fact that it would cost the players 30 of their 480 jobs.

Simmons said that the NBA is leaving money on the table by not having sponsors on its jerseys while Stern replied that there is a finite pool of endorsement dollars that would merely be allocated differently as opposed to grow if this were to occur. For whatever reason, Simmons failed to bring up the substantial amount of money that is and has been lost on the WNBA, an obvious blight on resources that I have to imagine was explicitly forbidden from being discussed as a pre-condition for access to Stern.

As I alluded to before, though, Stern is so compelling that we often forget that he is willing to stretch or obfuscate the truth to advance his agenda. He said that the players have won the last three CBA negotiations when in 1999 the owners were widely lauded as emerging victorious in securing a new structure for cost control. Stern repeatedly references opening the league’s books to the union and says that the numbers are “undisputed.” In a comprehensive analysis on his NY Times FiveThirtyEight blog, Nate Silver notes that the “the NBA’s claims of financial hardship should be viewed more skeptically,” and that it may have used accounting tricks to exaggerate its losses.

Put another way, ESPN’s Ric Bucher recently tweeted, “Add: if NBA teams had really lost nearly $1 billion over the last three years, wouldn’t the negotiator of that bad deal be out of a job?” FoxSports’s Jason Whitlock, meanwhile, thinks that the owners are making a power play to squeeze every drop of what will be a lucrative next television deal as sports become the only programming that people watch live instead of DVR’ing: “The owners want to crush the NBA players union and get the players to agree to a 10-year deal that will in no way reflect the value of the league once the owners negotiate new television packages in five years.”

None of this is to suggest that Stern has done a poor job as NBA commissioner or that the NBA’s CBA does not need fixing. Stern has presided over an era of unfathomable growth since taking over as NBA commissioner in 1984. If it has not already done so, the NBA is on fast track to pass baseball as the 2nd most popular in the United States and has by far the biggest international following of any American sport. Stern is correct that guaranteed contracts should be shorter in order to better align performance with pay and that revenue sharing should be addressed immediately to ensure competitive balance.

However, in exaggerating the extent of the league’s “dire” financial situation (has a franchise EVER been sold at a loss?) and attempting to unilaterally assert his will, Stern is behaving more as a bully than as a reasonable counterparty who is negotiating with the players’ union in good faith. If some of his arguments are shown to be exaggerated and untrue, his overall message that the league needs to reform its economic structure to be competitive on a domestic and international playing field is weakened as opposed to enhanced.

Stern knows exactly what he is doing; we learned in 1999 that even some of the wealthiest players are so fiscally irresponsible that they live paycheck to paycheck and can be coerced into a crappy deal as soon as their profligate lifestyle is compromised. The billionaire owners can afford to wait out the millionaire players and if the league is actually losing money then it profits in the very short run from a loss of games while the players lose everything. That being said, just because the owners CAN railroad the players does not mean they should. The NBA has tremendous momentum right now; it has a wide array of talented, marketable stars, a higher number of great teams that are fun to watch and have the ability to compete for the championship than ever before, and is coming off the most compelling playoffs in recent memory.

Just as he lauds the NFL in its revenue sharing and competitive balance, Stern should be striving to emulate what Roger Goodell and DeMaurice Smith accomplished this offseason: collaborative CBA negotiations that reached a fair deal for both sides and did not miss any preseason or regular season play. The NBA owners and players need to be addressing this situation with more urgency and more of a willingness to get a deal done where concessions are made and games are not lost. Stern’s ultimate legacy will take a huge hit if this season is lost; hopefully he will have the foresight and humility to treat the players as partners in these negotiations instead of enemy combatants that he is trying to squeeze every last dime out of.


August 15, 2011

Expanding on MMQB

As is inevitable during this time of year, I find myself fiending for football season to start. Each August, when we have passed training camp and are slogging through the preseason, nothing gets me quite as excited about football as Peter King’s Monday Morning Quarterback. King uses MMQB as a platform to both expound upon and inform on tidbits he picks up traveling from camp to camp. It is unclear whether he sleeps or rests during this stretch but each Monday King’s tone invariably becomes increasingly anxious; his enthusiasm and excitement for the start of the regular season are palpable and infectious.

King started today’s MMQB by writing about the Packers, specifically detailing the selfless leadership of Aaron Rodgers, Mike McCarthy, and Ted Thompson. King writes:

And when it was the biggest story in sports back in 2008 — pick a side: you’re for Favre or for Rodgers, and there’s no middle ground — Rodgers said precious little. Rodgers knew Thompson and McCarthy had his back, and though it was going to be tough, he could trust them to keep their word. Which they did. And in the last three years, despite the mud that landed on all of them after the Favre debacle, every one of them today looks like a genius.

Thompson for sticking to his guns, McCarthy for believing in Rodgers, and Rodgers for shutting up and just playing football. Rodgers’ average season since 2008: 4,130 passing yards, 29 touchdowns, 10 interceptions. And a Super Bowl win.

I understand that King has space constraints and is responsible for covering all 32 NFL teams. That being said, in his using the Favre situation as the main example for the Packers’ organizational strength, King is incomplete on two points. First, he failed to juxtapose Favre’s last three seasons on and off the field with those of Rodgers. Further, King completely ignores the unbelievable job that Thompson and McCarthy have done in building and training the rest of the Packers roster.

As I previously detailed in a post entitled “Live by the Favre, Die by the Favre,” Favre had a great start to the 2008 season as quarterback of the Jets, but ultimately ended up submarining their season and was excoriated by veteran teammates Thomas Jones and Kerry Rhodes on his way out. With the Vikings, he had a “storybook” 2009 season that concluded on one of his trademark mindnumbingly dumb interceptions and a lackluster 2010 season in which he threw 11 TDs and 19 INTs while the Vikings went 5-8 in his starts. He has retired three times, un-retired twice (so far…I have a bet that he does again), and been the subject of an off-field sexual harassment investigation. How and what Favre has done since Thompson and McCarthy opted to go with Rodgers is an important factor in the equation that goes unmentioned by King.

Moreover, while Rodgers was the most important piece of the Packers Super Bowl team there were lots of areas on the team where Thompson’s methodology of building through the draft and re-signing players before they became free agents, coupled with the training from McCarthy’s staff, contributed immensely to the team’s championship run.

The team’s only star free agent, Charles Woodson, originally signed with the Packers against his will after no other teams made a competitive offer. Middle linebacker Desmond Bishop was drafted in the 6th round in 2007 and signed to a four-year, $19 million dollar contract extension that now looks like a bargain. In the middle of last season, Thompson signed previously undrafted free agent cornerback Tramon Williams through 2014; Williams went on to have huge interceptions in the playoffs versus the Eagles and Falcons. Nick Collins, a 2005 2nd round pick, was signed to a three-year extension worth $23.4 million before last season and went on to have an interception Week 17 versus the Bears which sealed the Packers berth in the playoffs as well as a pick-six in the Super Bowl. Prior to the 2010 season, Greg Jennings was also locked up before he hit the open market.

Clay Matthews, BJ Raji, Jordy Nelson, and James Jones were drafted and developed in house. Any other team could have drafted or signed Sam Shields who was picked up as an undrafted free agent. As starters continued to go down, reserves continued to step in ably to take their places. The selflessness and forward-looking focus which King speaks about in Rodgers, McCarthy, and Thompson has pervaded through the organization to all these ancillary pieces who also deserve a share of the credit for the Packers past success and future promise.


Twitter @sportsrapport

    @highkin I don't miss the NFL version of that one bit. That was terrible.5 hours ago
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