Tag Archives: Economics

NBC’s Creative Accounting

NBC is claiming it lost a boatload on the most recent Super Bowl telecast:

The GE-owned network purportedly lost $45 million on the Feb. 1 telecast, despite monster ratings and a record $206 million in ad sales. The loss contributed to a 45 percent plunge in first-quarter profit for NBC Universal, according to corporate parent GE, which released earnings yesterday.

The claim is ridiculous on its face. As the Post piece speculates, this is probably all about NBC’s trying to strike a blow against escalating rights fees. It’s a lie, but NBC is hoping it’s a useful lie. In some ways it’s appropriate, in that NFL owners–and owners in almost every professional sports league–routinely lie about their financials as a way to apply downward pressure to labor costs. They’re all losing money, they say, and that’s why greedy Player X needs to soften his contract demands. It’s an ageless refrain.

Anyhow, it’s curious how NBC gets promptly called out for its lies, and, for instance, Latrell Sprewell is roundly ridiculed for his “feed my family” remark. But when your local grandfatherly sports team owner shrugs and shows you the linings of his empty pockets, the media is mostly sympathetic and unquestioning.

(HT: With Leather)

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Boondoggle in the Bronx

Neil DeMause nicely sums up why the new Yankee Stadium is nothing to celebrate:

“The Yankees deal actually manages to be both the largest team expense on a stadium in history, and the largest public expense on a stadium in history, somewhere in the neighborhood of $1 billion. The city gets no part of the new revenues the Yankees will reap from the stadium; the jobs created are virtually all part-time, and largely cannibalized from other stores and restaurants in the surrounding area; Bronx residents lost their only large neighborhood park [until the old Yankee stadium is demolished and replaced by a park], for at least five years; and fans got more expensive seats with a lousier view of the field. All this, so that the Yankees wouldn’t move out of New York – something that was never going to happen anyway, since the entire value of the Yankees franchise is wrapped up in where they play. I’d call that a pretty lousy deal.”

He’s absolutely right. Normally, I’m indifferent toward the Yankees, but the way they’ve comported themselves during the approval and construction process has turned me into a bit of a hater. I certainly shed no tears over the fact that they’re having trouble putting butts in some of the more grossly overpriced seats in the new ballpark (HT: Shysterball).

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Just Curious …

Now that TARP-funds recipient CitiGroup has finally turned a quarterly profit, can we stop wringing hands over the company’s sponsorship of the Mets’ new ballpark–a legitimate advertising expense?

No?

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The Sporting Economy, Part III

Some examples of how the global downturn is affecting the sports world …

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Olympics Econ

Touting the economic benefits of hosting the Olympics is s.o.p. for any city aspring to lure the Games. But a new study by the National Bureau of Economic Research throws some cold water on those claims:

Using a variety of trade models, we show that hosting a mega-event like the Olympics has a positive impact on national exports. This effect is statistically robust, permanent, and large; trade is around 30% higher for countries that have hosted the Olympics. Interestingly however, we also find that unsuccessful bids to host the Olympics have a similar positive impact on exports. We conclude that the Olympic effect on trade is attributable to the signal a country sends when bidding to host the games, rather than the act of actually holding a mega-event. We develop a political economy model that formalizes this idea, and derives the conditions under which a signal like this is used by countries wishing to liberalize.

Another money quote from the study’s authors:

Much of the spending on the event by local citizens is a substitute from a different leisure activity or consumption good, rather than true additional spending. Moreover, the projects associated with the games typically seem to be white elephants, such as poorly-used sporting facilities associated with idiosyncratic Olympic sports, or hotels and transportation infrastructure built to accommodate a one-time peak demand of just three weeks.

Here in Chicago, we’ve been assaulted with such specious arguments. Of course, sports fans are accustomed to all of this–it’s really the “build us a new taxpayer-funded stadium and behold the economic growth that follows!” trope writ large. Not surprisingly, it’s just as false.

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What’s the Polite Word for “Stupid”?

Rasmussen Reports takes a poll. Here’s what they find:

One in three Americans believe the government should make it illegal to pay athletes and movie stars more than $1 million per year, according to a new poll.

One can only sigh at this. If you limit the pay of athletes, the prices of tickets/concessions/parking/scorecards will stay the same. That’s because those price points are determined by supply and demand and not by what A-Rod is making. This bears repeating: limiting the salaries of athletes will not result in lower costs for the consumer.

What it will do is further enrich team owners. In essence, you’d be transferring wealth from millionaires (the players) to billionaires (the owners). If that’s your thing, fine. But don’t buy into the populist delusion that what player X makes has any bearing on what you’re paying at the ticket window.

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The Sporting Economy, Part II

Some examples of how the global downturn is affecting the sports world …

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