NOTES Preface 1. Stewart Mandel of Sports Illustrated wrote the article about the convention in which Slive was quoted. The article can be read here: http://sportsillustrated.cnn.com/college-football/ news/20140117/ncaa-division-i-power-conferences-autonomy/ 1 Rottenberg, Neale, and the Governance Policies of Sports Leagues 1. See the underrated movie BASEketball for a fictitious primer on this process. 2. Simon Rottenberg. “The Baseball Players’ Labor Market.” Journal of Political Economy. June 1956. 3. The Handbook of Sports Economics has a good discussion of the controlled optimization behind targeting competitive balance. 4. Sports economists often point to Rottenberg’s invariance prin- ciple as saying essentially the same thing that the Coase Theorem states, only five years prior to Coase wrote his classic article “The Problem with Social Cost,” which might imply that maybe Coase gets too much credit for the ideas he presented. I stand in awe of Rottenberg’s observations, but I’m not one of those people. 5. There’s a reason the play isn’t called Damn Pirates. 6. Walter Neale. “The Peculiar Economics of Professional Sports: A Contribution to the Theory of the Firm in Sporting Competition and in Market Competition.” Quarterly Journal of Economics. February 1964. 140 NOTES 7. Neale published his article in 1964, but used the Max Schmelling- Joe Louis boxing rivalry as an example of the need for legitimate rivals to exist in order for compelling competition to be pro- duced. I always found this odd because those matches occurred some 25 years before the article was published. Wasn’t there a more recent example he could use to illustrate this important topic? Russell v. Chamberlain? Dodgers v. Yankees? Then again, he hilariously cites his mother-in-law as a source of information. Neale played by his own rules. 8. Major League Baseball used this system until 1964, the year it held its first draft. 9. Drafts can also be seen as a way to reduce costs associated with scouting for all league members. The way rookies have been treated by the players’ unions in their sport reflects the leagues’ desire to reduce operational costs. For instance, in the 1990s, the NBA had to change the way contracts were negotiated between rookies and the teams that drafted them. Instead of open mar- ket negotiations between players and teams, the NBA and the Players’ Association decided upon a predetermined salary struc- ture for rookies that was based upon their selection number, thus making it less costly to sign a high draft pick. 10. The commissioner’s office did negotiate radio rights for the World Series. 11. MLB allows for teams to take a more free agent approach with their media deals. The NBA and the NFL tend to negotiate as one entity when negotiating and sharing revenue deals. 12. Numerous examples of this sacrifice exist. Michael Jordan’s yearly salary from the Chicago Bulls was much lower than mar- ket value for much of his career. He agreed to this arrangement so that he could be surrounded with the types of players who could help win him championships. Other athletes who made the same sacrifice are Tom Brady of the New England Patriots and LeBron James of the Miami Heat. 13. The Premier League in England uses a system of relegation and promotion to keep things interesting for all teams for the entire regular season. Lower-quality teams can be relegated to a lower- flight league, which they decidedly want to avoid for financial purposes. I like to imagine the terrible Chicago Cubs teams of my youth being told to play in the AAA leagues rather than the major leagues, where they regularly bask in what can charitably be called mediocrity. NOTES 141 14. In economics, the alignment of incentives between so-called principals (owners or coaches) and agents (teams) is referred to as the principal–agent dilemma. 15. It’s hard to overstate how messy a place the NBA was in the early 1980s. The league was such a mess that a team tanking games in order to have a higher draft pick wasn’t even a question. The competitive spirits of Larry Bird, Magic Johnson, Isaiah Thomas, and Michael Jordan really saved the league. 16. Taylor, Beck A., and Justin G. Trogdon. “Losing to Win: Tournament Incentives in the National Basketball Association.” Journal of Labor Economics 20, no. 1 (2002): 23–41. 17. Other sports might not need to do so because the impact that one player can have on a team’s fortunes is relatively small in football, baseball, or hockey compared to basketball. 18. I’m talking about absolute on-field success when I say this. The Yankees are assuredly not the most well-run franchise in base- ball. It’s spent a lot of money to win those games, and if we used a metric like dollars/win, we could reach a different conclusion. My larger point is that it’s hard to argue that the Yankees have done nothing but invest in creating winning teams. 19. I always like to think of late Yankees’owner George Steinbrenner seething over this issue. But when I imagine him complaining, I use the version presented in Seinfeld, which was played expertly by Larry David. “Coe-stanza!” 20. This assumption doesn’t ignore entirely reality. In 2011, both Mark Cuban and Mickey Arison, the owner of the Miami Heat, openly discussed their problems with the eventually agreed upon CBA. Both owners admitted they voted against the agreement because of the CBA’s luxury tax levels. 21. The epic 2010 free agency of Chris Bosh and LeBron James was an example of such a move. The Heat held Dwyane Wade’s Bird rights, so it could sign him and exceed the salary cap after it signed Bosh and James. In order to sign Bosh and James, the Heat had to clear space on their salary ledger for Bosh and James because their contracts were not protected by the Bird Rule. Without the Bird Rule, the incredible double-signing would have had to have been concocted differently because Miami would have been too restricted by the league’s salary cap rules. 22. The biggest potential competitor to the National and American Leagues was the Federal League, which eventually sued the National League for violations of antitrust regulations. Justice 142 NOTES Oliver Wendell Holmes sided with the NL, thus granting an antitrust exemption to the National and American Leagues, a golden goose that still protects MLB. Justice Holmes exhibited a staggeringly strange sense of legal justice in that opinion. 23. The NBA seemingly side-stepped a major scandal when a ref- eree, Tim Donaghy, was found to have fixed games he offici- ated. So, we need to remember to provide proper incentives to all people who have the ability to sway a game’s outcome. 2 The NCAA’s Peculiar Economic System 1. There are a number of previous authors who have tackled the subject of the NCAA and its organizational structure. For a good discussion of the anticompetitive practices of the NCAA, see Fleisher, Goff, and Tollison’s excellent book The National Collegiate Athletic Association. For a primer on the morality of the institution, vis-à-vis the student-athlete, see the famous article by Taylor Branch, which appeared in the October 2011 edition of The Atlantic Monthly. 2. For a brief and good history of college sports, see Zimbalist’s book, Unpaid Professionals: Commercialism and Conflict in Big-Time College Sports (Princeton: Princeton University Press, 2001). 3. Example of the Committee and the Panel making a rule change: http://www.ncaa.com/news/basketball-men/article/ 2013-10-30/what-do-changes-rules-officiating-mean- basketball 4. At the time of this book being written, this was the list of execu- tive committee members: http://web1.ncaa.org/committees /committees_roster.jsp?CommitteeName=EXEC 5. History of the NABC: http://www.nabc.com/about/history /index 6. See Ken Mink’s book Big Blue Blues (Independently published in 2011) for a primer on the University of Kentucky’s involvement in the gambling scandals. 7. http://supreme.justia.com/cases/federal/us/468/85/case.html 8. The fantastic story of the early days of televised college basket- ball is told in How March Became Madness, by Eddie Einhorn and Ron Rapaport (Chicago: Triumph Books, 2006). 9. The 1982 Final Four provides strong evidence as to why the tournament became so riveting and valuable. Three future Hall NOTES 143 of Famers, Jordan, Ewing, and James Worthy, played in the national final. Another pair of Hall of Famers, Hakeem Olajuwon and Clyde Drexler, played in the semifinals for the University of Houston. Additionally, two future NBA fixtures, Sam Perkins and Sleepy Floyd, competed in the national championship game. All that, and the final game was over-the-top dramatic. 10. When I hear people thank the basketball gods for the shot clock, I always pause before I agree because the 1985 national championship game wouldn’t have unfolded in the manner it did had a shot clock been used. It never can be forgotten that Villanova University stunned heavily favored Georgetown that night, 66–64, by shooting 22–28 from the field. That’s almost 79 percent. There’s no way Villanova does that in a game with a 45-second shot clock. http://www.sports-reference.com/cbb/ boxscores/1985-04-01-georgetown.html 11. Byers left his post at the NCAA in 1987. He wrote a highly charged book that was critical of the NCAA and its actions called Unsportsmanlike Conduct, which was published in 1997.