By Robbie Butler

Next year, Club Internacional de Fútbol Miami, more commonly known as Inter Miami will join Major League Soccer (MLS) and become the 26th active franchise in North America. The arrival of the Florida based team is well flagged, even within European circles, as it is linked to the 2007 contract that David Beckham signed when agreeing to play for LA Galaxy. MLS is different to European leagues in regards to many aspects, and here is yet another example.

The goal of most sports franchise owners in North America is to maximise profit. While this is advantageous in European leagues, clubs are more often regarded as 'win maximers'. The reason North American sports can focus on profit (as well as winning) is helped by the behaviour of franchise owners, who often manage or directly influence the leagues they compete it. Acting as a monopsony, owners behave in a manner that reduces the power of other stakeholders. e.g. players.

One way this can occurs is through league expansion. Creating a new franchise is no easy task. As North American leagues generally don't facilitate promotion and relegation, successful entry to a league means 'permanent' status. Such entry is then only permitted with the payment of a sizable fee, and full agreement of the current league members.

For evidence of league expansions one need only look at US soccer. By 2022, the MLS should reach 28 franchises. Inter Miami will be joined by Nashville SC next year, Austin FC (2021) and St. Louis (2022). 28 is a good number and a far cry from the original 10-team MLS that started in 1996. However, as the image below shows, it hasn't been all plain sailing.

​Since the league was inaugurated in 1996, three franchises have gone out of business. Worryingly for Backham and Co., two of these were based in Florida (Tampa Bay and Miami).

The most recent bankruptcy was Chivas USA, which left the MLS in 2014. Sale of the franchise to a group of businessmen, including Cardiff owner Vincent Tan, resulted in the emergence of Los Angeles FC in 2017.

This brings the number of major franchises in LA to 10! (NFL - Rams and Chargers; MLB Dodgers and Angels; NBA - Lakers and Clippers; NHL -Kings and Ducks; MLS - Galaxy). Only New York (11) has more.

One can only guess as to how much more the MLS will expand, but it would seem that 30 to 32 franchises may be the target. This would then put the sport in line with MLB, NBA or NFL. In fact, the current franchise map is starting to look very like the other major sports.

On the left, the current locations of the MLS sit reasonably well with the locations of NFL franchises. The return of a second MLS franchise to Florida would appear to make sense. As does the arrival of the first franchises in Missouri and Tennesse. 

The decision to create a 3rd franchise in Texas is a little less obvious but a first for the MLS. No other state will have 3 MLS teams. In fact, the only example of  major US sport with the three NHL franchises in the same city is that of New York - New York Rangers, New York Islanders and Buffalo Sabres.

By John Eakins

Last Sunday night one of the classic NFL (American Football) play off games took place between the Green Bay Packers and the Dallas Cowboys. The Green Bay Packers lead for most of the game but a last quarter comeback from the Cowboys saw them tie the game at 28 apiece with a little over 4 minutes left. The next drive from the Packers saw them retake the lead with a field goal only for the Cowboys to tie the game once again with their own field goal. At this point there were only 44 seconds left and the game was heading towards overtime. The next couple of plays and particularly the 36 yard pass from Aaron Rodgers to Jared Cook on a 3rd and 20 has already become the stuff of legend.

That play left Mason Crosby, the Green Bay Packers kicker, with a 51 yard field goal to win the game with the last play. However Jason Garrett, head coach of the Dallas Cowboys had one last option open to him. Just before the snap for the field goal he called a timeout, a tactic which is commonly referred to as ‘icing the kicker’. Because the timeout is called effectively simultaneously with the snap, the snap takes place and the kicker attempts the kick. Crosby made the first attempt quite easily but would have to do it again. Crosby stepped up to the plate however and made the second attempt albeit with a little less to spare as it flew just inside the left hand post.

One interesting question that arises out of this is whether ‘icing the kicker’ actually works. In their book Scorecasting, Tobias J. Moskowitz and L. Jon Wertheim analysed these types of pressure kicks while controlling for the distance of the field-goal attempt. They found little evidence to suggest that that icing the kicker produces the desired effect – kickers kick around the same percentages whether they were iced or not. In fact, in some cases, they found that it can benefit the kicker. A short video by the team at Freakonomics provides a nice overview of the issue.

The video also outlines reasons why a coach would employ this tactic when its success is debatable. Ultimately it comes down to the fact that the negative payoffs to the coach are weighted more heavily if they do not ice the kicker. One could use game theory terminology here and say that icing the kicker is a dominant strategy to coaches especially for important field goal attempts. Even if the kicker gets the kick having been iced, it is still a better outcome than not icing and the kicker being successful. There is one caveat to the last sentence. It is possible that the kicker, having being iced, misses the first kick but gets the second. If this were to happen often enough, I suspect icing would become employed less frequently.  

By Robbie Butler

Last week Matt Cooper interviewed Commercial Director of the GAA, Peter McKenna on The Last Word and asked him about the upcoming Croke Park Classic which is due to be held at the Dublin venue on Saturday 30th of August 2014. For those unfamiliar with the event, the Croke Park Classic or Emerald Isle Classic, as it was originally known, was the first National Collegiate Atheletic Assocation-sanctioned American college football game to be played in Europe. This year’s installment will be the fifth time teams have competed for the Dan Rooney Trophy, with previous games held in 1988, 1989, 1996 and 2012. Fans will have the chance to see the University of Central Florida take on Penn State University.

During the interview Mr McKenna estimated that 16,000 visitors would travel to the game from the US, a further 4,000 from Europe, with the remaining 35,000 spectators from Ireland. He suggested Dublin “was probably looking at a 30 million economic generator here” (one must assume he means euros).

€30 million seems like an awfully large figure for one game, especially when around 65% of those attending the game will probably be Irish. Let’s see if we can figure out where this estimate has come from.

The Central Statsitics Office (CSO) can help us here. The CSO’s StatBank provides data on tourist numbers and tourist expenditure in Ireland. As I discussed previously here and Paul O’Sullivan here, spending by Irish tourists in Ireland does little to generate economic activity. It’s simply a transfer of money from one to another. It does impact on local economies but has no impact at the national level. We are only interested in the 20,000 estimated international visitors.

Using CSO data from 2009 to 2013 we can estimate the average "expenditure of overseas travellers in Ireland" over a five year period. Excluding airfare, the average tourist spent roughly €470 per visit. Including airfare, this rises to €577. The CSO breaks down international arrivals into three categories: (1) Holiday/Leisure/Recreation, (2) Visit to Friends/Relatives and (3) Business. This analysis assumes that the 20,000 international visitors attending Croke Park fall into category (1). Excluding airfare, the average spend per visit by those coming for Holiday/Leisure/Recreation was €550 per person. As mentioned in the interview, the expected attendance at the game is 55,000 spectators, resulting in an economic stimulus of €30 million. Get this, €550 x 55,000 = €30,250,000.

I hope this is not where the €30 million figure comes from. Firstly, it does not take into account that around 65% of those at the game will be Irish. Secondly, it fails to consider the length of stay. The average length of stay in Ireland from 2009-2013 was 6.9 days. Whether this would hold for visitors (many of whom may be university students) coming for a single match is unclear. However, assuming we follow the averages, the 20,000 international visitors to Ireland for the Croke Park Classic are likely to generate just over €11,000,000 for the Irish economy. The remaining Irish fans will boost the local (Dublin) economy if they are travelling to the game from outside the capital. Dubs in attendance will add close to nothing. They are simply substituting their spending from one activity to another.  
 
Of course, the €30 million figure may have been extrapolated by other means, and could well be accurate. I would be delighted if workings on this estimation could be provided.

By Gary Burns

A‘Franchise Tag’ is a concept that exists in the NFL that allows each team (franchise) a once off mechanism to restrict the movement of a player that is (generally) due to become a free agent. This restricts from a player in that year from moving to another team. The window to apply the tag opened on Monday 17th February and will close on the 3rd of March.

Due to the differences in wage caps and not having transfer fees, it is almost impossible to apply to concept to association football but is a novel idea to think about all the same.

There are two types franchise tags, exclusive and non-exclusive and can get quite complex as there is also a transition tag. I’ll focus on explain the exclusive and non-exclusive tags here. Contracts in the NFL work as per association football but transfer fees are not offered to contracted players to move to other teams and once a contract ends a player becomes a free agent and thus is free to discuss, with other teams, terms and conditions. The equivalent of a footballer who is out of contract. There is also restricted free agency where the NFL team in which the player is currently playing for has the option to match other offers made to that player. Finally an NFL franchise can apply one ‘Franchise Tag’ per annum to one player to keep them at the team for at least  one more year. There is set ‘Franchise Tag’ wages for the player depending on their position. For it to be an Exclusive Tag According to the NFL's collective bargaining agreement, the player must be paid the average salary of the top five players at his position or 120 percent of the player's previous year's salary, whichever is greater. The player is guaranteed his salary for the next season and the club is guaranteed his services. 

A non-exclusive Franchise Tag, allows the player to negotiate contracts with other teams with their current team is given the right to match whatever contract they sign, if the team decides not to match the contract they are given two first-round picks as compensation for the loss of the franchise tag that year. The contract salary formula for a non-exclusive Franchise Tag is based off the average of the last five years of salaries for the top 5 players at that position.

Teams can keep prized assets for another year so new longer term contracts can be negotiated or they can position themselves for when the player eventually leaves. 

The economics behind the concept is important as the mechanism is designed to reduce player movement. As with the Draft system in the NFL, it does not allow dominant markets (teams) to emerge as have happened in football. Coupled with salary caps, it promotes competitive balance. 
 
A team can tag the same player for consecutive years but will have to pay 120% in the second year of the salary and 144% of the second tag salary if the wish to pursue a third year which is highly unlikely. 

Problems do occur of course. At the moment the biggest story stateside is that of New Orleans Jimmy Graham. The New Orleans Saints wish to apply the tag to Graham but as a Tight End. Graham believes he is a Wide Receiver. The salary disparity is nearly $5m depending on whether he is designated as a tight end or wide receiver.

So applied to Association Football, what franchise tag would you apply to your team to restrict a player leaving in another year? With Wayne Rooney’s reported£300,000 per week contract almost agreed, assuming an opportunity cost of a large transfer fee for Rooney maybe Manchester United would have been better served allowing him to become a free agent in 2015(when current contract is up), apply the franchise tag and keep his services until 2016 when he would be 31 that October? Instead they will probably contract Rooney until 2019 when Rooney will be in his 34th year.

By Paul O'Sullivan

An article in Friday’s New York Times outlines the financing of Met Life Stadium in New Jersey, home of the NFL’s Giants and Jets from New York. While the stadium itself may not have been directly paid for with public money, the teams were granted state-owned land in return for a relatively small annual payment as well as other benefits that had previously gone into state coffers.  Also, the state spent over $250 million on infrastructure projects that may not have occurred in the absence of the new stadium. Any money that is transferred from public to private bodies is effectively a subsidy, while there is also the opportunity cost as the money could have been spent on something else.

One of the arguments for building the stadium was that it would be able to host a Superbowl, which it will do on February 2nd, and that this will have spillover benefits for the state, particularly in terms of an influx of fans and media from outside the NY/NJ area. Economists are generally sceptical about the extent of such spillovers, and many studies have shown that such spillovers are almost always much lower than promised.

Proponents of using public money to host major sporting events usually base their support on a commissioned report that predicts massive economic benefits to the local area. In the case of the NY/NJ Superbowl, the host committee has refused to publish the economic impact report.  If past experience of such reports is anything to go by, the expected benefits are likely to be over-stated while the expected costs will be under-stated. The use of terms like ‘economic impact’ and ‘generate economic activity’ usually give the game away as to the true impact of hosting such large events like the Superbowl, Olympics and World Cup. In terms of investing public money, what really matters is the net effect of hosting an event, not the gross effect. 
 
It would be terrible for anybody to think that Irish politicians and vested sporting and business interests would ever engage in this type of behaviour in order to attract a major sporting event to this country.

By Gary Burns

The draft in the NFL is seemingly quite simple. The Number 1 pick goes to the team with the worst record from the previous season. Each team then picks starting in reverse order of performance until we’re back to the worst team again. Currently the draft consists of seven rounds.  
 
The reason why this occurs is also quite simple; competitive balance.  As College football is such a high standard in the US, teams are picking from almost ‘NFL ready’ players. That means then you can pick the best player in the country to add to your team, thus raising standards with the aim of becoming more competitive.

Some recent number one draft picks include Andrew Luck, whom the Colts ousted Peyton Manning for, and prompted a race to the bottom ‘Suck for Luck’ campaign amongst fans in order to acquire his talents, Cam Newton of the Carolina Panthers and Eric Fisher, who is now part of the undefeated Kansas City Chiefs. Those teams went from being the worst to some of the most competitive in the NFL in a short amount of time.

But are perverse incentives at play to get the best college players? Is it worthwhile for a team with a losing record halfway through a regular season and no hope of a playoff spot to perform badly to ensure they get a high draft pick? For instance as of last week Tampa Bay Buccaneers (0-7), Jacksonville Jaguars (0-8) and Minnesota Vikings (1-7) are all front runners, or back runners if you will, for the number one pick in next year’s Draft. If they continue their poor form, they will be rewarded with an incredibly talented college footballer such as Quarterback Teddy Bridgewater from University of Louisville, Defensive End Jadeveon Clowney from University of South Carolina or University of Oregon’s
Quarterback Marcus Mariotta. These are just examples, but all of them are athletically ready for the NFL. 

Every team has different positional needs, so to have the number one overall pick a team must ensure it has the worst record. An astute acquisition can change a franchises fortunes for a future decade. John Elway probably being the most famous number one draft pick of all time by the Baltimore Colts but was traded later to the Denver Broncos where he won two Super Bowls. That same draft Dan Marino and Jim Kelly where both drafted in a particularly vintage year for QB’s.

Of course getting a high pick does not mean the chosen player will turn around the franchises fortunes and also low picks can also develop into Super Bowl winners (Tom Brady was drafted as 199th overall pick in 2000), but surely the option of having a high pick is better than not. 

So what’s stopping NFL teams from angling for this number one overall pick? In the NBA for example a lottery system has been introduced as to not give the worst record team an automatic number one pick. All 14 non-playoff teams have a chance, although not equal, to get one of the top 3 picks. Its weighted so the worst teams have a higher chance of a top three pick. Beck Taylor and Justin Trogdon, in a paperpublished in 2002 in The Journal of Labour Economics showed that NBA teams, prior to the lottery introduction, were more likely to lose, then would otherwise would be the case, if there was an incentive of a high draft pick. However an interesting point is one player drafted will have a much greater effect on a basketball team than an American Football team. One player can only take a team so far. This uncertainty of one players success reduces the incentive to do everything you can to improve your draft position in the NFL.

An argument against teams wanting the worst record is that players and coaches alike, need to perform to their highest ability constantly to ensure contract extensions, lucrative bonuses and playing time due to the extremely competitive nature of the industry. A high draft pick may mean one player being cut from the roster. That player has absolutely no incentive to perform poorly. This is sport and those that have made it to the level of the NFL have spent their entire careers being the best or striving to be. That attitude is not easily changed.

by Declan Jordan

In a recent post I considered the need for regulation by sports bodies for players suffering from concussion. Such regulation would protect them from themselves and coaches and clubs that may put pressure on them to continue playing while concussed.

It was interesting then to see that the NFL have agreed to settle pending lawsuits from 4,000 retired players. The players claimed the NFL did not properly warn them of the dangers and did not do all it could to help the players suffering from the effects. The settlement is $765 million. It's unclear if that will be enough to address the health needs of former players suffering from long-term effects of the hits taken in the sport.

What is particularly noteworthy though is that a settlement was made at all. It does not come with any admittance of liability, but this outcome has to be a concern for other contact sports and suggests that they need to develop prompt regulations around concussion and protection for players. Even if not for the good of its players, the sports bodies need to act in their wn long-term financial interest.