Tag: sports

ESPN 30 for 30: Broke — Risky Investments

 

Athletes become broke after retirement because of overspending, unexpected expenses, and poor financial advice from third parties. Because of the prominence of reporting athlete salaries, distant friends and family pitch business ideas to athletes, most of which have no knowledge of the risk involved in starting a business. Safer assets are not viewed as exciting or sexy, despite their considerable safety. One way to help secure financial futures is to seek out financial advice from professionals who are educated in the field.

Abdullah Al-Bahrani and Darshak Patel have a great paper in the Southern Economic Journal that looks at using ESPN 30 for 30 to teach economics.

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30 for 30: Broke — Unexpected Expenses

 

One reason why so many athletes become broke after retirement is overspending, but a secondary issue is the unexpected costs associated with earning millions of dollars each year. This segment of the ESPN 30 for 30 special looks at the taxes and unexpected costs associated with earning millions of dollars per year. For many athletes, this may be the first real job they have held, which means they are unaware that they are now part of the highest tax bracket, so approximately 40% of their millions is withheld. A secondary issue is that athletes play in multiple states and countries, which means that they owe state and federal taxes in more than one jurisdiction. Because of the complicated tax situations, many athletes need a financial advisor in addition to their agents, who also take a percentage of the total income.

Abdullah Al-Bahrani and Darshak Patel have a great paper in the Southern Economic Journal that looks at using ESPN 30 for 30 to teach economics.

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ESPN 30 for 30: Broke — Budgeting and Spending

 

Young professional athletes are essentially lottery winners once they’ve signed a contract with a team. Seemingly overnight they become millionaires. One reason why so many athletes become broke after retirement is not for a lack of income, but rather a misunderstanding of needs and wants. Many athletes struggle to budget their income appropriately and don’t consumption smooth between in-season and offseason.

Common spending patterns include:

  1. Buying a home/car for self and family members
  2. Jewelry/clothes/shoes

The issue that many athletes face is the lack of realization that most professional careers are short term, but the costs of those items have lasting impacts.

Abdullah Al-Bahrani and Darshak Patel have a great paper in the Southern Economic Journal that looks at using ESPN 30 for 30 to teach economics.

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ESPN 30 for 30: Broke — Financial Literacy

 

The growth of professional sports over the past few decades has also meant that athlete salaries have grown as well. The issue? Professional athletes fresh out of high school and college (most under the age of 22) are become overnight millionaires, and most lack the financial literacy to handle that adjustment. Surprising to most, a large percentage of professional athletes declare bankruptcy within a few years because of their inability to manage their finances. Nearly 16% of NFL players file for bankruptcy within 12 years of retirement and ESPN’s Broke looked at the prevalence of financial stress for professional athletes.

Abdullah Al-Bahrani and Darshak Patel have a great paper in the Southern Economic Journal that looks at using ESPN 30 for 30 to teach economics.

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Battle of the Sexes — The Press Release

Billie Jean King left the United States Lawn Tennis Association because of the promoter’s  refusal to compensate the female players the same as the male players. Promoter Jack Kramer (played by Bill Pullman) argues that the men are paid more because they are stronger and faster. His colleague argues it from a reservation wage standpoint, that men needed to be paid more to attract them to the circuit. King (played by Emma Stone) argued that women should be paid equally based on marginal revenue product theory since the women sell the same number of tickets as men.

This same issue has been recently discussed regarding the US men’s and women’s national soccer teams.

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Young Sheldon — Go for it!

Young Sheldon teaches his family about the statistics behind going for it on 4th down. A lot of football fans believe you just have to punt, but studies by economists like David Romer show that it’s often better to go for it on 4th down than to punt. The famous Pulaski Academy coach who never punts became a bit hit after being interviewed by ESPN. The NY Times even created a Twitter bot that would tweet about whether teams should punt or go for it and the bot tweets during NFL games.

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Reason TV — Why Stadium Subsidies Always Win: Q&A with J.C. Bradbury

Local municipalities often dump significant resources into funding sports stadiums in the hopes of attracting economic benefits from additional tourism. Despite criticism from nearly every economist, economic impact reports are designed and pitched to citizens as the justification for subsidizing sports teams. In this interview, JC Bradbury discusses the counterfactual of tourists’ true impact and how these stadiums continue to be funded.

If you’d like more to read more about sports stadiums and funding, check out Field of Schemes.

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Tampa ABC — Rays Looking for New Stadium

 

When teams request public funding for new stadiums, they often do so with the threat of relocating to a city that is eager for a team. These credible threats must be without a team (either never having one or recently lost one) and are willing to put up the money to support a team. With a credible threat in place, host cities are often left with the option of paying large public subsidies.

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Los Angeles Clippers — Dynamic & Variable Pricing

The LA Clippers explain the difference between variable and dynamic ticket pricing, which are often confused by fans. Variable pricing refers to changes in ticket prices based on factors like opponent, day of the week, or time of the game. Dynamic ticket pricing takes things a step further and actually bases the ticket price off demand and supply for a particular game.

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Northwestern — Purple Pricing Plan

Northwestern University unveiled one of the first dynamic pricing models for college sports in 2014. Students can reserve seats for upcoming sporting events and if prices fall to lower prices because of low demand, anyone who paid higher prices would be refunded. This incentive was meant to encourage students to reserve their seats early for big games. The two also introduce a Dutch Auction for tickets where students can set their reserve price and if they fall within the window then they’ll be assigned tickets.

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