Wednesday, March 04, 2009

Odds and ends...

A couple of things that I've seen this week that I wanted to comment on...


  • From Peter King's mailbag at CNNSI.com, Justin from Peoria, Illinois, demonstrates the kind of economic ignorance that is currently running our government.
    Regardless of the actual terms of Albert Haynesworth's contract, I believe we are seeing some disturbing developments. When America is suffering through a recession, it does the fan no good to see some of these contracts. Won't ticket prices and merchandise have to increase?

    (Emphasis mine.)

    Dear Justin,

    The Washington Redskins are in the business of selling entertainment. Their strategic goal, as a business, is to maximize their profits and the return on their investments. Accordingly, they will price their tickets to maximize their revenues. If they increase ticket prices, one of two things will happen. Either the number of tickets sold will drop, or the number of tickets sold will not drop. (As they have sold out all of their games for the last 40 years, the number of tickets sold will not increase.) If they increase the ticket price and the number of tickets sold does not drop, then the tickets were underpriced. If they raise the ticket price and the number of tickets sold drops, then they were at an equilibrium condition of supply and demand, and revenues may drop (or may not, depending on the relative size of the price increase and the ticket sale drop.)

    If you look carefully, you'll note that player salaries are not mentioned in that previous paragraph. There's a reason for that. Player salaries are irrelevant to pricing policy.

    Shall I repeat that?

    Player salaries are irrelevant to pricing policy.

    (If you don't believe this, do a little experimental research. What is the price of a ticket to a Washington Nationals game? What is the price of a ticket to an NCAA final four game? In which game are the player salaries higher? For which game is the ticket price higher?)

    Pricing is set to maximize revenues, profits and ROI. Period. Pricing is based on two factors - supply (which is fixed in the case of football tickets) and demand. To the extent that the Haynesworth signing has any effect on pricing, the relationship is actually the inverse of what you are proposing. The Redskins cannot increase prices because they've paid a lot of money to Albert Haynesworth. They may be able to increase prices because Haynesworth's presence increases demand for that fixed supply of tickets.

    (And all of this ignores the fact that the Redskins are playing in a league with a salary cap. The money going to Albert Haynesworth cannot be spent on someone else. In the end, the Redskins total salary cost is going to be pretty much the same with or without him.)

    In other words Justin, no, ticket prices don't have to increase because of the Haynesworth signing.


  • I don't dislike Tony Massarotti, but his piece the other day about the Cassel trade includes possibly the stupidest premise I'll read in a non-budget related story this year.

  • Nonetheless, one cannot help but wonder if the Patriots did themselves more harm than good when they used the franchise tag on Matt Cassel.

    The short response is, "one certainly can help but wonder," particularly if one is not a moron. Let us, briefly, concede that there is some possibility that the Patriots did not actually extract the maximum possible value from the Cassel transaction. But that isn't the question that Tony's positing. His theory is that they may have been better off not franchising Cassel in the first place. Which is, to put it politely, insane.

    Ending weeks of speculation that began during the final stages of the 2008 regular season, the Patriots on Saturday traded Cassel and linebacker Mike Vrabel to the Kansas City Chiefs for a second-round pick (34th overall) in next month's draft. Just like that, Cassel's meteoric rise in New England crashed to a halt. After all that debate and all that posturing, the Patriots seemed to give up more than they received, unloading the same Cassel contract they saddled themselves with in the first place.

    Pssst...Tony - just to let you in on a little secret, the contract they "saddled themselves with in the first place" enabled them to TRADE Cassel, thus acquiring an excellent pick in the upcoming draft, rather than watching him WALK AWAY FOR NOTHING!

    Assuming, as I do, that Vrabel was gone one way or the other, and that had he not been included in the trade, it still would have happened the same way and he'd have then been cut, the two possible options were:

    A) Decline to franchise Cassel. In this scenario, Cassel negotiates and signs a big free agent contract with someone else, Vrabel gets cut, the Patriots end up with nothing.

    or

    B) Franchise Cassel. Trade him as soon as free agency starts, include Vrabel so that you have some control over where he ends up, get back the 34th pick in the draft (an excellent value pick, as you expect to get a good player at a reasonable price.)

    Right? To summarize, option A leaves the Patriots with:
    No Cassel
    No Vrabel
    No pick


    Option B leaves the Patriots with:
    No Cassel
    No Vrabel
    The 34th pick in the draft


    And Tony somehow thinks it's legitimate to question whether they should have tagged Cassel in the first place? And an editor let it go through? I don't know whether to laugh or cry...

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