UAH Economics Program

The Oakland A's current situation, like so many before it in Major League Baseball and other sports leagues, exemplifies the ever-present conflict between sports franchises, their desire for new venues, and the localities in which they operate -- in this case Oakland, California. We explore such conflicts extensively in ECN 406 (Sports Economics) at UAH as a stalwart part of analyzing the role of government in the sports industry, where we fundamentally recognize sports leagues and franchises as public goods and these situations consequently as ripe for government subsidization of (especially) new venues. Things get especially serious, and expensive, very fast in California, home of gargantuan land prices; note the talk in billions of dollars, plural, in Jeff Passan's article here. Meanwhile, in these matters a franchise, and the league it represents, must have a credible threat of relocation, which of course is the headline news here, but these considerations merely scratch the surface of the many layers of microeconomics underlying public confrontations like these, which can also play out in non-sports industries. Those layers make this one of my favorite topics to teach in ECN 406.

MLB wants A's to explore relocating from Oakland The A's, who have played in Oakland since 1968, will look into relocating elsewhere after years of failed plans for a new stadium. The team has asked the city council to vote on a new Howard Terminal site prior to its late-July recess.

Schroeder understands the difference between utility maximization and wealth maximization. Not so sure about Lucy!

Peanuts by Charles Schulz for January 25, 2020 | GoComics.com View the comic strip for Peanuts by cartoonist Charles Schulz created January 25, 2020 available on GoComics.com

Burrito economics? Breakfast economics? Danielle Wiener-Bronner actually gives us quite a bit to think about (munch on?) in this article about Chipotle (one of my personal favorite eateries), but I especially like the little bit of labor economics in the last few paragraphs. When Wiener-Bronner writes of difficulty recruiting workers in a "tight labor market," she's speaking of the presence of a shortage of labor in the relevant market: the quantity of labor demanded exceeds the quantity of labor supplied at a prevailing compensation level, and natural market forces exert upward pressure on wages to move things toward equilibrium. When we learn that Chipotle is "trying to attract workers by encouraging mobility within the company, offering quarterly bonuses and...teaching unique skills...," we get an idea how this one employer in the market for restaurant labor is taking steps that increase compensation in creative ways, thus contributing to the eventual resolution of that labor shortage. Those "unique skills" Chipotle CEO Brian Niccol touts "transfer...to other opportunities in the restaurant industry," marking those skills as "general" in one sense (making workers more productive beyond Chipotle) but "specific" in another sense (making workers particularly more productive in the restaurant industry, though not likely in any other industry). In my labor economics course at UAH, ECN 475 (also available for masters students, ECN 575), we learn all about the workings of labor markets and the nature of worker training. The Chipotle story offers a nice application.

Chipotle CEO says breakfast is off the table ... for now Chipotle wants to keep growing. Just not in the morning.

What's particularly interesting to me about this story shows up near the end of the article. While Amazon and FedEx appear to be severing ties, with Amazon trying to get into the shipping business itself (at least for its own customers), we learn that Amazon constitutes a minimal competitive threat in that area for the moment -- because of the "$122 billion worth of investment" required to "catch up to" long-established industry leaders UPS and FedEx. This illustrates an important part of the theory of the firm that recognizes that the nature of start-up costs and economies of scale, especially in relation to physical capital, can challenge a newcomer's ability to produce efficiently and thus can become a barrier to entry into an industry. Certainly, deep-pocketed Amazon would seem to have a better chance of eventually establishing such a foothold than most other such entrants, but we nevertheless are reminded of a fundamental concept in the analysis of firms and competition.

FedEx is severing shipping ties with Amazon as Jeff Bezos' company scales up its own logistics operation FedEx executives have made it clear in recent months that the company views Amazon as a competitor rather than a partner.

This article discusses the potential for Formula One to return to the African continent, either to South Africa or Morocco. Telling here is the open acknowledgment by F1 commercial boss Sean Bratches of the inevitability of public funding for either venture. F1 races, Bratches says, "are economic engines for these countries, cities, principalities, municipalities" and that most grands prix are "underpinned by government and it's because it works." He further speaks of the economic impact of F1 races. An important part of sports economics concerns the role of government in the sports industry. Sports leagues and sports events take on the properties of public goods, highlighting the fundamental resource-underallocation problems that frequently require government involvement in helping make them happen. Learn more about this in my course ECN 406 (Sports Economics) at UAH!

F1 return to Africa a priority for Liberty amid Marrakech interest Formula 1's commercial boss Sean Bratches says a return to the African continent is a priority for Liberty Media, and that Marrakech has expressed an interest in holding a race

In this article about the temporarily reduced-price Frosty at Wendy's, I think it's interesting that the company is quite purposefully trying to take advantage of customers viewing Frosties and other menu items as complementary goods -- obviously a central idea when we develop the concept of consumer demand. Quoting the CEO, the author writes of the $0.50 Frosty as a "traffic driver" that might motivate customers to buy food (or more expensive Frosties with cookies) while visiting Wendy's for those cheaper desserts. Complementary goods: not just an academic idea!

Why Wendy's brought back 50¢ Frosties Wendy's knows customers love its half-price Frosty promotion. That's why it's bringing it back yet again.

Unfathomably, Alan Krueger is gone. He was a truly great labor economist who perhaps eventually would have been awarded the Nobel Prize. As the article discusses, Kruger helped change the way we think about the economic implications of the minimum wage -- no small achievement. I discuss this extensively in ECN 475 (Labor Economics) at UAH. His is a stunning, monumental loss.

Alan Krueger, famed economist, dies at age 58 Former White House economist and Princeton University professor Alan Krueger died over the weekend, the school announced Monday. He was 58.

Students who take my course Sports Economics (ECN 406) at UAH learn some economics of leagues, which includes coming to terms with the intuition of league expansion and the equilibrium formation of league expansion fees. Those fees simultaneously reflect expected net benefits of expansion that accrue to the expansion franchise and to existing franchises in the league, and typically range in the high hundreds of millions of dollars. Appropriately, then, the Seattle NHL franchise will pay a fee of $650 million, but maybe more importantly (as the article indicates) this fee is $150 million higher than the Vegas Golden Knights fee: a sign of NHL growth and the anticipated joint benefit of the Seattle hockey market. Applied microeconomics, baby.

It's unanimous: Seattle gets NHL expansion team Seattle has been granted an expansion team for the 2021-22 NHL season. The team will play at a renovated KeyArena and compete in the league's Pacific Division.

In my course Sports Economics (ECN 406), which I have taught at UAH since Spring 2009, students learn of how sports organizations have many sources of revenue, including media revenue, and they learn other things about the role of media and media rights as well. This article illustrates how media revenue is now king, even more prominent in the sports industry than gate revenue, collectively speaking.

Media rights are North American sports' largest source of revenue, and are set to keep rising Media rights fees across North American sports have grown 286 percent since 2005, and have become the largest source of revenue.

"Service time manipulation," the theme of this article, strikes me as a vestige of the reserve clause (which was born in baseball), as does the fact that MLB requires six years before a player can reach unrestricted free agency. That's a long time. Students in my course ECN 406 (Sports Economics) at UAH learn about the reserve clause and its labor market implications extensively.

MLB Must End Teams Purposely Keeping Out Baseball's Biggest Phenoms One of Major League Baseball's latest controversies calls to mind a bit from the 2009 Star Trek , in which Dr. McCoy offers words of wisdom to Mr. Spock...

https://www.nytimes.com/interactive/2018/07/11/business/trade-war.html
Aside from being a useful (& concise) explainer of the trade war we find ourselves in, this is a truly epic data visualization.

How Trump’s Trade War Went From 18 Products to 10,000 The battle began when the United States imposed tariffs on solar panels and washing machines. It has led to a global tit-for-tat targeting billions of dollars of goods.