anyone..

[Lennys Tap]

That would be easy if you are making widgets, to get your costs under control.  Problem is that sports is a human business, the cost of goods are tied to paying athletes and\or rights fees.  So unless you can get the NFL, NBA, Big Ten, Big East, SEC, etc to lower their rights fees, lower their salaries, it isn't going to happen.   I'm glad you recognize the costs in your post, most people can't even make that connection to understand the drivers.  Plus 1 for you.  The next question is, how do you do it?  Do you think any of those entities are going to take a hit?  I don't.

This is why I have kept telling you guys for the last few years to compare this industry to "normal" industries is a fool's errand.  These aren't widgets.  This isn't an assembly line for cars.  Silicon chips are not being mass produced here.  Again, I tip my hat to you that you recognize the cost drivers, because most folks don't get it.

The cost drivers are artificially inflated because non consumers are paying for the product. Imagine a restaurant paying a meat purveyor $40 a steak that his customers will only pay $30 for. What's the fair solution? Have people who don't go to the restaurant make up the difference and then some so that the restaurant owner can make a profit? Or tell the meat purveyor that he'll have to "get by" on what his product is actually worth? I get that telling the commissioners, owners, players, announcers, colleges, etc., to "get by" on the ridiculously large amounts of money their efforts actually earn but give up their phony "bonuses" (subsidies) won't be popular with them. People who are unfairly compensated will, over time, inevitably come to view ill gotten gain as earned. But the NFL, NBA, Big 10, etc., don't "set" their rights fees - they take whatever they can get. Take the sports networks off of welfare and the rights fees will become real. Still enormous to normal people, but real.

[ChicosBailBonds]

The cost drivers are artificially inflated because non consumers are paying for the product. Imagine a restaurant paying a meat purveyor $40 a steak that his customers will only pay $30 for. What's the fair solution? Have people who don't go to the restaurant make up the difference and then some so that the restaurant owner can make a profit? Or tell the meat purveyor that he'll have to "get by" on what his product is actually worth? I get that telling the commissioners, owners, players, announcers, colleges, etc., to "get by" on the ridiculously large amounts of money their efforts actually earn but give up their phony "bonuses" (subsidies) won't be popular with them. People who are unfairly compensated will, over time, inevitably come to view ill gotten gain as earned. But the NFL, NBA, Big 10, etc., don't "set" their rights fees - they take whatever they can get. Take the sports networks off of welfare and the rights fees will become real. Still enormous to normal people, but real.

Yup, that is true.  Non consumers are paying for it which is why I keep telling you not to compare it to other industries, it's not the same.

Should we start with Buzz Williams $2M+ salary as the first sacrificial lamb.  He can take a pay cut and then we go from there?  When Buzz leaves, do you intend to pay the next coach $250K?    

It all sounds so easy until the real world gets in the way.  You should watch the video that Henry linked.  You really should.

[ChicosBailBonds]

No. But my companies have not engaged in obvious monopolies and heavily lobbied for questionable legislation, welfare, etc. and generally skirted the system at every turn.

For the vast majority of people, they have a minimum of 3 television service providers to choose from (two satellite and a cable company).  Where I live, I have 4 to choose from (Directv, Dish, AT&T Uverse, Time Warner Cable).  Not exactly a monopoly.

Sounds like you don't like how our political system works....can't say I disagree with you.  I heard all about change a few years ago....change.....

[ChicosBailBonds]

Chicos is spot-on. If anyone is really interested in the economics of bundling and how it applies to the cable industry, I recommend taking fifteen minutes to watch the youtube video from Marginal Revolution. The first ten minutes covers bundling in general and the last five applies it to cable TV.

http://marginalrevolution.com/marginalrevolution/2013/05/bundling.html

In general, for industries with high fixed costs and near zero marginal costs, it's a net benefit to everyone (firm and consumer) for bundling to be involved.

Also, there's a general relationship between innovation and monopoly structure for industries with high fixed costs (television, telecom, etc). More competition reduces innovation in these industries, which is something to think about if you like being able to watch MU on a new cable channel like FS1.

Appreciate the links.  I do have a bit of nit on the last paragraph, at least in this industry, but I guess it depends how you examine it.  For many years cable was actually a monopoly and they did very little to innovate. Then satellite came around and made TV way better, that forced cable to innovate (or at least copy) to bring better technology, more offerings, etc.  To me, competition forced their hands to compete with a better product or die.  Just my two cents.

[Henry Sugar]

Appreciate the links.  I do have a bit of nit on the last paragraph, at least in this industry, but I guess it depends how you examine it.  For many years cable was actually a monopoly and they did very little to innovate. Then satellite came around and made TV way better, that forced cable to innovate (or at least copy) to bring better technology, more offerings, etc.  To me, competition forced their hands to compete with a better product or die.  Just my two cents.

I think it's more accurate to say that industries with high fixed costs are innovative with fewer entrants (two or three) rather than a pure monopoly structure or a highly competitive environment

[ChicosBailBonds]

I think it's more accurate to say that industries with high fixed costs are innovative with fewer entrants (two or three) rather than a pure monopoly structure or a highly competitive environment

Fair enough

[Lennys Tap]

Yup, that is true.  Non consumers are paying for it which is why I keep telling you not to compare it to other industries, it's not the same.

Should we start with Buzz Williams $2M+ salary as the first sacrificial lamb.  He can take a pay cut and then we go from there?  When Buzz leaves, do you intend to pay the next coach $250K?    

It all sounds so easy until the real world gets in the way.  You should watch the video that Henry linked.  You really should.

If almost 90% of Buzz's salary is really being paid by people who never consume college basketball (as your numbers suggest) then yes - but of course that % is unreal, so the amount of the haircut he would have to take is likewise. That said, should Buzz's (and Cal's, Pastner's, Crean's, Izzo's, Bo's, etc.) compensation be a more fair and accurate measure of the revenue they help produce and not be augmented by money they steal? In a word, yes.

[ChicosBailBonds]

Money they steal....sigh.


I truly think you should watch that video, or many others I can provide.  Does a nice job of showing why it is actually pro consumer, etc.  To each their own.

[Lennys Tap]

Money they steal....sigh.


I truly think you should watch that video, or many others I can provide.  Does a nice job of showing why it is actually pro consumer, etc.  To each their own.

I get "bundling". It's everywhere, and for many, it works. But some people don't want the CD, they want the single. Some people want the burger and fries and not the "meal' that includes a drink allegedly worth $1 for a mere 50c more. I'm not saying a side of bacon shouldn't cost more ala carte than it does in a bacon, eggs, hash browns, toast and coffee "bundle", just that it should be made available and at not at a ridiculous price. In short, rewarding mega consumers of content with a "big gulp" kind of deal while allowing the only occasional one to pay a reasonable premium for ala carte options doesn't seem unreasonable (let alone content provider Armageddon) to me. The link provided by Henry did nothing to dissuade me from that notion.

[ChicosBailBonds]

http://www.thewrap.com/sports-rights-17-billion-2017-tv-lions-share


Timing of this article couldn't be better