This Is A Business

A common question people ask: why don't I fill this site with team and conference previews in early November? Shouldn't I use my extensive knowledge of mid-major college basketball for the common good? The easy answer: all that stuff can be found elsewhere. I did a 1,400-word flyover for this month's Basketball Times, for one, and my work can be found in the soon-to-be-released College Basketball Prospectus 2010-11 (and yes, I now work the volunteer desk over there, and thank you for the well-wishes).

I can tell you, unequivocally, that CBP2K11 is "the only phone book-sized guide to the season you will ever need" - Kyle Whelliston. I say that because I root for the under-dog in this fight, because I hope Prospectus crushes its competition, and because I know in my heart it's only a matter of time.

The long answer is, well, longer. Each preseason Top 25, bracket prediction, and take-it-to-the-bank gambler's aid becomes part of a market. It's like any market. Whether it's a book or magazine on the newsstand, a salaried writer's subsidized prediction set, or an unpaid blog post by an eager and aspiring scribe, each stakes a homestead claim. Each must compete for a precious resource: the attention of interested consumers. When I choose not to participate in previewing here on The Mid-Majority, it's only to help save this market from itself.

Every new entry into the field contributes to ubiquity and glut. Each decreases the mean value of the average preseason preview down towards zero. Why would anyone pay for something one can so readily obtain for no money at all? Whatever becomes less worthwhile to buy inevitably becomes less worthwhile to produce at reasonable cost. That's a downward-spiraling process by which quality is inevitably reduced. Free, when unsubsidized somehow, is crap.

I know a lot of folks don't see things that way. Humanity has made advances in nearly every applied discipline -- except, that is, for economics. We've launched people into space, built instant global communication networks and created Robot hearts for humans, but we still don't understand the science of value. We think we do. Every new development, each theory on top of theory, has only served to make us more dangerous to ourselves. Whenever we outsmart the system by finding new and exciting ways to unhinge value from time, we all get stupider. Our economy gets worse.

The only transactions that truly make sense are those that match the classical model that predates money: two parties trade resources, and each places a higher value on what the other has. You have 20 dollars, which Prospectus would like in order to pay to print the books and warehouse them, and they have a collection of basketball information that you want. And so the exchange takes place.

If you've paid with money you actually own, and not with some card that lets you have hamburgers today instead of Tuesday, there's no ambiguity at all there. And, of course, you have to take into account that the value of your 20 dollars will be different tomorrow. It has, unfortunately, had a tempest-tost floating value ever since Fort Knox stopped backing your bills with gold bars.

Poor money. I feel sorry for it these days. Thanks to our advanced yet tragically flawed thinking, it just can't help being complicated. Perhaps Nate Silver's organization will accept a fox pelt in return for College Basketball Prospectus 2010-11.

***Sportswriters are the worst economists in the world. I say this in the utmost Olbermaniacal sense of the phrase, and I don't deal in cut-and-drieds too often, but I strongly believe that this is one of the few things in this world not up for debate.

I know professional sportswriters. I know that they work very hard at what they do. A bunch of them, I like. But with very few exceptions, the majority of sportswriters live in the slipping parsecs of the middle class, dress horribly, and drive in cars and live in houses owned by their banks. These are not the kinds of people to trust about relative value. Neither are the few who pander to low denominators on a national basis. Never expect proper readings of tea leaves from lite beer culture.

Still, though, sportswriters will confidently delineate between the workaday professional ballplayer worth $5 million per year, and the one worth $7 million. They can empty out a thesaurus to tell you exactly how stupid the team owner is. But there is a high rate of likelihood that the fonts of these opinions are helplessly trapped under five-figure credit card debt, that they complain incessantly on SportsJournalists.com about budget cuts at the paper, and that they learned everything they know about high finance by playing Monopoly.

All I'm saying is consider the source -- that's one of the top five mantras my professors repeated during freshman year at J-school. Sportswriters are simply unreliable when it comes to financial information and analysis. From my own voracious daily reading, I know that more than several can't tell the difference between revenues and profits, and think they're interchangeable terms for "making money." Some I've come across even think a venture capital infusion counts as income. In the end, though, that's okay. You don't turn to me for medical advice... but I don't pretend to be a doctor.

So I'm not surprised at all that talk about the Sports Bubble hasn't really caught on, even during a summer during which the cracks and fissures in the industry became wider. The very few specialized sports-business writers out there can see it for what it is, and they noticed this long before I ever did, but that's mostly because they went to the right kind of school. For the most part, we've got people who think they're firemen, eating bag lunches inside a house that's on fire.

When assets and values don't match up, problems occur. When there aren't enough subsidies to cover the difference, disasters happen. A workaday professional ballplayer can be worth $5 million or $7 million a year, but only when the system makes enough sense. And it did once. For a while, there were enough people to buy three-digit sporting event tickets. Television networks were able to pay leagues huge rights fees, because they could pass the cost on to eager advertisers. Licensed goods made for additional revenue streams, because there were people willing to pay $200 on something that cost two dollars to produce.

Now, the NBA is on the verge of a nasty lockout, teams in the NHL are running up massive debts trying to maintain their expensive lifestyles, and MLB has exhausted its supply of new-stadium silver bullets. With the high-revenue, high-expense NFL, it's only a matter of time before the cracks show. Did we really believe it would last forever?

Thirty years ago, none of the aforementioned genius economic contraptions were in place. Someday in the future, the gonzo-sportz era will be a curious footnote. I'm not exactly sure whom among us will remember it fondly. For now, we are living the kind of history that Michael Lewis will win a Pulitzer for writing about in 2041. What important lessons will be learned from the mistakes our chosen industry is in the middle of making? We gadflies, those of us who try our best to speak truth to the Bubble, can only guess.

I'd venture we'll end up learning that everything in a free market gravitates towards free. With the exception of those diminishing percentiles with unlimited money to spend, most sports fans subvert the Bubble, whether they know it or not, by spending as little as they can on as much sports consumption as possible. With things like #pixelvision (yeah!), blogs (don't click on the ads) and sports bars (nurse that two-dollar draft, nurse it), it's becoming easier and easier. In 2010, it's just as much of a game as the play on the field, just a lot less athletic.

Here's a game. Think back on the recently-completed month of October 2010, and add up all the money you spent that directly ended up funding the sports industry. Include everything, including the $2.50 in your cable bill that went to ESPN for its carriage fee. If you're under, say, $50, you either don't care enough... or you're a certified Bubblefighter, and here's your badge.

Secondly, I'll bet this era will serve to remind, once again, about the balance of power in a written services contract. The upper hand is held by the side that's collecting money. The quality of future services cannot be guaranteed, and can be debated and loosely defined. The amount due, however, is cold and precise and printed on paper. It's payable in full, and easily enforced in a court of law when it's not. No wonder, then, that ownership always seeks to limit the length of term, and that employee and agent both make every effort to extend, extend, extend.

Which brings me, finally, to college basketball. Back in the spring, the NCAA threatened to expand the men's basketball tournament bracket to 96 teams. A lot of people got caught up in the emotion of it all. Few stopped to consider how little sense this made. CBS, which couldn't find enough advertising income to make broadcasting 63 games feasible under the current contract, was bleeding money. According to multiple published reports, CBS' losses for broadcasting the 2010 Big Dance were $200 million. In May, as the New York Times reported, it turned out that CBS executives saw this coming. Last fall, they practically begged on their knees for ESPN to sublease, please baby please. No matter what, CBS had to pay the NCAA's bills, or face a landmark breach-of-contract lawsuit.

The only way Plan 96 could have worked is if magical ESPN dropped helicopters full of doubloons on the NCAA's Indianapolis offices. ESPN, which currently must outpace its spiraling rights-fee costs by turning studio chairs into sponsorship opportunities, was not in an advantageous position to do so. A joint bid by CBS and Turner, the indefatigable go-getting spaniel of cable sports, earned a $10.8 billion contract to televise the NCAA Tournament from 2011 through 2024.

At least 99 percent of the media coverage of this had to do with relief over the revelation that the Big Dance would only expand to 68, and a lot of the discussion was about the purity and the gut feeling of it all. I got over that quickly. It was the deal I was in love with.

These NCAA people are geniuses, I thought. They got fourteen years. In 2024, I will be 51 years old, a crank put out to pasture. Between now and then, university athletic departments will continue to scramble over each other after dwindling dollars, and sell their conferences out if it means fending off unprofitability. Pro leagues will splinter and contract. The six-figure pro contract will return. Entire seasons will be wiped out by labor disputes.

But because CBS and Turner are legally bound to find some way to make those payments, there will be an NCAA Tournament. Every March. On the TV broadcast, there might be a spinning VitaminWater logo projected on the court with computer Robots, but there will be an NCAA Tournament. It is the great under-reported college basketball story of 2010: in an American sports world that makes less and less sense every year, Our Game is guaranteed to go on.

***Though it's never turned a profit, and is not designed to, The Mid-Majority is a business. Any entity that lays out cash for billable expenses is. The major expense here is travel. During the first season, six long years ago, all of that was paid for out-of-pocket on a shoestring basis. For the next three-and-a-half seasons, it was subsidized by one of the large mega-conglomerates listed above. In 2009-10, it was listener-supported like an empty guitar box on a sidewalk.

I didn't go to one of those fancy specialized schools, like the sports-business writers did. Anything I know about industry is from running the software company I co-founded while at Drexel 12 years ago. When the money is flowing freely, like it was in the dot-com era of the late 1990s, you don't have to be a trained businessperson to run a business. You don't even have to think about where the money comes from. You just turn on the faucet and use it to brush your teeth, then go out and spend it on three-digit sporting event tickets, and document the flow well enough to keep from being audited by the IRS.

There's a lot of sport in running a business, besides the obvious competition aspects. You're on Team Revenue, running your plays and taking it to the hoop (bank, y'all). You're trying to run up the score on the Monstars of the Expense Squad, who tend to play really great defense. If they win, you're eliminated and you go home. Back then, I knew a lot of people who lost.

In that extended metaphor, making it to 2004 was some kind of Sweet Sixteen. How did we do it? "Belt tightening," I think that's the common phrase. Being "nimble" is another one that analysts use. We made mistakes, but not enough to let the NASDAQ crash and 9/11 take us out. None of us back then thought we were living in a bubble -- when you're inside one, it looks like a new, beautiful kind of rose-colored sky. When there were enough brilliant people on the other side of the world who were willing and able to produce what we did for virtually nothing, that was it. It was time to go. Eventually, I stopped being bitter about it and appreciated the central lesson of the previous seven years: small, efficient things sustain. Besides, they're much more interesting.

And that, right there, is the primary "because" for the "why" of this site. But it took six years, and the intervention of good friends, to think of The Mid-Majority as a non-profit business and not simply as an outlet and a hobby. To support the effort now is to purchase instead of give. In return for a hundred dollars, there's a really big book, a premium website subscription, a t-shirt, a membership card and something special for the holidays. With shipping, that's a retail value of about 65 bucks, with an actual production cost of $35, and the rest goes to travel expenses. If we enter into this transaction, we carry on a tradition as old as swapping cattle for crops. Or, you can buy a package for a deserving college student. There's a line out the door (as of this writing, over 50 are waiting).

Taking into account budgets of previous seasons: to travel to 100 games across the country, and fulfill all these orders as well, would require 226 memberships. (Previous estimates, it should be noted, did not take into account that the book would be 600 &^#@* pages long and cost a lot to ship.) A total of 121 memberships were sold during the offseason, and I'm grateful that each member has found value here. If the difference isn't made up, there just won't be as much travel. I can't do it without you. I don't exactly have a Prospectus expense account, and I'm too uncompromising to be independently wealthy.

But Team Expenses will never win this game, and that's the whole point. TMM will be scaled and sized to budget, something NBA teams dearly wish they could do right about now. The desperation to cover high costs carries a sharp stink, as illustrated by the post-Lucky Strike era of Mad Men's Sterling Draper Cooper Pryce, and displayed in modern life by the increasingly bizarre promotional tie-ins permeating the sports industry. Obviously, I hope you join up. Please do. If you can, please help a young man or woman out with a TMM scholarship.

I hope we go the distance, because I love to travel non-stop and write about it. But I know what the market value for online writing is, and by extension, what a pretty website is worth. Every new domain, every new killer app, every new blog pushes the mean value of these things down towards zero. There so many staked-out properties on this frontier now that there is no expectation on the part of the consumer at all that they should pay to look at them. Blogging is so cheap, most people don't even consider it work.

But these are facts: smaller revenue means cut corners, lower overall quality, inconsistency. That's just business. There's an important difference between the two disparate concepts that The Mid-Majority is nothing without your support, and that it's better with it.

And I realize that most people, including myself, don't have the same kind of money as in the past. The biggest reasons why have to do with these brilliant time-lapse financial schemes that enriched very few at the heavy cost of just about everybody else. They've done nothing for me. We're all learning how to get small. So no more arm-twisting, no more thermometers, and, most likely, no more talking about it unless we're specifically asked. Whatever happens will be.

Besides, that's enough economics for one Essay Season. Tomorrow we talk about art.

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