According to a recent study by Dr. Irina Zotova and Pete Yu, the Covid-19 pandemic brought about a decrease in U.S. domestic airfares of $24 per quarter beginning with the first quarter of 2020. Using an extensive database of airline information maintained by the U.S Dept. of Transportation, the authors found the impact of the pandemic to be pervasive across both major and smaller U.S. airports. The study reflects ongoing interest in the airline industry by Dr. Zotova, whose previous work includes examination of the short- and long-term impacts of aviation disasters on stock prices of industry participants. Copies of the current study are available on the Publications page of this website.
In a new study, Ryan Smart and Roy Weinstein addressed ways in which current attitudes toward team sports have impacted the landscape of amateur and professional sports in the United States. They observed that while in the past, kids participating in local community sports would have no difficulty finding others to play with, the advent of exclusive, expensive traveling teams have left behind teammates who longer benefit from exposure to the best local athletes. This has created a vacuum of opportunity for local kids who don’t make the cut or who are unable to afford the kinds of financial and other commitments required by traveling teams. In addition, traveling teams push kids to specialize in one sport despite the fact that several studies have shown that young athletes who concentrate on one sport were far more likely to sustain overuse injuries than their multi-sport peers. Once they turn professional, it’s not only the athlete that suffers – the economic burden shouldered by sports teams and their insurers can be enormous. Over the past 15 years, MLB teams have spent more than $7 billion for players on the disabled list; the 2018-2019 NBA season saw players miss more than 5,000 games due to injury or illness; injuries cost the English Premier Soccer League $267 million for the 2018-2019 season. At least some of these costs can be traced back to too many years of overly intense training on young bodies. Taking a step in the right direction, the NBA recently released guidelines for youth basketball advocating delayed specialization, at least one day a week of rest, extended time away from the sport each year, and age-specific scheduling. Other sports leagues should take notice.
In a path breaking study, Roy Weinstein and Joe Hale addressed the importance of the creative economy to the State of California. The creative economy consists of cultural, sporting, arts and entertainment events and activities that provide economic and social benefits to host cities, counties and states in which these events take place. The importance and commercial significance of these benefits is apparent from the vigorous competition that exists to host them among public entities elsewhere in the United States and throughout the world.
Weinstein and Hale quantified benefits associated with the creative economy in order to determine whether creation of a special fund that could be used to attract and support those events would be cost effective. They determined that an annual reserve of approximately $22 million would allow the State of California to bid for and support multiple creative economy events. Some of these events, such as Art Basel or the FIFA World Cup, have international appeal; others, such as events typically held in smaller locales such as Monterey, Tahoe or Temecula, may be more homegrown. Both types of events could be eligible to benefit from the reserve fund.
Weinstein and Hale observed that in light of visitor spending at these events -- at hotels, restaurants, transportation, and shopping -- the reserve fund would be self-sustaining: i.e. the reserve fund would be fully financed by tax revenues generated by creative economy events. In other words, use of the reserve fund to attract and support events could be accomplished at zero cost to taxpayers – annual tax revenues generated by spending associated with creative economy events will be sufficient to replenish the fund.
Operationally, the study suggests that public entities such as the California State Legislature would do well to establish such a fund. Residents of cities and counties hosting creative economy events would benefit at no cost to taxpayers.
Roy Weinstein and Joe Hale provided the Straus Institute at Pepperdine Law School with an economic analysis of costs associated with delays in dispute resolution. Delay requires an ongoing commitment of resources to the litigative process, tying up assets until litigation is resolved. As a result, they determined that the economic cost of delay adjudicating disputes is significant.
Peter Quies, Joe Hale and Roy Weinstein discussed possible next steps for U.S. soccer in the Sports Business Journal, making the point that we could do better with more play time for kids and less engineering from the top.
Peter Quies, Joe Hale and Roy Weinstein addressed the question of how it could be that the United States soccer team failed to qualify for the World Cup, and how soccer franchises such as Manchester United, Real Madrid and Barcelona are worth more than the New York Yankees, New England Patriots, New York Knicks and Los Angeles Lakers. The answer: Soccer in the United States is over-engineered, with kids spending too much time driving to venues, waiting around, warming up and listening to chalk talks, rather than actually playing, developing soccer moves and experiencing genuine love for the game. The remedy: Bring more fun to U.S. soccer, with additional open play field space for soccer play time without adult supervision. Why not a TV program about soccer comparable to “Inside the NBA,” with the soccer equivalent of Charles Barkley, Shaquille O’Neill, Kenny Smith and Ernie Johnson: a program comprised of humor and fun along with informed insights about soccer? Soccer programming also could address foreign cultures and international issues the way Anthony Bourdain’s “Parts Unknown” did through food. Although soccer has increased in popularity in the U.S., adding more fun to the mix would prove tremendously beneficial to the kids who play and the communities and cities they play in.
Micronomics was asked by the Los Angeles Sports & Entertainment Commission to ascertain the economic impact of the 2018 National Basketball Association (NBA) All-Star Game, played in Staples Center on February 18. Joe Hale and Roy Weinstein, authors of the study, concluded that hosting this game and its ancillary events produced at least $116 million in increased economic activity for the Los Angeles market. This includes a minimum of $90 million in expenditures associated with increased tourism and an additional $26 million in expenditures by local residents and businesses. These impacts represent a significant increase over the revenue impact in 2011, the last time the NBA All-Star game took place in Los Angeles.
Micronomics was asked to determine whether U.S. district court cases require more time to resolve than matters handled by the American Arbitration Association (AAA). Using publicly available data from the U.S. Courts website and proprietary information furnished by the American Arbitration Association, Micronomics determined that district court cases required approximately 12 months longer to get to trial than cases fully adjudicated by AAA arbitration. When cases were appealed, the difference between dispute resolution through the federal court system and AAA arbitration was an average of 21 months. To measure the cost associated with these delays, Micronomics applied figures reflecting the average return on the S&P 500 index to estimated minimum amounts at issue in U.S. district court civil cases. Between 2011 and 2015, direct losses associated with additional time to trial are approximately $10.9-$13.6 billion; direct losses associated with delay through appeal are approximately $20.0-$22.9 billion. Once these losses have worked their way through the economy, total losses associated with delay between 2011 and 2015 are as much as $35.3 billion through trial and $59.2 billion through appeal.