Sports Economics

Last week’s Kentucky Derby provided a race with some historic happenings.  It also provided a historically high handle for wagering.

  • The Derby itself attracted $148M in total bets.
  • The entire card for Derby Day was $223.7M according to The Daily Racing Form which is an authoritative source on matters such as this.

The handle on US horse racing has increased this year and the common interpretation for this is that new tax rules reduce the number of winning wagers that are automatically reported to the IRS and for which a portion of the winnings will be withheld immediately.  I certainly cannot offer any informed opinion on that.  I would also point out that the number of races at tracks in the US has also declined meaning that there are possibly more races with more betting interest available to hose players.  Whatever the cause, it appears that the racing industry is experiencing an uptick in its fundamental economics.

The other datum about Derby Day that was interesting to me was that attendance at Churchill Downs was announced as 157,813.  That was the eighth largest attendance in Derby history and the weather had to be one of the eight worst in Derby history.

In another sport, there are reports of possible changes based on fundamental economics there.  Reuters reported on Monday that NASCAR may be up for sale and this potential decision by the France family – the folks who own NASCAR – may be in response to:

“… an aging fan base, stricter safety rules and a competitive media landscape that have weighed on its popularity and made it less attractive to advertisers and sponsors.”

Reuters also says that the France family has retained Goldman Sachs to look for deals here but that things are still in a very preliminary/exploratory stage.  The “aging fan base” has been a drag on NASCAR because younger fans – particularly millennials – have not shown a great affinity for NASCAR meaning that TV ratings have dropped significantly from previous high levels.  This has reduced revenues meaning that networks and media distributors are reluctant to continue to pay a lot for TV rights fees.  Here is a link to the Reuters report.

Every once in a while, I run across a story that makes me think to myself:

  • There is dumb, and there is stupid … and then there is this.

A couple of weeks ago, Packers’ WR, Trevor Davis, got himself arrested.  He was not driving drunk or strung out on some sort of recreational drug; he was not involved in any sort of domestic violence; he was not brandishing a weapon.  Here is what allegedly happened.

  • Trevor Davis and a female traveling companion were at Los Angeles International Airport evidently checking in for a flight on Hawaiian Airlines.
  • When he was asked the standard suite of security questions at the baggage check counter, he turned to his traveling companion and allegedly asked her, “Did you remember to pack the explosives?”
  • That is a stupid thing to do but his traveling companion took it to a new level when she allegedly answered, “Yes.”
  • The attendant at the baggage check counter did not respond to this as light-hearted banter or anything of the sort; she called airport security.
  • Airport security folks take nothing of this sort lightly; when they arrived, they arrested Trevor Davis.  He was booked and then released because in fact he did not have any explosives in his baggage.

Maybe this is the reason that NFL teams continue to administer the Wonderlic test to potential draftees/signees?  That was a monumentally stupid thing for Davis to have done.

Finally, here is a comment from Scott Ostler of the SF Chronicle about a recent nominee to President Trump’s new President’s Council on Sports, Fitness and Nutrition:

“Bill Belichick. Because nothing screams healthy lifestyle like Bill Belichick.”

But don’t get me wrong, I love sports………