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Friday, December 16, 2011

THIS IS SO MISGUIDED I HAD TO POST RIGHT AWAY (SORRY NO MONSTER)

This so flies in the face of even Econ 101 that I had to post it right away.  Sorry no monster, I was in a hurry.

Sportsfans.org is a sports fan movement attempting to right many perceived wrongs.  But that should never get anybody off the hook for using really (really) bad logic that flies in the face of even the most basic economic concept.

Headline Dec. 6, 2011:  "High Costs of Sports on TV Always Passed on to YOU"

Grab Line on the webpage:  "Think your cable/satellite bill is high now?  Wait till the costs of the latest NFL TV rights deal are passed on to you."

Weak Thinking:  NFL charges cable/satellite providers whatever it wants for rights fees.  The media providers then pass it along, with markup, to poor slack-jawed NFL fans.  Which they pay because, well, that's just how badly they need their sports fix (I guess; this part is never really covered by anybody who adopts this view).  The cruel, insensitive, and eminently greedy NFL laughs all the way to the bank.

Econ 101:  Both the NFL and media providers are constrained in what they can charge by the willingness of NFL fans to pay for games, given the other options that fans consider to be substitutes.  It is the job of both the NFL and cable/satellite providers to estimate this willingness to pay.  They set their agreement on the basis of those estimates.  If the NFL and media providers are correct, fans pay as estimated and they make profits.  If they are wrong, they sell less than they had hoped, because they charged too much, and they make less than they planned.  This is true whether the NFL has market power or not.

Possible Motive for Publishing Such Weak Thinking:  Sportsfans.org is trying to build membership and interest in their cause.  They say inflammatory things to fuel that interest.

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Now, perhaps pushing this kind of misinformation serves the needs of sports fans.org, but that can only be in the short run.  In the long run, what will sports fans.org do when it cannot come through on this issue--as long as fans are willing to pay more, the NFL and media providers will gladly charge them for it.  If this is stymied, politically somehow, we are in a regime of price controls that we know will simply reduce the availability of what buyers want most.  Fans will get lower cable/satellite bills because they get less sports programming than they are willing to pay for.

Garbage in, garbage out.

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