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Thursday, July 9, 2015

The Economics of Sports Seminar: Rules and Order, Cooperation and Competition

A great close to a fun run of seminars

Student athletes and future leaders from around the nation came together for FEE’s third seminar in Orange, California, on the Economics of Sports. Aimed at high schoolers, this seminar explored economic concepts as they apply to sports, as well as the social benefits sports can create.

The seminar was comprised of many esteemed faculty speakers, including T.K. Coleman, Dan Smith, Edward Lopez, and Stephen Bienko.

T.K. Coleman, who has worked as a financial adviser for American Express and is currently the Education Director for Praxis, opened up the seminar by introducing students to core economic concepts such as rational choice theory, scarcity, subjective value, and opportunity cost.

Coleman expanded on subjective value by discussing trade decisions in sports and later talked about the social benefits and life lessons we can draw from sports.

Once students were introduced to basic economic concepts, Dr. Dan Smith applied this thinking directly to sports. Dr. Smith is an Assistant Professor of Economics at the Johnson Center at Troy University.

He explained how to use economics to further understand sports and sports to further illuminate economics. He also discussed informal norms in sports relating to spontaneous order and the nature of sports in the centrally planned Soviet Union.

One example explained the informal norms of the Tour de France. There are many unwritten rules in the world famous race, including not challenging top contenders who stop to eat or use the restroom, the entire group slowing if a top contender falls down, and not competing during the final stage of the race into Paris.

All of these norms, explained Dr. Smith, help to increase the profitability and spectator enjoyment of the race.

As time progresses, so does the playability, accessibility, and rules of sports. Dr. Edward Lopez discussed how rules must be suitable for the times, drawing from the history of barbaric customs such as a pre-Columbian ball game, in which the end result was human sacrifice. Dr. Lopez is an economics professor at Western Carolina University and is the BB&T Distinguished Professor of Capitalism.

In addition to the nature of rules in sports, he also discussed how sports leagues serve as private governance systems and how sports are great at pioneering social change.

Social change in sports often arises via a small number of people who see a problem with the status quo. Faculty guest speaker, Stephen Bienko, called these problems “pain points” and related the concept to entrepreneurship.

When starting a business, one needs to find a pain point and create a solution. This is how entrepreneurs can create opportunities for themselves and further create value in society.

Bienko is currently serving as the president of 42 Holdings, which specializes in brand ownership in firms within the home services industry. He has also been involved in sports marketing and athlete management for over ten years, implementing some of the most successful marketing initiatives in the Olympic sports division.

After Bienko’s discussion, he surprised students by inviting the 2008 Olympic gold medal decathlete, Bryan Clay up to talk about his experience overcoming adversity through sports, as well as his experience as an entrepreneur. He stuck around to answer questions from inspired students, providing sound advice on following your dreams and entrepreneurship.

Outside of traditional lectures, students participated in exercises in free trade, group discussions, and a group activity. The discussions were focused on two fundamental readings for anyone interested in economics: Leonard Read’s I, Pencil and Henry Hazlitt’s Economics in One Lesson.

In the group activity “Find a Better Way,” eight separate groups were tasked with using critical economic thinking to find private solutions problems that the government currently handles. The problems included healthcare, public transit, airport security, and food-borne illness.

When not attending lectures or engaging in discussions and activities, students did exactly what one would expect at a seminar about sports: The young athletes played volleyball, basketball, soccer, and jogged around beautiful Chapman University.

After three days’ worth of learning, the Economics of Sports came to a close on Friday. These exceptionally bright students now possess valuable knowledge that will undoubtedly be put to use in the development of their academic, athletic, and professional careers.

  • Nick Hanchey is a Summer Programs Associate at FEE. He is a senior at Georgia College & State University double majoring in Economics and Management.