Monthly Archives: March 2014

The Economics Of Playing HBCU Championships At Pro Stadiums – When Winners Still Lose


Essentially, economics is the science of determining whether the interests of human beings are harmonious or antagonistic. – Claude-Frédéric Bastiat

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This past November, I attended the 2013 SWAC championship game with my father despite our family school, Prairie View A&M not being present. My father felt it was important to go out and support the SWAC. Our family annually attends the SWAC’s Labor Day Classic between Prairie View A&M University and Texas Southern University, which was eventually put out of Reliant it is rumored from poor attendance. A very sad indictment since Prairie View and Texas Southern are located 45 minutes and 15 minutes from the stadium, respectively. My father and I discussed why HBCUs have such a difficult time with attendance overall, save for a few select schools that travel really well. Even more importantly to me was whether the economics of playing the SWAC football championship in football at Reliant Stadium and the SWAC basketball championship at Toyota Center made dollars and sense. My father noted as he bought our tickets that the median ticket price was $35 that night and if the attendance came in well that the SWAC and both schools should do well. However, my question was could they do better?

The reported attendance at the game was 38 985 according to HBCU Digest. Calculated with the stated median price from above it equals out to approximately $1.37 million. Not a bad days haul on its first examination. Unfortunately, the SWAC does not own Reliant and therefore having a game there is not free. Based on the financial terms that were given for the UH-SMU game at Reliant, we can start to see just perhaps what that final figure might look like. There is a $75 000 license fee per game. Then there is the facility expense of $85 000 for 30 000 to attend plus $2 for every attendee over 30 000, bringing the total expense for the SWAC game to $177 970. All parking and concession revenue go to Reliant and 20 percent of merchandise sales also go to Reliant. Using a ratio of four people to a car, then the SWAC championship car attendance was 9 746 with parking cost at $10 or revenue of approximately $98 000. The median soda/beer cost at Reliant is $6.13 and a regular nacho (easily the most popular item at the SWAC championship – probably because it was the cheapest) was $7.00. Assuming that half of attendees will purchase at a minimum a drink and nacho that is worth approximately $256 000 based on the game’s attendance. This means that HBCUs are potentially only taking home 61 percent of the potential revenue (not including merchandise) when they play at professional stadiums if this is a standard deal. In the SWAC’s case a loss of revenue equal to $532 000 (not including merchandise) just for the football game.

My father’s argument was that if the game had not been played at the Reliant, then most fans would not come nor do most HBCU stadiums have the capacity for 40 000 fans. Prairie View’s stadium at best holds 5 000 comfortably. He argues that fans want to be in a nice venue, especially if you plan to get the fan who has no rooting interest to come to the game. There is some validity to this since the attendance for the SWAC championship when it was in Birmingham struggled mightily with attendance, even when Alabama A&M or Alabama State were in the game. There is also the issue of lodging, which for rural HBCUs tend to be lacking. That being said, I am not totally convinced.

I believe if the game was located in the central most urban geographic location to both schools playing in the championship, then an opportunity to collect a vast more of the pie could be accomplished. Could I be wrong in this? Absolutely. However, that we have not explored alternatives is an issue that we can ill afford. Given that conferences tend to share the revenues of these games throughout the conferencem it is worth an economic examination. Just as classics should be re-examined and the very questionable deal that HBCUs have with ESPN and the Disney SWAC/MEAC classic where attendance has consistently been less than stellar.

It often feels as if there is a lack of creativity to HBCU athletic departments. HBCU athletics will never be profitable because demographics simply do not allow for it. However, they can be less of a loss leader than they currently exhibit. Already underfunded, instead of trying out of the box scenarios that could draw larger crowds to generate higher revenues, we seem content to just mimic our counterparts who have vast resources and seven and eight figure boosters. Do we believe we can just walk by a penny on the ground? If we do, then we are in real denial about our financial crisis.

HBCU Money™ Business Book Feature – The Everything Store: Jeff Bezos and the Age of Amazon


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The definitive story of Amazon.com, one of the most successful companies in the world, and of its driven, brilliant founder, Jeff Bezos.

Amazon.com started off delivering books through the mail. But its visionary founder, Jeff Bezos, wasn’t content with being a bookseller. He wanted Amazon to become the everything store, offering limitless selection and seductive convenience at disruptively low prices. To do so, he developed a corporate culture of relentless ambition and secrecy that’s never been cracked. Until now. Brad Stone enjoyed unprecedented access to current and former Amazon employees and Bezos family members, giving readers the first in-depth, fly-on-the-wall account of life at Amazon. Compared to tech’s other elite innovators–Jobs, Gates, Zuckerberg–Bezos is a private man. But he stands out for his restless pursuit of new markets, leading Amazon into risky new ventures like the Kindle and cloud computing, and transforming retail in the same way Henry Ford revolutionized manufacturing.

THE EVERYTHING STORE will be the revealing, definitive biography of the company that placed one of the first and largest bets on the Internet and forever changed the way we shop and read.

HBCU Money™ Dozen 3/17 – 3/21


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Did you miss HBCU Money™ Dozen via Twitter? No worry. We are now putting them on the site for you to visit at your leisure. We have made some changes here at HBCU Money™ Dozen. We are now solely focused on research and central bank articles from the previous week.

Research

Tim Cook’s Approval Ranking Climbs One Spot in Top-50 CEO List l CIOonline trib.al/Kx7saeV

What VCs Look for in Big Data Startups l CIOonline trib.al/ZFzgJY8

This New Electric Car Is Demolishing The Competition In China l Clean Technica dlvr.it/5C9FgT

Europe’s home-grown space shuttle gears up for launch. We take an up-close look at it l New Scientist ow.ly/uPW4s

This is a great time to start a career in cybersecurity l Network World ow.ly/uQn0z

Scientist Nisha Sipes is looking at how a mother’s chemical exposures affect a developing embryo l EPA http://go.usa.gov/KVQx

Federal Reserve, Central Banks, & Financial Departments

Teachers: Attend “Getting to the Core through Economics and History” on June 17 l St. Louis Fed http://bit.ly/1pggZbh

The gap b/w the countries that perform best & worst in #trade logistics is still quite large l World Bank http://wrld.bg/uP75n

Podcast explains how to small towns manage to retain their best and brightest l St. Louis Fed http://bit.ly/1hTh0Ay

If you’re interested in how money is created this video explains l Bank of England http://ow.ly/uPtFr

How can entrepreneurs make use of #data when it isn’t open or doesn’t exist? l World Bank http://wrld.bg/uNQ1F

How can we improve educational outcomes for low-income youth? l Philadelphia Fed http://ow.ly/uQoXN

Thank you as always for joining us on Saturday for HBCU Money™ Dozen. The 12 most important research and finance articles of the week.

The HBCU Money™ Weekly Market Watch


Our Money Matters /\ March 21, 2014

A weekly snapshot of African American owned public companies and HBCU Money™ tracked African stock exchanges.

NAME TICKER PRICE (GAIN/LOSS %)

African American Publicly Traded Companies

Citizens Bancshares Georgia (CZBS) $8.04 (0.00% UNCH)

M&F Bancorp (MFBP) $3.67 (0.00% UNCH)

Radio One (ROIA) $4.84 (1.02% DN)

African Stock Exchanges

Bourse Regionale des Valeurs Mobilieres (BRVM)  239.76 (0.44% DN)

Botswana Stock Exchange (BSE)  8 933.27 (0.03% UP)

Ghana Stock Exchange (GSE)  2 388.74 (11.35% UP)*

Nairobi Stock Exchange (NSE)  144.50 (N/A)

Johannesburg Stock Exchange (JSE) 46 508.26 (0.00% UNCH)

International Stock Exchanges

New York Stock Exchange (NYSE) 10 392.22 (0.08% DN)

London Stock Exchange (LSE)  3 533.20 (0.10% UP)

Tokyo Stock Exchange (TOPIX)  1 145.97 (1.58% DN)

Commodities

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Currencies Of The African Diaspora – Comoros


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One of the world’s poorest countries, Comoros is made up of three islands that have inadequate transportation links, a young and rapidly increasing population, and few natural resources. The low educational level of the labor force contributes to a subsistence level of economic activity, high unemployment, and a heavy dependence on foreign grants and technical assistance. Agriculture, including fishing, hunting, and forestry, contributes 50% to GDP, employs 80% of the labor force, and provides most of the exports. Export income is heavily reliant on the three main crops of vanilla, cloves, and ylang-ylang; and Comoros’ export earnings are easily disrupted by disasters such as fires. The country is not self-sufficient in food production; rice, the main staple, accounts for the bulk of imports. The government – which is hampered by internal political disputes – lacks a comprehensive strategy to attract foreign investment and is struggling to upgrade education and technical training, privatize commercial and industrial enterprises, improve health services, diversify exports, promote tourism, and reduce the high population growth rate. Political problems have inhibited growth. Remittances from 150,000 Comorans abroad help supplement GDP. In December 2012, IMF and the World Bank’s International Development Association supported $176 million in debt relief for Comoros, resulting in a 59% reduction of its future external debt service over a period of 40 years.
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Source: Economy overview provided by CIA Factbook