Saturday, January 14, 2017

Trying to put the bird in its cage

Twitter seems like it was created just for me.

Every time I read an article on the future of Twitter that details how it's having trouble attracting and keeping users -- I can't fathom how that's happening. It's everything I want.

- Constant stream of news and information

- Always on

- Curated feed of people I like to read

- Minimal interference from advertising (the occasional promoted tweet but nothing more)

- Tendency to feature snarky thoughts, jokes and one-liners

It's no wonder I've been addicted. But it's also a little surprising that I'm trying really hard to stop.

I love getting new information -- probably too much -- and I'm trying to re-orient myself to keep my dips into the Twitter-stream to a minimum.

Why? Well, first, I have a second kid now. That means I have even less time to check in with my phone.

But more importantly I think Twitter makes me marginally more informed, but significantly more agitated.

The news that breaks on Twitter is one of the best things about it -- and for major events there's still no place to beat it. But for everything else, it just takes every incremental piece of news and throws a huge cloud of craziness around it.

And the democracy of every user essentially having an equal voice is the contributor to that craziness. It's great that anyone can say anything I suppose -- but that everyone is treating equally means there's a lot more chaff in that wheat than there should be.

That chaff ends up getting me angry -- and it's so much a part of the platform that I think I need to take a step back for a while.

As an example -- I follow a lot of political tweeters -- and sometimes I look at their tweet. Then I look at the responses to the tweet. Most of them are nonsense and garbage. And I'll see a garbage tweet and I'll think, 'really? this person believes this?', and I'll dig into that garbage response and find MORE garbage responses -- or a garbage conservation or a garbage manifesto. Just piles and piles of garbage thoughts, processed into 140 character bits, shouted into a void. But somehow I'm finding that garbage through the void, and when I step back I realize it's just some random goofball with 6 followers who I'll never meet.

You do that enough times and you start to wonder about how you choose to allocate your time.

And by the way, it's not just political tweeters. It's sports. It's movies. This is across the board.

Everyone's stupid thoughts are just as available as actually meaningful thoughts or information. It's like Twitter saw the message board at any newspaper website and thought, 'let's let this people talk about EVERYTHING'

And sure - I've been one of those people too, although I like to think at least my tweets are properly spelled.

But since I don't know how I can fix it from my side, I think the best thing I can do is put it down and slowly back away. We'll see if I can manage that.

Tuesday, December 27, 2016

Discharging Student Loans in Bankruptcy

There's no shortage of articles warning of an impending student debt crisis in the U.S. News organizations are quick to remind us that student debt now represents a larger portion of overall outstanding debt than credit cards and auto loans. So I dug into it a little bit...

It's over $1 trillion, and all the reports warn of the potential damage it can do if a large swath of the country is buried under debt -- sacrificing other forms of consumption to go towards digging out of the hole.

It's not hard to imagine why student debt loads have increased so dramatically. If there's one theme that's been pounded into our collective heads regarding education, it's that it is the primary tool to realize economic/social class mobility. If there's another theme, it's that college keeps getting more and more expensive. Put those two themes together, and you have a recipe for increasing student debt, but with a critical catalyst that I'll get to shortly.

As the parent of two young children -- that college prices are exploding has me concerned. The raw increase in college costs has been pretty extraordinary, just one data point:

This fall, Harvard's annual tuition and fees (not including room and board) will set you back $45,278, more than 17 times the 1971-72 cost. If annual increases had simply tracked the inflation rate since 1971, next year's tuition would be to just $15,189.

I know it's Harvard, but what can I say? I'm setting my expectations for my kids very high! Although by the early 2030's when they'll be looking to go, who knows if I'll be able to afford what it costs.

Let's set my own finances aside, and come back to what's driving the increase in college costs. Much is made of colleges building amenities and features that range from the merely opulent to the truly fantastical. Climbing walls in state-of-the-art fitness centers, dorms with private bathrooms, and iPads as far as the eye can see. That's a line of thought that gets buy-in and nodding from liberals and conservatives. Then there's another focus on increase in administrative staff -- more frequently raised by conservatives -- because to attribute the cost increases to nest-feathering bureaucrats who happen to tilt liberal fits well with the conservative view of the world. With that said, it's very likely true to some degree as well.

But I was curious if another structural force could be at work to drive increasing college costs and resulting debt obligations. That's the inability of borrowers to discharge educational debt in bankruptcy.

Unlike other forms of debt -- student loan debt doesn't disappear if you try to declare bankruptcy. It doesn't get discharged. It stays there forever.

And this isn't some historical artifact, the major legislation which drives it dates back only about ten years ago:

Before 1976, all education loans were dischargeable in bankruptcy. That year, the bankruptcy code was altered so loans made by the government or a non-profit college or university could not be discharged during the first five years of repayment. They could, however, be discharged if they had been in repayment for five years or if the borrower experienced “undue hardship.” Then, the Bankruptcy Amendments and Federal Judgeship Act of 1984 made it so all private student loans were excepted from discharge too.

Two decades of further tweaks to the bankruptcy code ensued until 2005, when Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which made it so that no student loan — federal or private — could be discharged in bankruptcy unless the borrower can prove repaying the loan would cause “undue hardship,” a condition that is incredibly difficult to demonstrate unless the person has a severe disability. That essentially lumps student loan debt in with child support and criminal fines — other types of debt that can’t be discharged.

So we treat student debt in the same way we treat criminal fines or child support -- you can't get out of it, pretty much under any circumstances. Although there are some measures like repayment programs that try to make it easier -- it's not a stretch to say it's extremely difficult and unlikely you'll escape from student loan debts if you're unable to pay them back.

If we think through the impact of that legislation -- I'd argue you can draw a pretty clear line to an ever-increasing debt load for students in the U.S. Thinking about it logically, the bankruptcy legislation eliminated a major cost for student debt issuers. With the threat of bankruptcy discharge off the table, financial institutions would be much more liberal in doling out money, as they're no longer left holding the bag if a student can't pay. Now it doesn't matter if a student can't pay, the debt stays with them, and while it's clearly not as financially beneficial to a bank vs. paying back a loan on schedule, they maintain the means to get theirs even if it takes decades and essentially throws the student into a practical debtors prison.

Looking through some research to find evidence of this thought - I came across an NBER paper summary which explains exactly the phenomenon I assumed existed:

The answer is that by making it harder for consumers to escape their debts, the new law dramatically reduced lenders' losses from default and bankruptcy. As a result, they started lending more, even to consumers with bad credit. Credit card debt increased more quickly during the past two years than at any time during the previous five years.

Consumers should have responded to the new harsher bankruptcy law by borrowing less, which would have lowered their risk of getting into financial distress. But not all consumers behaved in this rational way. Instead, many behaved shortsightedly and took advantage of the greater availability of credit to borrow more than they could easily handle --- ignoring the risk of financial distress. (Economists refer to this shortsighted behavior as "hyperbolic discounting" - consumers who are hyperbolic discounters intend to start paying off their debts immediately, but each month they consume too much and end up postponing repayment until the following month. So their debts steadily increase.)

The new bankruptcy law exacerbated the problem of shortsighted consumers borrowing too much, because it prevented many of them from using bankruptcy to limit their financial distress. Many consumers in financial distress are unable to file for bankruptcy under the new law, because they cannot afford the costs of filing, cannot meet the new paperwork requirements, or are ineligible. This means that their debts will not be discharged and they will remain vulnerable to creditors' collection calls and to wage garnishment that may take funds they need for basic necessities. Because of the new bankruptcy law, consumers can end up in deeper financial distress than would have been possible before 2005.

This paper is about credit card debt, not student loan debt, but the principle is the exact same. Eliminate the potential write-off cost of default from the lender, and not so surprisingly, they lend more!

Reading more on the legislation ticked me off a little further -- especially given that support for the 2005 bill turned out to be bi-partisan, passing with over 70 votes in the Senate and over 300 in the House. Even Joe Biden voted for it (I assume because Delaware has some big interest in the credit card business), although Obama notably didn't.

If we're interested in reducing the amount of student debt borne by borrowers -- I'd advocate for allowing bankruptcy protection for borrowers. I'm not persuaded by the argument that loosening the rules will create tons of strategic bankruptcies by fresh Yale grads with Art History degrees. Bankruptcy, although it would help reduce debt loads, still has very real costs in terms of credit score impact that aren't easy to walk away from. The more persuasive counter-argument, is that allowing students to declare bankruptcy will tighten lending exactly for the group of prospective students -- those without much financial means -- that need it most.

I think that's probably true, but only to a point. I think it could dramatically reduce lending to students aiming to attend for-profit institutions, the same ones with pretty dubious records of leading to gainful employment in a given field. I also think that's probably a good thing. You wouldn't want to keep someone from being able to borrow to get an education that would dramatically help their career prospects -- but you would want to keep someone from being able to borrow to attend a crappy online college that can't help them get a job. If you were truly worried about the latter, I'd argue maybe you allow bankruptcy filing for borrowers attending for-profit colleges, but not for non-profit ones. Given that for-profit students make up 35% of all loan defaults, it would at least be a start

Monday, November 21, 2016

At least one point of optimism

Sure, the election results were terrible, and President Trump, despite receiving an initial benefit of the doubt from some in the mainstream pundit-sphere, seems intent on stocking his administration with the kind of loyalists and sycophants that at best would support a kleptocracy and at worst will be quick to start wars and trample the Constitution.

And then there are the clowns, the white nationalists using this as a signal to climb out from under their rocks (or mother's basements) and start making Nazi salutes. That Trump condemns a broadway show and NOT these deplorables implies he's either oblivious or despicable (and both are bad)

But in a search for a silver lining, one thing I do feel a little comfortable about is that progressive change can still be made. While there won't be any progress from a federal level (there might even be pullback) on issues like equal rights and gun safety -- my hope is that we'll still be able to drive change by leveraging corporate influence.

The federal government may not be on the side of freedom for the next few years -- but powerful examples now serve as a template for driving change.

The nonsense legal attempts by Indiana and North Carolina to restrict the rights of the LGBT community met with swift resistance. But the resistance didn't just come from typical activist groups:

Example 1 - North Carolina

Opponents of North Carolina's HB2 "bathroom bill" - which prevents transgender people from using restrooms that do not match the gender on their birth certificate - are being joined by some very powerful partners.

Former Solicitor General and Prop 8 litigator Theodore B. Olson has authored an amicus brief supporting the Justice Department's effort to block HB2, and 68 major corporations have signed on. These companies include American Airlines, Apple, Cisco, eBay, General Electric, IBM, Intel, LinkedIn, Microsoft, NIKE and Salesforce.

Example 2 - Indiana

A new study from Visit Indy — Indianapolis's convention and tourism organization — found that Indiana lost at least $60 million in revenue after lawmakers there passed the so-called Religious Freedom Restoration Act, which gave businesses the greenlight to discriminate against LGBT people on religious grounds.

In both of these cases, while the state government felt beholden to appease the will of troglodytes and bible-thumpers, they didn't anticipate opponents marshaling corporate resources against them so effectively. Turns out that corporations that need to compete in the modern economy, both for talent in their offices and customers (particularly the ones that have money), look as though they may take an increasingly active role in pushing back against discriminatory and/or bigoted policies.

If some of the particularly nefarious parts of the Bannon/Trump agenda (i.e., Muslim registry) come to pass -- my sincere hope is that while we who would oppose it can't pin our hopes on the official checks and balances within the government -- we can exert enough influence on and from within the business community to block such awfulness.

Because if it comes to a fight over protecting people's rights, we don't have the seats in congress, the supreme court, or the White House. But we do have more money and more shares of stock -- and we'll have to use whatever weapons are at our disposal

Sunday, November 13, 2016

Way Too Late Election Thoughts

At this point, there have been far too many thinkpieces on Donald Trump, Hillary Clinton, what Trump's victory means, what it doesn't mean, and how no one really knows what it will mean. There have been columns, and responses to those columns, and responses to the responses.

They've infiltrated my podcast feed, my twitter feed, and they're all over my facebook feed.

So what's one more.

Look, I was totally stunned by the election results. I'm a politics fanatic and listened/read all kinds of stuff over the last two years (enough to even go to Breitbart routinely -- though it's tough getting the stench off my hard drive) -- and I felt so confident we'd be talking about Clinton transition today.

I wish we were -- but we're not. We're talking about Donald Trump's transition to his presidency. It's still barely believable as I type it. And even as I try to avoid seeing any more news about it, as if that would somehow mean it wasn't actually happening, my blinders can't completely block out the massive, neon 'TRUMP' logo forcing its way on my mental image of the White House.

I wanted to write down some thoughts in the immediate aftermath, but I was insanely busy at work and my 2 year old doesn't really want to spend her nights talking politics. That helped. The election has made me feel all kinds of different feelings (nearly all of them negative) -- and sitting down at a keyboard last Tuesday night would've resulted in something you'd expect from the Unabomber.

I'm ashamed of the election -- not that the result didn't go my way -- but because it means that cynicism has delivered a crushing blow against hope.

That the Republicans, who have obstructed and stymied any and all efforts by President Obama to address any problem, are now poised to control all three branches of the federal government, almost feels unfair.

Many Americans are upset that the government isn't doing a better job to help them, and I get that, but to ignore Republican behavior in creating that atmosphere is frustrating. Between the Obamacare repeal efforts, shutting down the government, refusal to even consider filling a Supreme Court vacancy -- this is a party that has done far more than its fair share to destroy the chance of a functional federal government.

That is their wont -- but for them to be rewarded for it by those who are angry at the dysfunction -- well, it's like a town with a crime problem firing the police chief and hiring the local mafia boss to clean things up.

Make no mistake -- I am distraught at the agenda the Republicans are now salivating over. I'm distraught that they'll take the legacy of President Obama, and all the good he's fought to achieve, and rip it to pieces -- turning our country into the Ayn Rand Fantasy Camp Paul Ryan has been dreaming of (where the only things the government provides are paved roads and a box of shotgun shells).

But what's even worse -- if that's possible -- is where President Trump could force our country to go.

Now I've already listened to a bunch of pundit takes suggesting that Trump will 'evolve' or 'grow' into the job -- once he sees how much power and responsibility he has. Or that the Republican party leadership will work to rein him in. That's a great idea, and wonderful wishful thinking that I hope comes to pass, but my response to that would be -- have you not been paying attention to anything he's done?

The man is 70 years old and near as I can tell, has never had anyone tell him he's wrong. Now he's just succeeded in breaking all the norms of politics and defeating the two biggest political dynasties of the last 30 years. You mean to suggest this is someone who will change what he's doing? And by the way, the Republicans who noticeably ran away from him in their elections (examples: Mark Kirk, Joe Heck), lost.

Trump runs the Republican party now - and I don't see him willingly handing over the keys.

If this were only about Republican policy (or whatever policy Trump actually believes in), it wouldn't be so bad. I'm a white male with a pretty decent job -- that's a good recipe for success under Republican rule.

But it's two elements of his victory that are significantly more scary.

One -- is the penchant for nationalism at the expense of globalism.

I don't know much about what Trump really believes, but the man is an ardent nationalist. The electoral wind at his back rode in on a nationalist tide -- it was right there in the slogan -- 'Make America Great Again'. This is a stark contrast to Obama (and my own) world view.

I look at the global market and see greater interconnected world as a source of stability and prosperity. The more you trade with everyone, the less likely you are to want to blow them up. It's not complicated -- you figure that out anytime you play Civ.

Trump -- it appears -- doesn't agree with this world view. America needs to be number one, and this is a zero sum game. It's odd to hear the President-elect talk about trade with other countries as if its zero-sum, and that we need to win and others need to lose. That, plus his emphasis on halting immigration, withdrawing from defense agreements like NATO. These are all signals that, to Trump, if you're not first, you're last.

It's not just the U.S., lots of other countries including France, the UK, have seen an increase in nationalism. What worries me most, is that Nationalists need a foil, an enemy, someone to direct the negative energy at. During the election, it's easy for Trump to scream 'Lock Her Up!' as Clinton is a great enemy to rally around. But now that he's running the U.S., and the Republicans have unobstructed power at the federal level, who will play the bad guy?

China? Mexico? Illegal immigrants?

Trump is making a lot of economic promises -- and when those promises (4% GDP growth!) don't come to pass, someone will have to take the blame.

Trump has also shown that he can't accept losing face - and putting that all together presents scenarios that I'd have considered unthinkable.

Two -- is that there really isn't anyone who would stop him

In an ideal world, if Trump went too far in his nationalism or his aggressiveness to the point of danger, we'd hope that our legislature would band together across party lines to stop him.

But this election has only demonstrated the degree to which Republicans value party unity over American principles.

During Trump's run, he's pushed an absurdly large number of irresponsible ideas into the mainstream (too many to name here). In response to this, while a couple Republicans disavowed him entirely, the vast majority wouldn't let that get in the way of letting the ends justify the means.

Maybe a few of them made some statements -- but they all voted for him. He received 90% support from Republicans. This despite views on immigrants, Muslims, Mexicans, that are distinctly un-American at best and dangerous at worst. Republicans viewed this with a collective pause, and then went right ahead.

Paul Ryan, Marco Rubio, and others have made their true feelings known. Many of us won't forget.

I wish there were a better outcome in store for us. Perhaps I'm wrong in my dismissive attitude to a Trump change of heart, and I absolutely hope I am. But there are dark clouds ahead for the federal government -- and the key for those of us who now find ourselves and our philosophies in harms way owe more than just some blog posts and tweets in protest.

There is still work we can do, and still progressive change we can create (remember there are 50 state governments and thousands of city/local ones). If nothing else, maybe such a challenge can persuade some of us to do more than vote once every four years.

Friday, September 2, 2016

New Regulations to Reduce Salary Gap #FB

I fall for clickbait all the time. Slideshows featuring the 50 most exotic hamburgers? A quiz to tell me what brand of cereal I am?, Stories where a dog does something but you won't BELIEVE how it turns out?

NOMNOMNOM - I take all the clicks.

That's particularly true when I see an article run about wage-gaps or salary information in the workplace. Those headlines are boring by comparison but I always read them. I came across an op-ed in the Washington Post that I thought was interesting

Why did I find this interesting?

- I had no idea there were laws under consideration (and apparently passed in MA) that preclude employers from asking job applicants about their previous salary

- I agree with the author's conclusion (this seems like a bad idea), but not her reasoning

The argument for the legislation (I assume) goes something like this: There is a pay gap among women/minorities, and if employers are allowed to ask about previous salary, those previous salaries reflect our current gap-heavy environment and thus will be perpetuated.

The author's argument is that if you prevent employers from asking about applicant's salary history, they'll simply use proxies and get to the same outcome.

I think both of these arguments are not persuasive. The author's reference to proxies uses the example of employers now forbidden from using criminal history and proxies including things like drug tests. OK, I could see how an employer could argue that drug use is an indicator of criminality, there's an explicit link there. But what proxy are they going to use to guess at what your past salary was? Your brand of shoe? Your address? Do they own their own home? The links here are less clear and harder to boil down to an objective question on a job application. But I agree with her that the laws seem wrong, so let's set that aside.

What's more of a driver of wage gaps, to me, is there's not enough transparency in compensation. And it's not as big a problem among new hiring, but among existing employees. These new laws seem to think that less transparency will help the situation, which feels wrong.

The legislator's argument runs into a problem if you consider the employer as a rational actor in the hiring marketplace with a set of many candidates. If they find two candidates of equal talent/ability - one a man and one a woman, only the woman's prior salary is 20% lower - then you'd offer the woman the job for a lower salary and hire her.

This is a great outcome for the company, an employee at a 20% discount. This is not so great for the employee, who is taking a discount. But the key is to move the salary interaction from a one-time anchoring into a more dynamic engagement. How can we get the woman to earn her true worth once she's there? Lack of transparency within the workplace makes wages more sticky than they need to be, so even if whomever you hire demonstrates their value, there are fewer mechanisms/nudges to drive that higher.

The legislator seems more worried about the first part of the equation and a general employment context, that's probably not wrong. Nearly all salary discussions/changes seem to happen within the context of taking a new job (either changing companies or promotions). But why should that be the case, considering those events are few and far between for many people.

I think a better alternative is to make compensation policies more dynamic and more transparent for existing employees.

I'll use two incidents from my own personal experience.

When I was a much younger person, I was looking to change jobs within the finance industry. I also wanted to move back to Philadelphia, and I was pretty motivated to do so. I found a firm and encouraged them to hire me. They didn't really want to - they had just hired someone with more experience and were looking for one more person at more of an entry-level. They ultimately offered me the job (I forget if they knew my historical salary, they probably did), but at less of a base salary than I had made previously. I was fine with that trade-off because I really wanted the job...until I accidentally found out I was making less than a newly hired administrative coordinator.

I didn't leave the job because it was part of a long-term plan to go to B-school, but it certainly ticked me off and stuck with me (apparently). At the time I was a major asset to our firm's primary investment activity, and had I known of the gap, I certainly would have said something and am convinced it would have been a persuasive argument.

Let's contrast that with my post B-school career in consulting.

In that case, I knew what just about everyone else at the firm was making at all times. There were set cohorts with fixed salaries and bonus thresholds tied to employee ratings. I didn't know how everyone got rated, but I knew the scheme and there were relatively clear criteria on how to achieve it. Whenever I got promoted, I already knew what my new compensation would be. I never had a complaint about compensation, and you could argue over ratings and speed of promotions, but the rules of the game were clear. In such an environment, I think a wage gap is significantly less likely (although there's a very valid argument that qualities that get promotions are biased towards men or white people etc., I won't dispute that possibility, but it's a second order question in my mind)

If everyone knew what everyone else earned, I think that would be a huge nudge toward eliminating wage gaps and biases against certain groups. Nudge is probably too soft a word, I think it would be a shove. The less people know about how compensation works within the organization, the less they're able to articulate why they deserve more because like me all those years ago, they might have no idea they deserve more.

The argument against doing this, is that it's going to piss off lots of folks and set off a series of 'how does THAT guy get paid THAT MUCH?' That's why you'd see this much more easily implemented at new companies rather than existing ones, and at smaller ones vs. larger ones.

But if your goal is to reduce bias, a change that makes compensation more public is, in my mind, a much more effective way to go about it.

Friday, August 19, 2016

How can the NFL Make More Money? #FB

No election talk for now - I promise.

Even though that's what's been dominating much of my podcast and article feed for now, I wanted to think about something else, if only for a little while.

Football season is coming, and even though the Eagles don't look like they'll be all that great (prediction: 8-8, I think the defense is better than people expect and the offense is worse), I remain thrilled about it being back. I was ecstatic to spend $100+ on DirecTV's Sunday Ticket streaming package, and would happily give the NFL more money if they would just find more ways to give me football.

So I tried to think, what if I were the commissioner of the NFL? And what if I were charged with growing the world's biggest sport (by revenue, yeah I know soccer is more popular)?

Where would I look first?

I had to set one quick guardrail for myself -- I'm not allowed to just make changes that have no prayer of happening in reality anytime soon...that means no more games (because the players won't approve), and no cyborg player technology (because that doesn't exist...yet). But if I had to present to all 32 owners a concrete plan of how I was going to make them more money...what would I go after?

Unfortunately, the NFL is in a tough spot, because it's already so damned huge. It made $13B last season (per wikipedia), so big growth isn't going to be that easy (unless you launch a hostile takeover of the NBA and force LeBron to play for the Browns)

The way I look at it, the NFL only succeeds in making money because every Sunday, me and millions of other people like me glue our eyeballs to various screens to watch the football. There aren't many places where you can depend on those eyeballs showing up, and the NFL is a huge one. Because revenue is tied to those eyeballs, I see a few discrete ways to grow:

1. Increase the monetization of the eyeballs you already have
2. Increase the time those eyeballs are spent watching the NFL
3. Increase the number of eyeballs watching the NFL

Those are the big types of opportunities in my mind, and as you'd might expect I've got some thoughts on each one.

1. Improve Existing Eyeball monetization: This is deriving incremental revenue from the customers (eyeballs you already have). Now, in any of these areas there are tons of possibilities. What I'm trying to focus on is what's both more achievable and large. So while some ideas might be compelling (e.g., create new products to sell to fans, create new pricing/loyalty schemes to more effectively price discriminate), there's the big easy one that's too obvious to pass up:

Uniform sponsorship.

It's coming, it's just a matter of time. Major non-U.S. soccer clubs around the world sell jersey advertising. Every Nascar is basically a billboard. The Sixers have finally broken the seal of the major four sports leagues (MLS and others have already done it years ago), and for an NFL who has officially-sponsored everything, the spartan uniforms are
sacrificing revenue for the sake of, I don't know, traditionalism? (Which is nonsense btw -- the Green Bay Packers were the freaking Acme Packers in their first season)

Now, this is such an obvious opportunity that people have already quantified it:

According to a Horizon Media study, the Dallas Cowboys, New England Patriots and New York Giants could all land jersey sponsorship deals worth more than $14 million per year.

That study, says the biggest teams would be worth $14M a year. If you assume the average NFL team is half of that ($7M, as I'm assuming that they're evenly distributed between $14M and $0. That may be conservative, especially because I'd argue every team is essentially a nationally-watched team), then you've just made the league an extra $224M.

That's an easy way to grow 2%.

2. Grow Eyeball duration The last bucket was focused on getting more money out of existing viewership/fanbase. This one is similar to that idea, but rather than through improved monetization, this is just expanding share of time we're all spending with the NFL. It doesn't enhance the value of the content, it's creating more content.

Now I stipulated that we can't make more games. That's the easiest way, but let's take that off the table. So what's my big idea?

Expand the Regular Season.

Wait, what?

Before someone calls the Players Association on me. I'm not saying teams should play more than 16 games. In fact, call the Players Association, because they would love this idea.

The NFL generates $7B a year in TV revenue from all their network partners. Why is that? Because football fans are obsessed with following the league every week of the 17 week regular season.

But why does the regular season have to be only 17 weeks?

Teams currently play 16 regular season games and get one bye week off. OK, well under my new and improved regular season, teams still play 16 regular season games. They just get two weeks off instead.

Expand the calendar, and expand your eyeball duration. Because if you tell me that fans forget about the NFL when their local team is on a bye week, I'll tell you you're full of crap. Whether it's fantasy football, gambling, or just finding a way to avoid their families, football fans will watch the NFL when it is on, even if their team isn't playing.

Now you've got 18 weeks of content for the networks to sell advertising against.

And if you'd protest by arguing that you can't fit it into the calendar, then fine, lop off the 4th week of the pre-season. No one cares about it anyway, I'm sure an extra week of full-on NFL regular season would be a little more revenue generating.

If that $7B package per year was for just the regular season and not the post-season, pro bowl, draft or other events, to me, that means this opportunity is worth an extra $400M.

Grow Eyeballs: This is the toughest one for me. How to create new fans essentially. It might be the hardest one to do, unless you take my previous idea of a hostile takeover of the NBA

Destination London.

OK, this is a bit of a cheat. If I had to be honest, I'd say that it's more of a Grow Eyeball Duration instead of Grow Eyeballs, but I think it could be both.

The NFL has been hosting games in London for a number of years. And if you want to get more fans, you can try to pick up more fans in the US (tough) or you could try and make a go of it in an untapped market (tough too, but a different kind of tough).

A problem we have is that I'm taking expansion off the table. Expansion would be a way to create marginally more fans in a specific US market (imagine Las Vegas, or whatever, St. Louis I guess). But that expansion comes at the expense of diluting the revenue shared by everyone else. You'd create a one-time lump sum payment to the existing owners in return for giving them a slice of the pie forever.

So no expansion.

That means growing eyeballs would necessitate relocating a franchise to help you create incrementally more NFL fans. The most effective way to do that is to take a team no one would miss and ship them to a huge market somewhere.

Toronto would be a candidate, but I prefer London. I suspect the NFL does too.

Why? Two reasons:

1 - It's bigger. The UK has ~60M people, Canada only has ~30-35M. If you're trying to get more people into the NFL, go where they are.
2 - It can also expand your eyeball duration

So ignore the complexities of how a team in London would work schedule-wise. Yes the travel would be tricky, but with my new double-bye week schedule it could be easier to have teams visit London around a bye. I'm sure we could solve that.

But when the London team plays its 8 home games a year - you've got a new 10am timeslot for a nationally televised game. Again, we're taking the same amount of content and stretching it out, allowing more people to watch it and more importantly have network partners sell more advertising against it.

It would mean I'd have to miss Meet the Press 8 times a year, but that's a sacrifice I could live with.

If you only think about how much that could be worth, it's not unlike the Thursday night package the NFL artificially created with the exact same strategy. That deal is worth $450M a year.

Now, weeknight prime-time is obviously more valuable than Sunday morning. But would Sunday morning be worth 25% of that? I'd need a media expert's help to confirm, maybe it's only 10% of the value. But that's still between $50-$100M in revenue.

So there you go Mr. Goodell. I've just given you about $700M+ in ideas that are both pretty achievable and pretty significant.

I'll just wait for my check. You can hit me up on Twitter @jaredscohen.

Wednesday, August 10, 2016

Donald Trump and Collective Behavior Thresholds #FB

I was reading an article about football strategy not long ago. The article was on football referred to a podcast on basketball, which itself referred to a sociology paper from 1978. But as I was thinking about the presidential election and how things have evolved over the last week -- I thought the theory made a lot of sense as it relates to where Donald Trump currently finds himself.

The thrust of the football article is about how a construct around individual behavior thresholds might apply to NFL coaches. In short (and probably summarizing in a way that doesn't do justice to the academic paper), the typical model of how coaches would make 4th down decisions is a little too simplistic. In this simplified version, coaches are either aggressive or conservative, and this trait is fixed.

In considering the impact of thresholds, there's the thinking that it's not necessarily a binary condition. You aren't firmly conservative or firmly aggressive...rather, there are conditions where you'd decide in a conservative way and conditions where you'd be aggressive. Seems pretty logical.

Those conditions include (and for the purposes of discussion only consist of) the behavior of the collective body of coaches around you.

Think about a coach with a relatively high threshold for aggressiveness. He needs to see a lot of collectively aggressive behavior in order to be persuaded to take aggressive action himself. Maybe he needs 20 other coaches to make aggressive decisions.

Then there is a coach with a low threshold. Maybe he only needs 2 or 3 other coaches before the actions of the collective are enough for him to make an aggressive choice.

Chase Stuart explains this all much more clearly than I can in the article...but the model is interesting to think about in consideration of lots of collective action situations (example most commonly used would be riots/looting -- it's not that everyone becomes a maniac when their team wins the Super Bowl, it might be that select individuals with low thresholds for rioting start something, which creates a snowball effect as the broader group crosses their respective individual thresholds)

So as I'm reading article after article about Trump, it occurred to me that this may be a useful construct with which to view the collective actions of Republican office-holders at large.

Trump has done a bunch of, let's put this diplomatically, wacky-ass-shit, over the last few news cycles. Most recently, he subtly raised the idea of his supporters shooting Hillary Clinton (or her designated judges). Whether these individual comments were beyond the pale or not is not what I'm thinking about. At this point, Trump is a fairly known commodity.

But Republicans continue to waver in their level of endorsement/support -- and if we think about each of them as having a threshold for their support based on their collective behaviors, there are some interesting implications.

The first incumbent congressperson to come out against Trump (i.e., say they wouldn't vote for him), was Richard Hanna from NY.

Ok, the first one, someone with a low threshold to going public with his lack of support (in part, because he's retiring. That's a different conversation around what might influence your threshold)

Then, if I remember correctly, came Adam Kinzinger of IL. Kinzinger, as far as I'm aware, still plans to serve in Congress.

After that, it was a Senator, Susan Collins.

In each of these cases, it's interesting to consider whether it wasn't a particular soundbite, action, or polling number on Trump's part that drove the legislators to come out and announce their opposition, but potentially the acts of others who had preceded them pushing them beyond their internal threshold for action.

If that is the scenario, there are obvious implications about an impending death spiral of a campaign. As more Republicans abandon ship, they embolden those that remain.

It's an interesting way to think about their collective action (and one that I selfishly hope comes to fruition).