Come for the lakes, stay for the scalping

There are many great things about Minnesota. The beautiful lakes, that hilarious regional accent, and more lakes. But something else is about to make Minnesota even greater.

In what can best be described as a noble social experiment, or capitalism at its absolute worst, scalping is now almost 100% legal in Minnesota.

The bill to legalize scalping passed by a vote of 124-8 earlier this week in the Minnesota House and the Governor has said he will sign it into law today. As soon as that happens, anyone in Minnesota can sell tickets for above face value, including grandmas on the sidewalk. I'm sure this makes 35-year old Vinny who still lives at home with Mom and showers once a week very happy.

Rep. Phyllis Kahn from Minneapolis said the scalping law wasted police resources on victimless transactions. Kahn said the old law represented "the worst kind of socialist interference with the free market."

Proponents of the bill say legal competition could bring some ticket prices down. And scalping laws haven't capped soaring street prices for high-demand tickets anyway.

As you can imagine, many fans of Minnesota sports teams are far from thrilled.

One woman complained that legalizing scalping will mean "good-bye to box-office prices forever" because "scalpers will buy up all the seats and then sell them for twice the price or more." That may be true. But with with Kevin Garnett having just been traded, the Twins mired in third place, and the Vikings being the Vikings, somehow I don't think ticket prices are going to rise all that much.

Just in case you'd like to see the Simpsons version of scalping, here you go.



-WCK

Is having the #1 pick in the NFL Draft actually worth it?

There's a great article by Daniel Brown from Sunday's San Jose Mercury News that looks at whether or not having the first pick in the NFL Draft actually makes economic sense for teams. This year, here in the Bay Area, the Raiders have the 1st pick and the 49ers have the 11th pick. The 1st pick in this year's draft is expected to get an estimated $30 million guaranteed while the 11th pick would get in the $10-12 million range. This thus begs the question: Is the #1 pick really worth three times as much as the #11 pick?

Two economists say no. Richard Thaler of the University of Chicago and Cade Massey, formerly of Duke, but now at Yale, insist the top pick is usually a burden for teams. An expensive mistake (see Detroit Lions) can cripple a franchise for years. Massey said that the "sweet-spot" of the draft comes late in the first round and early second round.

There's certainly plenty of data to back it up. Peyton Manning is the only #1 pick after 1997 to play in a Super Bowl.

Teams have also done historically well by trading down. The best recent example is the San Diego Chargers who traded away Eli Manning to the Giants and picked up Philip Rivers and Nate Kaeding in that draft, as well as a 2005 first-round pick that they used on Shawne Merriman.

If you want to read the actual study by Thaler and Massey, here is a link for it.

Also, let's take a look at how recent #1 picks stack up against #11 picks.

Year ---- #1 pick
2006 ---- Mario Williams
2005 ---- Alex Smith
2004 ---- Eli Manning
2003 ---- Carson Palmer
2002 ---- David Carr
2001 ---- Michael Vick
2000 ---- Courtney Brown
1999 ---- Tim Couch
1998 ---- Peyton Manning
1997 ---- Orlando Pace

Year ---- #11 pick
2006 ---- Jay Cutler
2005 ---- DeMarcus Ware
2004 ---- Ben Roethlisberger
2003 ---- Marcus Trufant
2002 ---- Dwight Freeney
2001 ---- Dan Morgan
2000 ---- Ron Dayne
1999 ---- Duante Culpepper
1998 ---- Tra Thomas
1997 ---- Michael Booker

Let the debate begin.

Why you don't want to be an Illinois taxpayer

As most people know by now, the US Olympic Committee selected Chicago as its applicant city for the 2016 Games. Both of us spent a lot of time in Chicago during the process leading up to the selection of Chicago. And from what we know, Chicago should consider itself lucky if it doesn't get the Olympic Games (which it admittedly is not expected to get).

While the Tribune ran a story at the beginning of the month looking at the economic impact of the Olympics, we decided to dig back even further into the past for an article a buddy of ours wrote a year before the Trib's version, even though it didn't appear on the Web until May 2006. It speaks in greater detail about how Atlanta buried some building costs in order to say they turned a profit.

Although Mayor Daley has claimed that Illinois taxpayers won't have much to worry about, recent history suggests otherwise. British taxpayers were recently informed that the bill for the 2012 Games jumped from an original estimate of $6 billion to $18 billion. When you combine that with the fact that Chicago has a history of screwing taxpayers royally, see Soldier Field ($660 million dollar reconstruction costs - 2/3 of which were paid for by taxpayers) and Millenium Park (which went more than $300 million over budget), it doesn't look good for Chicago if they get the Games.

One also has to remember that Soldier Field (seating about 62,000) is not capable of holding an Olympic capacity crowd. So a completely new stadium would have to be built or Memorial Stadium at UIUC would need to be upgraded even further than currently planned (which might not be such a bad thing).