Duopoly Hypothesis for slayr:
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Understand the following is all hypothetical.
Suppose you were a member of a basketball shoe duopoly trying to manage risk and market share for the long term in a duopoly relationship. What kind of regime of dominant teams would you want to encourage?
To hypothesize an answer, one first has to make an assumption about whether duopoly members might want to stay a duopoly, or want to kill off one of the members, and become a monopoly, or add more and become an oligopoly.
Historically, in my recollection, most monopolies eventually default into oligopolies of two to six members. There are lots of reasons for this that we don’t need to go into now in order to make a reasonable assumption.
Historically, I can recall few if any oligopolies that have defaulted into monopoly, but that does not mean there are none. It just indicates my anecdotal sense of tendency. Again, there are lots of reasons for this that we don’t need to go into now in order to make a reasonable assumption.
Lets be conservative here and stick with historical tendency, or at least my anecdotal recollection of it. Let’s assume that path dependence in the future favors the currently hypothesized duopoly choosing either to stay a duopoly, or choosing to default into an oligopoly of up to six members. Let’s further assume, for the sake of simplicity, that duopoly is the regime that persists for the foreseeable future simply out of path dependent inertia. This last is probably an unreliable assumption in the long term, but almost any assumption is unreliable in the long term, so let’s go with it for the sake of simplicity in taking our first baby steps in thinking about this stuff.
Under this assumption, what regime of dominant teams in a four region NCAA tournament might most likely support the perpetuation of a duopoly?
Hypothesis: I reckon each duopolist would seek to establish four heavily talent laden teams with each one having a high probability of being a one-, or a two-seed team in each region by the end of the season.
Duopolist A loading four teams with top talent, and Duopolist B loading 4 teams with top talent, would go along way statistically to ensuring that a Final Four and a Final Two included Duopoly teams, and that a Duopoly team won the ring. Dominating the Final Four and Final Two and winning most of the rings would go along way to perpetuating the duopoly members’ market positions and would overtime, make it a high probability that one, or the other, duopolist almost always landed the “next Michael Jordan.”
Not saying this is how it necessarily is.
Saying this is a hypothesis that might be interesting to fit with data.
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@jaybate : Two of our duopolists’ teams took a big hit the last week. UM’s McGary out for the season with back surgery and Louisville bouncing players to RS and buh-bye hurts adidas
s’ chances of landing at least one in the F4.
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In past years, I never gave your posts on shoe company influences enough thought. I diverted all my attention to Xs and Os.
But this year, with Wiggins on board, and all the attention on his grand future, I’ve been pulled away from the play chart and forced to consider the heavy-handed business tactics of shoe companies.
Word on the street, distributed by sports media sources and spouted on every city court in America is that Andrew Wiggins will sign into a relationship with Adidas for the tune of $180m. If this deal becomes reality, it is (by far) the largest bag of bills ever given an athlete just to say, “hey, I like their stuff!”
The financial disparity created through a deal of this magnitude between the lunchtime YMCA ball player and Andrew Wiggins can not be easily comprehended. Perhaps it is best compared through historic eyes, say, feudal Europe. This created disparity (growing even higher with the addition of his team salary and other endorsements) could challenge the disparity of the House of Bourbon and the peasants of Navarre, and eventually, the entire country of France.
The comparison gives credence to the statement, “I’d trade a shoe for a kingdom.”
Kansas has become the segway for the kings of basketball to connect with their regal sponsors. Word on the street now: “Kansas pays top dollar!”
So to tie this into your post… the future elite schools in basketball must have a sponsor. Not just any sponsor, but a sponsor who will make these schools the front line for bidding battles to possess future roundball royalty.
It appears that Adidas is raising the stakes. So for the time being, Kansas will benefit hugely from their commitment.
The tournament of tournaments may end up being the Champions Classic. The idea is to bring four teams (and their sponsors) into a single-elimination tournament where shoe companies can battle it out. That’s my prediction.
As much as we all covet March Madness, it has too many variables to call it stable for the shoe companies to pay top dollar and expect a winner. Too many teams, not enough dollars to go around when it comes to the elite bidding battles. Shoe companies can’t fight this battle with a rifle, they have to fight it with a shotgun. Money is spread wide, but the prizes are limited to a flash in time moment. Shoe companies are investing in franchise players and programs. Players and programs they think can impact the market for a decade or so.
Someday soon, there will have to be restructuring. My guess… March Madness continues as scheduled… except the four elite schools will not participate. The elite schools will hold their own 4-team tourney directly following March Madness. This is the only way to guarantee one of the über-sponsored schools wins an elite title every year, so all the marketing money in the world can be dumped into this blue blood event! Obviously, this will have to be endorsed by the NCAA. Doesn’t seem possible or realistic until you imagine what kind of “grant money” might be thrown in the pot by four shoe companies. It seems that there must be four elite shoe companies to make this work. My guess (in order): Nike, Air Jordan, Adidas, Reebok or Under Armour.
The entire scheme cements the futures of the elite shoe companies and the elite schools, while ruining college basketball in the process. Money rules.
Lines are being drawn in the sand now. Our future will be… The Adidas Jayhawks!
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@drgnslayr–interesting angle. Migrate to a 4-team BCS-equivalent tournament. Marginalize the Madness incrementally the way bowls were marginalized. Makes some sense. Some of what happens depends on if, how and when Nike and Adidas are merged/converged. This depends on whether a global holding company decides to move to merge them. This is all about controlling global apparel markets through the back door of petrobasketball shoes. The oil bidness apparently wants to take all apparel onto the oil standard, because they know energy is migrating off oil and onto LNG and hydrogen stored as Formic acid for hydrogen fuel cell electricity generation. The new Tesla 4-door proves electricity beats internal combustion hands down, just as Henry Ford and Thomas Edison said back in 1910 or so before the lead and oil monopolies reputedly colluded to kill Ford and Edison’s game changing electric car (note: Henry reputedly built his early cars to run on magnetos to avoid the lead monopoly’s lead acid batteries. Edison invented a different battery and the Ford-Edison electric car was to run on switchable battery packs at Ford-Edison service stations. But I digress. ) Global-petro-clothing is reputedly a critical step to underwriting the migration off oil based energy. Gotta soak up surplus oil to keep it from continuing to be used as a competitive energy supply for LNG and Formic acid stored hydrogen. It will take migrating the world off natural fibers and onto petro fibers (rayon, polyester, blends and new stuff) to even begin to soak up the supply. It takes global promotion to achieve that; that’s where sports come in, and basketball and tennis are the only two sports with shoes that can double as street shoes. And basketball is the more telegenic sport, so basketball and it’s globalization are the path and battle ground that must be shaped and won in order to enable migration from oil to LNG and Formica acid stored hydrogen for energy.
Marketing at this level has to occur through global trading blocks. The largest global trading block is the Commonwealth of Great Britain–the first or second largest private economic entity in the world. Wiggins is a Canadian. Canada is in the Commonwealth. Wiggins has a natural marketing tie-in to the commonwealth. Shell, BP and Exxon are reputedly basically contolled by the Crown of Great Brittain that in effect controls the Commonwealth. Wiggins’ unprecedented market value may stem from his unprecedented capacity for being marketed to the commonwealth at a time when the Crown of Great Brittain seems to be riding to a new peak of financial power, as USA struggles with insolvency. In short, Wiggins is probably worth all that someone like Lebron is, plus the additional sizeable increment of Wiggins marketing tie to the Commonwealth that Lebron lacks, plus the growing numbers of Chinese and Indian shoe buyers expected during his playing career, plus some increment for in part indirectly enabling the coming transition from oil to LNG and hydrogen. All opining and speculation without insider information, of course.
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Dang I’ve been gone forever i guess. How did I miss so many of your posts in such a short time. Nice having you on board, I’ve missed these reads.
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The $180M figure has been widely discredited as being completely and utterly unrealistic. Not even established megastars like Jordan or Tiger Woods get that kind of money.
Wiggins initial contract will likely be one order of magnitude less and the second will be considerably larger, depending on how he performs in the NBA and how marketable he is.
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Speaking of market potential, Yahoo Sports just posted an interesting take on Julius Randle’s biggest NBA limitation: his comparatively short wingspan.
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College athletics make both Nike and adidas good money but the real money for these two clothing and shoe giants are at the pro level.
Nike ( Beaverton, Oregon ) has an exclusive deal with the NFL. EXCLUSIVE. NFL = CASH. They have sponsorship deals with Man U and Barca, number 2 and 3 in top grossing sports franchises world wide, as well as other top clubs Arsenal, Man City, Juventus, and PSG. Nike has deals in place with players like Lebron, Jordan, Tiger, Rory, Cristiano Ronaldo, Didier Drogba, Rooney, Zlatan Ibrahimović, and Neymar.
adidas ( Herzogenaurach, Bavaria ) sponsors all of the NBA and the top grossing franchise Real Madrid CF. They also sponsor Bayern (no. 12 grossing franchise and own a 9% stake in the club) and several of the top (in a tv viewership/$$) nations Spain, Germany, Argentina, and Mexico. They are also the exclusive sponsor of MLS and NHL. They don’t have the fire power of individual contracts like their competitor by the do have big contracts with Beckham and D. Rose.
But the real money is in the NFL (Nike). College basketball is couch change compared to it. Of the top 30 grossing franchises world wide, the list is heavily seasoned in shoulder pads and helmets. There are a few MLB (Majestic Athletics) and football clubs (both adidas and Nike) but it’s an American football world. The top NBA team is at 23 (Knicks) world wide. Lakers are 30th.
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I admit I had a fantasy post… or is it?
Back in my day I would never have thought one day in the future I’d be watching the Tostitos Bowl!
The only thing I’m sure of is that big corporations will find more ways to weave in their interests into college sports.
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@Kip_McSmithers “the future Mr. Glitters, the future.”
The NFL is chump change compared to a world hooked on gambling on professional hoops and buying petro apparel.
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I meant, Mr. Gittes from Chinatown.
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@jaybate : It’s worth more than 10 million.
Here’s a piece about the world of gambling. Now that’s huge $ jaybate. USNews : Think Sports Gambling isn’t Big Money??
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After the great pyramids were built, the kings asked, “what should we have them build next?”
It’s a question that remained throughout time… when the Romans where asked, they responded with… “How about a place of combat? How about a sandy place to soak up the blood?” Hence, the term ‘arena’ was coined, and “civilization” has never been the same since!
So how will the shoe kings answer the question this time?
Jaybate?
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I was just looking at the image I used and it’s for football a few years back. Back in the days when t.a&m and that school to the east weren’t curse words. Coincidentally okie state vs K-State is one of the games that weekend. They play each other this weekend at the Hawktagon. And Kansas is right above our next opponent Whales Vagina State…
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@Blown–good to hear from you again. Hope your time away was re-creating for your soul. The Greek chorus continues.
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@REHawk–thanks for the Randle scoop. Quite interesting.
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@Kip_McSmithers–yes, gambling is the 10,000 pound T-Rex in the living room of sports. The numbers stagger and are growing exponentially with globalization 2.0 and the internet.
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@jaybate - I remember flying into Vegas with my dad at night… while we were looking out the window at all the lights he said, “do you think they built all that off of winners?”
I think gambling is so big no one has an idea of how much capital is tied up in it. So much is behind the scenes… and some cultures gambling is far more popular than here in the US… where the masses like to gamble on absolutely everything; sports, politics, royalty baby sex… everything.
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My prediction (which some of you may remember from my blog posts on our former home) is that the NCAA tournament will end in another 5-10 years when the NCAA loses its grip on the major colleges.
The Big Ten, Big 12, ACC, SEC, Pac-12 and perhaps the American will all break away from the NCAA and form their own collegiate division, complete with its own rules regarding recruitment, player benefits, etc. This is already nearly here, as the major players have basically torn the control of football away and created their own committee. In time, that committee will turn into the body that controls major collegiate athletics.
As it stands now, there will be between 70-80 “major colleges.” The SEC has 14 schools. The ACC has 15. The Big 10 has 12. The Pac 12 has 12. The Big 12 has 10. That’s 63 spots already taken, not counting the American. The schools that will join this new college athletic body will have to compete in the following sports - football, mens and womens basketball, baseball, softball, volleyball and track and field.
This new college athletic division will be heavily sponsored and that’s where the shoe companies, apparel companies, etc. come in. Right now the NCAA can’t do the deal because they have the veil of amateurism. But this new division will do that, and they will do it on an enormous scale. That’s where the money for paying stipends to players will come from - large scale sponsorships. And because there will be a limited number of seats at the table - as few as 65 or 70 - the marketing potential is huge.
So who gets the last several spots? Is the American in? Could Florida International nab a spot? What about San Diego State?
Ultimately, I believe we will see five 16 team conferences for a total of 80 schools. Even the conferences are tiring of seeing schools bouncing from league to league. This agreement will end that and settle the landscape.
The losers are obviously the mid majors in all of this. Leagues like the Missouri Valley, MAC, and Mountain West will miss out, and stand to lose their strongest teams to the new level. The winners will be everyone that makes the cut (yes, even the schools that are regularly at the bottom of their leagues). And of course, the sponsors, who will redouble their efforts, this time with the money on top of the table.
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Interesting fan,
Just about any scenario I’ve seen has KU as part of the new system-I guess something will morph sometime which is okay if KU remains relevant.
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I agree, interesting post, @justanotherfan !
I think we all feel like it is the calm before the storm. College basketball doesn’t exactly feel like it is on solid ground. We are all trying to catch our breath and adjust to recent changes; conference realignments, school media networks, network contracts, rules interpretations predicated by marketing interests, shoe companies dealing with schools and impacting in many ways through sponsorships at the college and pro level…
The one thing all of us can agree on: big money will decide the future direction of college basketball. Anyone arguing otherwise should have their head examined.
One correction to your post; the NCAA is NOT an amateur institution. The only amateur status is the title given to the athletes and is used to leverage power and control over their rights. In reality, the athletes are not amateurs… they are given valuable educational scholarships, room and board, and a monthly stipend. Nothing amateur about it, just call them what they are; “pros with a very-restricted pay cap.” When considering the disparity of what money is generated from their activities, you can debate if it is a form of regulated slavery. I’m not trying to open up that can of worms here… but just stating that the topic is debatable.
Why we don’t see even more direct commercialism with the NCAA? Because they know they’ve had an unfair advantage over college athletes, and that is going to end someday soon. Better legal representation is coming in every day for the athlete’s side. Big money won’t be able to stop the inevitable. Meanwhile, the NCAA is concerned about their public relations. They desire to mask the disparity between student-athlete, university and governing body. There is the place to use your word; veil!
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@drgnslayr You said it better and more truthfully than any one else ever has. There is a huge disparity between what the players get (a valuable educational experience, maybe) and what the NCAA and the universities get (Billions of dollars). This can’t go on forever.
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@drgnslayr so, this might be a stupid question, but will coaches and schools want this and approve? Or will there be no choice?
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@Crimsonorblue22 The way I see it, the universities will make sure there is enough money for the the coaches to be happy.
