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Source link: http://archive.mises.org/11224/the-tiger-crash/

The Tiger Crash

December 11, 2009 by

I just have one question: What if Tiger Woods stops playing golf?

This is not the forum to recap the media-fueled scandals that have enveloped Woods since Thanksgiving. This is an economics blog. So let’s talk economics.

Much like a Fed-induced credit bubble, the mainstream press has inflated a Tiger bubble. Built mostly on a foundation of tabloid-level reporting, the higher-paid “journalists” and pundits on the food chain perform two basic functions: (1) repeat the tabloid reports, and (2) continually insist this is a major story and that everyone must pay attention. It’s easy to condemn the ethics of, say, ESPN for relying on tabloid reports, but there’s clearly consumer demand for tabloid gossip about well-known celebrities. The economic question here is, Why should ESPN pay expensive writers like Rick Reilly ($2 million per year) and Bill Simmons ($1 million per year) to pontificate about a subject where the cheap tabloid reporters are at least three steps ahead of the actual story? Where’s the value in paying a premium for writers who do little original reporting and contribute primarily to self-sustaining hype?

Reilly, Simmons, and their top-columnist brethren are the $3 gourmet cupcakes of modern media. Sure, they might have fancy resumes and ingredients, but they’re still just cupcakes. In the long run, more consumers will get the same sugar rush from 50-cent cupcakes from the grocery store.

Since the gourmet cupcakes don’t contribute much to actual profits, all they bring to the market is hype. They can relentlessly pound the message about how big this story is – Simmons comically labeled the “Tiger Zoo” as the “sports story of the decade” – but eventually, customers lose interest in mere hype.

This is what happened during the last sports-media-fueled bubble – aka steroids. The top press dogs spent years berating athletes and fans about the importance of hunting down every suspected steroid user. (Reilly famously dared a former Chicago Cubs player to pee for him on-the-spot.) But there was never any interest of widespread consumer interest in the story. Baseball attendance continued to grow while “tell-all” steroid exposes came and went from the bookstore shelves.

And this leads back to my original question: What if Tiger Woods stops playing golf? The current bubble inflation is predicated on the belief that this will be an ongoing story for years, as Woods resumes his career goal of winning more major championships than Jack Nicklaus. (Woods is currently four behind Nicklaus.) But Woods can burst that bubble by simply retiring and spending the rest of his life in comfortable seclusion.

Not only would this collapse demand for the gourmet cupcakes’ “advice” on how Woods must live his life, it would also trigger a contraction of the overall consumer demand for professional golf. The same press that’s now trying to destroy Tiger spent years building him up as an unassailable economic force. Indeed, there’s plenty of empirical data to support the notion that Woods’ mere presence elevates the PGA Tour’s income and television ratings. Overall playing purses are substantially higher now than when Woods became a PGA Tour member.

If consumers are deprived of the world’s best player, ratings and revenue will suffer – and so will the media establishment that drove him away. It has nothing to do with journalistic “ethics.” It has to do with the seemingly quaint notion that lower demand for golf means lower demand for highly-paid media types to cover golf (or in this case, cover Tiger Woods.)

But such long-term thinking is beyond the capabilities of the gourmet cupcakes. After all, they weren’t hired for their special analytical skills or insights; they were hired to regurgitate the work of others and generate self-sustaining hype. Which is a great gig…while it lasts.

{ 19 comments }

Randy December 11, 2009 at 3:17 pm

Tiger Woods Shrugged!

I love it.

Capn Mike December 11, 2009 at 3:43 pm

Randy,

I can’t top that!!!!!

Well Done!

David Davis_libertarian Alliance December 11, 2009 at 4:05 pm

A most sensible analysis. Another one, about the origins of – and fuel for – the underlying taste for prurience which currently infects the Anglo-Socialist Popular Press/Media, would be welcome.

It was interesting that, suddenly, 12,387 young women, all looking and sounding substantially alike, “came forward” together within a very few days really, to identify just one man – but a very rich and also sociologically-vulnerable one.

When I was a boy in the 1950s in London, I remember that all people I know, from parents/friends’-parents/teachers/local worthies/whatever, to whatever, all used to frown on what we called “yellow journalism”: which is to say, deliberately managing a designed set of events and people to create a particular story with a particular angle.

What the whole “Tiger” Woods (is that really his name? Then he’s always been asking for trouble!) also shows is the folly of doing two things at once – _if_ the allegations are actually true:-

(1) Letting your PR people and global agents cultivate, for you, the image of an immaculate sinless professional of a globally-admired and popular past-time, with an exemplary and chaste familiy life (which may also be in fact real) while also…

(2) Enjoying the obviously delightful, easy-to-come-by, and deliciously sexy and thrilling fringe-benefits of being one of the richest, most heroic and most identifiable (and powerful, in the sense of “someone admired whom you’d like to be seen with”) men in the world.

Unless you are called John Fitzgerald Kennedy, you _/will/_ get grassed up…one day, by media-types who won’t back off when asked nicely.

I have never doubted that the world contains an inexhaustible supply of pretty young women, often in straitened circumstances for whatever reason, who would take any opportunity to rub up against such men, in the (correct) belief that some money will fall off.

Why else would they become, for example “Cocktail Waitresses”, or “Night Club Promoters”? (If a Night Club’s good, why does it need “promoting”? If it’s bad, the business won’t be repeat and it’ll shut.)

David Davis_libertarian Alliance December 11, 2009 at 4:08 pm

I also agree with “Randy” (see above) that the poor blighter should simply “shrug” – I presume you did mean in a Randian sense? (bad pun, sorry.) ;-)

steve December 11, 2009 at 5:25 pm

He could go the opposite direction. Continue to play golf, and chat up comely young women while the cameras are rolling. Then when asked about it by some blowhard reporter just joke. I always wanted to be in the NBA. Might hurt his endorsements, might not. I imagine he would still be making a lot of money. That’s what I would do assuming I still liked to play golf and women.

Ted Amadeus December 11, 2009 at 5:31 pm

To the flawless analogy: If Woods was as smart as he is legend to be, why doesn’t he have his press agent and lawyers play the “RACIST!!!” card in his defense? It always seems to work for Obama.
To the reality behind it: Tiger’s not going to be the only one “shrugging” if the elected cupcakes keep using tommy-rot excuses like health care reform and frauds like global warming to pick everyone’s pocket. Licensed gov’t theft destroys profitability which ruins incentive to work: Why labor when mooching is more profitable, and you can get SSI for “attention deficit disorder”!?

S.M. Oliva December 11, 2009 at 5:57 pm

Damn. That was fast.

http://web.tigerwoods.com/news/article/200912117801012/news/

“After much soul searching, I have decided to take an indefinite break from professional golf.”

Hard Rain December 11, 2009 at 6:09 pm

He’ll be back once the storm blows over. America loves an underdog comeback story.

Walt D. December 11, 2009 at 6:14 pm

What if Tiger Woods stops playing golf?
He just has!

Matthew December 11, 2009 at 6:34 pm

I find your characterization of this as a bubble to be troubling. Do you mean it in a negative sense, that its lack of sustainability somehow makes it a detriment to existence, which people never wanted? Or is your discussion of it value-free, sans-judgment, just observing that the resources that have been allocated to it are likely to peak and decline in the near future?

It’s the possibility that you might mean the former that troubles me. If that is indeed the case, your own distaste for the topic is apparent and you certainly have the right to it, but to lump it into the same group of phenomena as “Fed-induced bubbles” is dangerous.

Whereas the Fed-induced bubble was the result of invasions of property rights and fraud, no such thing occurred to create the Tiger bubble.* Lots of people want to hear about Tiger Woods. The media is responding to its incentives by giving that to them. What’s wrong with that?

If this scandal is a bubble just because it’s going to peak and decline, why don’t we call typewriters, horse-and-buggies, or any other aspect of human existence that will come and go a bubble?

* I suppose you could argue that regulations on the media are invasions of property rights in the same vein, but I don’t think they’re material. No one is being forced to report on Tiger, and there are plenty of unregulated media outlets for those who don’t care to watch the networks.

S.M. Oliva December 11, 2009 at 6:51 pm

Matthew –

Thank you for your comment. It’s the latter. Obviously the Fed comparison is a simile, not a metaphor.

Where I argue this is different then “any other aspect human existence that will come and go” is that you have a distinct group of professionals commanding a premium price for an inferior product; the Woods story is simply exposing this fact and there’s a substantial risk to those professionals that demand for their services will suddenly collapse.

It’s not about whether it’s ethical to report about Woods’ life. It’s about whether media organizations like ESPN will continue to pay seven-figure salaries for pundits who can’t out-perform reporters at the National Enquirer and TMZ.

Conza88 December 11, 2009 at 8:28 pm

The next obvious question is… does Tiger Woods read Mises.org? ;D

Patrick December 11, 2009 at 8:38 pm

Mr. Oliva,

I think you are a bit off in your analysis. As a regular reader of Rick Reilly and a huge fan of Bill Simmons work, I completely disagree with your assessment that their writing is not worth the large sums of money that ESPN pays them. The reason that they attract so many readers, and thus merit their large salaries, is not because they break news stories, but because both are tremendously talented sports writers and offer unique, and often funny, commentary on various sports subjects. Bill Simmons is in fact extremely popular exactly because he doesn’t break any news. He does most of his writing based off of what he sees watching sports on television or in the stands at a game. He attracts readers for his pop culture analogies, often hilarious mailbag columns and his many various theories about sports, such as the “Ewing Theory.” To say that his writings don’t add value is like saying that current events commentary from mises.org or on LRC is useless. We don’t read because they are the ones to break the news; we read because they offer commentary from a perspective not offered by those who do break the news or an opinion on the news that we may not have thought about.

In fact if number of readers (people consuming the writing) is the metric used to judge the value of an authors work, I think the over 1 million people that follow Bill Simmons on twitter (http://twitter.com/sportsguy33) say a tremendous amount about how much value his non-news breaking writing produces.

Magnus December 11, 2009 at 10:57 pm

Tiger’s market is middle-aged men who belong to country clubs. It’s a slightly obscure marketing demographic, since most media tend to target younger people. Men in this age and income group get advertised to for big cars, investment companies, and erectile dysfunction medications. Tiger himself is much younger than the core of his target market.

His target market won’t care. Middle-aged golfers are generally over-represented when it comes to functional alcoholism and failed marriages. If anything, his target market is more envious of him than ever.

I could see this as a case of bubble-and-crash if it were based on the usual pattern of rise to superstardom followed by obscurity. The typical one-hit-wonder pop star or movie starlet comes to mind as a better example of the overvalued commodity whose street price suddenly goes bust. Tiger Woods’s media popularity is based on genuine, measurable performance as an athlete, not on purely subjective favor as an entertainer. His current tale of woe is more a matter of soap-opera story lines than a bubble.

George P. Burdell December 12, 2009 at 3:43 pm

The reason that reporters are spending so much time on the Tiger Woods story is because it is low-hanging fruit. Why do your own reporting when you can make several posts a day rehashing the same story and get payed all the same. Besides, I doubt many of these reporters have enough spine to “let” someone else run with a story (even as dubious and irrelevant as this one) for fear of letting some other reporter out “scoop” or report them.

As for the bursting of the Tiger “Bubble” hurting the reporters and the PGA Tour, none of these reporters have ever even considered that fact. Instead, they are already talking about how grand it will be when Tiger returns, family mended, to win a grand slam event and complete his “comeback.” Of course, Tiger never went forth so that he would need to comeback, but that is beside the point. Chances are, Tiger will return to golf, it will be touted as the most glorious comeback since MacArthur returned to the Philippines, and ratings will be higher than they have ever been before. Of course, like with MacArthur, (practically) no one cares about the casualties resulting from this malicious expedition.

I will miss watching Tiger play golf. When, and if, he returns, I will watch for the same reason that I always have, because I, as an avid golfer, never cease to be amazed by the other-worldly nature of the shots that he executes on a routine basis.

Briggs December 12, 2009 at 7:44 pm

There seem to be very few of us who refuse to believe that we should care where Tiger puts his 3 wood.

As noted, the media keeps explaining to us that this is a huge deal and that we must care. Oddly, I think most people do care. Whether they actually care or just care because they are told they are supposed to care is a mystery to me.

I half-wish that I could say that I don’t care because of some high minded concern for his privacy, but thee fact is that I just don’t care for any reason.

Shay December 12, 2009 at 7:56 pm

I think the previous media circus was over a much more aptly-named subject: “Balloon Boy”. That one sure popped quickly as well.

Mark December 12, 2009 at 10:28 pm

The only articles I’ve read about Woods are on this site. This might be the best comment I’ve read all year: Tiger Woods Shrugged!

htran December 12, 2009 at 11:46 pm

I agree with Patrick.

I don’t know about Rick Reilly (don’t read his stuff), but Bill Simmons is very entertaining to read. A significant amount of his stuff isn’t even about sports, but more in line with social commentary, which is in line with the Woods story.

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