NBA And Taxes

Here is an interesting article on how taxes plays a critical role in shaping of NBA’s recruitment and team performance.

From Bill Bradley of the SacBee (Hat tip SM Oliva Mises Blog)

“The absence of state income tax in Florida and Texas is a big reason the Miami Heat and Dallas Mavericks can be active in free agency.

“Compare that to the New York Knicks, whose players have to pay combined state and city income taxes of 12.618 percent. That means Amar'e Stoudemire's five-year, $99.8 million deal with the Knicks is worth about $12 million less than if he had signed with the Heat.

“While athletes are taxed by other states when playing road games, they come out well ahead if they live in Texas or Florida.

“Yes, these Florida and Texas teams had to have salary cap space to get involved in this circus. Yes, they wanted to improve their rosters.

“But think about this: There are five NBA teams in Florida and Texas. Those are the only teams without state income tax. All five are among the most competitive in the league. (bold highlights mine)

Bottom line: taxes function as a major influence on how resources or manpower are allocated, and this is obvious even in sports!

Philippine Sports: The Craze For Basketball And The Lack Of Interest In The World Cup

``Almost everywhere on the planet, people on Friday were stocking up on beer and food and readying themselves for long hours in front of the television set as football’s World Cup mania hit fever-pitch with the opening matches in Johannesburg, South Africa.”

This is from the Inquirer, who observed of the Filipinos’ lack of interest with the international football games.

The same article rationalizes such indifference...

``Fegidero said the continued failure of the Philippines to compete in major tournaments abroad had been the main reason football had not picked up here.

“We’re nowhere near the level of the world’s best teams, even in Asia, which is considered a weak continent in football,” he explained.

``The Philippines has never qualified for the World Cup since 1930, when the quadrennial meet began.

``This year, the country was only one of four countries that did not even bother to join the qualifying series for the tournament. The other three were Bhutan, Brunei and Laos.

“We don’t have the programs that can produce good players who can compete internationally,” Fegidero said. “We lack participation in international tournaments and local leagues.”

The Philippines has been obsessed with basketball, a sport, which unfortunately, we fail to excel in and continues to see rapid deterioration in performance based on the global or even regional competition standards.

The losing glory of Philippine men's basketball performance in the Asian Championship and the Asian Games, shown in the above table, where from the triumphant days in 60s to the early 70s, our competitive ranking continues to plunge, as time goes by.

But as consolation, at least based on South East Asia, we still remain dominant. (both charts from wikipedia) But the question is, given the underlying trend, for how long will this last?

Maybe we should ask first why Filipinos have been so fixated with a sport which we can't seem to win internationally due to structural reasons (lack of height)?

Yet this has been the case in spite of the active "participation in international tournaments and local leagues" in basketball, opposite to the reasoning of the expert as quoted above by the Inquirer article.

To consider, Philippine basketball teams have been complimented with Fil-Ams or Filipino Americans to fill in on the endemic height handicap, yet this has not been enough to reverse the degenerating trend.

The point is, it doesn't seem to be the lack of programs that determines the lack of acceptance of the World Cup. Instead, it is the lack of incentives brought about by the undue obsession on an unviable or unwinnable sport (basketball) and the attendant misdirection of investments that continues to feed on such delusion.

I see three reasons why Filipinos can't move away from basketball, in spite of the harsh reality that this is a sport which we simply can't compete in globally.

One, it seems a form of status signalling, which misleads Filipinos to believe that basketball is an irreplaceable cultural or social norm that needs to be conformed with. Otherwise said, to be IN (or to be identified as Filipino) means to patronize basketball in one way or another.

Second, it is part of the Groupthink fallacy, which Filipinos seem so entranced with.

According to Gloria Allendorfer Anderson, PhD., ``One of the dangers of our world today is group-think. It occurs as a person lets identification with a group cloud their reasoning and deliberations when reaching a position on a given issue. At best, it is a rhetorical device. At it's worst, it can be a very harmful replacement for sensible thought. In fact, it is considered one of the common fallacies of modern society." (emphasis added)

And groupthink is part of what shapes social or cultural norm, adds Ms. Anderson,

``When individuals identify with the state where they live, or a country of their heritage or origin, they relate to other individuals from the same state or country in their views of the world around them. This type of group identification indicates that they are part of a group of people who share the same life experience."(emphasis added)

Lastly basketball is a political sport or a sport used by politicians to attain political goals.

Basketball courts are one of the pet projects for pork barrel spending of local officials bent on achieving "accomplishments" for reelection or posterity or for financial purposes.

According to Gary W. Elliott,

``This year each of the 214 congressmen is allocated 60 million pesos (roughly USD1.5 million) for spending at his discretion, and each of the 24 senators receives twice that amount. With no real oversight or accountability, this institution is rife with corruption. Some of the funds intended for priority development projects in the congressmen’s districts, such as health care, clean water, and poverty alleviation, are typically spent on trivial projects which contribute nothing to the social and economic development of the country. Common examples are cement outdoor basketball courts and “waiting sheds,” small awnings or covered benches beside roads, where those waiting for a bus can get out of the rain. Large signs laud the congressman for spending government funds on the project (instead of just pocketing them?). Such projects are often accomplished just before elections, so signs touting the congressmen provide free campaign advertising for those seeking re-election." (bold highlights mine)

Since a basketball court has more player density per unit area, adding more courts on the local level draws in greater number of people to the sport. One may say that this is an example of Keynes' misinterpretation of Say's law where "supply creates its own demand"

So massive grassroot political investments in basketball courts impels more patrons relative to the other sports, hence more patrons translates to cultural acceptance, and the unwarranted fixation to basketball, in spite of the inherent handicaps, in terms of global standards. So goes the feedback mechanism driving the dynamics of basketball as a political sport.

So in my view, domestic politics represent as one of the key obstacles (if not the key hurdle) to the lack of diversity of Filipinos to engage in other more internationally competitive sports such as football.

Olympics: Trend of Breaking Records Accelerates! What drives them?

From the Economist,

``TUMBLING world records are part of the Olympic experience, but just how much have swimmers or runners improved over the past 100 years? In Beijing, new records have been set in the most glamorous events in athletics and swimming—the men's 100m sprint and freestyle. Jamaica's Usain Bolt cruised to victory, taking his own 100m sprint world record down by three-hundredths of a second to 9.69 seconds. In the century or so since official records began, the quickest time has fallen by just under a second—a 9% improvement. But in the pool, Australia's Eamon Sullivan covered 100m in the heats (although he lost in the final) in a world-fastest time of 47.05 seconds, 19 seconds (and 28%) quicker than the record-holder of 1905."

Courtesy of the Economist

With these trends here are some questions we’d like to know…

-Has demographics or world population growth been a significant contributor to these developments?

Courtesy of Franklin Institute Science Museum

Or more people equals better odds for outperformance?

-or has rapid and sweeping advances in technology or “sports science” (sports gears, equipments, arenas-e.g. pool design, scientific training etc…) been the major driver?

Example, this from the New York Times (underscore mine), ``As swimming becomes more popular, it attracts better athletes, who often stay in the sport for more than one Olympics and have access to increasingly sophisticated sports science. Swimmers who once concentrated mostly on endurance now spend up to 50 percent of their training on refining the technical aspects of kicking, pulling, breathing and body position, said Genadijus Sokolovas, director of sports science for USA Swimming….

``American swimmers here are accompanied by four sports-science experts. Each race is videotaped. Immediately after a race, each swimmer has an ear pricked to test for lactic-acid levels. After a warm-down swim, video analysis is made immediately available to monitor stroke counts, distance per stroke, split times, and the biomechanics of takeoffs and turns.

Another example (HT: Forbes’ Josh Wolfe) Phil Mickelson’s Congressional testimony on the importance of Math and Science (emphasis mine)``I use math and science every day, and it's not just adding yardages to the pin. I actually practice based on statistics. I use course management based on numbers. For instance, I know that my margin of error is plus or minus 5 or 6 percent. So if I have a 200 yard shot, 6 percent of that is going to be 32 yards off line - that's going to be my margin of error. And there's even more science involved in equipment I use. Launch angles, spin rate, loft, deflection, initial velocity, the transfer of energy. I continually work with companies like Callaway and some of the most technical design processes to optimize the performance of my clubs.”

“I use statistics to maximize my practice. I do a drill with 3-foot putts. And I can make 100% of them. But at 4 feet, it's 88%, at 5 feet 78%, and at 6 feet, it's only 65%. So while I may not be wasting my time trying to add 20 yards to my drives, what I really need to do is hit my chip shots within 3 feet of the hole. That's the best way to lower my score."

-or has the global political economic dimensions of Olympics (globalization’s role-e.g. training abroad or migration trends; investment or financing of participants a function of markets or of government?; type of government and or social acceptability etc..) played a major role?

The Socionomics of the First Philippine Olympic Gold Medal-Thank You Manny Pacquiao

``Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.”-Milton Friedman (1912 –2006), an American Nobel Laureate economist and public intellectual

The Olympic season is upon us.

What more is there than to speculate on whether the Philippines will attain or harvest its first ever dream gold medal. And I believe that the time is ripe where boxing among other sports will most likely deliver the goods. And mind you, we may be speaking of more than just one medal.

Although I had been an aficionado during the era of Muhammad Ali and Sugar Ray Leonard, I haven’t followed the sport enough to know the chain of events since. Candidly speaking, not even much of the recent string of triumphs by our legendary Manny Pacquiao (until this article) or of the composition of our national team for the August Beijing 2008 Games.

The online Wikipedia encyclopedia says that the Filipinos have had a disappointing record of only 5 medalists throughout the years: 2 silver-Anthony Villanueva, Featherweight in 1964 Tokyo and Mansueto Velasco, Light Flyweight in 1996 Atlanta and 3 bonzes:-José Villanueva - Bantamweight 1932 Los Angeles, Leopoldo Serantes - Light Flyweight 1988 Seoul, Roel Velasco - Light Flyweight 1992 Barcelona.

These despite some 30 world professional boxing champions past and present; the noble list of Philippine boxing greats from boxrec.com -Pedro Adigue Jr., Rene Barrientos, Bobby Berna, Rolando Bohol, Frank Cedeno, Eric Chavez, Florante Condes, Roberto Cruz, Nonito Donaire, Morris East, Flash Elorde, Luisito Espinosa, Joma Gamboa, Ceferino Garcia, Eric Jamili, Tacy Macalos, Manny Melchor, Small Montana, Rolando Navarrete, Donnie Nietes, Manny Pacquiao, Rolando Pascua, Dodie Boy Penalosa, Gerry Penalosa, Erbito Salavarria, Jesus Salud, Malcolm Tunacao, Pancho Villa, Bernabe Villacampo and Ben Villaflor.

Of course one may argue that professional boxing and amateur boxing are worlds apart. This may somehow be true but overall the incentives from the expression of social mood could be an indicator of the sport’s likely bright future.

There are 3 main factors why I think the elusive Philippine Olympic gold medal in boxing will be within reach hopefully this August at the Beijing 2008 Games:

1. Social Acceptance

Prior to Manny Pacquiao’s glory, boxing as a sport has been mostly associated with the lower levels of the social strata. Pacman overhauled this image. Today, the proliferation of boxing gyms even within the rich enclaves (yes I have seen a gym at a hotel in Ortigas) have virtually closed the gap of societal participation in the sport.

This means that with more people-regardless of the income or social class-getting connected or involved, structural support (financing, training and etc.) for the sport is expected to mount.

2. Economics of Boxing and Wider Access to Financing.

Of course boxing is not only a sport, it has become an industry.

Aside from prestige or fame, Pacman’s humongous prize earnings, plus the ancillary fees such as pay per view, advertisement or sponsorships, merchandising, appearance and others (I suspect that these have even grown more than the prized earnings) should be another incentive to draw in more participants (players, trainers, coaches, investors, financers, media coverage etc.).

Of course Pacman signifies a statistical “fat tail”, whose feat will unlikely be replicated soon. The fact that he joins the ranks of Sugar Ray Leonard, Oscar de la Hoya, Roberto Duran and Floyd Mayweather Jr. in capturing championships in four weight divisions, the Pacman has become a legend in his own right and importantly one for the WORLD sports history books. What prestige!

The point is that the economics of boxing has shown its potential rewards in both tangible and intangible aspects as powerful incentives enough to attract a larger segment of participants. The Pacman model now becomes a sizeable magnet for the industry’s growth!

In contrast, in relative terms, Billiards, another sport where the Philippines have excelled internationally, has shown similar bandwith (of social acceptance and economics), but whose incentives (not included in the Olympics, lesser degree in terms of price money or fame or world audience relative to boxing) have not been as compelling enough to generate sustainability to the same level (as seen by the diminishing billiard pool outlets). Nevertheless, we are glad to see a continuing stream of supply of world billiard champions.

And this burgeoning economics of boxing has been emblematic with the sprouting of boxing gyms nationally. In short, the industry/sport now has not only garnered the social support but a wider reach or access to capitalization.

When finance greases the wheels of the industry/sport we expect a boom to follow with attendant results.

Importantly this also shows that private initiatives and not of government (in contrast to the conventional thinking) will drive the Philippines’ realization for world boxing supremacy-and our Olympic gold(s).

3. Plentiful Supply of Talents

As we earlier mentioned the Philippines has a cornucopia of boxing talents even during times when the sport was not as socially diffused as it is today. The 20+ champions (prior to Pacman regime) and 5 Olympic medals during those scarcity times are enough credentials to state of the endemic supply of champion quality boxers.

The snowballing economics fueled by social action will improve on the scale and quality of participation aside from increasing the pool of available highly qualified candidates for the championship class.

If I am not mistaken this marks the first time in Philippines sports history where we have four simultaneous incumbent world champions as of this writing, specifically Manny Pacquiao, Nonito Donaire Jr. IBF Flyweight, Gerry Penalosa WBO Bantamweight and Donnie Nietes WBO Minimumweight. This is a testament to the progressing dynamics from a booming boxing industry.

Of course in the games there will be other factors involved such as acclimatization, conditioning, the quality of opponents, judge biases and plain ol’ lady luck…among other variables.

The important thing to remember is that the greater the caliber or quality of our players emanating from the above dynamics, materially increases the odds for the realization of the long sought after gold medal/s. To my intuition, this dream could come into fruition by next month at the Beijing games.

To our Olympians (boxing and non boxing representatives), it's time to Go for Gold!