“Millions of people around the world enjoy and follow the exploits of their favorite college teams engaged in sports,” Cosier says. “However, dedicated fans and viewer enjoyment don’t tell the complete story of intercollegiate athletics. For intercollegiate athletics to exist, the various programs must run as a business.
“Each of the basic principles of business management apply to the successful conducting of intercollegiate athletics activities – strategic planning, marketing, human resource management, finance, business law, external and internal governance, leadership, ethics and integrity, and communications.”
Ben Van Kammen, a continuous term lecturer in economics, also has developed an interesting course offering capitalizing on the interest in sports and its numerous applications to business.
Van Kammen’s Economics of Sports course blends the theories of microeconomics with examples from the professional sports industry. “It’s a big business,” he says.
Most of the topics Van Kammen covers in his microeconomics classes have parallels to professional sports, including labor markets, collective bargaining, mobility in changing teams and employers, payroll, taxation, monopolies and market competition.
“I want students to take economics away from it but in a way that motivates them a little bit more than a pure theoretical economics class does,” he says. “Instead of using examples of growing apples and corn, let students learn the same stuff you should learn from a couple of microeconomic theory courses but in a way you’re more motivated to apply it to something you like.”
Van Kammen’s idea of mixing economics and sports started about 10 years ago as an undergraduate student at University of Wisconsin-Milwaukee. The subject has steadily gained more legitimacy in the academic community, even earning its own Journal of Economic Literature code.
If you’re looking for help with your fantasy leagues, however, Van Kammen’s class isn’t the right elective. “It’s not a sabermetrics fantasy sports class,” he says. “I have that on the first page of syllabus.”
Instead, Van Kammen says students thrive in two subjects they find interesting: “The theoretical side of economics and the applications to something I think they’re already interested in with the sports.”
Playing for profit
Alumnus Clay Graham, who earned a BS in mathematics and economics from Purdue in 1964, has taken his expertise in analytics to the bank as the manager of a highly successful sports gambling hedge fund.
He has also applied it in academia as an adjunct professor of management at DePaul University, and in industry as the chief analytical architect at Advantage Analytics LLC.
One of Graham’s papers on the topic, “Diamonds on the Line: Profits through Investment Gaming,” won top honors in its track at the 2015 MIT Sloan Sports Analytics Conference.
“Ever since Alexander Cartwright put his New York Knickerbockers Baseball Club on the field in 1845, there have been those on the sidelines wagering on the outcome of the day's contest,” Graham says. “Integrating baseball game modeling with analytically based gambling allows for these two elements to be exploited with a single objective: profiting from the marketplace inequities between the game (production) and betting markets (price and lines).”
Simple enough for quant jocks, but what’s the payoff?
According to Graham’s paper, only 23 percent of all games even warrant an investment. Of those worth betting on, however, his formula predicts the winner 68 percent of the time with an average return on capital at risk of 35 percent. Over a period of four months, gamblers using his methodology would grow their bankrolls by a factor of fourteen.
Well played, indeed.
