College Football's Big-Money, Big-Risk Business Model

College Football’s Big-Money, Big-Risk Business Model – WSJ.com.

The conclusions in this WSJ article drawn corroborate what Cornell economist Robert Frank has been saying for years – that big-time college sports is a winner-takes-all game, and that it is a losing proposition for the vast majority (apparently > 80%) of colleges and universities that participate in this competition.

I thought Stanford economist Roger Noll’s comment was interesting – that “It’s obvious that intercollegiate sports are less popular in the rest of the country than they are in the Midwest and in the South.”  Having taught for five years at Penn State, Noll’s point was not at all obvious to me – I guess it all depends upon how you define “Midwest”.

I also found the following statement interesting: “The success of this marriage between broadcasters and college football will depend on a set of assumptions—one of them being that the current structure of the cable television business won’t change.”  The article goes on to point out an important demographic trend which suggests otherwise – people (especially younger people) are cutting the cord in droves.  No wonder this is happening, considering how expensive cable is (the article lists an average price of $135 per month).

So in a nutshell, it seems like the business model that “Big Football” is based upon is pretty much doomed; that is, unless Big Football figures out a way to monetize itself in a cord-cutting world…

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College Football’s Big-Money, Big-Risk Business Model

College Football’s Big-Money, Big-Risk Business Model – WSJ.com.

The conclusions in this WSJ article drawn corroborate what Cornell economist Robert Frank has been saying for years – that big-time college sports is a winner-takes-all game, and that it is a losing proposition for the vast majority (apparently > 80%) of colleges and universities that participate in this competition.

I thought Stanford economist Roger Noll’s comment was interesting – that “It’s obvious that intercollegiate sports are less popular in the rest of the country than they are in the Midwest and in the South.”  Having taught for five years at Penn State, Noll’s point was not at all obvious to me – I guess it all depends upon how you define “Midwest”.

I also found the following statement interesting: “The success of this marriage between broadcasters and college football will depend on a set of assumptions—one of them being that the current structure of the cable television business won’t change.”  The article goes on to point out an important demographic trend which suggests otherwise – people (especially younger people) are cutting the cord in droves.  No wonder this is happening, considering how expensive cable is (the article lists an average price of $135 per month).

So in a nutshell, it seems like the business model that “Big Football” is based upon is pretty much doomed; that is, unless Big Football figures out a way to monetize itself in a cord-cutting world…

Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

by Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru  –  #18609 (AP CF)

Abstract:

Yes, it did.  We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity.  Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams.  We find that adherence to the act led to riskier lending by banks:  in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often.  These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks.  The effects are strongest during the time period when the market for private securitization was booming.

http://papers.nber.org/papers/W18609