Saturday, April 26, 2008

A Monetary Thing

"Inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output." Milton Friedman

Inflation is easily defined as too much money chasing too few goods. In the world of big time college football the scares good is a combination of a home game and and the just as important a win. Given this and the reduction is the stigma of playing down a division the price for a D-1AA opponent has gone up dramatically over the past few years. Recent announcement by West Virginia University and Florida State are interesting in that the price they are paying is more than the going rate for a guaranteed win against a D1 school in recent memory.

Consider this from 2006:
NMSU (New Mexico)was to receive about $300,000 for the OSU (Oregon) game. Its reported guarantee at Auburn is nearly three times that amount.
Also see John Auburn Strikes Again

FSU will open the 2009 season against the Bears of the University of Maine and pay them $450,000 according to the Bangor Daily News And the same weekend WVU will open with Liberty University at a price of $365,000 (Mountaineers add Liberty to their 2009 football slate)

If we assume that the college football world no longer looks at the D-1AA with disdain might we see a fall in the price in the D1 body bag game. As we learned in Econ 101, if you were not sleeping that is, that while increased demand will cause prices to rise initially as more supply is brought to market, attracted by the higher price and consumers make substitution prices will fall.

In the case of college football the prices will fall not back to previous levels but you will not see Auburn paying $900,000 for a visist form NMSU.

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