Joe’s Notes: Why Jerry Reinsdorf and Politicians Don’t Behave Strategically

I promise this isn’t going to be political. It’s about strategy, and it’s going to feed into a comparison I think is helpful for the broader point we’re trying to make:

Kamala Harris’s choice of Tim Walz as her running mate was a surprise, at least compared to where prediction markets viewed the situation a week ago. Why was it a surprise to prediction markets in particular? Because those who bet in prediction markets tend to think strategically, and Tim Walz is a strategically unsound choice. All available evidence suggests that VP picks are nearly meaningless to the outcome of a presidential election, with the lone proven impact that they tend to supply a little bit of a boost in the VP candidate’s home state. When we say little, we mean it. Nate Silver, the most proven statistical modeler of these elections, has the impact at less than one percentage point in the state’s final margin.

Barring something highly historically abnormal, then, the VP nominee can only change the outcome of the election if the election comes down to one state, if that state is their home state, and if that state is decided by one percentage point or less. This is very unlikely, maybe a 1-in-30 situation if that, but it’s the strategic calculus that led many bettors to expect Harris to choose Josh Shapiro, the highly popular governor of Pennsylvania. National polling is close, Pennsylvanian polling is close, and Pennsylvania has a lot of electoral votes. The election coming down to Pennsylvania is unlikely, but it’s realistic. The election will not come down to Minnesota. To cite a similar situation from the world of baseball: Harris had Zack Britton in the bullpen, but she went with Ubaldo Jiménez instead. The difference in win probability is marginal. But the choice is strategically surprising.

As was possible with Buck Showalter in that 2016 Wild Card Game, it’s possible Harris had information bettors didn’t have. It’s possible she knew something about Shapiro or something about Walz that dramatically changed the situation. More likely, as we believe happened with Showalter in 2016, she went against the strategic recommendation. Like a coach punting on 4^th-and-1, or like Alex Cora leaving Wilyer Abreu in to face a left-hander the other day, Harris went with her gut.

We aren’t here to criticize or praise Harris’s choice. She had more information than we have, and the choice was hers to make. But if winning this election is the most important thing to her, Harris took a risk. She acted inefficiently. Does she know this? Does her party?

The U.S. Presidential Election is fundamentally an inefficient market. It’s our only national election, it only happens once every four years, it’s immensely complicated strategically, and there are generally only two teams with any chance to win. Imagine playing chess, except you only got to do it 14 times in your adult life and instead of one game of chess it was 51 games of chess, each on a different board, all played simultaneously against the same opponent. There would be optimum strategies, but would you find them?

You could prepare ceaselessly. You could run simulations. You could play a lot of one-on-one games of chess. But real-world data would be both too sparse (once every four years, remember) and too immense (51 games at once, remember) to give you clear answers on the best way to approach the task. Even Silver, the most proven statistical modeler of these elections, never knows on Election Day who is going to win. He can only give a probability.

What really makes these elections inefficient, though, is not their quadrennial cadence or their 51–games–at–once design. What makes them the most inefficient is that it’s always the same two players. Again, we’re not trying to be political here. This is not a critique of the two-party system. We care much more about how our country is governed than about the strategic soundness of our presidential candidates’ campaigns. But the fact of the matter is that in a monopolistic industry, inertia is massive, and when each player gets to keep playing the game no matter how they perform, winning becomes less of an incentive. Other focuses get in the way. Other priorities emerge. It becomes easy to justify what sounds nicest to one player rather than doing the thing likeliest to help that player win. This is why the two biggest political parties in America don’t always maximize their chances of winning the thing they value most.

This brings us to American professional sports.

The White Sox, as we continue to mention, are in the midst of an historic losing streak. Tonight, they might set the American League record. Across town, the Bulls are trying to trade two of their highest-paid players, and they can’t find anyone to take either of them. Beyond playing in Chicago and being two of the worst-run franchises in America, what the Bulls and White Sox have in common is their owner: Jerry Reinsdorf. That’s why they have that “worst-run franchises” piece in common. Jerry Reinsdorf is the man running franchises the worst.

Sports are played much more regularly than once every four years. Individual games are much less complex than a presidential election. But as with politics, there aren’t many competitors in American professional sports. In baseball and basketball, there are only 30. 30 franchises, and no matter how they do, they get to keep playing the game. This is what enables Jerry Reinsdorf. This is what paves the road for the Charlotte Hornets. This is how the Browns happen. The competitive field is so small that the value of winning gets diluted. Other focuses get in the way. Other priorities emerge. It becomes easy to justify what sounds nicest to the owner rather than doing the thing likeliest to help the franchise win.

In European sports and to an increasing extent in American college sports, winning is survival. Winning is what allows a team to continue playing the game. In American professional sports, the teams never change. Why should Jerry Reinsdorf change his strategy?

Miscellany – Howard and Private Equity

Evidently Kenny Blakeney, men’s basketball coach at Howard, has been talking about private equity? I missed this report last week from the Washington Post. Today, Howard’s athletic director clarified to ESPN that while Blakeney has the school’s full support as a coach, the school hasn’t “vetted” his ideas about soliciting outside investment. In other words: Blakeney was speaking for himself, not Howard.

With this kind of proposal, I’m again curious what shape the investment would take. How is the investor’s share of profits determined? The hypothetical Big 12 arrangement is easiest to imagine—a private investor would get a portion of the revenue otherwise sent to schools. The hypothetical Florida State arrangement is more difficult—does the athletic department become a partner with the school, independent for accounting purposes? This Howard suggestion is like FSU’s but even more complex, because it’s just one sport. How do you carve men’s basketball’s financials out from the rest of the athletic department?

I am not an accountant, and I have no background in finance. Maybe these answers are obvious to those with more context. Absent details on how such an arrangement would work, it’s hard to have much of an opinion of whether it’s a good or a bad idea.

Miscellany – Miscellany

• Why are the 49ers trying to trade Brandon Aiyuk now and not earlier in the offseason? Assuming the reports of an impending deal are true, it would imply that either the 49ers were caught off guard by Aiyuk’s trade request or that Aiyuk changed his mind about playing. Is that what happened? What did I miss?
• New York’s getting hit by a line of storms tonight, bumping tonight’s Yankees/Angels game into a doubleheader tomorrow. What comes tomorrow? Possibly more rain. Then, Hurricane Debby’s remnants are supposed to move through late this week. Just as the Yanks got hot, the weather comes in and strikes them a blow. Now, they’re going to play a lot of innings in a five-day stretch, possibly with some hearty rain delays mixed in. If any games from this Angels series need to be made up, the last Monday of the regular season seems like the best fit that’s a mutual off day.