I got 99 Problems but a Blog aint one

It’s been almost a year and nothing new has been added to the blog. Behind the Numbers has sunk in to the kind of slump that most blogs end up in. The “343 Days since Last Update Slump”.

It’s been so long that my last Blog Update was about The Champions League Twenty20 Cricket tournament. But not the one being played right now in India. The one from last year. In the blogosphere that type of silence is deadly.

For almost ten years I avoided blogging because I didn’t want to end up like the 99% of bloggers writing for no particular audience but themselves and while doing that for a couple of weeks then just stop and never update. So when I finally started my own blog I wanted it to have a specific focus. I decided to write the stories Behind the Numbers. My inspirations were blogs like The Big Picture, and The Economist’s Game Theory blog. That’s how I wanted my blog to be. Because I didn’t have a job at the time I had lots of time to write. In short I tried creating a job for myself by blogging.

There are lots of stories about bloggers who turned there blogs and passion in to daytime jobs. My favorite, all-time hero Bill Simmons did just this. After graduating college he worked for a newspaper for a couple of years covering high school football. Since that didn’t get him where he wanted, he quit his job, worked as a bartender and started blogging. His prose and style earned him many readers and he was “discovered” by the now defunct ESPN Page2. Today he holds a senior position within that company and is the godfather of sportsjournalism 2.0 in the US through the Grantland website.

I tried to do the same without the same conviction. I mean, I love writing, but after being one of many freelance journalists who suffered at the hands of the financial crisis I recreated myself in finance (if you can’t beat them, join them). Today I work for Wells Fargo, I’m a CFA Level II Candidate and I’m on my way to a great career in finance. But along the way of getting more efficient something was lost.

And it wasn’t until I read Lauren Foster’s CFA Blog this week that I was able to describe what I was losing. The blog Weekend Reads for Advisers: Investing, Poker, and Retirement talks about following your curiosity towards subjects that not necessarily are related to your job. In fact, she explains my challenge, better than anything I could’ve written:

Curiosity underpins success because it begets relentless questioning. Adam Bryant of the New York Times captured it well in the column “Distilling the Wisdom of C.E.O.’s.”
“Why ‘passionate curiosity’?” he asks. ”There are plenty of people who are passionate, but many of their passions are focused on just one area. There are a lot of curious people in the world, but they can also be wallflowers. But ‘passionate curiosity’ — a phrase used by Nell Minow, the co-founder of the Corporate Library — better captures the infectious sense of fascination that some people have with everything around them.”
And as Jason notes in his recent post, “Advice on How to Become a Research Analyst”  curiosity is an important trait. After all, by reading across a wide array of topics and publications, we create, what he calls, “a mosaic of knowledge.”

So, without further ado, this is the resurrection of my blog.  Behind the Numbers Ver 2.0 has less numbers, more stories, more hip-hop quotes, more stories about passion and play and of course, there'll still be lots of cricket, but most of all, a lot more hip-hop quotes. In fact, here’s one from LL Cool J.

“Don’t Call it a Comeback”

In Cricket, Veterans Past Their Prime Continue to Outperform Younger Players

If there is a country for old men, right now it is South Africa and they are playing cricket there. The Champions League Twenty20 cricket competition currently being played in the Rainbow nation showcases many of the world’s top international performers from yesteryear; Herschelle Gibbs, Brett Lee, Brad Hogg and other old men have found a lucrative way in to retirement by playing the shortest format of the cricket game.
Usually in sports the sight of legends past their prime is associated with lower quality –Pele playing in an American soccer league, Björn Borg in the early 1990’ies, any boxing comeback you can think of- but in cricket the legendary names still perform at the top of their game and continue to keep younger players out of the starting line-up.
The only notable absence from the tournament is 43-year old legendary Australian leg-spinner, Shane Warne. After retiring from international cricket in 2007 he has continued to play in the shortest format and in 2008 he coached and captained his Indian side, Rajasthan Royals, to the Indian Premier League Twenty20 title. Recently he has played in the Australian Big Bash league for The Melbourne Stars who failed to qualify for the Champions League Twenty20 competition.

The traditional explanation why most sportsmen fail to compete in their late 30’ies is rooted in the fact that the body deteriorates. While it is true that reaction time gets slower and physical capabilities deteriorate no theory has been able to convincingly explain the connection between physical deterioration and changes in the decision making process. What can be observed, though, is that while the body may deteriorate the decisions get better. Retired NFL-player and Hall of Fame inductee, Jerry Rice, explained it best when he said “as you get older and slower, you have to get smarter to stay in the game.” He backed up his words by playing until he was 44 years old.

The veterans may not have the fitness levels or reaction time of their peak years but their cricketing knowledge and decisions are so good they remain elite performers. Batsmen survive longer in the game by changing their decision making process and limit themselves from playing the high-risk shots, while bowlers stick to the more basic low-risk deliveries.
The reason why veterans continue to outshine the younger players in the shortest format of the game has to do with the difference between aerobic (low-intensity) and anaerobic (high-intensity) workload. When crossing the anaerobic threshold, lactic acid begins to build in the body, which makes muscles start to burn and causes fine-motor skills to deteriorate. Older players with lower fitness levels cross in to the anaerobic zone faster than younger players. This is why the older players lose their places in starting lineups in the long formats of the game.
In the shortest format the player rarely moves into the anaerobic zone making veterans able to replicate performances of their prime in the short bursts allowed in twenty20 cricket.
This is the reason why you can watch cricket stars past their prime still playing with the best in the world.

The Un-Luxuriousness of Luxury

In Economy 101 we learn that products can be sorted in to three different categories. Generally, when you make more money, you buy less of inferior goods (usually low quality products) and more of normal goods (which is why they are called “normal”). But those are absolute terms. There’s a third category called luxury goods. Luxury goods are the ones that make you change the percentage of funds you allocate to a particular type of product.
If you’re making $25,000 a year, you probably don’t need to own a Jaeger-leCoultre watch since a normal $10 will be just as good at telling you the time.  But if your annual bonus is $25,000 you have to own at least one luxury watch. So from spending 0% on luxury you allocate a certain percentage of your salary to luxury.
This is why the main driver in the luxury industry is related to general economic growth. At least that’s what we learned in Economy 101. If we follow that reasoning the luxury business should be in a sad state these days. The world economy is still punch drunk after being down twice, and it’s not sure if it wants to get up again or lay down a third time to let Europe join the party.

But in spite of these circumstances most luxury brands are actually massively outperforming the general market. Companies like PPR (Gucci, Brioni, Bottega Veneta et. al.), Richemont (Cartier, Dunhil & IWC) and LVMH (Louis Vuitton, Fendi, Berluti, Bulgari, TAG Heuer et. al.) have all produced double digit growth in 2012.
Does that mean that economic theory is wrong and that we have to re-write the economy books? Well, yes and no. Economic theory accurately describes the historical trends it is built upon, but it comes to terms when being forced upon events of the past fifty years.

Although income disparity has grown during the last century –the rich getting richer and the poor remaining poor- the general utility score of the average individual has risen. The utility score describes the possibilities an individual has. A hundred years ago only the rich were able to stay updated on current affairs (buying a newspaper), enjoy music (going to a concert) or be entertained by going to the theatre. Today, internet access will let you access all the news, music, movies and entertainment you want. For free.
This significantly alters the distribution of funds in the household budget. With all the entertainment you want available for the price of a decent web connection it frees up funds to buy stuff that you might not need, but that you want. Like luxury products. This is why the general economy might be worse than 5 years ago but the luxury business is bigger than ever before. Luxury items have not become cheaper but they have become more attainable by the general public. This makes luxury products more democratic, less exquisite, and as a result, a little less luxurious.

In Hip Hop you don’t need to make music to make Money

“Get rich or die tryin’” was the title of the 50 Cent album that made him a Global Hip Hop Phenom and propelled him into the Hop Hop Spheres of Stardom. By now it seems fairly obvious that he succeeded. For two reasons.

1. 50 Cent is still alive
2. He ranks second on Forbes’ List of Hip Hop Cash Kings 2007-2011 (only Jay-Z managed to make more money in that time-span)

What isn’t that obvious at all is what 50 Cent has done to become rich. Yes, he made an album that sold well. But, if you thought, that the Hip Hop artists got rich by making music, it seems, you're wrong. Music does not keep them rich.

Generating income from music is a very volatile business. Styles and preferences change quickly, while icons of sub-genres remain the same. Just look at Timbaland (no. 5 on the list). In 2007 he was at the top of his game, he had produced albums by Justin Timberlake and Nelly Furtado (whose two albums combined for 7 No. 1 singles between them), and his own cash cow “Timbaland Presents: Shock Value” hit the streets with every top name in the business making an appearance. At the time, Timbaland had the sound. Not just a sound or his own sound. Timbaland had the sound. The sound that everybody wanted to have that year. Everyone wanted to sound like that. 

And it is a great sound. Just listen to practically any track from Nelly Furtado’s “Loose” or Justin’s “FutureSexLoveSounds”, close your eyes, and the sound takes you back in time. But then new years came around and all of a sudden it is 2008. All of a sudden, the Timbaland sound is “so last year”.

Everything he’d done in the early noughties led straight to “Timbaland Presents: Shock Value”. It was the zenith of his career. But that only lasted so lang, and after that he just didn't have the sound anymore. Now people want a different sound and Timbaland has been nowhere near the position he had in 2007.

Artist	Income 07'-11'
Jay-Z	$251 Mill.
50 Cent	$216 Mill.
P. Diddy	$158  Mill.
Kanye West	$100  Mill.
Timbaland	$81  Mill.
Dr. Dre	$80  Mill.
Pharrell Williams	$76  Mill.
Snoop Doggy Dogg	$73  Mill.
Ludacris	$68  Mill.
Lil' Wayne	$66  Mill.
Eminem	$66  Mill.

The same thing can be said about the remaining artists on the Forbes list. They are not rich because of their ability to release new music (there's a correlation of 0.08 between money made and number of albums released). What sets the Cash kings apart is the fact that they have successful business ventures not directly related to music. Jay-Z is part-owner of the Brooklyn Nets and is the creator of apparel company Rocawear. 50 Cent made half his fortune on the list from selling his stake in a company he founded Glaceau to make a vitamin water drink and has many other interesting companies in the pipeline.

So 50 Cent might have made his initial fortune by making music, but it’s his entrepreneurial spirit and business savy that keeps him in the Top 10 of Hip Hop’s Cash Kings.

Big boys get no love from Sponsors (NFL edition)

If you’re a young football player hoping to one day play in the NFL and have fame, wealth, girls and lots of lucrative sponsorship deals, your best hope is to be at a position where your ideal playing weight is below 250 pounds. That is the conclusion after analyzing the data from Forbes’ list of The World’s 100 Highest-Paid Athletes in 2012.

The highest salaries in the NFL may go to defensive linemen Haloi Ngata (Baltimore Ravens) and Ndamukong Suh (Detroit Lions), who are both above 250 pounds, but the big boys find it harder to secure sponsorship deals.

To attract top endorsement dollar, you have to be smaller. Eli Manning, 218 pounds of quarterback for the New York Giants, makes $8 mill. a year or 30.1% of his total income from endorsements. At the other end of the spectrum is Charles Johnson, 285 pounds of defensive end for the Carolina Panthers, who only makes $100,000 a year (0.3% of his total income) from endorsements.

To explain, let’s look at the highest paid player pound-for-pound in the NFL. This classification tells us how much money each player is able to generate in salary per pound of body weight. Larry Fitzgerald, WR for the Arizona Cardinals, is the best paid with each pound of body weight generating $161,927 of salary in 2012.

	Name	Salary/P
1.	Larry Fitzgerald	161,927
2.	Peyton Manning	140,870
3.	Darelle Revis	136,364
4.	Charles Johnson	120,351
5.	Sam Bradford	119,643
6.	Ndamukong Suh	115,635
7.	Mario Williams	112,671
8.	Haloi Ngata	109,118
9.	Mark Sanchez	103,111
10.	Tom Brady	102,667

Because of their huge pay checks both Suh & Ngata are in the Top 10 of salary per pound of body weight. But they don't receive similar endorsements. Nobody over 250 pounds feature in the Top 10 of endorsement dollars per pound of body weight.

It gets worse: nobody over 250 pounds are able to make seven figures from sponsorship deals. Even though Ndamukong Suh is the player with the best endorsement deals ($500,000 per year) he is forced to settle for fame and wealth (according to this GQ profile of Ndamukon Suh the only girl in his life is his sister, who is also his manager).

Books are Cool Again

The song “Video killed the radio star” by Buggles was the first video to be played when the music channel MTV started broadcasting in 1981. The reference was supposed to allure to the fact that during the history of mankind new media has always overtaken old media.
During much of the 20th century, the advent of new media and entertainment channels have almost always been met with a cry of fear from bibliophiles everywhere. The book has been pronounced threatened or dead on many occasions for reasons ranging from Homo Modernicus’ frantic lifestyle to the very notion that the book itself is not flashy or cool enough, and that the book needed to reinvent itself.
Although these claims have been supported by empirical evidence of declining sales, it is surprising to see the list of the UK’s All-Time Most Selling Books, as compiled by The Guardian. It seems that books are still very relevant and entertaining. But it is not the classics that are being read. One has to go all the way down to 65th place on the list to find a book that was first published before the advent of the most entertaining medium of the 20th century: The Internet. The book in question is Harper Lee's "To kill a mockingbird".
Dan Brown tops the list with “The Da Vinci Code”, and seven of J.K. Rowling's books have made it in to the Top 10. So it should not come as too big of a surprise that no Nobel Prize winners are to be found on the list.
Though iPad’s, Kindle’s, Nook’s and other tablets have contributed to the renewed life in the publishing industry, these only account for 10% of total sales. The publishing industry will agree to the famous quote from American author, Mark Twain, that "The report of my death was an exaggeration". Unfortunately, the same can not be said for the sales of Mark Twain’s books.

Will Cricket be bigger than Baseball?

Five years ago it would have been outrageous to compare cricket and baseball. While both are bat-and-ball games played in English-speaking countries, the economics were significantly different. In 2007 the Major League Baseball (MLB) team New York Yankees generated nearly $400 million in revenue, while Sussex were able to win the English Cricket County Championship with less than 2% of that revenue.

But the balance seems to be shifting and cricket is gaining ground on baseball by becoming more Americanized. The most obvious sign of this change is, that two cricketers have entered Forbes’ list of The World’s 100 Highest-Paid Athletes. While only two MLB players (Alex Rodriguez and Joe Mauer) rank higher than Indian cricket captain, Mahendra Singh Dhoni, there are still some ways to go before cricket has closed the 11-to-1 gap on the list.

2007 was the year when the dynamic momentum and growth for these two sports started to change. It was the year where cricket’s Twenty20 format became global. Unlike cricket’s traditional five-day Test Matches, a Twenty20 game, like baseball, takes only 150 minutes. This has made it a lot more attractive to the general public. In 2007 the Board of Control for Cricket in India announced plans for a franchise-based Twenty20 league, called the Indian Premier League (IPL), starting in India the following year. The IPL received a huge boost long before its first game with India winning the inaugural International Cricket Council (ICC) Twenty20 World Cup in 2007.

The massive economic growth of India in recent years has been a major factor in the IPL’s success. The league has attracted the world’s best players, while large TV revenues and airtime has multiplied player’s earnings potential. The IPL has not just meant a growth in player’s salaries, it has also opened the door for endorsement deals. India’s captain and the world’s highest paid cricketer, Mahendra Singh Dhoni, generates 87% of his income from endorsement deals.

In a global perspective, cricket seems to be on the rise, while baseball, though more popular than ever in the US, have not been able to grow with the same speed globally. After having been an Olympic sport since 1984, baseball was left out of the 2012 London Olympics, because it was only popular on the American continent. The same does not hold true for cricket, which is played all over the world. The 10 best cricket-playing nations in the world are scattered over five different continents.

Cricket was dropped as an Olympic sport after being present at the first ever modern Olympic Games in 1896. But in 2010, the ICC became a recognized association of the International Olympic Committee (IOC). This has made it possible for cricket to follow the path of rugby, which became an Olympic sport at London 2012 with a revamped format. And in true Hollywood style it would only be fitting for a game called Twenty20, to be included in the 2020 Olympics.