Fantasy football: The structured finance of the sports and leisure world?
[Warning: This is a post with actual writing that has no new cartoons and only tangentially relates to bankruptcy.]
Has anyone else noticed the uncanny parallels between fantasy football and structured finance?
Both seem to involve disconnecting the value from the source of the value. In the case of structured finance, it’s separating the payments from payment-generating assets such as loans for homes. This process created a bubble by disconnecting the incentive to make loans from the actual value of the loans.
In the case of fantasy football it seems a similar process is occurring. We take all the numbers and statistics generated by teams of actual players who practice and work together on a daily basis and form relationships, and we structurally isolate them from true value of the games. Then we rearrange and redistribute the numbers and re-value them in a way that creates a variety of perverse incentives that are often disconnected from the value of the games themselves.
Where’s the bubble in all of this? NFL Football is more popular than ever, and a large part of that is due to interest in fantasy football. Now instead of just following the Redskins and maybe keeping an eye on the Cowboys, you might also flip back and forth to the Lions-Raiders game to see whether Darren McFadden or Justin Fargas is getting the bulk of the carries. (Seriously.)
On top of that, services like DirectTV are flourishing thanks to the “need” of football fans to not miss a game. And fantasy football league hosters, news providers and bloggers are gainfully employed for using skills that previously had no value outside of a sports bar. All because we’ve developed a more creative way to use these statistics that were sitting around not being used by anyone.
What’s the danger of this bubble? As a fantasy football participant myself (Team name: “BAPCPA Men”), I’m not sure but I can’t help feeling rather cynical. The bubble created by the structured finance machine left a lot of destruction and bankruptcy in its wake, and somehow most of our country didn’t see that coming. So I propose we start worrying about the Fantasy Football Bubble now. Maybe set up a think tank or ABI commission to start really thinking these issues through.
Or perhaps we can figure it out right here if anyone wants to post some additional thoughts or comments.
September 15th, 2009 at 3:40 pm
[...] An appreciative mention of our recent fantasy football/structured finance commentary by NYU Professor of Political Science Josh Tucker on The Monkey Cage, a blog written by a group of [...]
October 6th, 2009 at 9:21 pm
[...] here for all previous Bankruptcy Bill cartoons, and here for a previous post on the connection between structured finance and fantasy [...]