Wednesday, June 07, 2006

The World Cup Debacle

Israel's World Cup debacle has made it as far as the UK's The Guardian newspaper.

Charlton, the company which has the World Cup rights in Israel is trying to make a killing by charging 492 Shekels (the figures quoted in the article are incorrect) to watch the world's most important sports competition which is free basically everywhere else in the world and has been in Israel up until now. The Israeli consumer doesn't like it and is letting Charlton, part owned by sports agent extraordinaire Pini Zahavi, know what he thinks by keeping his wallet in his pocket. The price has just been reduced to 308 shekels as, instead of having their predicted 150,000 customers signed up, as of last week the number was 1700.

The Guardian article reports that Prime Minister Olmert, a renowned football fan, announced last week that he was not one of the 1,700 as he too was waiting for the price to drop.

Charlton has made itself a whole lot of enemies - and threatening to send inspectors around to pubs, the most natural environment to watch a game, has only worsened matters for them. The World Cup, along with the Olympics and certain other sporting events should be free to watch - in other countries there is legislation to guarantee that certain sports events should be available to everyone. Any broadcaster with the rights to the World Cup will make a fortune in advertising and all the peripherals that go along with the contest.

Charlton should acknowledge the fact that they have been greedy and have underestimated the Israeli public. Make it free for all Pini!



amechad said...

Sorry, no. The company which owns the right to the World Cup has the right to do what he wants with, what is essentially his property. You don't like it? You have two choices:

1. Buy the rights to the Cup and give it away
2. Choose not to buy (as many people are doing which is leading to the price dropping).

It's not the government's business to regulate such things and to do so is a disgusting and damaging abuse of the market as well as a violation of property rights. Your house is bigger than mine so does the government have the right to make you permit me to come to your house and eat your food since you have so much that I want but can't afford or should be entitled to for free. No way! Of course, if you wanted to be nice and give it to me for free, great and the company can do that -- but is not and should not under any obligation to.

Let the market work. In the US plenty of sporting events are on pay-per-view. Why not? Clearly people avoiding purchasing the WC will then lead to price drops which is their decision to decide that it is not worth 492NIS or whatever to see it.

But let the market decide. The free market is the best distribution mechanism in the world.

Gilly said...

Thank you for disgreeing with something that I haven't said. Of course they have the right to do what they want with the rights but I can, and do disagree with what they have chosen to do - and I am joined in doing so by a hell of a lot of people.

I believe that there are certain events which should be open to the general public as a public good - in Britain for example, Wimbledon, the FA Cup final, The World Cup and the Olympics are among a number of sporting events which fit this category - it is something that I happen to agree with.

The example that you have given regarding the house is very far from being the same thing (I don't really see any connection to be quite honest - it's certainly not a public good).

Important to stress - I don't have an objection to "plenty of sporting events" being on pay per view (although I'd prefer that they weren't) - certain events however, I believe, should not be.

The market is speaking and in 2012 the company purchasing the rights will take that factor under consideration - in the meantime, they've seriously misunderstood the marketplace.


amechad said...

First off, you are absolutely right that the market is speaking and they have significantly misunderstood the marketplace. That's their loss and certainly the market has the right to speak. Nevertheless you wrote:

"The World Cup, along with the Olympics and certain other sporting events should be free to watch - in other countries there is legislation to guarantee that certain sports events should be available to everyone."

and in your comments "I believe that there are certain events which should be open to the general public as a public good - in Britain for example, Wimbledon, the FA Cup final, The World Cup and the Olympics are among a number of sporting events which fit this category"

This is my opposition -- the World Cup is NOT a public good. No TV show is a public good, no sporting event is a public good. If it is a public good do you think they should be giving away free tickets and the government ought to be building stadiums (I do oppose tax subsidies and the govt intervention in sports teams/stadium deals)? If not, what's the difference.

It's really simply - the world cup, nor any other sports game is a public good. Rather, it is a privately run corporate event and private property. Stadiums are private property. Licensing rights are private property. The company which owns Israel's licensing rights owns a private item and has every right to do whatever they want to do with it. The World Cup and its broadcasting rights (intellectual property) are private property just as much as your apartment is private property. It is, of course, clear now that they may have made a bad business decision and misunderstood the needs and desires and will of the market but it's their punishment for that. However, it is not a public good and any legislation to require its free airing is immoral and a violation of the basic principles of the free market. Hence, no, I didn't disagree with anything you didn't say but rather what you did say.

Gilly said...

Hence to sum up - I think that it should be public (as it is in Britain and pretty much everywhere else around the world). You disagree.

Fair enough - that's your right!

Come on England!

Dot Co Dot Il said...

Great post Gilly!

Amechad - What a load of complete waffle! There comes a point where commerce and social welfare intersect and this is one of them. Would you be saying the same thing if all the milk sellers decided to sell milk at 150 NIS a litre or the egg sellers would sell eggs at 200 NIS a dozen?
Why do you think toll roads are viewed so heinously?

You miss the point completely - the point being that you can't hold people to ransom. You shouldn't be allowed to do so in the first place and you definitely shoulnd't be allowed to profit from it.

These idiots are victims of their own greed. Sadly the government is as incompetent which is why two days away from kick-off no one knows what is going on.

Anonymous said...

Changing the discussion slightly (although I agree with Gilly, and most of the civilised world that the matches should be free. You'd never guess that Am Echad was a Septic would you?!?!?)....

Gilly, you write that Charlton probably expected to make a fortune on advertising etc. too, but I understood that this was part of the problem. The world cup rights were sold to Charlton with conditions severly limiting/banning the advertising they would be able to show. This is part of Charlton's problem and one of the reasons they set such high fees (other than being greedy bastards). I can't rememebr where I heard this though so don't know if it's correct. Anyone got a source?

Yellow Boy

amechad said...

Dot co - first off, a supermarket has its right to sell egg/milk at 150-200NIS. And the consumer has the right not to buy it (there are other staple foods after all -- I was a vegan for several years).

And, while I see logic for toll roads, the difference (in theory) is that roads are public goods and it would be difficult to build truly private roads. I fail to see (and have not seen a single argument for it) how a commercial sports match is a public good because by definition it's commercial. Teams are privately owned and broadcasting rights are sold. Give me one reason why the World Cup (based on economics) is a public good.

Dot Co Dot Il said...

Amechad - I am not talking about a supermarket persay but rather someone with a monopoly who has the ability to charge whatever it wants due to its high price inelasticity.

"Teams are privately owned"??? Well actually no, they are not. The teams represent countries.

The tournament is the World Cup and belongs to the World thus is a public good. In many countries legislation is in place to ensure it is on free to air TV. Israel should not be your yardstick.

amechad said...

Jonathan Tobin has another (American) reason to ignore the World Cup in the Jerusalem Post -

Gilly said...

I really don't care whether Americans watch the World Cup or not.

As for Israeli qualification - in that like other European countries (and unlike Middle Eastern ones), Israel sends teams to the Champions League and UEFA Cup, we clearly belong in the European qualifying groups. You can't have it both ways!

If the great footballing powers of Serbia, Croatia and the Ukraine can qualify - then so can Israel.

FB said...

why am I not surprised that Amechad used to be a vegan?