February 8, 2017--Over-Under

I have a friend who's a big sports fan. Especially of professional football. So Super Bowl Sunday is his national holiday. Bigger than Thanksgiving (though he can watch at least three NFL games then and ignore the turkey), more important than July 4th, and ditto for New Years (though again there are some games that day which he watches while the rest of us struggle with hangovers).

In truth, he's not really a sports or football fan. He's a sports gambler. He doesn't root for any teams except when he has a bet placed on one of them.

So a few days before last Sunday, when he said, "Can you believe the over-under?" I knew he was talking about the game and betting, but I had no idea what he meant.

"Over-under? I never heard of that. What is it?"

"Fifty-six points."

I continued to be confused, "Enlighten me. I don't know anything about this."

"That's the number of points that oddsmakers say both teams will score." Seeing I was still not following him, he added, "Not each team but the number of points both teams will score. The total of both of their points. Say the game ends with Atlanta scoring 30 points while the Patriots score 26. That would total 56 points." He grinned at his ability to explain this to someone as untutored as me.

"So if you want to do over-under who do you root for?"

"For both of them because if you bet under, you hope that the teams will score fewer than a total of 56 points. And if you bet over, you hope both teams' totals will be more than 56 points."

"Doesn't sound like any fun to me. I like rooting for one team to win and . . ."

"You can do that too by, say, betting on Atlanta and taking the points."

"Now you really have me confused. I just want to watch the game and hope it turns out to be an exciting one."

He waved me off as hopeless.

But it did turn out to be a great game and that made me happy especially since as a half-time-a-year Mainer, I was rooting for New England. They won and scored a total of 34 points. The Falcons scored 28 and so their combined score was 62 points, six points above the 56-point over-under.

You figure it out.

A day or two later, still thinking about over-under, I realized that many stock market investors think in exactly the same way. They too, we too are gambling and frequently on the over-under of a company's earnings. Particularly how actual quarterly earnings either meet, exceed, of miss quarterly income projections. And as with football betting, you win or lose on the over or under. It's not about a company doing well but whether or not it beats (is over) or misses (is under).

So when Amazon reported it's quarterly earnings last week--since we have Amazon stock which over time (the old fashioned way of investing in the market) has done very well by us--I was focused on how well its earnings and profits looked. More important to the majority of investors on the other hand, who see the stock market as a big casino, was its over or under. Would earnings hit, beat, or miss estimates. In other words, what would the over-under look like.

Amazon's earnings were $1.54 per share, beating estimates which foresaw only $1.35 per share, but the company's total quarterly earnings were "only" $43.74 billion, while estimates were looking for more, for $44.66 billion.

To complicate matters, revenue was up a noteworthy 22.4 percent compared to the same quarter last year.

Overall this should have been good news, but missing the earnings estimate, the under, was enough bad news for shares of Amazon stocks to drop nearly 30 points, or dollars, down to about $800 a share. Thus, our portfolio took a hit.

I told my friend about this and he wasn't surprised. "Like I always say, people will turn everything into action. In fact, if you're interested, the odds makers have already established a line for next year's Super Bowl."

"You're kidding."

"I'm not. They are saying that the Cowboys and Patriots will meet in Super Bowl LII. With the Pats favored by 4.75 to 1. If I were you I'd drop a couple of hundred bucks on New England. Use some of your Amazon money."

September 15, 2014--You Gotta Be a Football Hero . . .

There is so much hypocrisy when it comes to big time sports.

College kids in Division 1 schools play football and basketball in sold out stadiums which in many ways are TV studios since the big bucks come from the broadcast networks and cable outlets such as ESPN. But these athletes who are responsible for making millions for their schools are not allowed to have agents, accept free sneakers from Nike, much less get paid for their efforts.

Hypocrisy is rampant as well in professional sports, which unabashedly are all about money. The teams themselves are worth a fortune. The LA Clippers recently sold for $2.0 billion and the hapless Buffalo Bills are on the market and could yield a cool billion. Elite players can command up to $20 million a year for throwing passes, slam dunking, or hitting home runs. TV contracts to show NCAA football or basketball games earns teams tens of millions a year.

But in all sports, though making money is the bottom line, not unrelated to the drive for profits, athletes are expected to be role models, especially to children, and lead exemplary lives. Even though we turn them into literally larger-than-life superheroes, in their private lives we require these demigods to live normally. Even acts that to ordinary people might be considered misdemeanors can get them in serious trouble--suspended for a game or two or banned from playing and collecting their salaries for a year or even a lifetime.

While managing the Cincinnati Reds, the legendary Pete Rose was banned for life by the baseball commissioner for betting on games, though never against his own team. Again hypocritically, everyone knows that half the reason sports are as popular as they are is because of gambling, most of it illegal. Last year, for example, on the Super Bowl, on that one game, an estimated $119 million was wagered.

We are currently seeing more hypocrisy in action.

This time regarding the Baltimore Ravens' (former) running back Ray Price. "Former" is in parentheses because the Ravens terminated his contract when a video was broadcast of Price assaulting his then fiancée. The league itself became involved when the commissioner, Roger Goodell, (who earns $44 million a year) at first suspended him for two games but subsequently, under pressure from women's groups among others, made that suspension "indefinite."

What Rice did--and this isn't alleged--is reprehensible; but, to take a contrarian position, did what he did, as unacceptable as it is, justify ending his ability to earn a living as a football player? Especially since his now wife has forgiven him, asserting that what he did was, not to her, a relationship deal-breaker, and that he has apologized and wants to enter an anger management treatment program.

Yes, what the Ravens did, what the League did, was within their rights. The NFL Personal Conduct Policy statement, which is a part of every player's contract, stipulates that disciplinary action may be taken if a player commits "criminal offenses including, but not limited to, those involving: the use or threat of violence; domestic violence and other forms of partner abuse; theft and other property crimes; sex offenses . . ."

Disciplinary action is permitted, the statement continues, for "conduct that undermines or puts at risk the integrity and reputation of the NFL, NFL clubs, or NFL players."

It's all about "reputation," which owners and league officials feel is linked directly to their bottom line--more than $10 billion in 2013--and since women now make an estimated 45 percent of the NFL fan base . . .

Rice's case feels as if it might be a rush to judgement or at least punishment that doesn't fit the crime. Is this one horrible act enough for the Ravens to have the power to terminate his contract? Shouldn't the NFL's disciplinary process require a conviction in a court of law before taking away one's livelihood? Are there other workplace equivalents? If an IBMer committed spousal abuse would that in itself justify barring him from the high-tech industry as the suspension will surely lead to Rice being banned for life from future NFL employment?

It is also ironic that football itself is substantially about violence, presumably controlled violence (though ask the dozens of former players who are now suffering from traumatic brain injuries how controlled it was). Football is largely about 300-pound men in versions of body armor slamming into each other with enough force to knock opponents flat. Even unconscious. It is our form of gladiatorial combat.

Just a few years ago, in 2009, the New Orleans Saints were found to have instituted a practice where players earned cash bonuses for inflicting injuries on the opposition, with the most money awarded for injuring quarterbacks enough so that they would have to be carried off the field on stretchers.

Not incidentally, though some of these hits were flagrant, not once during the 2009-10 season did game officials penalize any of them. And when the NFL learned of Bountygate, the discipline meted out to the Saints were mere slaps on the wrist compared to those imposed on Ray Price.