Archive for the ‘Sports’ Category

This has been mentioned by a few bloggers, but I think the topic is a good case study in investing in “growth areas” (or as I would call it speculating on stocks).

Olympic Final Hockey Tickets

When the Olympic Hockey Final tickets went on sale about 2 years ago, they were snapped up very quickly, but were all sold (presumably) at their face value by the Vancouver Olympic Committee. VanOC made their money selling those tickets, and this is much like a company issuing stock or like an IPO (for a newer company). The profits have been made by the issuer.

Now we get into the world of presumed value of the tickets, and what they start being re-sold for.

As the Olympics came closer and closer the value of the tickets rose from their face value, to what folks are willing to pay for this Final Game, and I would assume that they started appreciating in value the day they were sold by VanOC. The appreciation may not have been much, but I am sure you could have made some good money simply “flipping” your tickets as soon as you got them.  At this time there is very little “risk” in this investment, because other than the Olympics being cancelled or Team Canada refusing to use NHL players, the tickets are worth at least as much as what they were bought for.

Speculation Time

When Team Canada was announced a month or so ago, that is when the value of the tickets might have started going UP and DOWN (i.e fluctuating), with all the Arm Chair GM’s looking at the roster and deciding whether Team Canada could make it to the game.

The big risk now introduced is, if Team Canada does not make it to the game, the tickets value drop significantly (possibly well below face value).  This is what now will drive the value of the tickets, Canadians would go watch the game if Team Canada was going to win 100-0 or lose 0-100 (maybe not pay as much) but if there is no Team Canada your investment is going to “tank”.

Tournament Starts

Team Canada blows Norway out to start the tournament, and Confidence is high, so your ticket value is going up, and you are sitting pretty. No reason to sell right now, right? What about locking in your profits, because remember what happened in 2006? No, you decide to keep your tickets, and keep going!

Team Canada then plays a worrisome game against Switzerland to begin with and now the ticket value could go up or down with “experts” saying there is a chance this team may not “have the stuff” that is needed to get to the Gold Medal. Do you take your profits now, or do you hold on and hope for  Team Canada to turn it around? You decide to keep your tickets and pray for the best.

Team USA appears with a hot goaltender and puts a beating on Team Canada that causes a collective PLOTZ in Canada, and the experts are now sure this team does not have what it takes and now some of your implied profit disappears, because now Canada must play Germany and then Russia to get to the Semi-Finals. Your ticket value has now dropped a great deal, and you kick yourself for not selling after the Norway game, when your value must have been at the highest, but you decide to ride this donkey to the end.

Canada knocks off Germany handily, and now your ticket value is increasing again, and that voice in your head asks, “Is it time to sell?”, but you are a gambler, and you know that if you hold on and Team Canada beats Russia (the experts are again saying this is going to be a rough game) your ticket value will rebound, so you hold on.

Holy cow, Canada obliterates Russia, and your ticket prices sore, with the possibility of a re-match between the US and Canada in the finals a real possibility (this would give you the Maximum pay back on your ticket, because not only could you sell to Rich folk from Vancouver you could make Yankee Dollars from Americans there too). You are on Cloud 9, thinking, all Team Canada has to do is knock off the Slovaks, and you will make a fortune, on your simple investment!

Here come the Slovaks and Team Canada is cruising, until that Goal and suddenly the market for your tickets gets a lot more nervous. That second goal and you are again panicking that you should have sold after the Russian game and taken your profits!!! OH NO!!! But, Team Canada pulls it off and you are given the added bonus of the Americans pulverizing the Finns, so here you have the ultimate appreciation of your ticket investment, Team Canada vs. Team USA in the finals, your investment has paid off.

Congrats Your Investment Has Come in!

Or has it? Should you sell the day before the game, or what until the day of the game? How are you going to sell it? Will you sell it to a scalper, or will you stand in front of Hockey Place and try to sell the ticket yourself (risking running afoul of the law enforcement agencies that frown on that kind of free enterprise?)? What happens if you don’t find a buyer who is willing to pay what you want?

Maybe you are a Hockey Fan and you don’t care what anyone offers now, you are going to enjoy what you paid for, and don’t care of how much money you can make (you will however feel smug when the two guys who sit down beside you at the game saying they paid $10,000 each for the tickets, or will you? Will you have non-sellers remorse?).

An interesting case study, what would you have done?

Olympic and RRSP Random Thoughts

Given most Canadians are caught up in the excitement of the Vancouver Olympics, they hopefully will not forget that it is almost the end of RRSP season and you have until midnight March 1st to make that contribution to count on your current Income Tax submission. Given the lack of activity in most banks, I think most Canadians are more worried about Canada beating Slovakia in Hockey, or whether our Curling teams can bring home Gold (but we can forgive folks, after all there is nothing more Canadian than Hockey and Curling).

After all the excitement of hosting yet another Carnival and having my first ever give-away, let’s see what other Personal Finance Bloggers might have had to say this week:

• Michael James keeps with the Olympics feelings, telling investors to “…not grip your stick too tight…” in Investing Lessons from Hockey, oh and I think he also says, Always keep your stick on the ice.
• For all those Hockey Moms and Dads, the Canadian Capitalist points out that Tim Hortons Brews and Expensive DRIP and SPP, strange that they wouldn’t know how to DRiP? They couldn’t be using Instant Coffee could they?
• Million Dollar Journey takes a more financial angle with 5 ways to Reduce Financial Clutter which has some good ideas for those Financial Hoarders out there.
• The Task Force on Financial Literacy published a report this week entitled Leveraging Excellence writes Larry MacDonald, but is the task force made up of the right folks? I don’t know, no one asked me for my input.
• Preet at WheredoesAllMyMoneygo.com’s career as a Financial Talking Head took a minor setback this week when his Lang and O’Leary exchange interview was cancelled. Hopefully you will see Preet’s smiling face on your TV somewhere else soon (he is well worth listening too).
• The Four Pillars does a Quicktax Canadian Tax Software Review, which would be useful if someone gave away the software (like I did).
• Gail Vaz-Oxlade asks, Who are you trying to Impress? and my answer is, no one really. I gave up trying to impress folks once my age passed my waste size.



Go Canada! and remember RRSP season is almost over.

After switching off the Grey Cup (I stopped watching after the Alouettes vaunted defense gave up their 27th point), it dawned on me that no matter how it stacks up, in football, as in life, there is just no sure things. Every pundit that talks about the CFL (admittedly not a huge subset of sports writers) had the Alouettes victory parade already planned, and when I sat down to watch the game, I expected to see an annihilation of biblical proportions.

Evidently no one told the Roughriders from Saskatchewan (not to be confused with the hopefully soon to be resurrected Rough Riders from Ottawa) that they were supposed to roll over and die, and they decided to make it an exciting and close game (which luckily the Alouettes did finally win).

Football and Financial Planning?

What does this have to do with Financial Planning? First thing is, I didn’t have anything to write about before the game started, and you almost had a “Sorry, no post today, busy watching the Grey Cup”, but thanks to the closeness of the game, I had a story idea watching the game.

Second point is, no matter what assurances any financial planner, financial pundit or financial blogger makes about any financial plan, investment idea, or stock tip, they could very well be wrong (like the 90% of writers who picked the Alouettes annihilating the Roughriders). Be skeptical about any advice you get, and look in depth into what you are being told, and remember that no matter what decision you make, there will be risks involved in your decision. There are no sure things, keep that in mind.

Yes, the Alouettes did manage to pull the game out on the last play of the game, but the contest itself was much closer than expected, and it took a lot of luck for the Als to finally succeed (when they were supposed to win easily).

Yes, I also had to rewrite this post, because I had it all done with 4:00 left in the game and I was sure the Als were going to lose, which also shows that even when you are sure something is going to happen, sometimes things change drastically very quickly (like the Als comeback).

Remember, my only advice is, there are no sure things in life.

Oh and Congrats Alouettes, I never doubted you for one minute (where did that bandwagon go?).

Bring back the Ottawa Rough Riders too!

It’s been a busy very Long weekend for me, so I will put up a Best of posting about the very High Price of raising ‘healthy” kids, which I wrote about two years ago, I wrote two follow up stories that  you can also read:

• High Price of Healthy Kids Part II
• High Price of Healthy Kids Part III

The High Cost of Healthy Kids? (part i)

I have seen many articles posted lately in the “real” media complaining about obese kids and the implication that it is their parents fault that they are fat. I agree in some ways given that you as a parent should worry if your kid is morbidly obese, or way over weight (also knowing that some kids fill out and then shoot up in height, and there are sometimes extenuating health issues). Parents should most definitely be worried that their kids are not healthy, no argument there.

What I will write about here, is how the “real” media implies that it is a simple case of parents just not trying to get their kids healthy, and the simplest resolution to the problem is:

• Make sure the kids are active at school in sports
• Sign them up for sports at home in their spare time
• Limit their TV and Video Game access
• Limit their intake of snack foods and foods high in sugar and fat

Simple enough, and in an esoteric way, I agree, however, let’s look at this from a financial model.

The question to be answered is: is it cheaper to have healthy kids, or is it more expensive? I’ll give my opinions in the next couple of days: (see the links for those posts)

• High Price of Healthy Kids Part II
• High Price of Healthy Kids Part III

New Month Coming

September is on the event horizon folks, that means we are in the final third of the year, maybe it is time to revisit your financial plans, and also start thinking about big ticket end of year items that could broadside you if you don’t think of it. What do I mean?

• Christmas, better figure out what you are doing there, or you may as well get a pile of money and burn it.
• When do your insurance policies renew?
• What other yearly payments might come due on January 1? Do you have enough money to pay them?
• How about your RRSP input goals? Reached them yet?
• RESP Goals?
• Savings in General?

A good financial plan is a living, breathing entity, that you must attend to monthly.

House Keeping

I will be out of town for a few days this week so I may miss a day or two this week, my apologies, if I could figure out how to do THIS full time and make a living, I’d gladly do it.

Michael James (nominated by the Globe and Mail as one of Canada’s top Financial Bloggers) and I were having a discussion on Friday night about an interesting article written by Jon Chevreau at the National Post: Even Young Millionaires Need to Worry About Financial Planning.

The article outlines how young athletes who suddenly come into large amounts of money tend to expand their lifestyle and spending to reflect their new riches and many times don’t learn the importance of Personal Financial Planning until much too late in their lives. I quote:

Within two years of retirement, 78% of former NFL players have gone bankrupt or are under financial stress, while an estimated 60%  of former NBA players are broke within five years of retirement, according to the March 23, 2009 issue of Sports Illustrated magazine.

Michael James did not believe the number and questioned whether it was as bad as all that (he agreed that there is a problem, he just couldn’t believe it was as bad as all that). My view is this is very possible and I would not be surprised if it was worse than the numbers quoted by Sports Illustrated or by Mr. Chevreau.

The allure of a “rich” lifestyle and the fact that you have worked very hard to receive this monetary level does tend to throw off a lot of people’s Financial Gyroscopes (as it were). I have seen this at a smaller scale with folks that have got University degrees have lived a frugal lifestyle to get through the studies and when they graduate and get a good paying job, at first they remain frugal but then some folks just decide, “Heck, I deserve it!”, and start to lose their financial minds (I will plead guilty to this once or twice as well).

My guess is this is what happens with Professional Athletes, but they have the added problem of an entire species (for lack of a better term) of humans that seem to exist to prey on them, the hangers on (much like lampreys or other parasites). These people raison d’etre seems to be to leech off these walking banks, and this does not help these young people who suddenly get more money than they could ever dream of having. They get very odd financial advise from alleged professionals, and maybe trust people they shouldn’t trust (or worse trust people who then betray that trust). The players unions are trying to fix this, we shall see how well they might do (see the Sports Illustrated article for an eye opening statement by Raghib Ismail).

I remember when I was growing up and pro athletes did not make a lot of money (they made more than most working folks), but I remember a scout leader I had telling us about Dick Duff, because he played for the Canadiens (and the Leafs), but he had gone back to school to become a teacher, so he had a job after he finished with hockey. Do today’s athletes need to do this? Depends on the sport, and their pay level, but if they don’t plan their finances and plan for their ENTIRE life they are doomed to fall into the Rich Lifestyle trap.

Would I fall prey to this trap? We’ll never know, since my athletic talents were never a danger of putting me in this predicament.