Oh, the irony.
[/quote]Actually, Cold was dead on with his description of value and there is little irony. Cold also left many holes, allowing people the opportunity to trip. He never stated anything incorrect and at the same time, he wisely didn't object to me stating that the present value of Gregg Marshall imuch less than what Wichita State is currently paying.
Fair market value is simply what the market is willing to bear for a commodity, asset or a service at a particular moment in time. By nature, fair market value is constantly in flux. In the last week, the present market value of a head coach has dropped substantially. Quite simply, there isn't a large market for head coaches. Three weeks ago there was. And three weeks ago several buyers were in the market with big checkbooks. The demand then drove the market. The value of Gregg Marshall, as a function of supply and demand, had a high fair market value, so did Cuonzo Martin. Today, the bidders with the big checkbooks have all made their purchases and left the marketplace; there still is a market for coaches but the market isn't bearing $1,000,000, actually much less. Therefore, in the current marketplace, there is nobody bidding on Gregg Marshall and his present fair market value can be no higher than the top bid of the next coach hired. The small bidders may offer Marshall, but it would be their top offer that would determine fair market value, not at the level at which Gregg Marshall would be willing leave.
At this point next season, Marshall's fair market value could be quite high, it could be quite low, it all depends on how well Wichita State performes, how others performed, how many positions are open, who is bidding and at what level the bidding is taking place. If North Carolina, South Carolina and Duke are in the marketplace for a coach, it could drive the value of Gregg Marshall and all other coaches much higher. If there aren't a bunch of large checkbooks in the market, fair market value will drop. Simple economics.
Fair market value of a rare item, which all coaches are, is determined by the perceived quality of the rare item and is set at the top of the range being bid on the rare item. But at the same time, unless there is an active market for that item, you simply have a perceived value. That is what Wichita State fans have with Gregg Marshall, a perceived value. The owner of fine art has a perceived value in the art. Until the item is auctioned, there is no way to determine exactly the fair market value. And if the owner of the fine art will not sell it for less than a million, but the top bid is $500,000, $500,000 is the fair market value regardless of what the owner of the art might believe. That owner may even have the art appraised at a million and insured at a million, but the fair market value is still $500,000.
On the flipside, where fair market value on a rare item is determined by the top of the range, fair market value of a common item is determined by the mode. With common items, if gas is selling for $3.50 at most stations and that is what is driving the majority of gas sales, that is the fair market value of gas. The stations selling gas for $3.52 are selling above fair market value and the stations selling gas for $3.48 are selling gas below fair market value. This isn't that hard.
