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To Be Great, the NFL Must End Its Soft Socialism
by John Tamny, Toreador Research and Trading (VE Guest Contributor)
At present the National Football League (NFL) towers over all U.S. sports leagues in terms of profits, television ratings, team valuations, and just about any other measure of popularity and success. In that case, for an outsider to question the league's business model is surely the height of hubris.
Still, in a number of areas the NFL practices a modern version of Karl Marx's well known communistic principle, "From each according to his ability, to each according to his needs." This works to the league's detriment. Ultimately the weak prey off of the strong in the NFL, and this, at least on the margin, softly tarnishes what remains a brilliant product.
Consider the NFL Draft, which on its own speaks to the league's immense popularity. Not only is it a prime time event, but so great is the interest in it among fans that the draft now occurs over three days. The problem with the draft is one of incentives when it comes to the order of teams selecting players.
The NFL seeks parity, and as such, each year the team with the worst record gets to pick first. At first glance this seems like a good idea for obvious reasons related to the league's stated objective to make each team competitive, but given a second pass it becomes apparent that such a system rewards a team for failing.
To fix this, the NFL should copy the NBA's lottery system, but with one substantial alteration. At present the weakest NBA team has the greatest odds of drawing the number one pick. The NFL should reverse this, stage a lottery among the 10 worst teams, but give the greatest odds to the least weak of the ten teams.
If so, fans paying enormous sums of money to attend the games will no longer have to question the effort of teams and coaches at season's end. Knowing that they'll be rewarded for not being the worst team, players and coaches will more likely give maximum effort.
Also, as evidenced by the stupendous failure of recent #1 picks - think JaMarcus Russell, Alex Smith, David Carr and Tim Couch - the benefit of selecting first is really more of gamble that often places the team in question in salary cap hell for years on end. If parity is the league's goal, the weakest teams should be relieved of the burden of the first pick; one that forces them to pay through the nose for unproven talent.
Regarding ownership, it truly matters. For evidence, all one need do is compare Bill Belichick's record with the Cleveland Browns under the hapless Art Modell versus his winning ways under Bob Kraft.
We can't do counterfactuals, but if Joe Montana is the best quarterback ever by virtue of his years with the '49ers, does anyone think he would have achieved even a fraction of his brilliance if he'd been drafted by Bill Bidwill's (then) St. Louis Cardinals? Considering the '49ers implosion ever since the York family (owner John York famously pulled Hall of Fame coach Bill Walsh aside to "explain" leadership to him) took over from the De Bartolos, does anyone think Montana would be remotely the '49er he once was if playing for them today?
If ownership's importance is then agreed on, why doesn't the NFL as a private business reserve the right to relieve unfortunate owners of their teams? Maybe after five years of playoff-free seasons the owner could be put on watch, and then, if ten years pass without the team making it to the postseason, the league would put future ownership of the persistently failing team up to a vote.
The likely response to the above would be that giving the league or the league's owners this right would drive down the value of all teams. Maybe so in the near-term, but this assumption seems shortsighted.
Not considered are the longer-term benefits wrought by basic incentives. If owners know that their futility will force a sale, it's fair to assume that they'll do everything possible to avoid being forced to sell what for most has been a very profitable investment; one that pays exponentially more in psychic income when we consider the prestige that attaches itself to all NFL owners.
Lastly, revenue sharing in terms of television and licensing contracts needs to be revisited. Oddly, this form of socialism is always the one that establishment NFL commentators rave about. To hear them say it, revenue sharing has made the league what it is today thanks to revenue equality driving team parity. Really? When's the last time the '49ers, Bills and Lions contended for anything, let alone proved consistently worthy opponents to the rest of the league?
What's not discussed enough when it comes to equal access to revenues is how this props up the weakest owners at the expense of the strong ones. And the league surely suffers as a result.
Indeed, does anyone think the Fords (Lions), Bidwills (Cardinals), and Browns (Bengals) would still be owners today if the financial success of their teams over the years had solely been a function of their individual abilities? Not by a long shot.
At present, the innovative owners in the league (think Jerry Jones and Bob Kraft to name but two) are forced to prop up the failures. Worse, ownership failure in the NFL means major profits and rising team valuations no matter the ineptitude of each individual lucky enough to own a team.
If revenues earned by the league were instead apportioned based on individual team success on the field, television ratings and apparel sales it's not a reach to suggest that the economics of owning a team would suddenly become more of a challenge. If so, failed owners would be forced to sell to entrepreneurs actually interested in achieving success with regularity.
If it were to abolish revenue sharing, the NFL would in one fell swoop rid itself of its free riders on the way to attracting wealthier, and more ambitious owners. Team valuations would soon go skyward thanks to the league erasing a success penalty that funnels hard earned profits to the laggards.
So while logic says not to mess with success, it seems worthwhile to consider the NFL's amazing success through the prism of seen versus unseen. The seen in this case is the success of a league that grows more profitable each year, but the unseen is how much more profitable and popular the NFL would be if it ceased propping up the weak at the expense of the successful.
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Mr. Tamny is a senior economic advisor to Toreador Research & Trading, columnist for Forbes and editor of RealClearMarkets.com. Mr. Tamny frequently writes about the securities markets, along with tax, trade and monetary policy issues that impact those markets for a variety of publications including the Wall Street Journal, National Review and the Washington Times. He’s also a frequent guest on CNBC’s Kudlow & Co. along with the Fox Business Channe
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With the exception of the Green Bay Packers, the NFL is owned by a bunch of stick up artists who extort their states and municipalities for ever grander stadiums and subsidies while charging exorbitant ticket fees to the very taxpayers who underwrite them.The owners are nothing more than racketeers who pillage the populous and leave their players brain damaged and crippled. The teams are monopolistic public utilities and should be regulated as such.
Using socialism word seems to be a wonderful attractor.
The guy is off target. All these sports leagues sell competition or more exactly the process of competiting as a product.
They need to sustain it by then.
Issue is that competition is not an endless process but one that is meant to determine a monopoly. Competition is a self extinguishing process.
Big, big troubles for anyone who wish to sell the process of competiting as it requires never to let competition mature.
Hence a whole series of fixing to prevent competition from being carried out. All sports leagues are rigged in this aspect. None is as the US sport leagues, save maybe Formula one. Formula one has to face similar issues, with a few racing firms always threatening to accomplish olipoly status. So they reset season after season the rules, the restrictions, in order to keep the competiting process going.
football? yeah, that ranks right up there with "American Idol" in the grand scheme of things.
Women have "Grey's Anatomy".
Men have the NFL.
Both groups show themselves to be fucktards as the world economy melts around them.
Exactly what I was thinking.
the NFL will ruin itself it is doesn't support the small markets and reduce itself to MLB/NBA status of few haves, and plenty of have nots... the league will be ignored more and more if that is so..
Stopped watching NFL when they let Vick back in.
Only sport I watch now is fighting.
dog fighting??
The propositions in this article are ridiculous. The NFL is insanely profitable... the largest sports franchise in the US by an order of magnitude. If the NFL really is "socialism", then what a damning indignation of socialism! The Jones and Kraft's of the League make plenty of money despite "propping up" the failures and have most likely seen their investments in the team payoff in multiples.
If the NFL is "socialist" then America needs to become "socialist". We should aspire to it.
The real problem with this article is that the writer has no fuckin clue what the word "socialism" actually is.
http://www.theyankeeu.com/2010/11/guest-post-mlb-v-nfl-ratings-issue-22759
NFL Franchises are the best to own because they are a cartel operating without a strong counter-balace (like the MLB players Union). But, like any cartel, complacency may undermine the product. Speaking of which, on Saturday I just for the first time noticed that there is a UFL. There are some big names like Caulpepper, Dennis Green, Jim Fassel, etc.- is this a league gearing up to be the next (hopefully more successful) USFL once the bitter NFL labor dispute ensues?
First of all, if this "socialism" is so bad for the NFL then why is it the most profitable league in the US? Second, it is all about the owners and their toys to play with. If an owner does not have full control over a team, why buy? You are missing the entire point and I have a hard time calling it socialism.
"At present the National Football League (NFL) towers over all U.S. sports leagues in terms of profits, television ratings, team valuations, and just about any other measure of popularity and success. In that case, for an outsider to question the league's business model is surely the height of hubris"
Expecting people to invest money in a strategy skewed off the real axis by your ideological biases is the height of hubris.
Can't just look at the data? Too painful if it violates your worldview or what?