Following Karen De Coster’s lead, I will credit a sportswriter for demonstrating knowledge of how markets actually work. Unfortunately, this is something of a zero-sum game as the sportswriter, Jason Whitlock of ESPN and the Kansas City Star, was writing to expose the market ignorance of a colleague, HBO’s Bryant Gumbel. Last week Gumbel, the host of HBO’s “Real Sports” newsmagazine, ended the program with an editorial criticism of Gene Upshaw, the executive director of the NFL Players Association and a Hall of Fame player in his own right. Gumbel presented his criticism as an “open letter” to incoming NFL Commissioner Roger Goodell:
Before he cleans out his office, have [departing Commissioner] Paul Tagliabue show you where he keeps Gene Upshaw’s leash. By making the docile head of the players union his personal pet, your predecessor has kept the peace without giving players the kind of guarantees other pros take for granted. Try to make sure no one competent ever replaces Upshaw on your watch.
Whitlock took Gumbel to task for his racial stereotyping—criticizing Upshaw, who is black, for being a “nontraditional black leader”—and for his poor grasp of economics. Actually, Gumbel has problems understanding the NFL’s collective bargaining agreement (CBA), which was recently extended by Upshaw and Commissioner Tagliabue after some last-minute wrangling with the league’s 32 owners. Gumbel’s problem with Upshaw is that the CBA does not provide for the same kind of “guaranteed contracts” that players in the NBA and Major League Baseball enjoy. NBA and MLB players commonly sign multi-year contracts that guarantee their annual salary regardless of future performance. NFL contracts commonly provide an upfront signing bonus and annual salaries that are paid only if a player makes the roster each year. Gumbel thinks the NFL is taking advantage of its players with Upshaw’s assistance.
The truth, as Whitlock explains, is somewhat different. NBA and MLB contracts do not have to be “guaranteed” under their CBAs. The CBAs do set general parameters for contracts, such as minimum (and sometimes maximum) salaries based on length of service, but ultimately contracts are “guaranteed” simply because players and their agents have the leverage to obtain them. There are some “non-guaranteed” contracts in baseball and basketball, and there are some “guaranteed” deals in football. Indeed, the use of signing bonuses in the NFL effectively “guarantees” those contracts because the NFL’s aggregate salary cap punishes teams that cut such players.
Gumbel seems to think that all sports leagues should employ the same business model—he’d make a fine antitrust lawyer—but Whitlock argues that the NFL’s structure has to differ from baseball and basketball:
You do realize that if the NFL handed out long-term guaranteed contracts to players in their late 20s and early 30s, no sane businessman would have an interest in owning a team? Football is clearly the most violent team sport. Players try to hurt each other on nearly every play. The rosters are huge — about five times bigger than NBA rosters, and twice as big as baseball rosters. Careers are routinely cut short by injuries.If Barry Bonds played football, injuries would’ve forced him into retirement six or seven years ago. Instead, in baseball you can roll him out to left field in a wheelchair, pad him up at the plate and watch him limp around the bases one home run at a time. You can give Barry Bonds a guaranteed contract because he can contribute and sell tickets as long as he can breathe.
If a linebacker pops a running back like Priest Holmes one good time, a non-team doctor can state it’s too dangerous for Holmes to continue playing, and an NFL owner could be on the hook to pay Holmes $5 million a year for the next four years.
Football players get injured often. They routinely play with injuries and pain that would sideline most rational people. If all contracts were guaranteed — keep in mind, there are 53 players on an NFL team and 12 on an NBA team — it wouldn’t make economic sense to own a team.
Contracts have to make sense for both sides — owners and players.
This last sentence is one you rarely hear from members of the media on any economic subject. The conventional approach to covering economics is to pick a “right” side—i.e., “consumers” or “labor”—and report that the other side is somehow “wrong.” This is what Gumbel did. He criticized Upshaw for not being confrontational as a union leader is “supposed” to be.
Compared to other union leaders, particularly outside of sports, Upshaw has done a good job in maintaining the economic freedom of individual players. Most unions impose total collectivism on their membership. In the NFL system, players can still negotiate their own contracts and seek compensation based on skill and performance. Contrast this with, say, a government schoolteacher union, where pay is based primarily on seniority and “labor” is expected to act wholly in unison.
Gumbel’s criticism, taken seriously, would promote this collectivist approach at the expense of many individual players. A “stronger” union would strengthen the political power of the less-talented (and generally older) players at the expense of more talented, younger players. A good example is the NBA’s cap on new player salaries. The cap—which literally sets a first-year player’s salary based on the order he was taken in the NBA Draft—was imposed when the union, dominated by veterans, complained that rookies were making “too much.” Not to mention the fact that younger players take the roster sports of veterans trying to hold on to their careers. Similarly, the “guaranteed” contracts that Gumbel clamors for in the NFL would create a large class of underperforming veterans at the expense of potentially more productive talent.
{ 1 comment }
I absolutely agree that the NFL would be a terrible candidate for guaranteed long term salaries. Simply look at players who are in their last contract year. They know that any future pay will be directly correlated with their performance, so they step it up a notch. In the last year of a countract and the first year of a new contract, it is well known to coaches and owners that players will put in up to 50% more hours working out and studying game film. You will see the same pattern among players in the NHL. The point is that the work environments of professional atheletics are not uniform, so contracts can not be either. If these players were really worried about the risk of injury, the could handle it the same way soccer players and super models do and take out insurance policies.
Comments on this entry are closed.