Players Union Vs NFL Team Owners

While I make the time to understand most sports events and the character of the franchises, I understood very little about the economics of the National Football League until I listened to this podcast from Freakonomics. I do not only recommend it for enlightening me but for the depth that it revealed about the financial structure of the firms and what the real bone of contention is between the players through their union and the owners of the teams. For instance, while I am aware that incomes among professional athletes tend to be very unequal, i was still surprised that the average career for NFL athletes is less than four years. For all the high incomes, it is clear that the average athlete faces great odds against living purely from that income.

Having listened to that podcast, it became immediately clear to me that the player's union had far more sensible views about the sharing of revenues than the owners. For one, it is clear that the NFL should have no pretense to being a market because it like other leagues, is a cartel and a collusive arrangement. Once team owners have gained entry, they tend to have little skin in the game and usually sit back and are assured of revenue and profits.

James Surowiecki, writing in the New Yorker Magazine has given the dispute an analysis fit for illustrating the behaviour of cartels and the distortions that result from their market power. Immediately evident is the fact that there is less competition for revenues because teams are in a symbiotic relationship in which they rise or sink together. In my view, that's what makes the negotiations critical for the teams because owners know that having decided on the formula, they need to do little less. As the article lucidly explains, the structure under which players and owners transact business does not deserve to be called a market. I am not particularly fond of unions but they have my support on this matter though it is unlikely that their negotiation strategy will try and get the industry to be more in tune with real markets.

As the NFL stands today, the order of benefits is with owners, the players and with fans coming last. My view is that this should be turned by 180 degrees.