Monday, January 31, 2011

Why I'm Siding With The Players

With the NBA and the NFL both facing labor disputes and potential work stoppages in 2011, I thought I would take a little time and outline why I'm siding with players. In fact, I'm siding with the players this time, next time and probably every time after that. Here's why:

1) The players won't propose a deal that's bad for ownership

No, you read that correctly, the players won't and can't propose a deal that is bad for ownership. A bad deal for ownership would be one in which their labor costs to the players and other operating costs are so high that they don't make an acceptable profit and consider shutting down the sport for an extended length of time. If this were to happen, the players are basically putting themselves out of business. Since the players are (at least semi) rational, they won't offer a deal that kills the golden goose. Thus, the players have no choice but to agree to a deal that keeps the owners happily in business. Sure, they'll try to push as far into the owners profits as far as possible, but ultimately the players have to present a deal that is good for both sides.

The flip side of this is that the owners don't have to present a deal that is good for both sides. In fact, they want to maximize profits by lowering operating costs as much as possible. As long as their deal would be good enough to keep the talented players from choosing other professions (probably not hard to do since the average American makes somewhere south of $40k), then the owners would be in business and raking in even more cash.

2) The players are what we want to see

The players ARE the game. Watching the world's greatest athletes play the most exciting games at the very highest level is the reason we tune in to professional sports. Want proof of this: How many WNBA games did you watch last year? How many Division III college football games did you watch? How many cricket matches did you watch? I'm guessing the sum of these three question is probably less than five. Now, how many NFL games did you watch? That number is a lot higher, isn't it?

The talent is really the reason we watch professional sports. Without extraordinarily gifted players performing remarkable physical tasks, nobody pays attention. It doesn't matter how good your marketing is, how nice the stadium is or how delicious the hot dogs are, if the players aren't highly skilled nothing else matters. This isn't to say that we don't need the business side of sports to make things operate, we do, but the players are what draw people to the game.

In addition, it's important to note how scarce talented players are. Approximately 400 guys play in the NBA every year. Maybe another 2000 guys play in the NFL each year. That's 2400 people out of roughly 300 million Americans (yes, yes, some of the NBA guys come from overseas, bear with me). That means that roughly 0.0008% of the country is talented enough to play in the NFL or NBA. I don't care what other profession you name, I'm guessing more that 0.0008% of the population can do it.

3) It's a zero sum game

I've heard it a thousand times: "The players are just a bunch of spoiled millionaires who should shut up and be thankful they are getting paid 100 times more than the average school teacher". Ok, that's true, but guess what, the owners are multimillionaires too, and in most cases billionaires. Either way somebody really, really, really rich is going to end up with the money. It makes no sense to tell the players just to be grateful when it essentially makes someone else richer. Both sides are trying to maximize their slice of the revenue, this is capitalism.

4) Ticket prices aren't going anywhere

Another favorite argument is that if the players would accept less money, the owners (who were then facing lower operating costs) would lower ticket prices. This is flat out wrong. Ticket prices are calculated based on what people are willing to pay to walk in the gate. It's based on market research and demand to see the product on the field. Do this thought experiment: If all the player's salaries dropped to $100,000 tomorrow, what would happen to ticket prices? That's right, the ticket prices would stay exactly where they currently are...and the owners would pocket the difference.

5) The owners have an investment, the players have a job

Due to the increasing popularity of American professional sports (both in America and expanding around the world), an NBA or NFL franchise is worth more today than it was ten years ago...approximately 50% more. For example, the Jacksonville Jaguars (the NFL's least valuable franchise), was worth $460 million in 2000 is now worth $725 million. The Oakland Raiders went from $315 million to $758 million over the same ten year period. Even my beloved Cleveland Browns went from $557 million to $1032 million proving that you don't need to win to make money. Even if the owners weren't making any money year to year (and believe me, they are as all but 6 franchises had profits of greater than $10 million in 2009), the act of simply owning the team is returning 50% over ten years. Obviously, past results don't guarantee future returns, but, damn.

The players are another story. The average NFL career is only a few years and when you are done, you're done. Of course there is the NFL pension plan, but that is only for players that played at least three years and you can't get full benefits until the age of 55. While this is a nice benefit that most American workers would probably kill to receive, it doesn't exactly seem to match up with the 50% return on investment the owners are seeing.

Highly skilled players, representing the only real commodity of their sport, presenting a reasonable, win/win offer to ownership that is seeing huge returns on their investments. That is why I'm supporting the players in the upcoming NBA and NFL labor disputes.

1 comment:

GoodPointJoe said...

As was often the case when we were doing radio shows, I couldn't agree more. In sports, I've always supported labor, for basically the reasons you've stated.

It's interesting that I'd feel that way, though, when I think that most NFL players are idiots who have to be told what to do. It's a strange situation where you have to tell a man not to hit another man in the head, or where a guy suffers a serious injury and gets made fun of for missing time. But the fact that NFL contracts aren't guaranteed, and football is a ridiculously dangerous sport (partly because of those head shots), the players have to make sure they protect themselves. That means accepting the headshot rules, but also refusing the 18 game season, pushing for better health coverage benefits, and working towards more guaranteed money in contracts.

I promise you, if games get canceled this season, I'll be likely not watching much NFL this year, even if the real players are allowed to eventually return.

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