Football and Economics: More Packers Less Blood Suckers

My job is to translate economics for a political and policy-oriented audience. But economics is about much more than what something costs. It’s not just an excuse to expand or cut a given program. Economics is critical to understanding why some things happen, and why other things don’t. If you’re trying to discuss policies or personal choices without at least acknowledging economics, you’re acting as credulously as pagans making a bonfire in the dead of winter. The sun might come back and do a proper days work; you might get the policy results you champion. But what’s the necessary connection?

Y'all gonna pay me how much to build this here stadium? WELL YIPPE KI YAY AND HOT DANG!

Radley Balko pointed to a good piece today by Skip Oliva about the economic incentives and challenges behind the coming NFL lockout.

The NFL encapsulates, perhaps better than any other single business entity, the popular conceptions — and misconceptions — about capitalism and the nature of markets. The league is the epitome of statist “crony” capitalism. Its franchise operators demand huge government subsidies for stadiums while jealously guarding its prerogatives as a “private” business. Governments (and their media enablers) largely go along with this because they’ve been led to believe the NFL’s popularity is so immense that no respectable city can go without a franchise.

This is what makes it so hard for me to care that we won’t have any football. The owners and the League act from a ridiculously privileged position. They’ve even argued to the Supreme Court that they’re a single entity. The Court may have rejected that argument for legal purposes, but it’s telling about their business practices. On an older House of Punte, Josh said the League doesn’t care about the fans. At the time I thought that was extreme, but I’m coming around. Every week we see hundreds of thousands of rabid fans pack into cold, uncomfortable seating to yell, cheer, and drink. How could that kind of passion not be reciprocal? Skip explains:

The NFL is really two distinct products. There’s the in-stadium product represented by Jerry World and its taxpayer-financed brethren. And then there’s the way most people consume football, the television product produced by the major broadcast networks and ESPN. NFL-TV is a great product whose popularity remains high. NFL-Stadium is struggling to pay the mortgage.

Originally, of course, the NFL was purely a stadium product that relied on ticket sales and concessions. Television was viewed with skepticism and hostility in the early days, to the point where the NFL of the 1950s banned all telecasts of a team’s home games for fear of cannibalizing live attendance. A few decades later, television has proven to be the lifeblood of NFL expansion.

The NFL doesn’t care about the fans because it doesn’t have a direct connection to the fans. The fans are out there, separated from the League by the fourth wall of the television. And as long as Fox and CBS and NFL Network keep pumping out the football and pumping in the money, the NFL is just fine with that. Insulation from consumers produces apathy. It’s the same problem we have when corporations decide that the government, rather than innovation and customer focus, can save the company from the ravages of the market.

Then again, as a lifelong NFL bureaucrat, Goodell is simply extending the league’s on-field thinking to off-field situations. The NFL product is increasingly bureaucratic and not very “consumer friendly.” The league obsesses over trivial matters — fining players $5,000 for wearing the wrong socks, banning all truthful criticism of officiating mistakes, changing rules on the fly in the middle of the season — to the point where we’re no longer talking about private businessmen but quasi-governmental officials.

The NFL produces three things: stadium debt, intellectual property, and bureaucracy. None of these things should be confused with “free market” values. The league is a prime example of what happens when you mix politically influential egos with easy credit and a media environment that largely promotes economic ignorance. You have the perfect boom business.

But all booms eventually end. NFL acolytes — and they are presently the majority — will insist, as Homer Simpson once did, that “everything lasts forever.” One media writer I correspond with insisted to me recently the NFL will be even more popular in 20 years then it is today. Go back to 1991 and think about all of the businesses you could have said that about, incorrectly, at that time.

In fact, someone did that. It’s a silly management book called Built to Last about ‘great’ companies. Most subsequently went bust. They should have written about the Packers business model instead.

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