Recap: Supreme Court hears argument in American Needle v. NFL

The U.S. Supreme Court today heard argument in the American Needle v. NFL case, which proposed the question whether the NFL is a “single-entity” for antitrust purposes and thus immune to antitrust liability. (Read more about it here.) Or does it present that question? The excellent Lyle Denniston attended today’s oral argument (and, unlike most sports outlets, understands the issue), and has his take up on

If the National Football League, and other pro sports leagues, want to combine their efforts in commercial activity, they probably are going to have to justify that in federal court, in perhaps prolonged trials focusing on whether any such action is really for the good of the game, or is aimed only at making more money. Just one trip to the Supreme Court to avoid that, it appears, will not be enough. That prospect loomed on Wednesday as the Justices weighed the NFL’s broad claim to antitrust immunity for joint operations, a claim that the other pro sports leagues similarly make.

The Court heard 70 minutes of oral argument in American Needle v. NFL (08-661), a case that supposedly was to focus on a single, simple question: is the NFL, along with its 32 teams, a “single entity” and therefore immune to the Sherman Antitrust Act when they act jointly in a business effort? But Justice after Justice insisted strenuously that that is not really the issue, and that the case probably needs to go back to the lower courts for a potentially penetrating inquiry into what kinds of commerce are closely enough related to pro football that they escape antitrust liability.

In particular, the Justices were unconvinced of the NFL’s sweeping arguments:

The specific kind of activity under legal attack in the case is the joint effort of the NFL and its teams to sell hats, jerseys, and other fan gear displaying the teams’ trademarked logos. While the NFL insists that that is crucial to promoting the popularity of the games on the field, it did not appear that any Justice was firmly convinced — right now — of that. From the bench, for example, came the question of whether the NFL could escape antitrust liability if it decided, jointly, to build houses. While the NFL’s lawyer said that would not promote the game, Chief Justice John G. Roberts, Jr., shot back that, maybe, selling trademarked goods was closer to selling houses than it was to promoting football games. And that, it seems, is precisely the issue that would dominate a subsequent trial on the legality of joint selling of fan goods.

That doesn’t mean, however, American Needle would win the case outright — indeed, they probably have a loser. But the sweeping legal ruling that the NFL won at the lower courts preempted further inquiry into the specific facts. A remand to the lower courts would allow the NFL to win the case on narrower grounds that would not have much application in other, future cases beyond this one. Moreover, such a ruling would absolve the Justices of the danger of deciding a case about the NFL that applies to a wide swath of joint business ventures throughout the country. (The NFL’s argument was founded largely on its exceptionalism: We are the NFL and get this treatment, though no other business joint ventures should. That kind of argument is more persuasive on Around the Horn than it is in the Supreme Court building.) As Denniston added:

The content of the entire argument strongly suggested that there was not now a majority either to uphold broad immunity for pro sports leagues’ joint commercial enterprises, or to make everything the league and its teams do jointly open to antitrust challenge. What most of the Justices seemed to be tempted by was a middle-ground approach, with each specific joint effort tested under a “rule of reason” analysis to determine whether it was essentially to the success of the sporting enterprise. Even that, though, would amount to a significant tactical loss for pro sports.

I will post the transcript when it is up.

Update: The Associated Press has an article up titled “Court seems sceptical of NFL antitrust protection.”

Update: The transcript of the oral argument is available here.

Update again: It’s unclear what the Supreme Court will actually do (likely hold that these decisions of the NFL are subject to a “rule of reason” analysis, which means that the NFL could win below but they aren’t automatically immune). But this exchange at the end of the argument explains why I think it is highly unlikely that the NFL will succeed (after the jump; Levy is the NFL’s lawyer):


Supreme Court gives NFL the Terry Tate treatment

The NFL, having convinced both a district court and the Seventh Circuit Court of Appeals that it was a “single-entity” for anti-trust purposes and thus exempt from anti-trust liability under Section 1 of the Sherman Act, asked the U.S. Supreme Court to make that the law of the land for the entire country. Justice John Paul Stevens, writing for a unanimous court, said simply:

Actually that was Terry Tate, but the message was basically the same: NFL, you’ve overreached — you can’t transform 32 disparate, separately owned teams into a single-entity simply by setting up a joint venture, National Football League Properties or NFLP. For background, I’ve written about the case several times (where I confidently predicted that the NFL would lose), and the NY Times explains the posture well:

The case was brought by American Needle, an apparel maker from Illinois that lost its contract with the league when the N.F.L. entered into an exclusive 10-year, $250 million deal with Reebok in late 2000 to produce hats, jerseys and other league-branded merchandise.

American Needle argued that the league’s deal with Reebok violated antitrust law because the N.F.L. was a collection of individually owned teams that compete with one another, not a single entity able to negotiate contracts on behalf of its teams. By striking a deal with Reebok, the league effectively conspired to stifle competition, the company argued.

American Needle appealed to the Supreme Court….

In rejecting the position of the NFL (and that of the various other leagues who filed briefs in support of the NFL), the Court explained (I’ve removed the citations):

“Every contract, combination in the form of a trust or otherwise, or, conspiracy, in restraint of trade” is made illegal by §1 of the Sherman Act. The question whether an arrangement is a contract, combination, or conspiracy is different from and antecedent to the question whether it unreasonably restrains trade. This case raises that antecedent question about the business of the 32 teams in the National Football League (NFL) and a corporate entity that they formed to manage their intellectual property…


“[S]ubstance, not form, should determine whether a[n] . . . entity is capable of conspiring under §1.” This inquiry is sometimes described as asking whether the alleged conspirators are a single entity. That is perhaps a misdescription, however, because the question is not whether the defendant is a legally single entity or has a single name; nor is the question whether the parties involved “seem” like one firm or multiple firms in any metaphysical sense… The relevant inquiry, therefore, is whether there is a “contract, combination . . . or conspiracy” amongst “separate economic actors pursuing separate economic interests,” such that the agreement “deprives the marketplace of independent centers of decision-making” and therefore of “diversity of entrepreneurial interests.”

In applying this framework, the Court rejected the NFL and lower courts’ rationale that the NFL is a “single-entity” because the NFL is seems like a single-entity in what it termed a “metaphysical sense,” simply because you need multiple teams and hence cooperation to play a football game:

Each of the teams is a substantial, independently owned, and independently managed business. “[T]heir general corporate actions are guided or determined” by “separate corporate consciousnesses,” and “[t]heir objectives are” not “common.”… Directly relevant to this case, the teams compete in the market for intellectual property. To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks. When each NFL team licenses its intellectual property, it is not pursuing the “common interests of the whole” league but is instead pursuing interests of each “corporation itself”… Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that “depriv[e] the marketplace of independent centers of decision-making,” and therefore of actual or potential competition.

[The NFL and its teams] argue that they constitute a single entity because without their cooperation, there would be no NFL football….But that does not mean that necessity of cooperation transforms concerted action into independent action; a nut and a bolt can only operate together but an agreement between nut and bolt manufacturers is still subject to §1 analysis. Nor does it mean that once a group of firms agree to produce a joint product, cooperation amongst those firms must be treated as independent conduct. The mere fact that the teams operate jointly in some sense does not mean that they are immune.

And in a footnote, the Court summed up its rejection of the “Zen riddle: Who wins when a football team plays itself?” argument the NFL advanced:

Although two teams are needed to play a football game, not all aspects of elaborate inter-league cooperation are necessary to produce a game. Moreover, even if league-wide agreements are necessary to produce football, it does not follow that concerted activity in marketing intellectual property is necessary to produce football.

The Court of Appeals carved out a zone of antitrust immunity for conduct arguably related to league operations by reasoning that coordinated team trademark sales are necessary to produce “NFL football,” a single NFL brand that competes against other forms of entertainment. But defining the product as “NFL football” puts the cart before the horse: Of course the NFL produces NFL football; but that does not mean that cooperation amongst NFL teams is immune from §1 scrutiny. Members of any cartel could insist that their cooperation is necessary to produce the “cartel product” and compete with other products.

(Emphasis mine.) This is correct: the NFL’s position was really too bizarre to stand (hence the unanimity in rejecting it). But it’s also true that this case is not that significant: it merely overturned the ruling of one outlier lower court, and otherwise it was a narrow opinion. It did not rule out that the NFL could ultimately win the case — indeed, it sent fairly clear signals that the NFL ought to win under the “rule of reason” analysis (which again speaks to why it was so weird that the NFL wanted pure immunity in the first place). All the Court determined was that the NFL could be liable.

So it was a narrow case, likely to soon be forgotten other than as a real but relatively minor humiliation of the NFL’s upper management and legal counsel for asking the Supreme Court to take the case in the first place (a rare thing for a party that wins in a lower court). Lyle Denniston of Scotusblog explains the ho-hum nature of the case:


Smart Notes 1/14/2010

1 There’s a new book out there that I highlight recommend: Coaching the Under Front Defense, by Jerry Gordon. It’s a very nuts and bolts approach to the “under front,” a very common shifted variant of the traditional 4-3 defense, which is the defense of choice for teams and coaches as diverse as Charlie Strong (Florida, now Louisville) and Pete Carroll (USC, now Seattle Seahawks). I hope to have Jerry contribute to the site soon.

2. Haiti. EDSBS collects links on how and where to donate for Haiti. Please do.

3. American Needle round-up. In addition to my post from yesterday, there has been some other great work on yesterday’s oral arguments. The consensus with all seems to be: The NFL won’t get what it wants, though it may ultimately win the case on narrower grounds. From the NFL’s perspective, it was kind of like going deep on second and short: could have been a big play, but as it stands they’ll probably get the first down. If you read one thing, I highly recommend Josh Levin and Dahlia Lithwick’s piece on Slate, where they note how little the Justices seem to know (or care) about football. Both Justices Breyer and Sotomayor disclaim knowledge of football, and Breyer keeps turning the hypotheticals into ones about baseball. Justice Alito, who is a huge baseball fan, doesn’t seem too interested either. (The Court’s biggest football fan, Justice Thomas, is more of a college football fan — his favorite team is the Nebraska Cornhuskers — and in any event he rarely if ever asks questions at oral argument.) Other good takes on the case from: Adam Liptak (NY Times), David Savage (L.A. Times), Jess Bravin (WSJ), and Ashby Jones (WSJ Law Blog).

4. “Depends on what the meaning of ‘is,’ is.” Check the 1:30 mark of Lane Kiffin’s press conference.

5. Speaking of books, I’m currently reading Hilary Martel’s Wolf Hall: A Novel (Man Booker Prize), a sort of reiminaging of the court of Henry VIII. I recommend it.

More on whether the NFL is a “single-entity” for anti-trust purposes

This question — which is trickier than many give it credit for — is the subject of an upcoming Supreme Court case, American Needle v. NFL. I previously discussed it here, and now Gabriel Feldman of Tulane Law School is chiming in:

[American Needle v. NFL] involves an unremarkable set of facts. For many years, all of the NFL teams jointly licensed their trademarks and logos to a variety of apparel manufacturers. American Needle was one of these licensees, and had sold NFL-logoed hats since the late 1950’s. After retail sales of sports-related merchandise struggled in the 1990’s, the NFL teams decided to grant an exclusive license to Reebok to manufacture all NFL-licensed apparel, thus eliminating American Needle’s ability to continue selling NFL hats. In response, American Needle brought an antitrust lawsuit against the NFL and its teams, claiming that the exclusive license with Reebok eliminated competition in the market for NFL apparel and constituted an illegal “contract, combination…or conspiracy” in violation of the Sherman Antitrust Act. In American Needle’s brief to the Supreme Court, they note that “a Reebok vice-president hailed the elimination of price competition as ‘a godsend from a profitability standpoint,’ explaining that ‘[b]asic fitted caps that were selling for $19.99 a few years ago because of the price pressures are now selling for $30.'”

…[T]his case is about a lot more than whether the NFL’s exclusive license violates Section 1 of the Sherman Act. Instead, at issue here is whether the NFL is even capable of violating Section 1. Section 1 of the Sherman Act only applies to agreements, and (as Rob Bass and DJ EZ Rock might have put it) it takes two to make an agreement. So, for example, if all of the manufacturers of wool hats in the world got together to make a series of agreements, those agreements would be scrutinized under Section 1 to ensure they were not anticompetitive (e.g., to ensure that the manufacturers were not agreeing to fix prices). The question is, what happens when all of the NFL teams in the world get together and make a series of agreements? Should those agreements be scrutinized under Section 1?

In American Needle, the NFL argued that they are a single entity, and thus incapable of violating Section 1 (because a single entity cannot reach an agreement with itself). The NFL concedes that they do not look like a traditional single entity — that is, a single firm with a single owner. Instead, the NFL argues that they are a single entity because the NFL is a product that can only be created by cooperation among its teams, and none of its teams have any economic value without the league. The NFL’s argument is that the product created by the NFL teams is an interconnected series of games (the regular season) that leads to a playoffs, that eventually produces a Super Bowl champion, and that no individual team can produce this product on its own. Rather, the teams must make a series of agreements with each other–where to play, when to play, under what rules, etc. The NFL believes that this interdependence and need for cooperation renders the league a single entity, and that all of the agreements made by the league and its teams –ranging from scheduling to free agency restrictions to salary cap rules to franchise relocation restrictions –should thus not be subject to scrutiny under Section 1.

This is not a new argument. Sports leagues have been making this same argument for over thirty years, and virtually every court to address the issue has rejected the argument for over thirty years, often finding that agreements made by teams have violated Section 1. . . . I want to quickly touch on three basic points that have either been overlooked or misconstrued by the press covering this story.

Is the NFL a “single entity” (and therefore exempt from many anti-trust laws)? A round-up

That’s the question presented in the upcoming U.S. Supreme Court case. And while there has already been some hyperbole (ESPN: “Antitrust case could be Armageddon”), the case does present some real and interesting questions, including ones beyond the narrow issue of the NFL and other sports leagues — I know, it’s hard to imagine anything beyond sports leagues. Here is how the full issue was summarized by David Savage in the ABA Journal:

[I]n American Needle v. National Football League, the justices will decide a legal question that has long hung over pro sports. Are their leagues a “single entity” and, therefore, immune from antitrust laws, or can these independently owned teams be sued for conspiring to restrain trade? A suburban Chicago maker of stocking hats and caps, American Needle sued in 2004 after it was shut out from using NFL logos. The league had made an exclusive deal with Reebok. The suit was thrown out by the 7th Circuit, but the justices agreed to decide whether pro leagues are shielded from antitrust charges.

Upon reading this you probably have an impulsive answer right away. Either, “Hey, of course the NFL is just one entity!” Or “Hey, of course there are thirty-two teams!” But you have to understand the weird nature of sports leagues as a branch of joint ventures, and the stakes — that a ruling of them as a joint entity makes them immune from anti-trust action, even with respect to other possible competitors.

Without getting too complicated, baseball has long enjoyed a unique place in anti-trust law — it doesn’t apply to it. Other leagues have come close, but haven’t been so lucky. There’s really no reason for these leagues to have such unique status, but baseball does and football wants it, anyway it can get it. The best they can muster from a policy perspective is that “hey, we’re the NFL, we’re important right!” And, within the cloistered halls of the NFL (not to mention ESPN, and the like) the world begins and ends insofar as it affects The Game, be it terrorism or the stockmarket or whatever else.

But legal battles in real courts deal with larger themes. Specifically, the government, in the form of the Solicitor General’s office, was asked to chime in on this case. This put them in an awkward position because (a) American Needle has a very weak case, even apart from this “single-entity theory,” and (b) the government really only cares about this case insofar as it affects other joint-ventures beyond sports leagues. As Morrison & Foerster partner Deanne Maynard noted at a recent Supreme Court panel, if the Court rules in favor of the NFL, this case could have wide-ranging implications beyond just sports organizations.

“I think it could affect any kind of joint business venture,” she said. “It could mean that in doing these (joint) activities, the companies are a single entity.”

Moreover, here’s some excellent commentary and background from Lyle Denniston of SCOTUSBlog (written while the Justices were still considering whether to hear the case): (more…)

Best Books I Read in 2016: Air Raid, Homo Sapiens, Song of Ice and Fire, Dragons and Tacos

The Perfect Pass: American Genius and the Reinvention of Football, by S.C. Gwynne. This is the most fun football book I’ve read in some time, which is a credit to Gwynne but also to his subject matter, namely Hal Mumme, Mike Leach and the motley bunch of players, coaches and a few administrators who supported or in some cases simply tolerated the birth of the Air Raid.

gwynneGwynne is an accomplished writer but not necessarily a football expert, but he nonetheless handles the technical aspects of the Air Raid with aplomb, which is in a sense not surprising given that one of the hallmarks of the Air Raid is its simplicity. But the heart of the book — and its true value — is Gwynne’s reconstruction of Mumme’s and later Leach’s journey as they designed and developed what eventually became the Air Raid offense the 1980s and early 1990s at places like Copperas Cove high school, Valdosta State and, most colorfully, Iowa Wesleyan.

As someone who has written extensively about Mumme, Leach and the Air Raid offense, I approached the book with trepidation — OK, fine, my usual policy on books like this is not to bother with reading them — but enough coaches told me I should read, and I’m glad I did. Gwynne’s book filled in for me the offense’s pre-Valdosta and pre-Kentucky history, but what I found most remarkable about the book was its chronicling of the fact that in the early 1980s Hal Mumme was a Division I offensive coordinator (UTEP from 1982 to 1985) who desperately wanted to run a pass-first offense but had no real idea how to do it and didn’t even know where to go to learn. He tried to watch San Francisco 49ers games and he eventually started trying to copy BYU’s schemes under LaVell Edwards, but these were poor emulations off of film without any of the related coaching points (indeed, some of Mumme’s earliest experiments involved Mumme trying to write down the plays he saw BYU QB Jim McMahon run while watching the Holiday Bowl on TV), and there were so few people to visit or spend time with that much of the early Air Raid was just trial and error. (Early in his tenure as head coach at Copperas Cove high school, Mumme tried running a version of the run and shoot but it largely died on arrival.)

Things took off when Mumme made more of a connection with the BYU staff and began meeting with Edwards and BYU assistants Norm Chow and Roger French, and then once Mumme teamed up with Leach at Iowa Wesleyan the two made a variety of pilgrimages to meet with pass-oriented coaches like then-Green Bay coach Lindy Infante and then-Miami coach Dennis Erickson. But again, consider how different this was than the situation in 2016: Nowadays one can watch unlimited NFL all-22 film (for a small fee) and can download countless playbooks and game films, there are coaching message boards and social media accounts dedicated to football and football strategy (plus, uh, some blogs and websites), one can easily buy or borrow a huge variety of books and DVDs, there’s Youtube videos of clinic talks and GIFs of basically every meaningful play, and communication among fans and coaches in general is much easier, and if all else fails there are coaching and consulting services you can pay for where they tell you how to install whatever offense or defense you want to run. But in 1989 the sole option was, more or less, get in the car and drive six hours to learn from someone who is doing what you would like to do, which is why it took Mumme roughly a decade of experimenting at high schools and small colleges to bring the Air Raid offense from conception to completion. On the other hand, however, those established coaches were willing to meet with off-the-radar guys like Leach and Mumme for hours and even days because the two of them had in fact gotten in the car and driven to their offices, rather than sending them some emails or just tweeting at them.

In any event, The Perfect Pass had a few minor flaws: it was probably a bit too charitable to Mumme regarding how his Kentucky tenure ended amid NCAA scandal, though that entire situation was a mess and I’m aware of no evidence that Mumme directly authorized the cash payments made by his staff, and the book’s arguments are weakest when trying to declare definitively that the game is only going in the direction of more and more passing (a weakness of hyperbole shared by the book’s title). But those are relatively minor quibbles, as this is one of the most fun football books I’ve read in years, and I’m glad the story of these guys and this offense finally got the definitive treatment they deserve. And, if nothing else, the following passage alone was worth the price of admission, as anyone who knows me (particularly my wife) simply nods when I show it to them:

[Mumme] spent much of his free time diagramming pass plays. He would often do this on scraps of paper or whatever he could find to write on, scrawling down ideas about how to freeze this or that defensive back, how to flood a zone defense, how to throw a curl/flat combination, how to protect against a blitz. He did this everywhere he went, day and night, so much so that he trailed these little artifacts of ambition and desire behind him at his home and office. They were tiny pieces of the master plan he didn’t have yet. June actually picked them up and put them in boxes. She soon discovered that he didn’t need to keep them. The writing itself was the mnemonic device.


Sapiens: A Brief History of Humankind, by Yuval Noah Harari. While The Perfect Pass was the best football book I read this year, Sapiens was far and away the best overall book I read. I looked it up after I heard Nobel laureate Dan Kahneman (another Smart Football favorite) mention it on a podcast, and I read a sample chapter with little expectation. But while I was immediately hooked, the book kept evolving as I read it, as what began with a fascinating recantation of the lives and activities of the earliest proto-humans — Neaderthals, homo erectus and early homo sapiens — soon turned to an examination of why it was that homo sapiens, after hundreds of thousands of years of surviving but pretty much existing in the middle of the food chain, suddenly rocketed to the top of it (and in the process driving many ancient beasts to extinction, like giant sloths and mammoths), conquered multiple climates, and eventually began domesticating the world around them, from farm animals and livestock to crops. And Harari includes a fascinating albeit depressing argument about the true nature of our relationship to our most necessary crop, wheat:

Think for a moment about the Agricultural Revolution from the viewpoint of wheat. Ten thousand years ago wheat was just a wild grass, one of many, confined to a small range in the Middle East. Suddenly, within just a few short millennia, it was growing all over the world. According to the basic evolutionary criteria of survival and reproduction, wheat has become one of the most successful plants in the history of the earth. In areas such as the Great Plains of North America, where not a single wheat stalk grew 10,000 years ago, you can today walk for hundreds upon hundreds of miles without encountering any other plant. Worldwide, wheat covers about 870,000 square miles of the globe’s surface, almost ten times the size of Britain. How did this grass turn from insignificant to ubiquitous? Wheat did it by manipulating Homo sapiens to its advantage. This ape had been living a fairly comfortable life hunting and gathering until about 10,000 years ago, but then began to invest more and more effort in cultivating wheat. Within a couple of millennia, humans in many parts of the world were doing little from dawn to dusk other than taking care of wheat plants. It wasn’t easy. Wheat demanded a lot of them. Wheat didn’t like rocks and pebbles, so Sapiens broke their backs clearing fields. Wheat didn’t like sharing its space, water and nutrients with other plants, so men and women laboured long days weeding under the scorching sun. Wheat got sick, so Sapiens had to keep a watch out for worms and blight. Wheat was attacked by rabbits and locust swarms, so the farmers built fences and stood guard over the fields. Wheat was thirsty, so humans dug irrigation canals or lugged heavy buckets from the well to water it. Sapiens even collected animal faeces to nourish the ground in which wheat grew.


Player salaries and economic rents

Brian Burke opines on NFL salaries:

Personally, I think they’re all overpaid, rookies and veterans. If you ask most football players if they would still play football for $80,000 per year instead of $800,000 or $8 million, they’d say yes. It’s almost certainly a better proposition than whatever else they’d be able to do in the labor market. If Sam Bradford had the choice between playing in the NFL for $80k/yr or looking for an entry level job in Oklahoma City, what do you think he’d do? Every dollar above $80k is icing on the cake. Technically, it could be considered economic rent.

In economic terms, rent is a misnomer. It does not refer to money you pay a landlord for your apartment. It refers to the money above the minimum amount required to induce the employment of a resource. There is always rent claimed by both sides of all voluntary transactions, otherwise people wouldn’t agree to the transaction in the first place. . . .

It seems to me almost all of the economic rent in professional sports goes to the players. It’s hard to imagine any other multi-billion dollar company paying more than 60% of its revenue to a few hundred employees. It’s not that the salaries are high in absolute terms, it’s that the athletes should gladly play for far less.

I tend to agree… or do I? I am conflicted. It is a plausible account, but there is a lot of uncertainty there as well. One, the NFL and other sports leagues are already incredibly distorted markets, aided as they are by exceptions to anti-trade law and a general public (to say nothing of lawmakers and judges) who are fine giving the NFL monopoly power over professional football (which may be a perfectly rational and fine choice). Second, and more importantly, the lifespan of an NFL player is blisteringly short. I’ve heard a variety of estimates, but most often the estimate is put at around 2-3 years; never have I heard even five seasons.

This skews the incentives. Were Sam Bradford to have taken the $80,000 a year job, he would be giving up a lot now, but it’s much more likely that his other career would last far longer, and as a result his income would be much smoother. And of course the number one pick is not really the appropriate metric; it’s not evident that, from a financial perspective at least, making around $400,000 a year for three or even four years and then having no career prospects at all is better than starting in a $70,000/year job with growth potential and stability. (I know in this economy nothing is certain.)

Two points flow from this. The first is that it cannot be accurate to compare an NFL player’s salary with the salary of Joe Schmo, office manager. Their income stream is more like that of an artist, or even an entrepreneur — variable with their success, with great opportunity to be set for life, with also a high likelihood of bust. As I’ve pointed out, 78% of NFL players file for bankruptcy. As this NY Times article points out, it’s not easy to manage your money if it comes in irregular, large chunks, followed by long dry-spells.

And second, if you make your money at once you end up paying more in taxes than someone who earned the same total amount, in smoother fashion, over the same period. To use an example of an entrepreneur, imagine the there are only two tax rates: 40% if you make over $200,000 and 20% if you make over $45,000. If two neighbors both make $500,000 over five years, with neighbor 1 making $100,000 every year while neighbor 2 making $250,000 twice and zero in the other years, neighbor 1 will have paid $100,000 in taxes while neighbor 2 will have paid $200,000.

Is any of this determinative of whether or not football players make too much? No, but I think it all adds a significant layer of uncertainty to their ability to make a living that, particularly when coupled with the well documented health issues that come from playing football, including brain injuries, make high incomes somewhat more understandable, even if they could be characterized as raw economic rents.