Sentences to ponder, NFL labor lockout/dispute edition

The owners overspent on unnecessary stadiums, and now they want the players to work more for less pay to help pay down the debt. That’s your entire labor dispute in one sentence.

That’s from the Mises blog, and the post is interesting throughout. The following is also important for understanding the NFL as government sanction and sponsored business entity:

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.

Regardless of how this labor dispute plays out, the future of football has to be in NFL as TV (and internet video, i.e. ESPN3), rather than the stadium experience. I don’t find going to pro games all that enjoyable. I much prefer going to college games (or even baseball games, and I don’t really even like baseball); such games are typically a blast, largely because they are a much more personal experience. Indeed, the only thing I really like about going to a pro game in person is that I get a better angle with which to watch the game, and TV and internet video options are beginning to finally provide more options in this respect. At the end of the day, for the NFL, the TV experience, whether at home or in a bar, is really superior.

The NFL business model is bizarre and discussions with most people about the labor dispute quickly degenerate because of the complexity as they take up the slogans of one side or the other. The analysis is neither laissez-faire capitalism nor typical labor economics nor even a the economics of a regulated public utility; it’s some weird unknowable mixture of a cartel and consumer business, and that makes all of these disputes both fascinating and maddening.

It’s not really a shock that there is a strange labor dispute going on, unilaterally initiated not by the union but by the owners in a way that few can analyze satisfactorily. Indeed, count up the factors: (i) The NFL is heavily subsidized by the government, (ii) with respect to the players selling their services, it’s a monopsony, and (iii) for the rest of us (and with government and to a lesser extent court approval), it’s an oligopoly. Put together, that is unlikely to lead to an efficient market. In the end, most of us just want to see someone pick up the damn football and play.

  • John

    The fact that you read Mises gives me hope for humanity.

    It’s no surprise to me that an organization (NFL) that has a labor union and participates in revenue sharing will have problems.

  • Peter Bernstein

    you’re comment about not enjoying the stadium experience is an interesting one to me. I don’t disagree, and having just watched some of my family move from “best seats in the house” seats in giants stadium to nose bleeds in the new building because of PSL pricing, i have a pretty passionate opinion on the topic. The on field product of college and nfl football isn’t all that different, and if anything better in the nfl, for a number of reasons. but whereas most college teams play in older stadiums, rich in tradition, with names for people, most pro teams play in new jerryworld type buildings that are named for corporations, and the difference doesn’t end there. I can think of a number of college stadiums without the “superior” club seats, but NFL stadiums that are low in these high end money-makers threaten to abandon their fan base in search of them (see Vikings). College games have cheaper tickets, sometimes all you need is a student ID to get in. On the other hand, the pro stadium has its PSLs, and over priced tickets, and over priced food. In the end the college stadium, is simply a place to go watch football, the pro stadium is a money maker for the owner. The net result of this reality speaks to the biggest difference between the experience: the customers. At a college game, you get lots of students, who are especially passionate, as are all the other fans who probably feed off the energy in the student section. The pro stadium has priced out the average fan, or relegated them to the upper deck. How can you possibly have much fun when all the real fans are either up stairs or at home, because they don’t have the extra 3,000 lying around to pay the season ticket package??

  • endersgame

    @Bernstein:

    Not only that, but the constant and never-ending TV commercial breaks they hold at NFL games becomes a real mood-killer (and foot-number during the winter) when you’re actually in the stadium.

  • zlionsfan

    Don’t forget that not all NCAA experiences fall into the same group: there are huge differences even within I-A football. Think of it as the have-it-alls, the haves, and the have-nots.

    The have-it-alls (your big-ticket, 90- to 100,000-seat stadiums) are really not that different than some NFL stadiums: yes, there are a lot of students to provide a different type of energy, but there are also luxury boxes, overpriced seats, and PSLs or their equivalent (setting priority based on athletic department contributions). The haves (lower-tier AQ schools) and have-nots (most non-AQ schools) are more like what we might remember from older days, sure, but that’s not going to be sustainable indefinitely. Either the football program has to generate more money, or other programs end up being cut.

    And in any case, it’s hard to beat watching a televised game in the comfort of your own home. Maybe that wasn’t true 10, 20, 30 years ago, but with HD TVs and satellite packages that make watching every game a reality for those who might otherwise buy tickets to an occasional NFL game (or perhaps season tickets to NCAA games), it’s hard to justify the in-person experience on anything other than a special occasion.

    Of course, special occasions are part of what break up the atmosphere in current NFL stadiums, and the same is true in other professional sports. As ticket prices soar, more tickets move from individuals to corporations … but corporations don’t sit in the seats, employees and/or guests do. Don’t get me wrong, I appreciate the opportunities I’ve had to watch Pacers and Colts games from expensive seats at reduced or no cost to myself, but at the same time, the value of the tickets isn’t the same, you know? I didn’t work for those tickets, I didn’t save up for them, and even so, I’m probably still one of the most involved fans in that section (even though I’m a Detroit fan, I still root for the local team at the actual game if it doesn’t involve my team, particularly if someone got me in free).

    As those expensive seats fall into the hands of those less involved with the team, the crowd as a whole (and specifically closer to the court/field/ice) gets quieter and more casual. Do you really want to spend $XXX to $XXXX and then be distracted by Businessperson 1 and Businessperson 2 all game? Heck no.

    And I’ve yet to see a game in, well, any stadium that would provide a reasonable amount of updates on other games. Hmm … I could stay at home and choose which of those games to watch (or watch the Red Zone Channel and catch a piece of all of them), or I could come to the stadium and hope you remember to post score updates every quarter. Yeah … no thanks. Nothing against the people who choose to go to each game – there’s nothing like watching your team in person with your fans – but it’s just too difficult for me to justify any more.

  • Steve

    It’s no surprise to me that an organization (NFL) that has a labor union and participates in revenue sharing will have problems.

    Except that the “problems” exist largely in the mind of the owners.

    The NFL is the biggest sport in the richest country in the world. It brings in billions every year and has never been more popular. The only “problem” here is that billionaires like Jerry Jones aren’t happy with merely raking in tens of millions of dollars a year in profits. They cry poverty but refuse to open their books to the other side to demonstrate how their costs have supposedly gone up, all while raking in money from stadiums heavily subsidized by the public.

    Its asinine to stick this on labor or on revenue sharing. This is greed on the part of the owners, pure and simple.

  • Dave

    Except that the “problems” exist largely in the mind of the owners.

    Not really.

    I think that by and large they’re aware of the problems the linked article cites, even if they’re mostly ignorant of (or at least unwilling to admit) their own roles in causing them. The bubble is going to burst, and as things currently stand, many of the teams aren’t in a position to survive when it does. Even with the sweetheart TV and stadium deals, they’re still not making as much money as they expected. Look at what has happened to the Packers’ profit in the past few years, even as revenues hit highs. I’m sure that the Cowboys, Giants, Jets, and some others have nicer numbers, but I’m also sure that some other teams have the opposite. And as easy as it is to say “let the poorly run ones fail,” this situation is different from regular businesses and economies.

    Not everyone’s intentions are good, and some of them may deserve to get screwed, but I think that for the most part, the greed already happened. Now it’s more of an “oh shit, how do we fix this” phase. Or maybe less “fix” and more “make sure we don’t all get fucked when this bubble pops.”

  • reber

    There is a big divide between the small market owners and larger market owners which will make reaching an agreement with the players difficult. Also, the NFL is a non-profit organization which is why only the publically held Packers provide financials.

    I find the NFL product boring. They all copy each other via film – seen one team seen them all except for uniforms. I would bet a lot of money most fans could not pick their home team out of a line-up of five games viewed with no sound, stadium markings, color, etc. – only using player play/movement!

  • Steve

    @ Dave

    I would tend to believe that the Packers profits are down largely as a result of the economic contraction of the last 2 years, which likely cut into their revenue streams. They are also unique in the sense that its a not for profit entity. I guarantee a profit minded owner would make more efforts to squeeze every last drop out of that market in order to increase their margins. And yet despite all that they were stillprofitable (and clearly are competitive, as we saw last Sunday).

    You are probably correct that the greed already happened, in terms of owners overreaching. What I don’t see is how that’s the players fault, since the CBA makes labor costs easy to figure, or why the players should be forced to just accept the owners demands without any proof from the owners that they are really going to hit hard times. The only evidence the players have is from Green Bay, a small market, not for profit team which still made money despite the recession and rising (but known) labor costs.

    I will admit that my first comment was mostly fueled by the fact that the comment I was responding to tried to shift blame away from the irresponsible and/or greedy actions of the owners onto the “evils” of collective bargaining and revenue sharing, for reasons that seemed purely ideological and divorced from the reality of the situation.

  • Dave

    I would tend to believe that the Packers profits are down largely as a result of the economic contraction of the last 2 years, which likely cut into their revenue streams.

    Certainly. But revenue is at all-time highs even in the contraction.

    There is, of course, a big difference between the league-wide TV stuff and local revenues, of course, and the Packers are at a disadvantage there. But the point is that I think the NFL recognizes that they’ve been a bit lucky, and they’re trying to be growth-minded to continue to get the money coming in, so that even if we end up experiencing a lost decade or something disastrous, the league can still survive.

    (Now, if you want to make the argument that all this London and foreign nonsense is an indication that their plans for growth border on or exceed too much growth and could present a whole other host of problems, I’m not going to battle you on that.)

    I tend to look at the last few years as a bit of an anomaly. The TV contracts aren’t going to continue to grow like this forever, and there’s no guarantees against empty stadiums either. All bubbles burst. And while owners like Jones and Snyder and the Maras can survive a big downturn, a lot of other markets will be in a load of trouble. As a fan of a smaller market team, it’s absolutely in my best interest for the owners to get their way, even if the motives of some of the more selfish guys aren’t the purest.

    What I don’t see is how that’s the players fault

    I don’t think anyone thinks it is. There’s really no way you can say that at all.

    But the owners are the bosses. If they want to have more money to sink into the business, they have that right. And if they demonstrate that they’ll be using it for something other than lining their pockets (everyone’s default assumption), I don’t really see anything wrong with that. If the league can take that extra billion a year and invest it to turn it into $5B worth of revenue in three years, the players still make a lot more money. The compensation has doubled in the last decade. If it needs to take a small step back before shooting back up again, that shouldn’t really be a problem. And if they stick in a rookie wage scale, maybe that’s all it takes to shave a few percentage points off the revenue cut, and the vets wouldn’t even be affected. And if you look at it like that, it’s really not all that offensive an idea. It makes good business sense.

    My fear, though, is that there has been too much damage done by Smith’s grandstanding and Goodell’s politicking and Richardson’s condescending and now this can’t ever be a collaborative process. Everyone’s pissed off, so rational discussions of the merits of the owners’ position can’t happen. It’s more rewarding in the short term to get mad and assign blame, just like with everything else in life. It just isn’t all that productive.

  • john

    As a fan, I have never cheered or booed an owener. I can’t pick one out of a lineup, never met one, probably will never meet one. I root for and watch the players. So its on the oweners to convince me why the players need a pay cut. They wont open the books, and now are ready to lock out the players. My only option is to stick with my class, or at least those who have come from my economic class. It appears it is the owners who r killing the golden goose. I would love to see an owner get a concussion, then groggly agree to a pay cut. That’s what they are asking the players to do

  • Ferreal

    How come you think stadium experience is not preferable for you? too far away from the field or the crowd noise being too annoying?

  • Clark

    “I find the NFL product boring. They all copy each other via film – seen one team seen them all except for uniforms. I would bet a lot of money most fans could not pick their home team out of a line-up of five games viewed with no sound, stadium markings, color, etc. – only using player play/movement!”

    I would love to see this as an experiment, actually.

  • Eric

    As a football coach and fan, along with having a young family, the biggest thing for me when it comes to watching football on TV vs. in the stadium is the DVR. Not only do I generally not have time to watch an entire game live, but being able to watch it after the fact, skip commercials, and run plays back as many times as I want makes the TV experience much better. Combine that with the big-screen HD and it’s almost preferable to be at home.

    I know, you can always go to the game and watch the recorded version later; I just don’t have the time. So I optimize.