Cash and sports

Short interlude for some sports today, spurred only by the fact that this article by Gene Wojciechowski at ESPN was rather delightfully titled “The economics of insanity” by my iGoogle newsbar; sadly it didn’t carry over into the article, but still some food for thought. The issue at hand is rookie contracts in the NFL:

“NFL commissioner Roger Goodell said it’s “ridiculous” to reward untested rookies with lucrative contracts, and wants the issue addressed in contract talks.”

I’m tempted to point out that no-one’s forcing teams to enter into these contracts, but then I’m not completely sure what the rules are about draft picks going unsigned. In any case, the negotiated salary cap rules determine the total pot available to pay rookies, right? Either way, it’s just more evidence in favor of the old truism that American sports are more socialist than their capitalist European counterparts: try this or this for some of the arguments.

It’s staggering how exactly the analogy holds, precisely opposite to the stereotypes of American and European rules for resource allocation. American sports are organized to give every team a fighting chance of winning within a few years, with the help of active intervention in the form the draft and salary caps and the guarantee that a terrible season is not punished the following year, while European sports are dog-eat-dog, pure capitalism. Maybe it’s because of cross-country competition in Europe: it would be hard for Spain, say, to use American-sport policies to level the playing field without players jumping ship to Italy or England and without Spanish teams being destroyed on the field by the elite of other countries.

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