Quote:
Originally Posted by Hoofbite
That's a flimsy argument. The league could pay the guys half of what they do now and still go bankrupt if they were horrible in managing their finances in so many other ways that it basically ate through every cent they earned and then some.
The league could also pay these guys a ton more and still stay afloat if they were so successful at managing their finances that they could overcome the large cost of employer salary.
What about at the break even point? What do we consider them to be at this point?
Seems like the issue isn't nearly so black-and-white but rather many shades of grey. Staying afloat or stagnating and growing at a fast rate both avoid bankruptcy but the players are compensated as the market dictates and as such are not overpaid?
[View Full Quote]And that's just a look at the idea that players are worth whatever they are paid up until the point of bankruptcy for the league............but still kind of raises the question as to why the players would be overpaid in such scenario like this when the market has clearly dictated the ridiculous salaries in the first place and it's still quite possible that players salaries were the main culprit for bankruptcy.
There are other things in play as well.
There are times when the market doesn't solely dictate pay. Al Davis didn't sign DeAngelo Hall to that ridiculous contract because that was the going rate for a CB. He did it because he was an idiot and while it didn't occur in this case, instances where teams overpay for players to great extents has an impact on the average of the top 5 salaries if that players falls into that bracket.
Team A: For whatever reason pays way more than they should have or what anyone else would have for a specific player. Player's salary increases the average of the top 5, thereby raising the cost of the franchise tag.
Team B: Applies the franchise tag to a player and is stuck having to pay the additional bump in the base salary because Team A was stupid.
Also, throw in the fact that a player could actually be paid less than what his perceived value might be on an annual but because of the structure of the contract he is sitting in a year where his base salary falls into the Top 5 for his position. His average annual salary is below this point for any season but for that given year, it raises the tag price for the following year.
A guy who is viewed as underpaid raises the price for other players? Doesn't seem to fit the model idea too well.
This is actually part of the reason Dallas' contract structure with Austin was so ridiculous. It raised the average of the Top 5 by like 1M, IIRC.
Essentially, market value is not a simple reflection of supply and demand and is partly determined by how each of the 32 teams write their contracts which is largely a result of how much cap space they have.....which in itself is heavily influenced by previous bad signings for which they still have to pay in cap space, which is ultimate the limiting factor in player acquisition.
I'll gladly admit I'm no authority in the realm of economics so perhaps these same variables are present in all business. I just don't think you can conclude they are paid at an appropriate level by citing supply and demand.
One thing I will say that completely refutes the idea of what the market demands indicating appropriate pay is the implementation of the rookie wage scale.
The market was demanding these guys get record contracts every year. If that's what the market demands, why did they slot pay these guys? The market was dictating these prices and the NFL wasn't going bankrupt. Doesn't that mean they were paid appropriately? The conclusion is obvious, those guys were overpaid regardless of what price the market had set. Had they not changed things, Andrew Luck would likely have a $90M contract on his hands. |
The distribution they agreed to in the new CBA.
We are actually studying wage determination in professional sports in my Labor Economics class. Later in the semester I will have a more educated answer. We have already covered it in a brief course overview and ultimately from what I can remember it comes down to the Labor Market supply and demand (like everything). It's a rare skilled labor that brings in massive revenue (low supply, high demand) so the price of athletes is traditionally always very high (demand). Just look at the difference between superstar salaries and league minimum salaries. Most of the money is made by the players in highest demand. The rookie wage scale is the equivalent of the government (the owners) putting a price ceiling on the market. Price floor would be the minimum salary. It helps spread the money to the veteran players who have earned it.
It has all the properties of any other market in which equilibrium comes down to supply and demand.