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Maybe It's A Case Of Economic Illiteracy
By John Connor
A DOW JONES NEWSWIRES COLUMN
WASHINGTON -- The big story hereabouts, to many people, is not the Democrats capturing both Chambers of Congress or President George W. Bush's dismal poll numbers.
No, the real story for a whole lot of people in the Washington, D.C., area and elsewhere is the collapse of the Washington Commanders football team.
Once billed as having playoff, indeed, Super Bowl potential, the Commanders currently are sitting on a 3-7 record that doesn't tell the real story of how truly awful they've been.
Their Hall of Fame head coach, Joe Gibbs, seems lost a lot of the time and his two highly paid top assistants on offense and defense appear to be sinking without a bubble.
Their once vaunted defense seem incapable of stopping anyone, and Mark Brunell, their number one quarterback until last week, peaked years ago and has mastery only of out-of- bounds passes. The new quarterback, Jason Campbell, started his first NFL game last Sunday and looked solid in a losing effort when the Skins' defense again failed to show up.
Against this backdrop comes an article posted Tuesday on the American Enterprise Institute's Web site entitled "Patriots vs. Commanders."
Authored by Kevin Hassett, resident scholar and director of economic policy studies at AEI, the paper begins by noting that National Football League teams "have a relatively simple economic problem to solve. They have to fill their rosters with players, and have to pay the entire collection of players an amount fixed by the league. They can add players in two main ways: sign veterans as free agents or hire new players out of college in a league-wide draft."
Hassett said it's "nearly impossible to derive surplus from the veteran free-agent market, since you are paying market wages," and that "while injuries and emergencies might require some veteran signing, the draft is the only place to build a winning team."
Hassett said economics thus would predict that teams would uniformly put enormous efforts into perfecting their drafts and avoid sinking big buck into costly free agents.
"In fact, this model predicts very well the behavior of one team, the New England Patriots," he said. "Their head coach, Bill Belichick, who received his undergraduate degree in economics from Wesleyan University in Connecticut, has been an artist at squeezing value-added out of his draft picks, and has won three of the last five Super Bowls."
Belichick keeps winning because so many others in the NFL behave so strangely, Hassett asserted, noting that economists Cade Massey of Yale and Richard Thaler of the University of Chicago studied years of draft history and found that teams make systematic errors that reflect serious economic illiteracy, such as placing too high a value on the top few draft picks and too low a value on picks a bit further down.
"The Washington Commanders are perhaps the leading exemplar of this tendency toward irrationality," giving up key draft picks for high-priced veteran players and filling their roster with "mediocre, high-priced veterans," Hassett said.
He observed that the Skins dropped $35 million on safety Adam Archuleta (who has been benched), $32.5 million on defensive lineman Andre Carter, $31 million on wide receiver Antwaan Randle El, and $25 million on wide receiver Brandon Lloyd -- none of whom has ever been in the Pro Bowl.
Hassett said the problem for economics is that teams like the Commanders continue to exist and aren't driven out by competitive forces -- because there is a high demand for football in Washington and the NFL has a monopoly.
"A wisely run team cannot enter Washington and compete for Commanders fans," he added.
-By John Connor, Dow Jones Newswires; 202-862-9273; John.Connor@DowJones.Com
Maybe It's A Case Of Economic Illiteracy
By John Connor
A DOW JONES NEWSWIRES COLUMN
WASHINGTON -- The big story hereabouts, to many people, is not the Democrats capturing both Chambers of Congress or President George W. Bush's dismal poll numbers.
No, the real story for a whole lot of people in the Washington, D.C., area and elsewhere is the collapse of the Washington Commanders football team.
Once billed as having playoff, indeed, Super Bowl potential, the Commanders currently are sitting on a 3-7 record that doesn't tell the real story of how truly awful they've been.
Their Hall of Fame head coach, Joe Gibbs, seems lost a lot of the time and his two highly paid top assistants on offense and defense appear to be sinking without a bubble.
Their once vaunted defense seem incapable of stopping anyone, and Mark Brunell, their number one quarterback until last week, peaked years ago and has mastery only of out-of- bounds passes. The new quarterback, Jason Campbell, started his first NFL game last Sunday and looked solid in a losing effort when the Skins' defense again failed to show up.
Against this backdrop comes an article posted Tuesday on the American Enterprise Institute's Web site entitled "Patriots vs. Commanders."
Authored by Kevin Hassett, resident scholar and director of economic policy studies at AEI, the paper begins by noting that National Football League teams "have a relatively simple economic problem to solve. They have to fill their rosters with players, and have to pay the entire collection of players an amount fixed by the league. They can add players in two main ways: sign veterans as free agents or hire new players out of college in a league-wide draft."
Hassett said it's "nearly impossible to derive surplus from the veteran free-agent market, since you are paying market wages," and that "while injuries and emergencies might require some veteran signing, the draft is the only place to build a winning team."
Hassett said economics thus would predict that teams would uniformly put enormous efforts into perfecting their drafts and avoid sinking big buck into costly free agents.
"In fact, this model predicts very well the behavior of one team, the New England Patriots," he said. "Their head coach, Bill Belichick, who received his undergraduate degree in economics from Wesleyan University in Connecticut, has been an artist at squeezing value-added out of his draft picks, and has won three of the last five Super Bowls."
Belichick keeps winning because so many others in the NFL behave so strangely, Hassett asserted, noting that economists Cade Massey of Yale and Richard Thaler of the University of Chicago studied years of draft history and found that teams make systematic errors that reflect serious economic illiteracy, such as placing too high a value on the top few draft picks and too low a value on picks a bit further down.
"The Washington Commanders are perhaps the leading exemplar of this tendency toward irrationality," giving up key draft picks for high-priced veteran players and filling their roster with "mediocre, high-priced veterans," Hassett said.
He observed that the Skins dropped $35 million on safety Adam Archuleta (who has been benched), $32.5 million on defensive lineman Andre Carter, $31 million on wide receiver Antwaan Randle El, and $25 million on wide receiver Brandon Lloyd -- none of whom has ever been in the Pro Bowl.
Hassett said the problem for economics is that teams like the Commanders continue to exist and aren't driven out by competitive forces -- because there is a high demand for football in Washington and the NFL has a monopoly.
"A wisely run team cannot enter Washington and compete for Commanders fans," he added.
-By John Connor, Dow Jones Newswires; 202-862-9273; John.Connor@DowJones.Com
