Michael Silver's Perspective on the NFL: Think Eastern Europe

Michael Silver's articles on the CBA did not go well with his readership and they let him know about. However, Silver did not take a step back and came up with a strong response.

 I believe most of us are aware of some regrettable accusations that Silver leveled at Jerry Richardson over the last few months. Before I go on, I would like to present his other side. Most interestingly,  Silver did not always hold Richardson in low regard:

A year ago, just before I unveiled these rankings, Richardson rocked my world by firing his sons, a clear sign of two things: He’s firmly back in the saddle after a heart transplant that saved his life, and he takes his role as the managing partner of an ownership group very, very seriously.

At the NFL owner meetings in Orlando last March Richardson, the management council’s point man on the labor front, made an even more emphatic statement, opening a session on the first day with a fiery speech that had some of his peers ready to run through a wall. Recalls one witness, "Jerry said, ‘We signed a [expletive] deal last time, and we’re going to stick together and take back our league and [expletive] do something about it.’ He was practically yelling. It was amazing, and it set an incredible tone." It helped that Richardson had as much credibility as anybody in the room. He’s a former player who has thrived in a small-market setting without whining about its challenges and has consistently stuck up for the interests and concerns of others. He’s also one of commissioner Roger Goodell’s closest allies and is the emblem of integrity and professionalism.

For what it’s worth I think Richardson likely had a potential lockout in mind when he resisted the temptation to fire coach John Fox after last season and throw tons of money at former Steelers coach Bill Cowher, who lives in North Carolina. With Fox’s contract set to expire after the current campaign, this thing could go a lot of different ways, but I have little doubt that after the labor war ends and a new CBA is forged, Richardson will continue to push aggressively for a championship.

And for what it’s worth Danny Morrison, the former TCU athletic director who Richardson hired as team president after relieving his son Mark of those duties, has gotten positive reviews in league circles

continued after the jump...

While I appreciate that Silver's attitude towards the Panthers and JR in recent memory has been regrettable, I would say that Silver can be an entertaining and occasionally insightful columnist. Ranking JR as the 3rd best owner in the league has got to count for something too. With that in mind, I found Silver's response to be one of his better pieces of writing. He takes on readers who felt that Silver exhibited poor understanding of how capitalism works and how it applies to the NFL.  I follow with some excerpts from his response:

And I’m here to tell you that there are many similarities between the people running NFL teams and the folks in charge of Soviet-bloc governments between World War II and the fall of the Berlin Wall.

The first and most obvious parallel is that the NFL’s 32 franchises equally distribute a large portion of their revenues, most glaringly the multi-billion-dollar TV-rights deals that are the lifeblood of the league, but also national sponsorships and licensing fees, and a percentage of gate receipts.

Fair start. He follows up with:

There is also a de facto cost-control mechanism via the presence of a salary cap, which annually mandates minimum and maximum spending figures for player compensation. With apologies to Adam Smith, there is no "invisible hand" regulating the NFL economy; rather, it’s more like a hand making a clenched-fist salute you might have seen in Red Square in the 1950s.

This point is a lot weaker - the salary cap establishes bounds on total player's cost, both upper and lower. In that sense I think it can be viewed as a budgeting constraint. That said, his overall point remains - this a highly regulated market rather than a free market. Later on:

The NFL is one big Eastern-bloc party. The league’s owners protect their economic fates by establishing perfect barriers to entry, courtesy of a partial government antitrust exemption and, until last week, a collective bargaining agreement with the players union. In other words, if my super-rich buddies and I decide we want to create a 33rd franchise and join the league, we’re told to go pound ice in Siberia. There’s no legitimate competition allowed unless it’s sanctioned by the Politburo – er, the league office.

He's on a roll now....

Ah, but the NFL has something for the Marxist purists as well: a draft designed to improve the fortunes of the downtrodden at the expense of the fortunate. Yes, the worst shall be first at the end of April, with the Carolina Panthers now on the clock and the Super Bowl-champion Green Bay Packers picking last. Somewhere, Leon Trotsky is smiling in his grave.

Similarly, the NFL’s scheduling formula is weighted toward giving the previous season’s also-rans a smoother path to the playoffs than the division winners – a system that regularly results in a 50-plus percent postseason turnover. And isn’t "parity" just another word for uniform equality?

 We'd all agree that we are grateful for the draft system. And yet:

Really? What risk? I would argue that among major U.S. businesses, owning an NFL team carries the least amount of risk of any private entity.

For one thing, franchise values continue to rise astronomically, and all economic indicators (other than the ones the owners steadfastly elect not to reveal) suggest that even in this poor economy, the business is thriving. But the real reason NFL owners don’t have to stress out like most of their counterparts in the private sector is because the TV deals are so lucrative, and their annual split so sizable, they’re basically guaranteed to make a profit.

The hits keep coming:

Again, the model is deliciously Eastern-bloc. The owners love free markets, but not when it comes to labor. There is the salary cap, which ensures that more than 40 percent of adjusted revenues (and, essentially, a little more than 50 percent of total revenues) don’t go to the players; there are rules limiting free agency and movement; and, coming soon, there will be a rookie wage scale that drastically holds down the free-market value for the top incoming players. The draft, as I wrote Wednesday, violates U.S. antitrust law. Imagine Harvard’s top business-school graduate being told he must work for a firm in Buffalo, at a predetermined wage, or have no other realistic options to ply his trade.


If the monopoly analogy doesn’t work for you, and you prefer to consider the NFL’s 32 teams to be individual businesses operating under common practices, perhaps it’s best to regard the league as a cartel. Maybe that’ll be my next column: NFL owners as OPEC chieftains.

Realistically, I’m not sure I have a deep understanding of any of these economic principles, so I’m going to stick with my initial assertion. The NFL is the most glaring illustration of institutionalized communism in American society, and if you’re one of those knee-jerk management apologists who reveres the ground on which the owners walk, you should probably come to terms with the fact that you’ve got a fair amount of pinko coursing through your blood.

Heavy stuff. Silver goes over the top with some of his analogies but it seems obvious that he was put off by some of the comments from his readers. It would be a mistake though not to recognize that this topic has become sensitive and people have aligned themselves along political lines. While it is a conflict between a union and management, there are layers that are unique to this case that go beyond political differences. 

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