Tuesday, February 08, 2005

A Real Collector's Item!

For all you video game players and/or hockey fans out there, the EA Sports NHL 2005 game might be a real collectors item: a video game memorializing a season that never was.

I very much miss my Detroit Red Wings on these long winter nights and I am not really sure which group -- the players or the owners -- I blame more. The players -- as in all professional sports -- are in many ways responsible for the deplorable financial state of the game. Face it, grown men playing a boy's game should not be paid millions of dollars a year. On the other hand, no one held a gun to the head of the individual owners and said: "Pay this guy a million bucks or ka-pow." Each owner knew what they were doing and continued doing it anyway.

"What?!?", say you, "I thought you were an ardent believer in capitalism and the law of supply and demand. Isn't that the way the system is supposed to work?"

But what a simple resort to the law of supply and demand misses are the distortions caused by television revenue and by the application of 1930s era labor laws to millionaire laborers. Competitive pressure has grown too great, magnified by the ridiculous TV deals the professional leagues keep getting. The TV money then fuels the free agency market, which favors the teams that have the most money (and my parents paid to get me a degree in Economics to come up with that one!). The end result can only be that "super teams" will dominate.

Ordinarily, this would result in the other owners (the numerical majority) simply voting changes in the rules to restore the competitive balance (e.g., a salary cap or luxury tax). Here's where the labor laws enter in. The players (naturally) oppose any organized restraint on salary inflation and they will exercise their collective bargaining power under the National Labor Relations Act to resist any substantive change that would limit those increases. And we are back to where we started, with the more well-entrenched teams gradually becoming completely dominant.

It's hardly ironic that the professional sports league with the most stringent restrictions on salary growth -- the NFL -- also features the most top-to-bottom balance amongst its teams and is the most financially successful.

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