The NFL's Rookie Wage Scale Proposal Is Ridiculous, Could Open Door For Rival League
By Jason Lisk
What I am opposed to, though, is the rhetoric and misinformation and unsupported statements coming from the NFL and members of the large media sources regarding this issue. I know that athletes and sports owners make a lot more money than any of us could ever fathom, and that makes this issue an easy one for public relations reasons. Joe Common Fan doesn’t want to hear about how much an athlete makes. Millions of Joe Common Fans also watch games and see the advertising. The networks sign huge contracts, and the owners and players get large amounts of money because of our interest. I suppose if the money they make bothers you, then you could stop watching, because you are a contributor.
I was unaware of the specifics of the league’s proposal until I read this editorial from last month in the Washington Post, written by Packers President Mark Murphy. As it contains many of the talking points that have been stated, I’ll go through it.
According to Murphy, “[t]he system is so bad that some teams no longer want picks in the top part of the first round of the NFL draft. The cost is too high, especially if a player taken that early turns out to be a bust.” You will find this unsupported statement often. It might surprise you then, that no team has ever a) refused to take a pick, which is its right; or b) traded down for a later pick straight up, which would happen if teams didn’t value these picks. Sure, players that are busts are going to provide negative value, and this is true whether they are rookies or veterans. The question is whether picks, on average, accounting for the busts and the stars, are valuable or not at the current salaries.
You could listen to the NFL, or you could observe behavior. The Rams did not trade out of the first spot, and the Lions did not trade out of the second spot last year though they could have done so and gotten multiple picks in return. I’m from Missouri, so I prefer to be shown. And the actions and words don’t match up.
From Murphy: “No other business operates this way, and no other union gives its entry-level hires such privileges.”
In how many professions is the best at a given craft likely to be under the age of 27? Many of the best players at a position would be playing under the initial five year deal. When Cade Massey and Richard Thaler published their study “Overconfidence versus Market Efficiency in the National Football League,” they determined that the picks in the early 2nd round were the most valuable from a cost/benefit perspective. However, they did not determine that the early first round picks were overpaid. In fact, those picks still had surplus value, meaning they provided more production for the cost compared to what you would get on the veteran free agent market.
I could cite that study or do a more involved analysis showing you point by point comparisons, or I could just send you to this article written by Ross Tucker less than a year ago. As evidence to how ridiculously overpriced rookie contracts are, he points out that Ndamukong Suh is getting similar guaranteed money as an established star veteran like Albert Haynesworth. Suh. Haynesworth. Awesome.
Murphy lays out the specifics of the league’s proposal about what the top pick would get. It adds up to a little less than 16 million total (only about 5 million guaranteed), and that is for the top pick. That is about an 80% discount over a number -that is already less than fair market value, and with a condition that there are no renegotiations until after year 3 for first round picks. How do I know it’s less than fair market value? Well, let’s compare it to the Jim Harbaugh situation, where there was no draft and teams were free to pursue him in a free market situation. There, the presence of multiple owners drove up the price. The draft is already a restraint on salary and the free market because it limits bidders, and now they want an 80% discount off that?
Mark my words. If the NFL goes through with this or anything close to this discounted with rookie wage scales, and not only gets this severe cap but also doesn’t budge on years of the contract, you will see ripe conditions for a competitor league to rise up and challenge the NFL. We saw it with the All-America Football Conference and the American Football League, when they were able to challenge the NFL and compete for college talent.
The difference will be that the NFL will have a hard cap that won’t be difficult for a competitor to beat. The competitor won’t have to engage in a bidding war that reduces all profits, because the young talent will be so underpaid. If the NFL goes through with this, they could get destroyed in new player development if another league came along and paid more. The free market will find a way, and the NFL would be wise not to think its self invulnerable in that respect by lowering young player salaries too far.
[photo via Getty]