Sunday, April 21, 2002

The Socialism of American professional sports (continued)

Below, I argued that pro sports drafts are a fundamental violation of free trade--one that people would find egregious in most (all?) other fields. I would like to now explore the standard argument in favor of the draft system and discuss its validity.

For those not familiar with how pro sports drafts are structured, there are generally many rounds in which each team (assuming they haven't traded their pick), is given the right to select a player (generally a recent college graduate or an athlete than has chosen to enter the draft before college graduation). The order of selection in each round is in reverse order to the results of the previous season--i.e. the team with the worst record is given the first choice in each round and the previous year's champion is given the last. In the NBA, this incentive to have the worse record proved so high in years when a potential superstar was going to be eligible to be drafted that teams would subtly (or not so subtly) lose games in order get the right to draft that player. In an effort to reduce this incentive to lose, the NBA initiated a lottery system where the worst team was most likely to get the first choice, but could given bad luck get as low as the fourth choice.

The "last shall be first," nature of the draft is justified by an appeal to the concept of "parity"--the idea that each team should have any equal chance of winning. It is argued that American sports fans demand that all teams have an equal chance of success and that no team has an unfair advantage due to, for example, a larger fan base. This also explains various "salary cap" structures in place that limit how much individual teams can spend on player salaries and schemes meant on "revenue sharing" in which teams with higher than average revenue will subsidize their less prosperous league mates.

The analogy to the progressive tax code and various income redistribution ideas are obvious.

Question: Does parity really make sports more popular?

I am sure this question could be attacked empirically (Megan, let's put that University of Chicago learnin' to some use!) But absent such a study I will suggest some anecdotal evidence to the contrary. People discussing the "glory days" of the various pro sports often refer back to eras of extreme lack of parity (the Yankees, Boston Celtics and Montreal Canadiens dynasties immediately pop into mind). Another anecdotal case suggesting parity is not critical is the English (and European leagues more generally) football (soccer) leagues. In the English League, team revenues and salary expenditures vary dramatically. Before a season begins, there are really only a handful of teams (Manchester United, Arsenal, Liverpool and maybe Chelsea or Leeds) have any realistic chance of winning the regular season title. Yet English football has a higher intensity level of popularity in the UK (and throughout the world) than any sports league in the US. Even teams with no realistic title hopes have rabid and long enduring fans.

More to come on this subject...I am only warming up!