Risk Aversion and Rent-Seeking Redistributions: Free Agency in the National Football League

This chapter traces the history of professional team sports in order to place the issues covered in the Congressional hearings in the proper context. It first considers the rise of baseball as America's national pastime and Major League Baseball (MLB)'s decision to maintain two separate leagues, the American League and the National League. It then discusses the dispute between MLB and the rival Federal League, along with the emergence of other sports that achieved Big League status, namely, football and basketball. It also examines the prosperity of the National Football League (NFL) and the National Basketball Association (NBA) as well as the appearance of new challengers to their dominance after World War II. Finally, it looks at the Flood v. Kuhn, a Supreme Court case that challenged baseball's reserve clause, along with the rise of free agency.

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Risk Aversion and the Full Costs of Rent-Seeking*

Bulletin of Economic Research ◽

10.1111/1467-8586.00073 ◽

1999 ◽

Vol 51 (2) ◽

pp. 95-109 ◽

Cited By ~ 1

Author(s):

Richard J. Allard

Keyword(s):

Risk Aversion ◽

Rent Seeking

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Free agency, owner incentives, and the national football league players association

Journal of Labor Research ◽

10.1007/bf02685211 ◽

1983 ◽

Vol 4 (3) ◽

pp. 257-264 ◽

Cited By ~ 7

Author(s):

Frank A. Scott ◽

James E. Long ◽

Ken Somppi

Keyword(s):

National Football League ◽

Free Agency

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The Impact of Free Agency on Competitive Balance in North American Professional Team Sports Leagues

Journal of Sport Management ◽

10.1123/jsm.20.3.345 ◽

2006 ◽

Vol 20 (3) ◽

pp. 345-365 ◽

Cited By ~ 26

Author(s):

Joel Maxcy ◽

Michael Mondello

Keyword(s):

National Football League ◽

Team Sports ◽

National Hockey League ◽

Competitive Balance ◽

Free Agency ◽

Free Agent ◽

Professional Team Sports ◽

Dependent Variables ◽

Sports Leagues ◽

The Impact

Free agency was reintroduced to professional team sport leagues in the 1970s. Sport enthusiasts expressed concern that competitive balance would diminish as star players congregated to large market cities. However, the economic invariance principle rejects this notion, indicating that balance should remain unchanged. This article empirically examines the effects of changes in free agent rules on competitive balance over time in the National Basketball Association (NBA), National Football League (NFL), and National Hockey League (NHL). Regression analysis using within-season and between-season measures of competitive balance as dependent variables provides mixed results. The NFL and NHL provide evidence that an aspect of competitive balance has improved, but results from the NBA indicate that balance has worsened since the introduction of free agency. We conclude that the ambiguous results suggest that the effects are not independent, but instead depend on the interaction of free agent rights with other labor market and league rules.

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Risk-aversion and prudence in rent-seeking games

Public Choice ◽

10.1007/s11127-009-9569-x ◽

2009 ◽

Vol 145 (3-4) ◽

pp. 339-349 ◽

Cited By ~ 44

Author(s):

Nicolas Treich

Keyword(s):

Risk Aversion ◽

Rent Seeking

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Professional Team Sports in the United States

Oxford Research Encyclopedia of American History ◽

10.1093/acrefore/9780199329175.013.198 ◽

2017 ◽

Author(s):

Steven A. Riess

Keyword(s):

World War Ii ◽

National Football League ◽

Team Sports ◽

The United States ◽

Employee Relations ◽

Free Agency ◽

Successful Operation ◽

Sports Teams ◽

Professional Team Sports ◽

Set Up

Professional sports teams are athletic organizations comprising talented, expert players hired by club owners whose revenues originally derived from admission fees charged to spectators seeing games in enclosed ballparks or indoor arenas. Teams are usually members of a league that schedules a championship season, although independent teams also can arrange their own contests. The first professional baseball teams emerged in the east and Midwest in 1860s, most notably the all-salaried undefeated Cincinnati Red Stockings of 1869. The first league was the haphazardly organized National Association of Professional Base Ball Players (1871), supplanted five years later by the more profit-oriented National League (NL) that set up strict rules for franchise locations, financing, and management–employee relations (including a reserve clause in 1879, which bound players to their original employer), and barred African Americans after 1884. Once the NL prospered, rival major leagues also sprang up, notably the American Association in 1882 and the American League in 1901. Major League Baseball (MLB) became a model for the professionalization of football, basketball, and hockey, which all had short-lived professional leagues around the turn of the century. The National Football League and the National Hockey League of the 1920s were underfinanced regional operations, and their teams often went out of business, while the National Basketball Association was not even organized until 1949. Professional team sports gained considerable popularity after World War II. The leagues dealt with such problems as franchise relocations and nationwide expansion, conflicts with interlopers, limiting player salaries, and racial integration. The NFL became the most successful operation by securing rich national television contracts, supplanting baseball as the national pastime in the 1970s. All these leagues became lucrative investments. With the rise of “free agency,” professional team athletes became extremely well paid, currently averaging more than $2 million a year.

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Luck as a Double-Edged Sword: Personnel and Performance Changes after Lucky Outcomes in the National Football League

10.31235/osf.io/csfpy ◽

2019 ◽

Author(s):

Kyle Siler

Keyword(s):

Decision Making ◽

Organizational Learning ◽

Risk Aversion ◽

National Football League ◽

Decision Makers ◽

Recovery Rates ◽

Future Performance ◽

Perverse Incentives ◽

And Performance ◽

Career Incentives

Luck is an omnipresent factor which influences experiences and outcomes for individuals and organizations. This article analyzes how lucky and unlucky outcomes influence future organizational learning, decision-making and performance. Team statistics and outcomes are analyzed over 769 National Football League seasons for 32 franchises from 1990-2015. Four specific sources of luck are identified and measured: 1) divergence of win outcomes from actual team quality; 2) difficulty of opposition; 3) fumble recovery rates and 4) player injuries. Teams and players have little or no influence over these lucky factors, which nevertheless influence game outcomes, and by extension, the careers of players and coaches. Luck alters game outcomes and in turn significantly influences the retention or firing of coaches and players, which shapes their career incentives and decision-making. In addition to negatively affecting future performance via distorted learning, luck can also generate perverse incentives; in this case, encouraging risk aversion and scapegoating. Mistaking noise for signal – and conflating luck with skill – is conducive to poorer future decisions and outcomes. Paradoxically, luck can provide a means of skill-based advantage for savvy decision-makers, who learn more effectively from noisy feedback than others who are misled.

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