Nfl Joins The Real World Of Economics

Remember Gordon Gekko, Michael Douglas’ character in “Wall Street”? He said: “Greed is good.” Americans, most of whom don’t know that much about economics, were horrified.

The same anger is now vented on Art Modell, the owner of the Cleveland Browns, who, a couple of weeks ago, announced he was moving his franchise from Cleveland, where it has been for 50 years, to Baltimore.

It had nothing to do with fan loyalty and support. Cleveland has sold out its 70,000-seat stadium for years. It had everything to do with money.

Get used to it, fans. What is happening in pro sports is happening in the American economy, only faster. It’s the nature of the system. Capitalism is great, the best in the world, at producing things and distributing them efficiently. But equity, much less fairness, is not part of the equation.

And nobody quite knows how to make things right.

Art Modell, the most hated man in Cleveland, is not the problem. Nor is Dallas Cowboys’ owner Jerry Jones, Bill Bidwill or Jerry Colangelo. They merely adapt to the system. Some might be greedy. Others might not be. They certainly are no worse than the legendary owners of yesteryear. We know they were greedy.

But in business, in sports and in life, there are winners and losers. That’s the system, economics. In football, the operative phrase is “revenue streams.” In the American economy, it’s “global competition” and “technology.”

Like it or not, the NFL is no longer the cozy little socialist monopoly that it was 20 years ago. The world has changed. The price has gone up. In the economics of modern sports, it’s not so much how many fans you can attract to the stadium or the arena. It’s how much you can earn from the advertising signage at the ballpark, naming rights and the luxury suites. It’s the “personal seat license,” a premium charged for the privilege of buying season tickets for a few thousand bucks. It’s the local TV deal, the parking, the concessions, the merchandising of the team’s paraphernalia.

You also have to keep expenses down: by arranging sweetheart deals with the host city, with the public picking up the tab. Get the taxpayers to build your ballpark, then don’t pay rent or taxes.

Art Modell, for all the Cleveland fans’ tradition, loyalty and mystique, was forced to borrow to pay the enormous signing bonuses that the best free-agent players demand nowadays. He was actually paying rent to Cleveland. Under the current NFL structure, Modell’s Browns (and probably Arizona’s Cardinals) can’t compete with the wealthiest teams, like the Cowboys and the Miami Dolphins.

So Bidwill isn’t greedy in seeking a new stadium. He’s trying to even the playing field, at least the one he plays on. Dozens of pro owners are leveraging new cities for new stadiums and sweeter deals. Houston Oilers owner Bud Adams just did last week with Nashville. That’s just the way it is.

The only real public outrage is how conveniently the owners try to change the definitions. When it suits their argument to raise prices, sports is a business. When it comes to extracting concessions from taxpayers, their business suddenly becomes a sacred community institution and family entertainment, a source of civic pride and economic development.

But the same phenomenon has occurred in the larger national economy, again with the acquiescence of the public and the blessing of the political hierarchy.

And some inequities are rampant. In the global economy, multinational corporations are the NFL owners and teams. They also face a new environment, with traditionally tough competitors from Japan, Germany, and now unlikely rivals such as Korea, Taiwan and Mexico. They must downsize, right-size, expand, abandon and merge, all to raise productivity and profits. What else can they do? If they don’t, they’ll be gone.

Stockholders and executives, like professional athletes and owners, are winning, reaping seven-figure salaries and double-digit profits. Well-educated professionals, of both genders and all races, are climbing up the income ladder, too.

Meanwhile, middle America’s per-capita incomes are flatter than a hardwood basketball floor. Only now, at the tail end of a three-year boom, are incomes rising to a level most Americans enjoyed in the bad old 1970s. Most of us are working harder to stay where we are.

It’s worse for the poor, whose inflation-adjusted wages are still falling. If the NFL were the U.S.A., they’d be Cleveland Browns’ fans.