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Super Bowl Socialism

What could be more American than football and the Superbowl? Ironically football — as practiced in the US — is socialist.

Now, this doesn’t mean I’m promoting socialism. I’m a hard core capitalist and I believe in free enterprise. But I’m also pragmatic enough to realize that there are situations where free market capitalism doesn’t work, and even when it does work, there must be rules and regulations.

So how is football socialist?

Sports leagues (not just football) realized a long time ago that there had to be rules limiting the “free market” of sports teams. If big or rich cities were allowed to spend unlimited amounts of money then they could hire the best players and the best coaches, do the most training, and they would most likely win most (if not all) of the time. What a dull sport that would be, with the same teams winning game after game, year after year. The losing teams would become even less popular, would lose money, which would make them get even worse, and they would lose even more. Games would be completely boring. The sport would likely die.

So in America, where we believe in free markets, each year the losing teams are given first draft picks for the new players. What kind of system rewards the worst teams and penalizes the winners? Isn’t that socialism? Not only that, but each team has a salary cap, which limits how much they can pay for players. All teams (win or lose) have the same limit on the amount of money they can spend. Oppressive regulations!!! And all television revenue is shared equally with all teams, regardless of how much that team generates (“each according to their need”). Even more socialism!!!

Why do they do that? Because as any sports fan knows, the whole point of a vibrant sport is good competition. That means that every team has to have the same inherent chances, an equal opportunity to succeed. It isn’t survival of the strongest that makes the game strong, it is having good competition.

Even more ironic, one of the best teams in football are the Green Bay Packers, who have won more NFL championships than any other team. How do they do this? Do they pay their players more? No! In fact, they have the lowest median salary in the NFL. Do they represent a big city? No! Green Bay (population 100,000) is the smallest city to have a major league football team. Their games always fill their stadium (which can hold 70% of the entire city population) and they have a waiting list for season tickets that could more than fill another stadium just as large.

So how do they do it? Most people don’t realize this, but the Green Bay Packers are a non-profit community-owned organization. You can buy stock in them, but it does not pay dividends, and it never increases in value. It is a worthless investment, and yet they have 112,000 shareholders (more than the population of Green Bay).

In other words, the Green Bay Packers are socialists (maybe even communists). As conservatives keep telling us, socialism never works and will destroy our economy. And yet the Green Bay Packers are consistently one of the top ten revenue generating teams in the NFL (so the socialists are supporting the capitalist teams!). According to the conservatives, taxing the successful and supporting the unsuccessful will destroy the incentive to win.

And yet the Green Bay Packers keep on winning.

If it is so clear to us that a level playing field is important in sports, why is it so difficult for us to realize that the same thing is just as important, if not more important, in our economy? That’s why we have laws against monopolies (monopolies are where companies control markets instead of competing against other companies). It is no accident that sports leagues are exempt from anti-trust laws.

The founding fathers realized this, and wrote free public education into the constitution, promoted equal rights under the law, and gave you the the dream that with drive, hard work, and a little luck, you can achieve anything. They knew that the more people who can compete, the better we will do as a country.

Think about this the next time someone claims that we have to keep cutting taxes for the rich or get rid of inheritance taxes. Or that poor people don’t deserve health care or access to universities. We need to give everyone a sporting chance.

UPDATE: I hadn’t seen this, but a reader pointed out that Bill Maher just did a similar segment:

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21 Comments

  1. Steve wrote:

    “A sporting chance” – I see what you did there!

    Sunday, January 30, 2011 at 2:59 am | Permalink
  2. No u wrote:

    Baseball=free market

    ” Games would be completely boring. The sport would likely die.”

    Baseball=still rolling right along

    Sunday, January 30, 2011 at 8:00 am | Permalink
  3. TENTHIRTYTWO wrote:

    Great post. My favorite analogy is terrible people raising the price of water during disasters. We call this price gouging and we stop it.

    But why? Why do we stop free-market capitalism from doing its job? Demand for water spikes and supply plummets. Inevitably the price goes up. This is the nature of the free market, and any regulation or manipulation of it is inherently wrong.

    When water gets pumped back in the area, supply goes up and the price drops. Alternatively, after enough time all but the richest will have died from dehydration, reducing demand. Only marginally of course, because when you are dying of thirst demand becomes unlimited. I’d say this is a failing of free market capitalism but we all know there is no such thing.

    The price eventually returns to the normal level and society resumes. Plus, just think about how many jobs we’ve created digging all those graves for people who couldn’t afford water! Those free market idealists sure know how to create shovel-ready jobs.

    Sunday, January 30, 2011 at 8:11 am | Permalink
  4. Mark wrote:

    Yeah, this was Bill Maher’s “New Rules” segment from 01-28-11. You should probably credit him.

    Sunday, January 30, 2011 at 8:14 am | Permalink
  5. Dan wrote:

    while taking a Labor Economics class at the U of Iowa, on the days we discussed European labor relations the comments were all about how uncompetitive their system was. After listening to this for a class meeting and then half of another, I pointed out that every Western European nation except (I think it was) Denmark was kicking our ass in trade.
    The room fell silent.

    Sunday, January 30, 2011 at 9:38 am | Permalink
  6. b wrote:

    Thank you. Very well done.

    Sunday, January 30, 2011 at 10:49 am | Permalink
  7. Iron Knee wrote:

    Mark, thanks for the tip, I hadn’t seen that. I seriously got the idea for this post over a month ago, and started writing it a week ago. I was waiting for it to be closer to Superbowl time to post it. But dang, Maher beat me to it!

    Sunday, January 30, 2011 at 11:46 am | Permalink
  8. Falkelord wrote:

    “Each according to his need” is a communist tenet, not a socialist tenet IK. C’mon man, you should know better :)

    I do agree that it’s a great post, but the system works a little differently because it’s somewhat of a closed, not open, system. What I mean is if the football system gets locked out this coming year due to a CBA disagreement, it’s not going to affect the economy as, say, a bank or two failing (read: “locking-out”). Sure, people are going to be upset and owners are going to bitch and moan about not making any money, but the global economy will not collapse (as much as many fans would like to believe).

    I think it’s great to give everyone a sporting chance, I just don’t think football is such a great analogy because there are just as many problems with THAT system as our own. Side note: Sports business law classes are awesome.

    Sunday, January 30, 2011 at 12:30 pm | Permalink
  9. Anonymous wrote:

    “Baseball=free market

    ‘Games would be completely boring. The sport would likely die.’

    Baseball=still rolling right along”

    Well, okay, so he was wrong on the last half of the quote. But he nailed the first half!

    Sunday, January 30, 2011 at 2:10 pm | Permalink
  10. Iron Knee wrote:

    Compared to football (as Bill Maher points out) baseball is peanuts.

    Sunday, January 30, 2011 at 2:14 pm | Permalink
  11. TENTHIRTYTWO wrote:

    And not to get too deep in it, but baseball is a different sport than football. I don’t mean that in the obvious sense; I mean that the physical talent on a team is much harder to define and has less of an effect on the success of a team.

    In football, being able to buy 300lb defensive linemen when the other team can only afford 200lb offensive linemen means you are going to absolutely murder them all day every day. Baseball is not nearly as cut and dry.

    Sunday, January 30, 2011 at 3:00 pm | Permalink
  12. Hassan wrote:

    NFL is not government run.. I run my house on socialism then.. most families are like that, does that make US government socialist? Would I want government how to run my life?

    The constitution is based on liberty for people/organization how to best run themselves.

    Sunday, January 30, 2011 at 3:44 pm | Permalink
  13. Dave TN wrote:

    The attached link provides trends of baseball attendance for the last decade. The attendance has been good for some while not so good for others, and that is case in point. The article tries to tie in the evidence of newer stadiums to this but admits there exceptions to that rule as well. Attendance is down over the last few years in all the sports, but NFL Football on the other hand has been known to have better attendance and much higher profit margin than baseball which makes it a better model for business, yet has a socialistic mode of operation. Oh the bitter irony.
    http://bleacherreport.com/articles/103477-mlbs-attendance-trends-good-or-bad

    Sunday, January 30, 2011 at 9:07 pm | Permalink
  14. C.S.Strowbridge wrote:

    “The constitution is based on liberty for people/organization how to best run themselves.”

    It also says the government should do things for the welfare of the people. And taxing the rich at a slightly higher rate than the middle class to make sure everyone has an equal opportunity is good for the welfare of the people.

    Sunday, January 30, 2011 at 11:02 pm | Permalink
  15. C.S.Strowbridge wrote:

    “The article tries to tie in the evidence of newer stadiums to this but admits there exceptions to that rule as well.”

    And those stadiums were probably build with government money, or at the very least, with a government subsidy.

    Socialize the expenses, privatize the profits. It’s the worst of both worlds, unless you are an owner.

    Sunday, January 30, 2011 at 11:08 pm | Permalink
  16. BTN wrote:

    “And yet the Green Bay Packers generate more revenue than any other team (the socialists are supporting the capitalist teams!)”
    Good article, but there is no way that the Green Bay Packers generate more revenue than the Dallas Cowboys. No, I didn’t look this up.

    As a side note, the biggest hurdle in the Social Security debate is that people put the crt before the horse: before deciding what to cut or how to modify SS, you have to dicide what it is: is it a Socialist safety net or a Capitalist retirement plan?

    Sunday, January 30, 2011 at 11:57 pm | Permalink
  17. Iron Knee wrote:

    BTN, I wasn’t 100% sure of my source for that number, so I backed off of it a bit. The point still remains.

    Monday, January 31, 2011 at 12:29 am | Permalink
  18. Adrian wrote:

    The NFL’s revenue-sharing agreement, which cuts the league’s revenue pie into 32 equal slices, is what has allowed the small-town Packers to remain in Green Bay all these years. THAT is the “socialist” part that has benefited the Packers, and that — combined with the salary cap — is what has created a level playing field in the NFL, unlike baseball, where the big-market teams have the biggest payrolls and win all the titles.

    But there’s nothing remotely “socialist” about the team’s ownership structure. The Packers aren’t owned by the city of Green Bay, or any other public municipality. They’re a nonprofit corporation owned by private shareholders, who annually vote for a board of directors. The board, in turn, votes for an executive committee to oversee the team’s day-to-day operations. I fail to see how that’s socialist in any way.

    As for the shares being “worthless” … I got the best return on my investment I could ever ask for. The Packers are in the Super Bowl.

    Monday, January 31, 2011 at 5:16 pm | Permalink
  19. Bert wrote:

    Baseball does exhibit the problem to some extent. New York City has taxes that support the Yankees. As a result, they do get the best talent. Fortunately, baseball seems to have a higher variance in play than other sports. I don’t think football would survive under the same set of rules. And baseball would be better without them.

    Monday, January 31, 2011 at 5:20 pm | Permalink
  20. Iron Knee wrote:

    Adrian, as I mentioned previously, Green Bay is consistently one of the top-ten revenue generating teams in the NFL. So the NFL revenue sharing has not benefited Green Bay, it has penalized it.

    And you can have socialist companies just like you can have socialist countries.

    Monday, January 31, 2011 at 9:48 pm | Permalink
  21. lee wrote:

    i do not see how a corporation paying dividends equally to its shareholders is an example of socialism.

    i believe the author was trying a bit too hard to make an ironical point about american, capitalism, and sports, but failed rather miserably.

    Friday, February 11, 2011 at 6:16 pm | Permalink

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