The NFL's Parity Perplex 

How the dismal science applies to your life.
June 23 2000 9:30 PM

The NFL's Parity Perplex 

The salary cap is one of the mysteries of the universe

(Continued from Page 1)

The example of the Giants points up another important truth: Contrary to popular belief, the threat to parity comes not from the richest teams but from the teams with lots of fans who are willing to pay high premiums to see good players. If quarterback Joe Btfsplk adds $5 million to the revenue of the Chicago Bears, then the Bears will offer him up to $5 million (and no more) regardless of whether the owner is rich or poor. This analysis assumes that NFL owners are rational profit-maximizers, and, of course, there is room to question that assumption.


How will the salary cap evolve in the future? Like the universe itself, it might continue to expand forever or suddenly vanish in a final "big crunch." Either prophecy can be self-fulfilling. Take the big-crunch theory: If teams believe the cap will be abandoned in a few years, they'll sign a lot of long-term contracts with large signing bonuses (figuring that most of the bonus will be scheduled to "count" in years when there will be no cap to count against). Once they've signed those contracts, they'll bring pressure on the league to abandon the cap. That's where the prophecy becomes self-fulfilling.

On the other hand, if teams believe the cap is here to stay—even with continuous adjustments and new exceptions and exceptions to the exceptions—those signing bonuses become less attractive, there will be fewer of them, fewer teams will be desperate to escape the constraints of the cap, and the cap has a better chance of surviving.

When two conflicting prophecies can each be self-fulfilling, we economists say we're in a situation with "multiple equilibria" and usually throw up our hands when it comes to making predictions. So the cap might or might not survive, but in any event it's a pretty good bet that the league has a long-run commitment to the conservation of parity. Closer contests mean more revenue, and professional sports organizations don't walk away from revenue. That's a law of nature you can take to the bank. 


The Juice

Ford’s Big Gamble

It’s completely transforming America’s best-selling vehicle.

Should the United States Grant Asylum to Victims of Domestic Violence?

The Apple Watch Will Make Everyone Around You Just a Little Worse Off

This Was the First Object Ever Designed

Don’t Expect Adrian Peterson to Go to Prison

In much of America, beating your kids is perfectly legal. 


How the Apple Watch Will Annoy Us

A glowing screen attached to someone else’s wrist is shinier than all but the blingiest jewels.


A Little Bit Softer Now, a Little Bit Softer Now …

The sad, gradual decline of the fade-out in popular music.

Is Everyone Going to Declare Independence if Scotland Does It? 

I Tried to Write an Honest Profile of One of Bollywood’s Biggest Stars. It Didn’t Go Well.

Trending News Channel
Sept. 12 2014 11:26 AM Identical Twins Aren’t Really Identical
  News & Politics
Sept. 14 2014 2:37 PM When Abuse Is Not Abuse Don’t expect Adrian Peterson to go to prison. In much of America, beating your kids is perfectly legal. 
Sept. 12 2014 5:54 PM Olive Garden Has Been Committing a Culinary Crime Against Humanity
Inside Higher Ed
Sept. 13 2014 8:38 AM “You’re More Than Just a Number” Goucher College goes transcript-free in admissions.
  Double X
The XX Factor
Sept. 12 2014 4:05 PM Life as an NFL Wife: “He's the Star. Keep Him Happy.”
  Slate Plus
Behind the Scenes
Sept. 12 2014 5:55 PM “Do You Know What Porn Is?” Conversations with Dahlia Lithwick’s 11-year-old son.
Sept. 14 2014 11:44 PM A Little Bit Softer Now, a Little Bit Softer Now … The sad, gradual decline of the fade-out in popular music.
Future Tense
Sept. 12 2014 3:53 PM We Need to Pass Legislation on Artificial Intelligence Early and Often
  Health & Science
New Scientist
Sept. 14 2014 8:38 AM Scientific Misconduct Should Be a Crime It’s as bad as fraud or theft, only potentially more dangerous.
Sports Nut
Sept. 12 2014 4:36 PM “There’s No Tolerance for That” Pete Carroll and Jim Harbaugh say they don’t abide domestic abuse. So why do the Seahawks and 49ers have a combined six players accused of violence against women?