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

84000_84947_brown_nflcap01
(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.

Advertisement

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. 

Steven E. Landsburg is the author, most recently, ofMore Sex Is Safer Sex: The Unconventional Wisdom of Economics. You can e-mail him at armchair@landsburg.com.

TODAY IN SLATE

Technocracy

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

The Congressional Republican Digging Through Scientists’ Grant Proposals

Renée Zellweger’s New Face Is Too Real

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Whole Foods Is Desperate for Customers to Feel Warm and Fuzzy Again

The XX Factor

I’m 25. I Have $250.03.

My doctors want me to freeze my eggs.

The XX Factor
Oct. 20 2014 6:17 PM I’m 25. I Have $250.03. My doctors want me to freeze my eggs.
Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

George Tiller’s Murderer Threatens Another Abortion Provider, Claims Free Speech

These Companies in Japan Are More Than 1,000 Years Old

  News & Politics
The World
Oct. 21 2014 3:13 PM Why Countries Make Human Rights Pledges They Have No Intention of Honoring
  Business
Moneybox
Oct. 21 2014 5:57 PM Soda and Fries Have Lost Their Charm for Both Consumers and Investors
  Life
The Vault
Oct. 21 2014 2:23 PM A Data-Packed Map of American Immigration in 1903
  Double X
The XX Factor
Oct. 21 2014 3:03 PM Renée Zellweger’s New Face Is Too Real
  Slate Plus
Behind the Scenes
Oct. 21 2014 1:02 PM Where Are Slate Plus Members From? This Weird Cartogram Explains. A weird-looking cartogram of Slate Plus memberships by state.
  Arts
Brow Beat
Oct. 21 2014 1:47 PM The Best Way to Fry an Egg
  Technology
Technology
Oct. 21 2014 5:38 PM Justified Paranoia Citizenfour offers a look into the mind of Edward Snowden.
  Health & Science
Climate Desk
Oct. 21 2014 11:53 AM Taking Research for Granted Texas Republican Lamar Smith continues his crusade against independence in science.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.