Forcing a Real Business Model Upon Pro Sports
defenestrate and cwthrash got me thinking about the current economic model of today’s NHL in d-strate’s latest article. During the thread the topic slightly veered from the Problems in the league right now, to the Business portion and how it’s all-dominant, all-consuming, and really just a big mess. And the more I got to thinking about this area of the NHL and pro sports in general, the more I realized something.
(NOTE: This is a slightly-modified version of an article I wrote earlier today on my own website. It’s more about pro sports in general, but is applicable to the NHL’s current situation in particular. You can find the original article at:
If sports wants so badly to be a business, then they’d best start operating like one.
What do I mean? Well let’s break everything down and take a long, hard look at what a professional sports league really is, and the environment in which the league exists.
Here in America we are a capitalist economy. Capitalism is supposed to encourage competition, so that anyone with enough drive and an idea can fight their way into the marketplace and make a dollar. Competition is theoretically supposed to keep product quality high, prices lower than normal, and essentially exist as the economic equivalent to Darwinism – survival of the fittest. Sometimes in a capitalist society, a person with a good idea and a good work ethic still won’t make their idea work, and they’ll lose out in the end. That’s just the nature of the beast, it’s all a big gamble.
In a corporate structure, a CEO commonly oversees the company and answers to “The Board” (or the stockholders and general public). If at any point that CEO’s job performance disappoints and doesn’t meet the expectations of the Board or stockholders, that CEO can be fired and removed from his or her position.
What does all of this have to do with sports?
A professional sports franchise is basically a company. And a league full of teams is a group of companies all competing for the top spot in the same marketplace. Some teams will succeed and rise to the top, and others will fail miserably. And the CEO overseeing each team is of course the Owner. Here’s where the real problem starts.
Unlike a real company in a real market, the CEO (the Owner) cannot be fired from his position. You could make a weak argument that the Fans are the Board and Stockholders, but as I said that’s weak because the Fans hold no real power in this issue. They cannot fire the Owner, nor can they exert any direct influence upon the franchise or team whatsoever. The Owner in fact has Absolute Control. And the Fans are merely the Consumers.
Let me simplify this even further — The Owner has nobody to answer to. Donald Trump cannot step in and say “You’re fired”.
And yet this is supposed to be Big Business? Please, that’s a sick joke.
If major pro sports leagues want to truly be considered Big Businesses then they need to take one more step and grant their league’s respective governing bodies the right to “fire” owners. It’s as simple as that.
A CEO is hired via a contract. And if the CEO doesn’t hold up to their terms of the contract, or flat-out breaks their contract, they get shown the door. When a prospective owner applies to the league for ownership, all the league needs to do is draw up a contract with performance and ethics clauses. Should the owner fail to meet these standards, he will be stripped of his ownership and his team or franchise will be run by the league until transferral of ownership under a new contract with a new owner can be obtained.
Think about it. Under this system many current owners of professional sports franchises would have been canned a long time ago with potential to have turned those abysmal franchises around.
That, my friends, is how you run a business.
And that is my challenge to every professional sports league out there. You don’t need a salary cap, that’s not in the spirit of capitalism. The NFL has a salary cap and while it temporarily has levelled the playing field it has also caused even more problems and more potential for owners to make bad situations even worse (for example, Daniel Snyder in Washington who doesn’t seem to understand how economic models work). The NBA has a Luxury Tax and it has done nothing to increase the competitiveness of the on-court product, nor has it improved the game. Instead it has lined the pockets of lawyers as unions file litigation and try to make exceptions like the Larry Bird Rule whereby one player who meets specific criteria doesn’t have to have the Luxury Tax and other financial rules apply to him. I don’t see that salary caps have made either of these leagues any more viable or better overall.
If you really, REALLY want to fix your leagues, your respective sports, and make the fans (your consumers) happy all at once, you the leagues will stop cowering in fear from players unions and the media, will step up, and start requiring incoming owners to agree to and sign legally-binding contracts that include performance clauses and the ability to lose their franchise because of general insubordination. It’s your league — take control of it.
Make it truly Darwinian folks. Then if owners want to gamble on outrageous player salaries they can, but if they fall flat on their face they have nobody to blame but themselves, and they can’t continue to control the team and just muck things up even more. Owners have no inherent right to profitability or support from the others in their league. This is not special ed, and you are not all winners.
If you want sports to truly be a business, then start operating it like one. Otherwise you’re not really a business, and you have no right to sit and whine and complain about how “unfair” a competitive model is when your own success or failure is your own responsibility. Right now, you’re not operating like a business, so how can you expect marketplace success?
It’s not about player salaries or a salary cap. It’s not about expansion or contraction. And it’s not unfair that some are the Haves and others are the Have Nots. That’s merely the way our capitalist economy and the marketplace works.
And nobody ever said capitalism was easy.