Are American Sports Leagues ‘Socialist’?

business_ethics_highlights_2Here, Five Thirty Eight’s Kirk Goldsberry attributes to Nate Silver the insight that American sports leagues are more ‘socialist’ than their ‘capitalist’ European counterparts. However, this insight is based on a failure to recognize fundamental differences in the way professional sports are organized as profit-making ventures in North America as against Europe. When one takes account of those differences, the apparent insight disappears. That American professional sports leagues promote parity through salary caps, preferential draft positions for low performers, and revenue sharing (in contradistinction to their European counterparts) isn’t evidence of ‘socialism’. It is instead evidence that the league itself, rather than any of the teams composing it, is the relevant firm seeking to maximize its returns. NFL, NBA, MLB, and NHL teams are called franchises for a reason: each is a league-granted concession; a local alter ego of the league. (Teams competing in European sports leagues are not league-granted franchises.) Just as a successful franchising business seeks to avoid franchisees cannibalizing one another’s sales, a successful sports league seeks to maintain spectator interest. American sports leagues hypothesize that any-given-Sunday game outcomes are more appealing than predictable dynastic victories and that this greater appeal will be reflected in revenues. By most ‘capitalist’ measures, the NFL is the most financially successful sports league in the world. Its franchises are competitors on the football field but cooperators in a joint business enterprise off the field. So, too, for the other American professional sports leagues. The failure to recognize this – and it is a widespread failure that sometimes finds expression in U.S. law and public policy – leads to ersatz ‘insights’ like the one the author gushes about at the outset of this article. >>>

LINK: How The Golden State Warriors Are Breaking The NBA (by KIRK GOLDSBERRY for FiveThirtyEight)

The first time I saw my boss, Nate Silver, give a talk was at the 2014 MIT Sloan Sports Analytics Conference in Boston. As usual, he was going on about numbers and statistics, but what stuck with me longest wasn’t quantitative. Pointing to the practice of relegation in European soccer leagues, he said European sports tend to be more capitalist by nature, while their American counterparts tend to be more socialist.

“It’s kind of ironic,” Silver said. “American sports are socialist.”

Nate’s framework was right: With provisions like “salary caps,” “revenue sharing” and drafts that generally allot the best new talent to the worst teams, American leagues intentionally promote parity while suppressing the natural tendency for some clubs to dominate others. But Curry and his teammates are unapologetically destroying Adam Silver’s Bolshevist basketball state. The Golden State Warriors are 15-0. If they win Tuesday against the lowly Los Angeles Lakers, they will break the record for the hottest start in NBA history; no NBA team has won its first 16 games.

What do you think?

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  1. Pingback: CEE Review: Are American sports leagues socialist? | 40 most exciting innovations of 2015 | The great sushi craze of 1905, and more » Center for Ethics and Entrepreneurship

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