NFL Agreement...ripped from the WSJ

REVIEW & OUTLOOK

A Touchdown for Capitalism
The NFL owners' agreement would make Adam Smith smile.

Friday, March 10, 2006 12:01 a.m.

Poor Adam Smith, who died in 1790, never got to see a pro football game. But it's a good guess that, somewhere up in heaven, the philosopher of capitalism is applauding Wednesday's deal among NFL owners and players.

The sports angle might not interest the author of "The Wealth of Nations." Judging by his obituary in London's Times, the most athletic thing he ever did was to tumble into a chemical vat at a tannery. What did fascinate Smith, however, was "the progress of opulence." And the league's new collective bargaining agreement is a perfect example of what he famously called the "enlightened self-interest" that guides free men and women toward the most rational economic decisions.

This week's agreement was something rare in modern sports: a case of good sense prevailing on both sides. This is especially true in the subdispute among the owners. In the NFL--unlike in other professional-sports leagues--owners pool much of their revenue and pay players out of that pool under a salary-cap system, all of which ensures enough resources for every team to afford good players and be competitive. When players demanded a higher salary cap, the less wealthy teams balked at contributing more to the pool. The teams with the highest revenues have now agreed to contribute more, so the poorer teams can afford to pay a share without becoming less competitive.

The owners also retained the salary cap for each team, albeit at higher levels, for the same reason. (By 2007, it will be $109 million.) The cap will help maintain the balance in the league that gives every team a chance to win sooner or later. It's an idea that took root in 1960, along with revenue-sharing, as part of a plan to keep competition exciting not only for TV but in the wider world of entertainment. The approximate parity among teams is a major reason why football is the most popular and successful of professional sports franchises.

Once again, NFL owners and players have determined that they have a mutual interest in keeping a good thing going and, weighing the alternatives, worked out their differences with that overriding goal in mind. Contrast that with what's happened in pro hockey, where an entire season was missed last year because of the players' rapacious stupidity. Or to baseball, whose richest owners want to dominate every year. The performance gap between teams that can afford the best, most expensive players and the poorer ones that cannot becomes more obvious--and the season more boring--every year. Even New Yorkers are deprived of genuine thrills if the Yankees too rarely lose.

Many sportswriters (and others who should know better) have described the NFL's revenue-sharing system as a form of socialism, as in: "Socialism has been good for the NFL" or revenue sharing is "socialism for the well-to-do."

The truth is that in the NFL, while owners and players compete on the field, off the field they are business partners whose real competition is with other forms of entertainment. By sharing revenues, they all get richer. That isn't socialism. Vide Mr. Smith, it's just good capitalist sense.

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"The Dude Abides"