preventing expansion franchises in the largest markets is also unnecessary if the most lucrative sites really are Tampa and Seattle. If Mr. Carothers views on the demand for football were correct, the only way an additional franchise could survive would be to overcome the initial handicaps arising from fan loyalties and displace the incumbent because it offered a superior product and/or charged lower prices. While I can understand the reluctance of owners to permit this eventuality, I hardly see the social desirability of protecting teams against this kind of competition. On page four Mr. Carothers offers the opinion that player salaries are higher now than they would be under competition. Notwithstanding the economic virtues of this argument, his opinion is certainly not supported by any evidence in the history of sports. Competition in basketball and hockey led to a doubling of salaries. And, in football, the AFL-NFL merger had a major effect on salaries. The bonus payments and salaries of the Atlanta Falcons, revealed in the tax case, clearly show the effect of the end of competition with the merger. Mr. Carothers discussion of how salaries are determined, and the "academic balderdash" of the notion that in competition people are paid what they are worth, overlooks the fact that the economic theory of wage determination does not depend on each owner knowing the contribution to revenues of each player. In competition, businessmen who make good decisions also make profits, while businessmen who make bad decisions go bankrupt. These decisions are made in a historical context-businessmen know the past salary history of players of various combinations of skills, and make salary offers to players on this basis. In competition, a team that persistently paid players more than they could contribute to revenues would go broke, while a team that persistently offered salaries below this value would lose players to other teams until it met the market price. Because of the various monopolistic practices in football, neither circumstance holds now and hence the lack of correlation between profits and team quality cited by Mr. Carothers. The reason for a divergence between the contribution of a player to a team and his contribution to a league is also rather straightforward. Players draw fans because they cause their teams to have a better chance of winning and because they may have charisma or star quality beyond their contribution to victories. Namath, quite obviously, has star quality. The star quality factor adds to league attendance-people will turn out to see the charismatic players of the game in all cities. But the effect of a player on winning adds more to the popularity of his team than it does to attendance in the entire league. Obviously, if team A wins one more game, somebody else loses one more, and the attendance gains by A are somewhat offset by the losses of B. This is the basis of the argument for revenue sharing among teams in a league: in order to reach a situation in which players are paid according to their contribution to league-wide revenues, an institutional rule must be set up that makes the financial success of a team depend upon the financial success of other teams. If this is done, teams will not want to dominate their competition completely because eventually further improvement in their quality will increase their home game revenues by less than the decline they experience in their share of the revenues of other teams. With respect to payroll ceilings, Mr. Carothers discusses the unfairness and morale-destructive features of the process. This recitation of problems of friction between, say, Joe Greene and Terry Bradshaw, or among Bill Kilmer, Sonny Jurgenson and Joe Theisman, provides the basis of the argument in favor of ceilings. In fact, in a competitive labor market, the best teams today could not afford to be as dominant as they are for this very reason. One of Washington's quarterbacks would have made a better deal elsewhere, and some Steelers would end up in Chicago or New Orleans. The flaw in Mr. Carothers argument is that he has not considered the possibility that a team would not have exclusive rights to its players. Obviously, a ceiling on salaries would have no effect if players still were not free to change teams. But in a competitive environment, a salary ceiling would limit the extent to which a single team could acquire a disproportionately large number of the best players. The question of competitive balance is, of course, crucial to the viability of a sport. In this regard, I have made the following calculations, based upon the records of football since 1970, a period beginning a few years after the AFL and NFL stopped competing for players and hence when the "balancing" effects of the Rozelle Rule should have been apparent. I have calculated the number of times a team would expect to reach the playoffs if the league were balanced—that is, if over a six year period each team had an equal probability of winning. I have compared these calculations with the facts regarding the frequency with which teams actually make the playoffs. I have made the comparison both for the entire period and for the two end years separately (1970 and 1975). Here are the results. 1 Because of rounding off, the expected number of teams in each category for 1970-75 adds to 27 instead of 26; however the relative magnitudes are accurate. To illustrate how this table should be interpreted, if all teams had, over the six year period, an equal chance of making the playoffs, three teams would be unlucky enough never to make the grade. In the NFL since 1970, ten teams have failed to make the playoffs. Similarly, the probability that any team would make the playoffs in five of the six years is so low that no teams would be expected to do it (the probability is about 1.1 percent). Yet four teams have made the playoffs five times in six years. Similarly, in comparing 1970 and 1975, five teams made the playoffs in both years. Statistically speaking, one would expect three teams to do so. In both cases, too few teams are of middling successmaking the playoffs one or two times in six years or once in two. In other words, good teams stay good and bad teams stay bad, despite the anticompetitive rules of the sport. These figures, it could be argued, cover too short a time period to be valid. That is certainly possible. But how long are the rules supposed to take in equalizing strengths? If the answer is decades, one wonders whether all the other undesirable features of the system-such as the control over where a professional athlete is allowed to live, the way a coach can treat a man without risking the loss of him to another team, the depressing effects on player salaries and the monopolization of lucrative markets-should be tolerated for such a lethargic balancing effect. Finally, let me close by disagreeing strongly with the last substantive point made by Mr. Carothers. At the end of his letter, he refers to two passages of the book which illustrates its impractical academic character. The first reference is to an appendix to one chapter which proves mathematically the verbal argument in the body of the chapter. The notion that mathematics and statistics are irrelevant to policy analysis is harmless, if unbelievably unaware of the contribution that analytical methods have made to policy analysis within the federal government over the past fiteen years. The Judiciary Committee's own investigations of the competitive structure of industries-most recently the sophisticated analysis the Committee is undertaking of the oil industry-are testimony to this development. But the other reference is to a senstive, serious attempt to deal with the problem of racial discrimination in sports in an objective, scientific fashion. To find concrete evidence of discrimination in sports is hardly "academic" or "impractical" and to label it as such is not harmless. I hope that these comments are useful to you in reaching a decision on the proper stance of the antitrust laws with respect to sports. Congress clearly is the main hope of dealing fairly and effectively with the peculiar problems of the structure of the sports, and the legislation you have submitted, along with the hearings it generated, has made an important contribution to rational consideration of the issues. Sincerely, ROGER G. NOLL, Professor of Economics. 94TH CONGRESS 1ST SESSION APPENDIX H. R. 694 IN THE HOUSE OF REPRESENTATIVES JANUARY 14, 1975 Mr. MURPHY of New York introduced the following bill; which was referred to the Committee on the Judiciary A BILL To protect the constitutional rights of professional athletes. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That (a) every individual who is engaged, or wishes to 4 engage, in an organized professional team sport in or affect5 ing interstate commerce has the right to enter into a contract 6 with any person for the purpose of engaging in such sport 7 with a particular team without agreeing to permit that per8 son to control his right, upon the expiration of his contract, 9 to enter into a contract with any other person for such pur10 pose, or agreeing to perform under any such contract for an 11 unreasonable period of time. I 2 1 (b) Any provision of a contract which requires such an 2 individual (1) to agree to permit the other party to the 3 contract to control his right, upon the expiration of that 4 contract, to enter into a contract with any other person for 5 the purpose of engaging in an organized professional team 6 sport, (2) to secure a release from the other party to the 7 contract before entering into or performing under such a 8 contract with any other person for such purpose, or (3) 9 to perform under that contract for an unreasonable period 10 of time shall be unenforceable. 11 (e) Any person who deprives, or conspires with any 12 other person to deprive, an individual of his rights under 13 subsection (a) shall be deemed guilty of a misdemeanor and, 14 upon conviction, shall be fined not more than $50,000, im15 prisoned for not more than one year, or both. 94TH CONGRESS 1ST SESSION H. R. 2355 IN THE HOUSE OF REPRESENTATIVES JANUARY 29, 1975 Mr. SEIBERLING (for himself, Mr. FRASER, MS. Abzug, Mr. Badillo, Ms. BURKE of California, Mr. DELLUMS, Mr. HARRINGTON, Ms. JORDAN, Mr. Mikva, Mr. MITCHELL of Maryland. Mr. REES, Mr. STARK, Mr. STOKES, and Mr. VAN DEERLIN) introduced the following bill; which was referred to the Committee on the Judiciary A BILL To protect the civil and constitutional rights of professional 1 athletes. Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That (a) every individual who is engaged, or wishes to 4 engage, in an organized professional team sport in or affect5 ing interstate commerce has the right to enter into a contract 6 with any person for the purpose of engaging in such sport 7 with a particular team without agreeing to permit that per8 son to control his right, upon the expiration of his contract, 9 to enter into a contract with any other person for such pur I |