This is the second part of a two-part series, and the question we're trying to answer came from a listener's email.
James McGinty is a 69-year-old training consultant who lives in a small town outside of Glasgow, Scotland.
He wrote in after hearing an episode of ours called When Is a Superstar Just Another Employee?
Episode number 557, if you want to look it up.
That episode looked into the daily life of the athletes who play in the National Football League which, if you don't know, is the most profitable and powerful sports league in history.
The episode included data from a survey that the players union had done.
They were hoping to put pressure on team owners to improve workplace conditions.
The people who own NFL teams aren't nearly as exploitive of their labor force as they used to be.
Still, the survey showed that some of the team's operations were surprisingly shoddy and that some of the owners were surprisingly cheap.
Anyway, here's what James McGinty wrote.
I was stunned to hear that the average career length for a player was 3.3 years.
This is essentially a product of the monopoly system that is the NFL."
McGinty pointed out that in European soccer, players often begin their professional careers at age 17 or 18 and play into their mid-30s.
Because of the pyramid system, McGinty wrote, and by pyramid he means the top professional soccer leagues in each country and the other pro leagues below them.
Because of this, he wrote, players can continue to play, albeit at lower salaries.
And so he wondered would it be worth your doing an episode showing these comparisons and questioning whether the NFL should end their monopoly and move to a pyramid system?
Well, yes, James McGinty, that is worth doing an episode on or actually two.
In last week's episode we floated the basic premise that the NFL and the NBA, while we're at it might think about a new type of expansion by merging with the top level college football and basketball programs.
Thanks to some recent legal developments, the economics of college sports are going to start looking a lot more like pro sports.
So what if, rather than just being a feeder system to the pros, what if the best college teams could get promoted into the top level of their sport?
And what if the worst pro teams got demoted into a lower tier league?
So that's the general idea moving from a closed monopolistic system to more of an open competitive market.
Are there a zillion details to be discussed?
Of course.
Will some people hate this idea from the outset?
Absolutely.
But is it still worth thinking through?
Well, I hope so, because today on Freakonomics Radio we think it through with some people who've already been thinking a lot about this kind of thing.
If you weren't born in America, you weren't raised in America.
This seems like motherhood and apple pie.
Natural, sensible, obvious thing to do.
I hate being in this position where I have to continue to shoot down these ideas.
It would be wildly disruptive to move from a current closed system to an open system.
That's never going to happen without some sort of benevolent overlord like me.
Overlords, benevolent and otherwise, that starts now.
This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner.
More Americans than ever are watching English Premier League soccer on TV, and the Premier League sits atop the most famous promotion relegation system in the world.
So maybe there could be a bit of enthusiasm for this idea in the US, but in most important ways the American sports business model is fundamentally different from the model in England and in other foreign leagues.
So how did they come to be so different?
To figure that out, we're going to start with an Englishman who just happens to teach at one of the epicenters of American college football.
My name is Stefan Cheminski, and I'm a professor of sport management at the University of Michigan.
How would you describe, Stefan, your major experience? areas of research?
I'm an economist who studies sports.
In doing so, I just don't look at the economics of it, but I also have to look into the history and culture of it to really understand the way these different forces interact.
There are a million people writing about, analyzing, and just yakking about sport.
What do you do that's different than all that?
I got into this 35 years ago, thinking about the relationship between what teams spend on their players and the performance of the team on the field.
I looked at financial data to try and track that performance.
And there was a time when nobody really looked at that.
Ever since then, I've become more and more involved in thinking about the way in which leagues are structured and the way in which competition works within the organizational structures established by leagues and governing bodies.
I might assume that the way leagues are structured and evolve over time is very intentional or at least rational.
I'm guessing that's actually not the case, though.
Well, it's important to say that leagues are human-designed structures.
They don't fall from heaven ready-made, as it were.
But, having said that, the way that leagues and organizational structures have evolved over time often has something to do with something somebody was worrying about 150 years ago, and very little to do with what people are thinking about today.
Now, when you come to America, you see that we have prominent pro leagues in football American football.
We have, you know, very high profile professional basketball league, but we also have really prominent college football and basketball.
What's the parallel like in England?
There is nothing like collegiate sport in the UK or anywhere else in the world.
Even though the whole idea of collegiate sport really comes from England.
They were playing what sports?
Early versions of soccer or rugby football, which would emerge into the American version of football.
They were playing cricket.
They were rowing.
Many of these students would actually come to the United States and put on exhibitions.
Students from Oxford might visit Yale or might visit Harvard.
American college students started to take up the idea that the British had really developed, which was collegiate sport would be fun.
Okay, so that's how collegiate sports got started.
What about the origin of professional sports?
The model of modern professional sport is baseball, and it emerged in the 1840s.
Within 20 years, it blossomed.
Baseball players were very proud of being amateurs.
But once you had paying spectators, the players wanted to be paid.
This all came to a head in 1871 when a group of players wanted to form a professional league.
The amateurs basically said, nope, we want nothing to do with you.
And so they split.
The professionals went on to be the National Association of Professional Baseball Players.
That folded in a few years.
But in 1876 the National League was created and out of that grew the whole of baseball and on that model grew the whole of professional league sports in the United States, with the principle established that amateurs and professionals do not mix.
In English soccer, this exact same problem comes up in 1885.
And they look to the American experience, and a different counsel prevails.
People still want to be amateurs and some people want to be professionals and they're still kind of suspicious of each other.
But the amateurs agree that they will not cast out the professionals, that they can remain within the same national association.
As a result of that, amateurs have always been able to play alongside professionals in soccer.
And in many other sports, you've seen this combination.
This difference between the segregation of amateur and professional versus the integration of amateur and professional is something that differentiates the way that sports evolved in the US and the rest of the world.
So what about now at colleges, at universities in England?
Do you see high level club teams, if not super competitive in these same sports?
You see almost nothing.
All universities in England will have teams and they play competitive sports, but nobody goes to watch.
The people watching.
It would be about the size of the typical unfavored high school team somewhere in the boonies in America.
If you grow up in England and are a very good athlete, do you not go to university?
Probably not.
If you're any good, you're probably going to get a contract to play for a professional team at the age of 17 or 18, sometimes even younger.
Really, what will have happened is you'll be coming through a youth development system of a club since you were probably about 10 years old.
Tell me the route then for, let's say, an American kid who wants to play in the NFL someday.
If you want to play in the NFL, you need to get on your high school football team and you need to play at the highest level you can.
Then you need to go to college and play for a college football team.
And on the basis of that, you can be drafted into the NFL.
And how do you like that progression?
Do you think it makes sense?
It makes sense for the owners of NFL teams, for sure.
Yeah.
They're essentially getting all the talent for free, fully trained up and fully developed.
It works quite well for the colleges as well, because this is a way of marketing themselves and attracting students and donations.
In last week's episode we spoke with the sportscaster, Dominique Foxworth, who played his college football at the University of Maryland.
His first season was in 2001, back when amateurism was still the way of the NCAA.
Our coach was getting a contract extension and all of the rest of the coaches got a Cadillac deal and we got a DVD player and a bag of sweatshirts.
But Foxworth did wind up making his own Cadillac money.
He was selected in the third round of the 2005 NFL draft, and he spent seven seasons in the league.
After that, he got an MBA at Harvard.
He has also worked with the players unions in both the NFL and the NBA.
I asked Foxworth to describe the financial security he saw for himself in the beginning when he was on that first NFL contract.
It's not a great deal of financial security.
It's a big number signed for like one point three million dollars over a four year contract, which is a lot of money for a 22 year old guy.
But it's your whole life.
That first contract, the terms are essentially set by where you're taken in the draft.
But then you have an opportunity as a player to make yourself more valuable and get that second contract and maybe even a third contract, which you did.
So you ended up making life changing money.
I think we'd agree.
Correct.
Absolutely.
So what was your mindset like on that first rookie contract where you're getting paid relatively a lot of money for a young person but a it's not guaranteed it could end immediately if you're injured and b there's always going to be younger, cheaper guys being drafted?
The first thing was getting drafted.
Wasn't this big miraculous, wonderful moment that we all think of the draft as because we watch the guys cry and hug their family on tv?
I was at home, i I got drafted and I expected to feel some sort of thrill.
I didn't.
I was like, all right, now time to go to work and figure it out.
I had a really good rookie season.
So I felt good about my trajectory to make the money that I had hoped to make.
But then things didn't go as well the next couple of seasons.
And I got traded just before the start of the most important season of my career.
And I traded to a pretty bad team.
That was when the routine changed, and that's when the pressure came.
I hate to use a word like depression because that feels so clinical and I was never diagnosed.
But that was a tough year, a tough season in my life.
I was so relieved when I played well and it was over.
The team that drafted you is the Denver Broncos, and the bad team, as you put it, that you got traded to is the Atlanta Falcons.
So your second and third years at Denver, what went wrong?
It was a bunch of different issues, but one of the major issues was one of our teammates got killed and it changed the trajectory of our planning for that position.
We played the same position.
They went and traded for a higher profile player at that position, Dre Bly.
And so the writing was on the wall for me that I wasn't going to be the long term player.
Answer there.
I expressed that in the media, which was probably not the best thing to do.
They no longer felt like it was an asset to have me on the team.
So they traded me to the Falcons the year after Michael Vick had been convicted and sent to jail for the dogfighting stuff.
We had a rookie quarterback and a rookie coach and we ended up having a good season.
But No one really gets big contracts off of bad teams.
So I was really stressing on that flight to Atlanta.
Like, man, we got a rookie quarterback.
We're going to stink.
I'm at the bottom of the depth chart.
What happened in that year at Atlanta that turned things around?
Matt Ryan was good.
That was the rookie quarterback.
He played well.
Play well.
Did you think you played uncharacteristically well or you just played the way that you had always been capable of playing?
Oh, yeah.
No, I think I played as well as I always could have played.
That's the thing about football is a very dependent sport.
You're relying on a lot of people around you in order to have success that you need.
After the Atlanta year, then you got a contract with the Baltimore Ravens, correct?
Yes.
And that was your big money contract.
So what did that feel like for you, for your folks and friends and family?
What was that feeling of accomplishment for you?
It felt like relief.
Everyone who plays football loves football to some degree.
It's a weird relationship to have.
You love something that can't love you back.
But part of the reason why we all love it whether people will be honest about it or not is the financial security.
So it felt like I had accomplished one of those major goals that I had set out to accomplish when I was eight.
Just walk me through.
My memory is a little hazy.
I remember you got hurt, but you had bought insurance against your contract.
Yeah.
I played my first year under the contract.
And then in training camp, the first day of training camp for the second season, I had torn my ACL.
That was during the lockout, so I couldn't rehab at the facility.
Fortunately, I had insurance on my contract.
So I came back and played a few more games, but ultimately determined that it was in my best interest to move on to business school and cash in on that insurance policy.
How unusual was it for a player like you to have insurance on your contract?
It was something that my agent advised me to do.
It was probably something I would not have considered before.
Career ending injuries are not as common as they used to be.
So the insurance isn't crazy expensive.
How many of your teammates had that kind of insurance?
To be honest with you, I don't know.
It's not something we talk about that much.
There are lots of things to discuss in the locker room.
Like your insurance portfolio doesn't come up too often.
What do you think your life would have been like if you hadn't gotten to that second big money contract?
I had already started looking at business schools.
I mean, I'm a cornerback, Stephen, so I got extreme confidence.
Yeah.
No matter what else I would have done, I would have been really successful.
If I put that confidence aside, it would be definitely a difficult path.
Most guys who don't get to that second contract.
They don't go on to have great second acts in other professions because the amount of effort it requires to be successful in this one has put them in a more challenging situation to be professionally successful elsewhere.
In the U.S., in the NFL, it's kind of all or nothing.
You either make the NFL or you don't.
That is Victor Matheson.
He's a sports economist at the College of the Holy Cross.
That next step down is a gigantic step down.
Maybe arena football, maybe the Canadian Football League.
But if you are a professional footballer in Europe, meaning a soccer player, there are more options.
There are real jobs making lots of money below that top division in the UK, in Germany, in Italy.
There are certainly a lot more middle class players in leagues with promotion relegation than there are in the US, where you're either a multimillionaire or you're not playing the game.
Considering that NCAA basketball and football are headed toward professionalism let's call it and considering that both the NFL and the NBA are extremely successful but also a little bit constrained in expanding further, what do you think of the idea of making NCAA football and NCAA basketball essentially lower-tier leagues of the NFL and the, with relegation and promotion, so that the top college teams could float up into the NFL or NBA and the bottom NFL or NBA teams could float down into the leagues formerly known as college leagues?
How do you like that idea, changing that whole ecosystem?
So fundamentally, I love the idea.
The one sport that is my true passion is soccer.
And soccer is the sport where promotion and relegation has been embraced.
Not in the U.S., but almost every league in the world has promotion and relegation.
We've got 20 teams in the Premier League.
The worst of these teams will battle it out at the end of the season for who gets to stay and who has to go.
Those will be replaced by the best teams who battle it out in the league right below them.
What would you say are the primary upsides of relegation promotion?
The biggest one is that games among the worst teams still matter.
And it's also great among minor leagues.
Lower level leagues have something to play for.
In...
The United States in minor league baseball, there's literally nothing to play for.
Fans show up because they like the peanuts, the popcorn and the Cracker Jack.
But there's really no other reason to watch minor league baseball, because there's nothing you win if you do well.
And actually the better you do, the more chance you will have of losing those players eventually to the parent club and actually ending up with a worse team.
So it's great for fans of teams outside the major leagues.
It's fantastic for competitive balance for those lower level teams.
And what about for the athletes?
Yes, it does probably create more movement among athletes, because teams that get relegated basically fire, sale all of their players and you get wholesale roster turnover.
The teams that battle their way up from a lower league into the bigs the players that got you there aren't necessarily the same players that you're going to stick with.
It's actually kind of a sad story, right?
The players who win the battle are generally aren't the players who get to stick around the next year.
If you get booted out of the Premier League and you said there's usually a fire sale for the roster can you talk about how the league handles that?
The Premier League in particular has something called parachute payments.
This is basically money that is provided to teams that get relegated to soften the blow as they move down to that lower league.
It's a huge fall in revenue.
You lose the shared media rights that the English Premier League gets versus the much lower media rights that that second division of soccer gets.
Which is called, weirdly to an American, the championship.
And the third division is called League One.
But to be fair, over here we do call a sport where you pick up the ball with your hands and run around football.
The other thing that causes revenues to fall is if you move from the Premier League down to that second division league.
Rather than regularly hosting Man United and Arsenal and Man City, you're now hosting Coventry and Bolton and Leicester, teams that aren't going to be as big a draw.
And what about the stadium itself?
Presumably, you'll draw a much larger crowd if you're playing in the Premier League and much smaller if you're playing in the championship or League One.
But you can't magically grow or shrink your stadium whenever you get promoted or relegated.
Man United, these teams that we know are going to stick around because they're always good enough to avoid relegation.
They can build these really expensive stadiums that are meant for the long haul.
But if you are Wolverhampton Bolton Burnley, you're one of these teams that goes up and down a lot.
You can't put that money in.
You're being asked to try to generate major league revenue with a minor league stadium.
And what about teams relocating or threatening to relocate in order to get a new taxpayer funded stadium, like we see in the US?
?
We don't see franchise relocation in Europe.
That simply doesn't happen in that sort of league.
You can have a team disappear into irrelevance over time.
That happened, for example, in a little tiny town in Wales called Wrexham.
They had a top-level team that had slowly disappeared into irrelevance over time, until a couple angel investors –.
Ryan Reynolds and Rob McElhaney came in and purchased that team and is trying to move them back up into those higher leagues over time.
That's the thing about a pyramid system.
Even when a team gets relegated, they still have a chance to return to the top league.
And this keeps them right in the place where they've been playing all along, even if there are five or 10 other professional teams nearby.
That doesn't happen in a league like the NFL, which tries to maintain not only a scarcity of teams but a geographic balance.
Here is Stefan Szymanski again.
You can't have another team within 75 miles that would compete in the league.
The question is, do the closed leagues represent monopolistic abuses?
That has been litigated endlessly in the United States.
Sometimes they're found to be in breach of the antitrust laws, sometimes they're not.
It is pretty striking that in the NFL you have 32 teams to cover the entire continental United States.
And in European soccer, you have literally hundreds and hundreds of professional teams.
And this might be the biggest upside to bringing an open pyramid setup to the US, rather than the existing professional monopoly.
The footprint of the sport would get much bigger.
In the NFL, there are around 1,700 active players each year.
In the NBA, there are fewer than 600.
In Spain meanwhile, which has about one seventh the population of the United States, there are more than 8000 professional soccer players.
The lower level leagues, of course, pay much less than the upper ones.
But a pyramid model creates career opportunities for more athletes more, More coaches and trainers and executives, more merch sellers and food vendors.
On and on.
And there is another benefit to growing the pyramid.
Pro franchises would no longer be confined to the big cities.
You could imagine smaller cities and college towns getting a boost an economic boost, but maybe even a social boost.
Sport today is one of the biggest forms of social community that we have.
That's coming up after the break.
I'm Stephen Dubner, and this is Freakonomics Radio.
So what does a sports league with promotion and relegation look like and feel like?
Here again is the sports economist Victor Matheson.
You have teams battling right down to the last day about whether you're going to stay in the league or not.
Many of the leagues also have basically...
A Super Bowl, but it's not really a Super Bowl because it's actually the worst teams that make the playoffs.
It's been called by some experts the most valuable game on the planet, because the difference between winning and losing that last playoff game that keeps you in the Premier League or promotes you from the league below is worth more dollars to that team than any other single game a team can play anywhere on the planet.
How many dollars?
You're talking about revenues from that team jumping by at least $50 million.
But it isn't just the big dollars that make these games memorable.
Consider a 2013 match between two teams near the top of the second tier of English soccer Leicester City and Watford.
They were playing in the second leg of a playoff that would send the winner to Wembley Stadium for a chance to be promoted into the Premier League the following season.
With just seconds left in the game, Leicester's Anthony Knockhart dribbled into the box.
Knockout goes to ground as Cassidy leads on him penalty.
That is a massive decision.
It's a season defining call, nothing short of that.
If knockout scores it, Leicester City go to Wembley and it's the end for Watford.
Knockout takes Amunia saves.
Knockout follows in Amunia saves again.
Absolutely astonishing.
Now here come Watford Forestieri.
Here's Hogg.
Didi!
Do not scratch your eyes.
You are really seeing the most extraordinary finish here.
So Watford clinched its trip to Wembley and Leicester was gutted.
They had come this close to promotion.
But perhaps that experience was valuable because the following season Leicester City did make it into the Premier League.
And they began one of the most miraculous accomplishments in sport history.
In 2016, playing in the Premier League against mighty Arsenal and Chelsea and Man City and all the rest little Leicester City won the league.
We made an episode about the Leicester story.
It was called The Longest Long Shot.
Here's a brief excerpt from that episode.
This is Roger Bennett from Men in Blazers.
What this team have done, this innocuous little team, a team that were almost like an extra in a movie or a third cousin at a bar mitzvah, surprised to be invited and just happy to be in the background of the photographs.
They've gone from the very bottom of the Premier League to the very top in the course of 12 months.
Can you even imagine what it feels like?
When the local team you've been supporting for generations miraculously ascends into the top professional league and then, even more miraculously, wins that league.
Maybe you can, especially if your local team is a college team.
Here again is the University of Michigan economist Stefan Szymanski.
An American college team looks much more like a European soccer club, where it's a representative of a community.
Even if they're trying to make money, they almost never do.
And somehow they feel themselves to have this broader social mission rather than simply a business selling tickets, selling TV rights.
Imagine for a minute that you and I are sitting somewhere watching, let's say, an NFL game on TV.
And I say you know Stefan, I see the NFL as phenomenally successful, but they're always striving for more growth.
And I don't really know where or how they're going to grow more.
Globalization is a tough route, especially these days.
And then I see college football as also phenomenally popular but facing a very uncertain future at the moment.
It's already at the top level.
Barely a college sport and soon may not be at all.
So how about a merger between, in this case, the NFL, National Football League, and NCAA football?
The top college teams become the second and maybe even third and fourth tier teams of the NFL.
And those lower tier teams would have a chance every season to for a few teams to play well, get promoted and the top tier teams to be relegated, as they are in soccer leagues around the world.
How do you like this admittedly heretical idea?
So if, like me, you weren't born in America, you weren't raised in America, this seems like well, how should I say it?
Motherhood and apple pie.
It seems natural, sensible, obvious thing to do.
If you're raised in America on the real motherhood and apple pie, then it seems horrible.
And how would you do such a stupid thing?
I mean, all sporting systems are under challenge right now.
There's movements in Europe to get rid of promotion relegation, just as there's movements in the United States to introduce promotion relegation.
I think the first thing to say about the NFL is their owners are never going to say yes to this, because what NFL team wants to get relegated?
That would be bad for them.
On the other hand, if you think about the attractiveness to the NCAA now, you're actually talking about something where there's seriously potential for interest.
The NCAA looks very similar in some ways institutionally to European soccer.
You have lots of regional competitions.
You have very large numbers of teams competing.
And you have enormous differences between the teams at the top and the teams at the bottom.
One reason why promotion and relegation works so well in soccer is precisely because of that diversity.
It creates opportunities at local levels whilst also ensuring a top-level competition.
And that's where the NCAA could really benefit from promotion and relegation, because they have the same kind of thing.
And the NCAA has been worrying, and college football has been struggling for years with this problem of how to align teams so that everyone's in the right conference, and That's what promotion relegation does for you automatically.
It automatically sorts the teams from best to worst on a continuing basis.
Teams change, some go up, some go down.
It helps to establish a hierarchy which is perceived as being fair.
Stefan, what would be involved with the NCAA deciding to play games on Sunday, which is currently blocked out for NFL games?
Is that within the power of these college conferences?
My understanding was this agreement was brokered in Congress.
There's an agreement to reserve Saturdays for the amateurs.
The original agreement was to defend the colleges.
If the colleges go to Congress and say you know what we don't need defending anymore, I think Congress would say yeah fine, go ahead, do it.
Even if they went ahead and did it and even if there was a legal case, I think courts would not look very sympathetically on the NFL.
It's a real threat to the NFL.
The NFL didn't want to play ball, as it were.
I think the colleges have some threats.
So you're saying this isn't a case where the NCAA teams ought to be begging the NFL to make them second and third tier appendages to their professional league?
You're saying that the NFL and NBA, if they know what's good for them, will wise up to what's going on and they'll take on this merger.
Yeah.
Right now, the NBA and NFL should feel threatened.
They should be worried about college sports.
They get free labor from there at the moment and they have a whole day reserved for their competition the NFL at least, so they don't face any threat.
I love the headline of this conversation, NFL and NBA under threat from college sports.
That's a good headline.
Could you imagine a Super Bowl in 10 years between the Dallas Cowboys and the University of Michigan Wolverines?
And if so, what would that look like?
Well, obviously the Wolverines would win, but Michigan has a professional organization running its football team and could train the right kind of athletes to compete in the NFL.
As a Michigan fan, I would want to see us rise up the table and win the championship.
There's absolutely no reason you couldn't do that.
We spend a fortune on our team.
We have fabulous training facilities.
We have great athletes.
We have great recruiting systems.
We are capable of putting together that kind of institution and it would broaden the competition enormously.
The problem is it would kill the NFL teams.
College football is, in a sense, bigger and more deeply embedded in the U.S. culture.
Why do you say that?
Because college sports understands better the meaning of just winning and not being bothered about the money.
The NFL owners.
They're focused on the bottom line and would have to adapt to a world in which people were playing to win.
To be honest, I think what would happen in this system is actually the college teams would end up dominating.
I
Great thing about promotion and relegation is that they sustain clubs in communities.
Small clubs can survive and thrive even when they're not doing particularly well, because there's always the hope of something better in the future.
So they build communities.
So if I'm a sports fan, I'm starting to like this merger idea, yes?
Fans should always want more competition.
They should want their teams to be trying as hard as they can and they should want the organizations to be totally committed to winning rather than worrying about other stuff which is tangential to the enjoyment of the spectator.
I'm very excited that you're even entertaining this idea.
Let's discuss how it might work in some detail.
And let's try and be as realistic as possible, considering the way the pro leagues and the way college sports are set up today.
How would you get started?
The obvious thing is you would want to get the NCAA conferences to agree to this system.
We're already seeing this emergence of the SEC and the Big Ten as the two dominant conferences.
They could institute promotion and relegation.
And in fact, a year ago, one college coach actually started saying we should be thinking about this.
This would give the smaller college teams the chance which they're being denied at the moment by not being in the two mega-conferences of making it into the national championship.
If the NCAA established this system and got it to work, the next stage would be to say to the NFL we would like promotion relegation into the NFL.
And the NFL is going to say no.
So then what college sports says is, oh, well, you know what?
We think we're going to play on Sundays then.
That would be a really credible threat.
So my ridiculous idea is starting to look good now.
Coming up after the break, it stops looking so good.
I'm Stephen Dubner.
This is Freakonomics Radio.
We'll be right back.
I went back to the sports economist, Victor Matheson, to see if he could envision a merger between the NFL and NCAA football.
What do you think would happen if, on a given day, in let's call it October, the worst NFL team, let's just pretend it might be the Cleveland Browns?
We don't need to pretend about the worst team in the NFL being the Cleveland Browns in a given year.
I was just trying to be a little bit generous.
But let's say that the Cleveland Browns play the Ohio State Buckeyes, the best team in college football last year.
They happen to be from the same states.
That's a very nice rivalry.
I could imagine the story being gigantic for months and months.
One is a pro team.
One is a college team.
In the year 2025, what would be the outcome of that game?
I would be extremely surprised if Ohio State keeps it within 30.
For those who don't know American football, that is a beating.
It's what Ohio State routinely beats lower level teams by, but they would be on the other side of that.
But the economics of college sports is changing fast with these recent lawsuits that allow the athletes to profit from their own name, image and likeness rights, and also to be paid directly.
So Is it possible, maybe even likely, that the top college teams will eventually be able to compete with the worst NFL teams?
The way to think about this is just look at the money that gets put into players.
The NFL has what's known as a salary cap.
So every team in the NFL is paying exactly the same amount for talent every year.
And that number for next season is roughly $250 million.
The Cleveland Browns are going to be spending $250 million on talent.
We don't have good numbers about exactly how much every team is paying their players through this external NIL money, but most experts estimate that Ohio State was about the highest in the country and it was about 20 million last year.
So we're talking about one-tenth the amount of money.
Money doesn't buy wins, but it sure does a lot to put a thumb on the scale.
I hate to keep beating up on the Cleveland Browns, but you seem to feel they deserve it at least.
If you're another NFL team owner, why do you want the Cleveland Browns in your league anymore?
That's another advantage of a promotion relegation system. or they are in a poor market.
Teams like the Florida Marlins.
Miami's just turned out to not be a very good market for baseball.
Maybe the hot and humid summers make it unattractive.
Because that team is in a closed league, it stays there.
A promotion relegation league might get new teams from better markets with better management.
That makes for more attractive matchups, better TV ratings, better media revenues.
Does the NFL itself and the component teams?
Do they have any incentive at all to embrace this plan of relegation promotion?
They have very little incentive.
First of all, these folks who, at the minimum, own a roughly 5 billion asset they don't want to all of a sudden own a minor league team.
The great thing about being an NFL owner is, if you buy your way into that league, you're there forever.
If there were a government position, created something like emperor of professional sports in America.
And the first emperor chosen was Victor Matheson.
What are the first few things you would do?
Number one, build your own damn stadium.
This should not be a taxpayer's job to build someone else's factory.
Number two, and we're already getting through this with the NCAA.
But a cartel that comes together to restrict what poor, disproportionately minority young people can earn as athletes, while disproportionately white, older coaches are making 10 million a year, is wildly unjust.
NIL is a very clunky way to get towards paying players, but it's a step in the right direction.
Certainly, we should allow people to make money for doing a job.
Promotion and relegation is, I think, a lot more fun for the fans in general than a closed system.
It would be wildly disruptive to move from a current closed system to an open system.
That's never going to happen without some sort of benevolent overlord like me.
Even in the most fantastic world, I don't see that we'll have promotion and relegation coming to any of the big American leagues.
So Victor Matheson's position is that my idea might make sports more fun for the fans, but that it is impractical and probably impossible.
You can't argue with his point that no team owner would be willing to surrender the guaranteed value of their operation.
I also went back to Dominique Foxworth, the former NFL player and professional wise man.
He had the same objection as Matheson, but he too did not totally hate the idea.
Yeah, I don't have a problem with it as a concept.
And while I did tell you it was crazy, crazy doesn't mean bad.
Lots of the best ideas are quite crazy.
I think the challenging part now is convincing the professional leagues that they need to do this.
Foxworth understands better than most people how these leagues work.
He was involved from the players end in negotiating the 2011 NFL Collective Bargaining Agreement, or CBA.
Why would you take hold of this unwieldy piece while right now you got a cash cow?
One argument you could make is you guys have been benefiting from the training of athletes that are ready for your league and you don't pay a penny for it.
Additionally, they're generating interest from fans and consumers who see these players and know them, so that by the time they get to you, they're already stars.
So basically, you've been getting billions of dollars worth of value for free, and it's time for you to pay.
So let's find a way for you to pay without breaking the bank, since that's already the direction we're going in.
Might you be persuaded by that argument?
You're a very smart man, Steven.
But there's a particular blind spot that you have.
It sounds like the argument that you're making is because it's the right thing to do.
It's like you've benefited from this situation for so many years.
It's only right.
You're making a reparations argument.
A little bit.
A little bit.
You think that's how a billionaire, I mean, obviously, you know better than that.
So you're saying the reality is nobody who gets to the position of owning a 5 billion franchise got to where they got by thinking that way.
I mean NCBA negotiations.
I was in lots and lots of hours and hours of meetings with league executives and team owners.
The thing that they were most focused on were their revenue targets and profitability targets.
Being in those meetings was eye-opening.
I came out of that being assured that I could hold my own at a place like Harvard Business School.
I didn't walk out of that meeting thinking that I should start a nonprofit, because these guys are looking to compensate the people who got them to where they were.
In those meetings they're arguing that the players that currently play for them deserve less money than they're currently getting.
It's pretty easy to understand how difficult it would be to sell NFL owners on the idea that you've benefited from this.
So let's say I'm going to amend my do the right thing argument.
Everything I said still stands, but – and I'm speaking here as maybe a university or the NCAA, or maybe I'm speaking on behalf of some college athlete organization.
I say since we're essentially competing with you in some ways, but my guys are not getting paid –
What if we compete against you more directly?
And what if we get rid of all this crazy old fashioned congressional backroom handshake stuff?
That means you own Sunday and I own Saturday.
I have a lot of football games being played in college and I'm going to start playing a lot of them on Sunday now.
I know you think that your Pittsburgh Steelers and your Green Bay Packers have a lot of fans, but do you know how many alumni of Notre Dame there are?
And if I put that game on Sunday at 1 p.m.
Eastern time, do you not think that I'm going to eat into your money quite a bit?
How do you like that negotiating tactic?
I like that a little bit better.
No one could compete with the NFL other than college football.
We saw how the NBA used to own Christmas and football was like, you know what?
We'll take that too.
So I think the NFL is not intimidated by that from most places.
It's possible, though, that... they could be moved by the college teams.
However, I would say once again that you tried to wave away the backroom congressional handshakes.
Who's better at those handshakes than the guys who own these teams?
Your point is taken, but I do have a slate counter, which is this.
I think if you take your median congressperson Almost all of them went to college.
They come from an area where the attachment to college sports is, on average, pretty intense.
The attachment of a particular area to its pro football team or pro basketball team.
Sometimes it's intense, but often it's not.
And so, while you say who would be better at congressional pressure or lobbying than an NFL owner, I might say well actually, I think the emotional resonance and maybe even the commercial power might lie in the college argument.
They could say hey really, this represents the country in my constituency much more than the pro team does.
And therefore, if you want to give privilege to anybody, you should give it to college sports.
How about that argument?
I hate being in this position where I have to continue to shoot down these ideas.
But I think about big situations like this.
I like to lay out all the stakeholders and try to figure out their interests.
And you're bringing another stakeholder into this, which is the fans and the constituents.
However, I don't think that you recognize in this situation what is in their interest.
I don't think that the people who are most passionate about college sports believe that the best thing to do with college sports is to marry it to pro sports.
Those people really feel that connection.
So I think that you would not necessarily have those constituents on your side if you're looking to move their game to Sunday.
There's something that the NFL teams and owners have that these constituents may not have, and it is a ton of money.
Maybe Auburn fans will be all on board for you doing this.
The owner dropped a couple hundred million dollars on your campaign.
Then I think you might shut up and get in line.
How about this idea, then?
I come to you, the NFL, and I say the NFL plainly, has been phenomenally successful, but just as plainly it keeps trying to expand.
The NFL is trying to squeeze in an extra game a season, which most players definitely don't want.
Trying to play more games outside the boundaries of the US, which seems to be working, although there have been many efforts that didn't work.
NFL Europe got shut down.
And so because you want to expand, may I propose to you an expansion that actually makes sense?
It could be phenomenally successful and it's organic in that if you can make the NFL less of a closed monopoly and more of a pyramid, the way that soccer is throughout most of the rest of the world, where there's a lot at stake in those lower tiers.
If NCAA football could become the second and third and fourth tier of the NFL essentially, then I think that's actually an organic and exciting way to expand.
Can I interest you in that, Dominique?
That is an interesting idea.
The model would have to be fewer teams, though.
The challenge with promotion and relegation is it's really nice to have a monopoly or honestly, a cartel?
Is what the NFL exists as right now?
And It's really difficult for me to imagine that any NFL owner would be willing to subject themselves to the idea that their team that currently is worth billions of dollars could be relegated.
In order to make up for that, the revenue that you'd have to consistently generate from the lower level of football would have to be enormous.
Once again, your objection is very sensible.
I can tell you went to Harvard Business School.
You're getting closer, though.
You're getting closer.
Let's just say that you know the NFL 10 years from now.
They're still mostly the teams you know, but the top level college teams which still represent their college constituencies and communities and they still play on campus.
But they can get promoted into the pros.
And let's say that there's a Super Bowl between the San Francisco 49ers and the Stanford Cardinal.
Is that good for the sport or is that not good for the sport?
I don't think it's good for the sport.
It'd be pretty cool watching the 49ers blow out the Cardinals.
I don't think that it's something that Stanford fans would be excited for.
And I certainly don't think it's something 49ers would be proud of.
It's like, yeah, we beat the college kids.
But you're saying 10 years from now, we've already gone to this other model.
And so then, when we change the eligibility, there's a lot of things that are easier to consider, that are probably not worth bringing up right now.
I just have a hard time understanding who would want this.
So Dominique Foxworth has a hard time understanding who would want this other than me, I guess.
And, in fact, the big European soccer leagues that do have promotion and relegation.
Well, some of the most powerful clubs there have tried to build a league of their own that looks quite a bit like the NFL model.
The plan was to take the Champions League, a prestigious Europe wide competition where teams have to qualify every year by being at the top of their domestic leagues, and upstage it with something called the European Super League.
This would be a closed system with the founding members given permanent status.
In other words, a cartel.
Some of the biggest backers of this new league happen to be the American owners of English soccer clubs like Liverpool, Manchester United and Arsenal.
Stan Kroenke, a real estate developer who married into the Walmart fortune, not only owns Arsenal in the Premier League, but also the Los Angeles Rams in the NFL, the Denver Nuggets and the NBA, the Colorado Avalanche and the NHL and more.
Anyway, this new European Super League was set back, at least for now, after fans held massive protests against what they saw as a hostile takeover of their beloved tournament traditions.
But none of us should be surprised if, sometime soon, the biggest European clubs try to adopt some elements of the American cartel model.
And why wouldn't they try?
It's an attractive prospect to be a member of a tiny elite group with pricing power, quality control and with a virtual guarantee that your investment will only become more valuable over time.
So I guess I will consider this whole NFL merger idea dead.
Same goes for any kind of promotion relegation system in the U.S., I guess.
But Stefan Szymanski, the English economist who teaches at the University of Michigan, he did offer me a glimmer of hope from history.
I'm going to give you an example of something I've been studying lately, which is minor league baseball in the 1950s.
So after World War II, the number of minor league baseball teams expanded from 100 to 450 in the space of three years.
Attendance rose from 10 million to 40 million in those three years as people came back from the war and wanted entertainment.
And then within 10 years, it was back down to 100 teams and back down to 10 million attendants.
The conventional story is that television killed minor league baseball.
And there's a good deal of truth in this.
10% of U.S. households had a TV in 1950s, 90% had a TV by 1960s.
And the idea is that only the major league teams were on TV?
More that television viewing hours quickly became so large that they squeezed out all your leisure opportunities.
By 1960, the average TV viewer was watching five and a half hours a day.
When have you got time to go to a minor league baseball game?
But television came to Europe and all the people watched more TV, and people stopped going to soccer games as much as well.
But the soccer clubs never died.
And that's because of promotion and relegation.
There was always a hope that you would come back.
Okay.
So of course I like the point you're making and it does give me some hope.
But I don't know, maybe hope is just a mirage.
What would you say, is the likelihood that some system similar to what we've been discussing, some kind of mingling, merger between, let's say, the NFL and NCAA football or the NBA and NCAA basketball, including relegation and promotion what's the likelihood that that would happen in, let's say, the next 20 years?
I would put that at less than 5%.
That hurts my heart a little bit.
I'm sorry.
That's okay.
I do like long shots.
Well, I took my longest long shot.
What do you think of this idea?
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