US more “socialist” than Europe in at least one regard…

By: ispeculatornew
Date posted: 04.23.2010 (5:00 am) | Write a Comment  (1 Comment)

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Tonight, as many of you know, is the start of the NFL entry draft, the way the most promising football (American football that is) get access to the league. This reminded me of a comparison I always like to make on both sides of the Socialism vs Capitalism debate. First off, for Americans who do not believe that socialism and equality are important. Sure, it’s only a sport, but it is a good example. And then of course to all those Europeans who think that America does not care about equality or helping the “less fortunate”. Just to point out, all major American sports have similar features (maybe less for baseball but still) but I decided to use the NFL in this example.

Draft

For those who do not know how it works, here is a brief intro. The teams are ranked according to how well they did last year during the regular season. Then, all players who become eligible to play in the NFL next year are made available in the draft. The worst team has the first pick and will generally take the best player. This usually explains why very poor teams can become great ones. Getting the best player might not get you a Super Bowl the next year but it will give you a good start and a reason to believe in the team for both fans and players.

Compare this to European soccer leagues where the best teams can simply go sign young players when they see enough talent. Of course, richer and better teams will have a major advantage when trying to sign young players. They will have more scouts to find them, will offer a more attractive proposition to young players and of course will generally be able to offer more money than a poor team.

Salary Cap

In European soccer, certain teams such as Real Madrid, Barcelona and Manchester United are able to play several hundred million dollars each year for players while less fortunate teams pay many times less. Compare that to the NFL, where teams are limited in the amount of money that they can spend each for players. This ensures that each team has more or less an equal opportunity to put up a decent team and offers the opportunity for smaller teams in cities such as Green Bay to compete with teams like the New York Giants.

Revenue sharing

In Europe, the best soccer teams set events such as the Championship league where the best and richest teams compete and can make very important sums of money. Smaller teams have a mathematical chance of playing in such events but let’s just say that the chances are slim and that results in consistent revenue shortfalls for these teams.

In the NFL, with most of the money being made in television contracts and merchandise, the major portion of the revenues are split between teams, giving a better chance at smaller and poorer teams of putting up solid teams. This ensures that a team in a small market will have comparable revenue to the richest teams.

Not buying players

I always wonder when I hear about these superstars being bought out in European soccer. Wonder why the best players never play for long for a smaller team? Because each time a small team is able to have such a player, it will do its best to sell the player at the highest price. It certainly makes it exciting for the top teams as they can easily buy the best and most exciting players. But what about those fans of smaller teams. They do not even have a hope of seeing one of the best in the world on their team, it simply will not happen.

In the NFL, players cannot be purchased in such a way. They can be traded of course but for all of the reasons listed above, players are rarely traded because they are too expensive. They might have a large contract compared to their performance on the field of course. But trading a player just to make a few $ or because a team cannot afford to pay the player? I don’t remember it happening.

Is it all that bad?

I’m not saying we should have a socialist economy. But like almost everything, it is not white or black. I doubt US fans would like the NFL to be entirely capitalist where a market like Green Bay could never compete with the richer and more powerful teams. Just some food for thought…

Is this too far stretched or does it make some sense?

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1 Comment

  1. Pingback by Finanical Ramblings — April 25, 2010 @ 6:35 pm

    […] US more “socialist” than Europe @ Intelligent Speculator (with a great analogy with football) […]

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