COMPARING AFL TO US MAJOR SPORTS LEAGUES
As a student of sports league design across nations, I read recent reports that a high-level AFL delegation would be flying past the Statue of Liberty on the way to meet with American sports league executives in hopes of gaining ideas for AFL equalisation with keen interest. There is a great deal that intelligent, forward-looking sports executives gain learn by studying their trans-Pacific counterparts (on both sides), but Aussies must exercise care in deciding whether an import is much desired or, like the rabbits that destroyed much of Australia’s grass-lands, unsuitable for your home girt by sea.
A fundamental philosophical questions needs first to be answered: what is the goal of an equalisation policy? Profit-oriented Americans, and Australian courts, have generally found competitive balance to be a legitimate goal as a consequentialist tool toward maximizing the public appeal of the sport. For the AFL, who does not have for-profit investors, this would translate into a level of balance that attracts more fans to the matches, a larger television audience, and more club memberships. There is an alternative view however, which reflects a major philosophical difference: under this “moral philosophy” view, footy fans largely inherit their team from parents and grandparents, and as one does not control the family to which one is born, it is only “fair” that Melbourne supporters should have an EQUAL chance to barrack their team to victory in the Grand Final with others born into Collingwood or Carlton families. (If this grabs your interest, Melbourne Uni economist Robert Macdonald has a paper applying the work of moral philosopher John Rawls to the AFL).
The NFL and MLB have designed their competitions quite differently with the shared goal of maximising fan appeal. In my view, the NFL is unique in world competitions, and not really a fit object for emulation. It has developed almost entirely as a television sport (live gate at NHL games is higher), with a massive audience watching games featuring teams for whom they do not barrack, and with many fans avidly supporting clubs far distant from their own home. Moreover, clubs need to sell tickets for only 8 games per year. Hence, the goal of parity among the 32 NFL clubs uniquely works for that league, and that league alone.
MLB offers, in my judgment, the better comparison. Because TV audiences are composed largely (though certainly not entirely) of supporters of the two teams featured, and because MLB clubs need to attract fans to 81 matches per year, a policy designed so that the Pittsburgh Pirates and New York Yankees enjoyed equal success would result in far less public appeal, because there are far more baseball fans in New York than Pittsburgh. Hence, a Commission articulated the goal not of parity, but for each club to have a “reasonably recurring chance of reaching post-season play.” As an American court described the reasonable goal of competitive balance, each team should have a chance to make it to the Finals every few years.
MLB has, in my judgment, largely succeeded in this goal, by a combination of a “luxury tax” on high payrolls that inhibits, but does not bar, the ability of wealthy clubs to invest in player talent, and significant revenue sharing. The latter scheme, an evolution from ill-conceived initial efforts, takes money from the “rich” (to lessen the economic benefits of success) but gives to the “poor” in a manner designed to promote the correct incentives toward sound use of the money to invest in player personnel, player development, as well as sound front-office initiatives regarding sponsorship and ticket sales.
Several clubs’ recent experience illustrates how the MLB scheme works to advantage. The New York Yankees have traditionally not found the luxury tax inhibiting in creating league-leading payrolls; their success has led to their development of an enormously successful local TV channel resulting in the payment of huge sums in revenue sharing to help other clubs; yet, while “unfairly” far better than average (missing the playoffs only once since 2000), the Yankees have won the World Series only twice this century. The Pittsburgh Pirates and Washington Nationals were recipients of significant revenue sharing; relying on top rookie draft picks and gradually increased investment (first in player development, now with major league payroll), they are now serious contenders. The Los Angeles Dodgers suffered from horrific ownership, but new wealthy owners have catapulted the team to the top of spending, despite having not won a World Series since 1988.
The NBA is a fascinating league to study with care, as superficial analysis may mislead the observer. Andrew Demetriou certainly should examine the leadership techniques of retired Commissioner David Stern, who is unsurpassed in both his vision and his ability to lead a contentious group of owners to reach results in the league’s best long-term interests. They also have, in my judgment, the best targeted incentive-based system for revenue sharing, which gives local clubs targets for success and bases the distribution of central funds on achievement of these benchmarks. Their loophole-riddled salary cap has not done that much to improve competitive balance, however. (Two other aspects of the NBA seem sub-optimal, in this American’s judgment, but because of factors not relevant to the AFL. Preliminary research suggests that the NBA might maximize franchise value if they eschewed the MLB model of giving each club a chance at reaching the finals for the EPL model of promotion and relegation, so that fans of lesser teams avidly followed their clubs in hopes of staying in the NBA, thus freeing top clubs to excel and gain worldwide fan appeal. Also, their Leninist system of centralized marketing likely inhibits individual club efforts for international marketing on par with the EPL.)
Much can be gained from studying these leagues, but the airfare and accommodations will have been wasted if a superficial analysis fails to seriously consider what the AFL’s goals are, and how effective American innovations might have different results Down Under.
Stephen Ross is a Professor of Law and Director, Institute for Sports Law Policy, and Research at The Pennsylvania State University