Economics and the Shiny Hood Ornament Man Law

Cold Hard Football Facts is a great (American) football analysis website. I like their numbers-based approach, and they invariably have a no-nonsense take on whatever they write about. But I think they might have missed something lately. They tweeted:

“Stupid” isn’t really part of the economics vocabulary; we usually say “irrational” instead. But is it really? The fact that it’s a common practice throughout the league for so long doesn’t necessarily rule out irrationality, but it should make us stop and think first.

What is the goal of a team? As a collection of players, the goal is to win games. As a business entity including owners, managers, staff, and many other non-players, the goal is to make money. These two are related, but they aren’t the same (just ask Jerry Jones). And another thing: the owners’ own money is up in the air here, which should make us think even harder for a method to the madness. It’s easy to be irrational with somebody else’s money. It’s a lot harder to be irrational with your own, especially in the long term. Maybe it’s a principal-agent problem: the GM who selects the players acts on behalf of the owner, and he might not do a good job of it. But at some point, with so much money on the line, the incentive is to correct this.

I suspect that flashy wide receivers generate more money than offensive tackles, even though they rarely get the ball. There are many sources of revenue: ticket sales, memorabilia sales, television money, etc. Whatever the relative values different positions add to offenses and defenses, it’s quite clear that they contribute in different proportions to generating revenue.

CHFF certainly has me beat when it comes to football knowledge, but they focus on football as a sport. It is a sport, but it’s also a business—for the decision makers in particular. I’m not convinced that what I’ve said here is correct. Maybe the decision makers really are getting caught up in hype and acting “stupid”. But maybe not. It certainly would explain some things.

I tweeted to CHFF jefe Kerry J. Byrnes:

To which he responded:

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