Single Entity?

The NFL, as well as other professional sports leagues in the US, have repeatedly been suspected of violating antitrust regulations. NFL v. American Needle  case was only the most recent in a row of cases dating back to the Oakland Raiders  case (consult Lehn and Sykuta, 1997) in the 1980s. The NFL has often come forward using the "single entity" defense, arguing that the league is basically one big enterprise not a trust formed by a number of teams as individual business entities.

In the wake of last year's lockout and the result that last year's NFL season is an uncapped (i.e. meaning that no salary cap would limit player salaries) two teams reportedly have tried to benefit from the situation. The Washington Redskins as well as the Dallas Cowboys have structured some contracts of their players to make the front-loaded in a way to shift substantial parts of the salaries into the 2010/2011 season. This would certainly create a competitive advantage in coming years as they will have an advantage in terms of salary cap space.

It has now surfaced that the NFL has taken away salary cap space from these two teams: $36 million in cap space from the Redskins and $10 million from the Cowboys. The league split this sum and handed it to 28 remaining teams, who receive an additional $1.6 million in cap space. Both teams argue that the NFL has no point in doing so, especially as 2010/2011 was an un-capped season. Some other teams who were obviously affected by what the Redskins and Cowboys did complained and the Washington Post cites the saying:

All the clubs were warned not to do anything to create a competitive advantage when the salary cap came back, and that's what [the Redskins] did [...].

So what do we have here: We have an organization, which is per constitution of the league the group of all team owners, telling teams not to take advantage of the lack of regulations. We have two individual organizations operating within this league who sought (which is only rational) an advantage and did nothing wrong because the regulations were missing. The Redskins and Cowboys acted like individual entities and are defending themselves as single entities now. The Cowboys issued the following statement:

The Dallas Cowboys were in compliance with all league salary cap rules during the uncapped year. We look forward to the start of the free agency period, where our commitment to improving our team remains unchanged.

As far as I am concerned they are perfectly right. And this recent events should really make antitrust officials even more suspicious. In the American Needle case (consult Brad Humphreys' excellent resource page for details)  the NFL actively sought antitrust immunity. The final ruling denied this. The way the NFL handled this recent salary cap issues is another strong argument against the single entity defense. Should the Cowboys and Redskins be willing to go to court I think they might have a good chance to win this case. Does not sound like a single entity to me...

 

Bounty hunters?

Quite recently a potentially big scandal shook up the "pre-Draft" NFL. Accusations surfaced that now Ex-New Orleans Defensive Coordinator Gregg Williams used to run illegal (under NFL rules) pay for performance schemes when he was with the Saints (2009-11), the Redskins and probably the Tennessee Titans and Buffalo Bills earlier in his career. Some former players came forward and described Williams' system as some sort of "bounty program" where hard hits and injuries of opponents where awarded extra money.

Former Titans and 49ers Safety Lance Schulters is cited by the Tennesseasn newspaper as follows:

“Guys would throw out there, ‘Hey, knock this guy out and it’s worth $1,000,’ ” Schulters said. “Let’s say when we played the Steelers, and Hines Ward was always trying to knock guys out. So if you knocked (him) out, there might be something in the pot, $100 or whatever, for a big hit on Hines — a legal, big hit."

He went on saying:

"A player scoring a touchdown might receive $500 from a pool, a defensive lineman with a sack might get $200 and a 100-yard rusher might be handed $1,000. Special teams players would get a bonus for a downing a punt inside the 10, and offensive linemen could expect to be handed extra cash for not giving up a sack. Sometimes the bonuses could be as much as $5,000." 

So we have two essentially different things: One is a clear incentive to injure and harm opponents and the other is basically extra financial compensation for making perfectly legal plays and performing well.

So let us turn our intention to the incentives to get opponents injured. Is this really something new or illegal? Every defender in the NFL or in other levels of football knows that knocking out any starter on the offense of the opponent will substantially increase the probability to win the game. Of course defenders will try to hit the opposing Quarterback as hard as possible and if he is on the sideline nobody will feel bad about it. And as long as the hits were legal it will (and should not) have any negative consequences. When Jay Cuttler (Chicago Bears) went down in the NFC Championship game last year against Green Bay, the chances of the Packers to win the game increase dramatically. I doubt that it needed any extra incentives for Green Bay defenders to go after Cuttler as hard as possible. So why make too much out of this new story?

But let us turn to the second Schulters quote. What he is saying is that there was systematic extra compensation for making plays on defense and offense.  $1.000 for a 100-yards rusher, $500 for a TD catch and a mere $200 for a sack. Should we really care for this at all? When we talk about  $1.000 for a 100 yards rusher we usually talk about an athlete earning a million dollars base salary, having a contract usually involving performances bonuses anyway and (more often than not) being a multi millionaire. The same is true for Wide Receivers who catch TDs and defenders who get to the QB. Performance will always be rewarded in professional sports. So what is an extra $200 for a linemen who earns thousands of dollars for each game anyway? What kind of an extra incentive is that? I say it is pretty much irrelevant. And as long as performance incentives are part of regular NFL contracts it just another way of rewarding (perfectly legal) performances.

We are either seeing just the tip of an iceberg right now, or this story is blown out of proportion already. Even if we condemn Gregg Williams' ways of coaching we could still say that it probably has not worked out anyway. The New Orleans Saints' defense has not really done well in recent years, culminating in a rather bad 2011 season. This ultimately got Williams fired. His approach failed, but was it really that "bad" after all? We will probably have to think about this as soon as the NFL has issued the penalty...