I've Solved the Deficit

[giblets]

You know what, I'm going to say NO.

As of 2008, the Washington Redskins were the NFL's highest-revenue team and they haven't won **** in decades.

Fan/Consumer loyalty, regional preference, 'drama', player personalities, etc. etc. all come into play and mean that on-field success is only one factor to commercial success for the team.

And what's good for an individual team isn't all that important here. The League is the firm.

I don't see why the individual teams don't matter. Don't they make the hiring decisions? I don't see why they wouldn't take into account how a player will affect their win percentage when they decide how much they're willing to offer for a player.

[Al B. Sure!]

I don't see why the individual teams don't matter. Don't they make the hiring decisions? I don't see why they wouldn't take into account how a player will affect their win percentage when they decide how much they're willing to offer for a player.

Yes, that is one factor, but as Jerry Jones in Dallas shows, marketability of the player is a significant consideration.

But the thing is that teams only compete with each other on the field; they don't really compete for revenue. In the NFL, for example, there is revenue sharing where the bigger market teams GIVE money to the small market teams.

The individual teams are just 'departments' so to speak of the league itself which is the actual 'firm'.

[giblets]

Yes, that is one factor, but as Jerry Jones in Dallas shows, marketability of the player is a significant consideration.

But the thing is that teams only compete with each other on the field; they don't really compete for revenue. In the NFL, for example, there is revenue sharing where the bigger market teams GIVE money to the small market teams.

The individual teams are just 'departments' so to speak of the league itself which is the actual 'firm'.

Well if winning is a factor in the salary a player can earn, and winning is zero sum...

[Al B. Sure!]

fine, insofar as a player's compensation is tied to his expected contribution to the team winning insofar as the team winning is tied to revenues, then that portion of the player's compensation may be 'positional'. But why any of this is relevant enough to tax the **** out of it, as Kuci wants to do, is beyond me.

I'm also not sure that that positional aspect doesn't have correspondence in most other professions or that certain instruments that exist in professional sports leagues (revenue sharing, salary cap, luxury tax, etc.) don't already account for this and distribute the 'positional' compensation into the league itself.

[Kuciwalker]

Let's say we have a person building widgets. He costs $100/day and produces enough widgets to generate $500/day in revenue. A new guy comes along and can make widgets faster. Now, if the market is there for more widgets and his asking wage is appropriate for the increase in revenues, then yeah... If he asks for $50 more a day and adding him generates $100 more in revenue, go ahead and the other slower guy gets laid-off.

I'm not understanding how that is at all different than what goes on in professional sports.

Because total welfare increases by $100 after he's hired. Contrast this with a perfectly-positional profession, where laying one person off in order to hire a better one increases total welfare by $0.

Let's say we have a person building a fan-base. He costs $10M/year and provides enough fans who buy stuff to generate $50M/year in revenue. A new guy comes along and is better at building a fan-base (he wins games, puts up numbers, is charismatic at press conferences, etc.). Now, if the market is there for more fans and his asking salary is appropriate for the increase in revenues, etc. and the first guy gets cut.

What the hell is the difference?

You've just assumed that sports are totally non-positional in your statement.

For the league, which is the actual firm in this case (NOT the team!), no, it's not a factor at all, obviously.

You are incorrect. Regardless of the legal structure; the term economic term "firm" in this situation refers to the teams.

[Kuciwalker]

I don't see why the individual teams don't matter. Don't they make the hiring decisions? I don't see why they wouldn't take into account how a player will affect their win percentage when they decide how much they're willing to offer for a player.

You are correct.

[Kuciwalker]

fine, insofar as a player's compensation is tied to his expected contribution to the team winning insofar as the team winning is tied to revenues, then that portion of the player's compensation may be 'positional'. But why any of this is relevant enough to tax the **** out of it, as Kuci wants to do, is beyond me.

Because positionality directly implies inelasticity of supply, which means that a given level of taxation results in lower deadweight losses, which means that an ideal tax regime would assign higher rates to that good.