I just watched Steve Young, the hall of fame quarterback of my favorite team, discuss on PTI the bigger picture of how last nights controversial touchdown call affected the NFL. I wanted to chime in because he makes some extremely important points regarding the NFL’s obligation to society. In business school some of this is called “Governance” but it applies to this topic as well.
First, Steve mentions that the NFL has an inelastic demand. I want to help define this for those interested and also explain how it applies in this context. First, the technical definition for inelastic demand is (When a price change has no effect on the supply and demand of a good or service, it is considered perfectly inelastic.) What does this mean? It means that if the NFL were to raise the price of a ticket, or charge networks more for broadcasting its programming, everyone would pay. Inelastic demand is a consequence of a pure power position in the marketplace. The NFL is the most powerful entertainment organization in the United States. Ratings are sky high, prices are ridiculous and it just doesn’t matter, because we all revere the NFL. This in and of itself is not the problem. The NFL deserves its place at the head of the throne. Sorry Khaleesi! Up until these last three weeks, the NFL put the most incredible athletes this country has to offer on the field for us to watch at the highest level. The product has been consistently good across he board, with great team parity and a terrific playoff system that builds excitement all the way up until the Super Bowl.
With great power comes great responsibility Spiderman, and this is where the NFL needs to step up in a big way. Steve Young was right in saying that this country demands wrongs to be righted. We do not like injustices and we demand good Governance of our organizations (See Nike child labor stories). It is not just that our economic crisis caused by investment banks frustrates Americans because of the irresponsibility and greed of Wall Street, it is that they were “too big to fail” and the country wasn’t able to properly punish those banks for what they did. Every other company in this country would have gone bankrupt for such irresponsibility, but because of the nature of the system, with the amount of money they had control of, OUR money, they could not fail or we all would suffer. That is the injustice.
The NFL faces a similar situation. Will ratings and profits go down as a result of this interception called a touchdown? NO. Should players and owners care financially about a few replacement refs screwing up a bunch of games? No. Do they care in this country though? Absolutely. The American people for right or wrong play judge and jury with integrity in this country, and if there is one thing we hold dear in this nation it is punishing those who have done wrong. Even Republicans in this country, though they might not like Obama for any number of reasons, they will not vote with enough conviction for Romney. Why? Because he is a liar, and his integrity is forever tarnished by his comments about the 47 percent. His integrity is tarnished because there is no trust for a man who lies, or who says horrible things about the people he wants to vote for him. There is no integrity for a man who helps create a great healthcare plan in his state of Mass. but then pretends like he had no part in creating it to get elected President. Inelastic Demand might seem like an incredible achievement by the NFL. The CFL, arena league, they will never take viewership away because of these refs. No other sport in America could replace what the NFL has built, but that power is paper-thin when it comes to integrity, and in this country that is not inelastic.