Thursday, September 10, 2009

Pro Football the way it used to be -- plus a note on "opportunity cost". 

The new NFL football season starts today. Pro football has become a business of such success (and excess) that Eli Manning, after being the league's 14th ranked quarterback last season, can pull down a new contract worth $97.5 million over six years, while Jerry Jones, owner of the Dallas Cowboys, can charge fans up to $150,000 just for a license to buy a season ticket in his team's new stadium --- cost of the ticket extra!

For some perspective on this, let's reminisce for a moment about how the game used to be, within the memory of a lot of people still walking around today, courtesy of the SI vault:

In the 1950s and '60s, the NFL was a kind of hobby ... Every preseason the players gathered around to listen to commissioner Bert Bell's annual this-is-not-a-career address, as if they needed him to deliver that news.

Johnny Unitas was making $7,000 the first time he heard ol' Bert, in 1956. Three years later his Baltimore Colt roommate, a middle-round draft choice named Jerry Richardson, was taking down $7,500 when he heard the commissioner's speech...

Almost every player had something going on the side, either supplementing his income or trying to develop a means to making a living once his playing days were over. "What have you got lined up?" was the clubhouse chatter of the day.

Unitas remembers ... the guys all meeting in the trainer's room after "work" but before their noon practice. There were more sample cases around than playbooks. "We had insurance salesmen, whiskey salesmen, paint salesmen, cardboard-box salesmen," says Unitas. "We'd all start at seven and call on customers until 10:30 or 11. That's just what we did. We had to."...

According to Alex Hawkins ... contract negotiations [with the team] were anguished and generally one-sided. "You might argue over $500 in your contract—$500!—for months," says Hawkins. "And in the end you'd come out of [general manager] Don Kellett's office crying, just crying."

Unitas had worked his way up to $10,000 by 1959 [in 2009 dollars: $74,000] but only after leading Baltimore to the first of two consecutive NFL championships ... "Finally, in 1960 I asked for $25,000," recalls Unitas. "Kellett blew his lid." Unitas eventually got his $25,000, but not until he took his case to owner Carroll Rosenbloom...

Less persuasive, apparently, was Richardson, whose contract called for him to be paid $9,750 for his third season, in 1961, but who wanted a full five figures ... he had a wife and two kids and a third on the way ... he had caught a touchdown pass in the championship game, and $9,750 just didn't seem right.

Over $250, he walked. Left camp in 1961 and never played another down of football. Went home to Spartanburg, S.C., and opened a hamburger stand...

"After the '61 season, my wife and I drove through Spartanburg, and sure enough, there was Jerry Richardson flipping burgers," says Hawkins. "We laughed and laughed at him. Told him what a great season we had had, how much fun we'd had. Ordered four burgers and told him to hurry it up, too. Kept asking him how much money you could make cooking hamburgers. It was a great joke. For Christmas, he sent me 12 of them in the mail."...

They laughed ... but Jerry Richardson parlayed his hamburger stand into a multi-billion dollar food industry business (Hardee's, Denny's, Canteen and more) and then returned to pro football as owner of the NFL's Carolina Panthers.

Skip Sauer at the Sports Economist cites Richardson's quitting the Colts as an example of "opportunity costs" being weighed in action.

Every action you take precludes you from taking other actions. Economists will tell you that the real cost of any action is not its money cost but its opportunity cost -- the alternative course of action of most value to you that you can no longer take.

(If you spend the money you've put aside for wife's anniversary present on rounds of drinks for your buddies in the local sports bar, your opportunity cost isn't the dollar amount of money spent, but rather the loss of the pleasure of your wife's company when she departs to stay with her mother, and after the divorce. Similarly, the opportunity cost of spending the money on the present is not having a such good time with your buddies for a few hours. Which cost you weigh more heavily is up to you and your personal utility schedule. The money cost is the same either way, a wash.)

For Jerry Richardson the opportunity cost of playing in the NFL was delaying using his businesses skills and instincts to start building his fortune. The opportunity cost of quitting the NFL to start building his fortune was $9,750 plus whatever psychic rewards (fame, game-day glory) he received from being a pro football player. He compared the two and made his choice. As Prof. Sauer put it: "If Jerry Richardson was going to be underpaid, he had better things to do. Like become a mega-millionaire."

It's interesting that considering the size of Richardson's fortune today, the difference between the two options discounted to $250 in 1961.