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The economics of the NFL referee lockout

The NFL labor lockout resulted in some ludicrously blown calls that have inspired biting satire from South Park and the enmity of football fan worldwide, but it also serves as a lesson in economics: a monopsony vs. a monopoly.
Written by David Worthington, Contributor on
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Even South Park has mocked the NFL's officiating.

The NFL labor lockout resulted in some ludicrously blown calls that have inspired biting satire from South Park and the enmity of football fan worldwide, but it also serves as a lesson in economics: a monopsony vs. a monopoly.

The NFL's unionized referees have so far been consigned to the sidelines this season. Replacements that are free agents from college football have taken on the job. While walking into a job isn't easy, the quality of the officiating has been called into question by sports fan and even some politicians that oppose unions.

The quality of the product has suffered, yet millions of fans loyally tune in each week to get their pigskin fix. Why? It's all purely economics.

Retired quarterback turned commentator Steve Young made the discussion academic earlier this weekend when he explained how demand for professional football is inelastic. There's no place else to get it other than from the National Football League, and the league doesn't have to care about the labor. The refs are just a commodity, Young explained.

I reached out to my former economics professor, Temple University's Dr. Michael Leeds, for his insights into the situation. Dr. Leeds is a labor economist who is noted for his research into the economics of sports, having co-authored a textbook of the same title. Here's what he has to say:

"I guess the NFL has become a moot point. The NFL versus referees was a case of bi-lateral monopoly. The NFL is something of a monopsony - the only buyer (or one of only a few) of referees' services - while the referees are a monopoly. Clearly, not everyone shares their skills," Leeds said.

That's an understatement. Here's examples of the refs' worst calls:

"It all comes down to bargaining power, which swung in the referees' favor Monday night," he added, in reference to a wildly controversial decision that ended the Green Bay Packer/ Seattle Seahawks game on Monday night.

It now appears that the officials will be back on the field before long. This entire lockout has been educational - both in the economics of it and just how much Americans value football (even over educators who are tasked with sparking the intellects of the next generation).

For instance, Chicago teachers striking during the same period did not receive equivalent support to football referees, and were targeted by some of the same politicians who backed the refs and their union.

"It is funny how many people who are loathe to grant anything to teachers or other public sector employees these days are eager to give the refs anything they want, as long as they don't cost the Packers another game," Leeds observed.

This post was originally published on Smartplanet.com

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