Considerations for an NFL Rookie Pay Scale

Abstract

Many believe current high first-round, NFL draft picks receive unjustifiably high compensation. The teams in possession of high draft picks are meant to use them to build towards future competitiveness. However, as contended, the cost of choosing a player within the first 5 selections is so astronomical, if a team makes a subpar pick, they can negatively affect their salary cap for years to come. Further, the tightened salary cap makes it harder to sign talented players, which, in turn, hurt team competitiveness. The fewer competitive teams in the leauge, the less entertaining the games become. Lagging entertainment value leads to decreased demand, which leads to decreased revenue.Through the use of several areas of Economics, the current compensation model and its underlying assumptions were examined. It was determined the model itself is correct, however many underlying assumptions are inaccurate, or worse -- invalid. Through exposing the inefficiences underlying the model, and devising methods with which to correct for these imperfections, the risk associated with high first-round selections is mitigated, and balance can be restored to the system.This is a very pressing issue because the current Collective Bargaining Agreement between Players and Owners is set to expire after the 2009 season, setting up an uncapped year in 2010, and a potential work-stoppage in 2011 -- a detrimental situation to both players and owners. This analysis does much to address a significant problem with the current CBA, and bring both parties one step closer to successfully negotiating a new CBA so a work-stoppage can be avoided.