The NFL Draft is taking place today in New York. Approximately 220 recent college football players will be assigned to the NFL’s 32 franchises over the next two days. Many will become instant millionaires, while others will find themselves working to earn a roster spot come training camp. Hundreds of undrafted players, meanwhile, will either give up their NFL dream or seek to get signed as a free agent with a club.
I’ve often heard criticism that the draft is “socialist” because a selected player is prevented from negotiating with any team other than the one which selected him. Superficially, this is an appealing argument, but it ultimately misses the point. Far from being socialist, the NFL Draft showcases the capitalist system at its finest.
First, the draft rewards superior achievement and ability. Higher picks get more money, simple as that. In a socialist system, pay is never based on merit, but rather on an arbitrary factor tied to some egalitarian principle. Take a public school teacher’s union, for example. Teacher unions expect to be compensated solely on the basis of seniority—a largely irrelevant characteristic—and merit is almost never permitted to affect actual compensation. Despite the fact a new teacher can choose which school district to work for, her actual salary will depend on factors outside her control, whereas an NFL player can refuse to sign a contract with the team that drafts him if he does not approve of the compensation terms. Rookie “holdouts” are in fact common in the NFL. A teacher which tried such a tactic would fail, since the union’s interests in paying everyone the same overrules the individual’s needs or abilities.
Second, the draft helps the NFL remain profitable by containing overall labor costs. All player contracts, including that of drafted rookies, must fit with the NFL’s salary cap. The cap is another practice sometimes labeled “socialist.” Again, this is incorrect. The salary cap is nothing more than a budget for player costs. The cap is tied to general league revenues to ensure labor costs don’t outpace teams’ ability to pay. The draft helps this process by preventing teams from overbidding for talented, yet unproven rookies. If every rookie was subject to an open auction, a number of franchises would wreck their cap by “hoarding” college talent at a cost far above actual value. This would be bad for players as well as franchises, since the hoarding teams would likely cut more overpriced rookies after a year or so in order to restore room under the salary cap. The result would be far less labor stability, which in turn drives down salaries while raising overall costs. The draft, thus, prevents labor anarchy while still preserving a merit-based system for allocating rookie players.
(Indeed, the advent of free agency for veteran players proves this hypothesis, as franchises which hoard free agents tend to do so at above-market rates, resulting in a breakdown of the salary cap after a year or two. The Washington Redskins are an ideal example of this practice.)
Finally, the draft itself is a wonderful spectacle. It’s hard not to enjoy the pride on the faces of newly drafted rookies as NFL Commissioner Paul Tagliabue announces their names and the team which selected them. The whole event has the look and feel of a college graduation ceremony, which in many ways the draft is. And unlike most liberal arts graduates, these players know they will have an opportunity (if not a guarantee) of post-college employment where they’ll be rewarded for their achievement.