Furthest Right

Sportsball Models Economic Bubbles

Allow me to offer you a deal. I’ll hook you up with a model employee in a performance-driven industry. Allow me to introduce you to NFL Quarterback Deshaun Watson. We will be fair here and temporarily deactivate the html sarcasm tags. Let’s start with why anyone would want Deshaun running his or her team’s offense.

He has played for five years, participated in 54 games, starting 53. He achieved a winning record of 28-25 as a starter. His stats also indicate playing success. He has 104 TD passes against 36 interceptions. He accounted for 18 TDs running against 30 fumbles. This gives him 122 TDs against 66 potential turnovers. This gives him a net ratio of two TDs for every turnover. For non-football fans, this means he wins games with a higher probability than most other Quarterbacks do.

Now we get into a couple of drawbacks. No deal is perfect. I mentioned he has played for five years. Now I have to show you the fine print that lawyers make you read fast at the end of an advertisement. He has participated in games in four of the last five years. This not due to injury or COVID-19. Last year he decided that the boss was an A-Hole.

Not an uncommon occurrence in the Amerikan workplace. Maybe his boss was a rectal orifice. A large number of managers and supervisors resemble that remark. We understand why Deshaun demanded a trade, packed up his ball, and then went home. Yet most people do not feel much empathy because most of us would not be able to carry the mortgage if we exhibited a similar puerile fit of pique.

Let us discuss how the remarkable Mr. Watson relieves the stress of doing that entire nothing. Mr. Watson would prefer not to. His lawyers have advised him the Fifth Amendment is a close, personal friend. Why so? Here are his stats on the vital issues that concern Amerikan women.

When a grand jury in Texas declined to indict Deshaun Watson on March 11, the Browns and three other NFL teams launched an intense competition for the quarterback. The Browns ultimately won the sweepstakes for Watson, agreeing to a trade March 18 with the Houston Texans for the three-time Pro Bowl passer. But Watson’s legal troubles are far from over, according to multiple reports.
One of the 22 women who has filed a civil lawsuit against Watson alleging sexual misconduct during massage appointments also has a criminal complaint being considered this week by another grand jury….

So let’s make like The Cleveland Browns and get past what are perhaps six undergraduate credit hours worth of Legal Latin. How much were the Browns willing to pay for the NFL’s QB version of Achilles? A man unbeatable in battle – as long as he did not sulk in his tent because he thought the boss was a Gluteus Maximus. Perhaps this asset would be somewhat distressed because of a level of sexual misconduct that could qualify Deshaun Watson to help preach at a ministry with The Duggers. There’s puts, there’s takes, and The Browns offer Deshaun….

Deshaun Watson signed a 5 year, $230,000,000 contract with the Cleveland Browns, including a $44,965,000 signing bonus, $230,000,000 guaranteed, and an average annual salary of $46,000,000. In 2022, Watson will earn a base salary of $1,035,000 and a signing bonus of $44,965,000, while carrying a cap hit of $10,028,000 and a dead cap value of $230,000,000.

This is more money than any NFL QB has ever been paid. Adjust it for Bidenflation, and it would still utterly nuke any set of paydays that either Tom Brady of Patrick Mahomes have ever enjoyed. Oh, and if you read all of that stuff carefully, Deshaun could still end up collecting some of that swag in the penitentiary. On the bright side of all of this, at least not all 22 counts of sexual misconduct involved one woman during a single message appointment. Jen Psaki enjoys her daily press conferences more than the PR staff for Cleveland’s NFL Team will like meeting the press next fall.

So how did this travesty occur? The same way people were suckered into losing their life savings on Dutch Tulips. The NFL has a QB market bubble. The elite of pro football perform no worse than the elite in every other level of Amerikan life. They are execrable. When the people suck, so do the economic outcomes.

In terms of economic judgement, this causes two specific failure modes.

1) The market does not properly evaluate assets. Deshaun Watson benefits from Cleveland’s overbuilt time preference. This short-term thinking would make Garret Hardin wince. Cleveland not only eats 1/5 to 1/4 of their total allowable salary pool for just one player each year, they also traded away their highest draft pick for the next three years just for the privilege of signing the same sort of deal Mephistopheles served up to Faust.

I am not sure exactly how much I would pay for an Eagle Scout version of Deshaun Watson. It still would not be that much. There are maybe 64 other people The Browns will have to pay. Give that much swag to just one person and some of the rest of these people will not be talented enough to survive on an NFL gridiron. Then there is the risk of him having his leg snapped in a manner reminiscent of Poor Joe Theismann. That $230M can go good-bye on one regrettable 30-second sequence of unfortunate events.

2) Crappy elites make poor economic decisions by overlooking perverse incentivization and moral hazard. People that do not have morals are probably blinder than most to moral hazard. Awarding someone who has behaved like Deshaun Watson has more likely than not behaved in the past causes that person to continue the behavior. Give me $230M to be the swell person I am, and the whole faculty of self-criticism will go take a content nap. Deshaun may want to head on over to the message parlor and splurge.

Let us be clear here. DeShaun is not the only amoral jerk here. NFL Teams hire entire firms of Private Investigators, PR Flacks, and Attorneys. They knew very well what they were buying. The Cleveland Browns have a message for women who do not appreciate how Deshaun behaves at the spa where they work. They should go cashier at Walmart. Deshaun probably shops over at Target instead.

Like much of the entertaining garbage loose in The Wild World of Sports, it is easy to miss the lessons on offer here. Imagine someone this stupid in charge of a brokerage firm or three Roman Legions that have just crossed The River Rhine. The one redeeming feature of sportsball is that nobody ends up bankrupt like Lehman Brothers or dead like Publius Varus trapped in the Mordkessel.

One hopes people will learn from the thermonuclear stupid that is The Cleveland Browns and strive for better. Three blown first Round Draft Picks is a much less painful loss than three dead legions. Maybe business schools will teach aspiring MBAs about this Deshaun Watson fiasco as a warning instead of an example. This is how not to act in the midst of an economic bubble.

Tags: , ,

Share on FacebookShare on RedditTweet about this on TwitterShare on LinkedIn