Cullen Roche Blog | The Economics of Le’Veon Bell’s NFL Gamble | Talkmarkets
Founder at Orcam Financial Group, LLC

Mr. Roche is the founder of Orcam Financial Group, LLC, a low fee financial services firm based in San Diego, CA as well as the founder of the popular financial website Pragmatic Capitalism. 

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The Economics of Le’Veon Bell’s NFL Gamble

Date: Saturday, November 24, 2018 11:34 PM EDT

The Le’Veon Bell drama has created some financial excitement in the NFL. For those who aren’t familiar with this situation, here’s the short version: Bell, who plays for the Pittsburgh Steelers, is one of the NFL’s top running backs (arguably, THE top RB). Bell was given a franchise tag in 2017 and then again in 2018. The franchise tag is a contract that the team can give to one player on their team that gives them exclusive rights to that player for one season. This guarantees their contract and locks them in at a relatively expensive rate for one season. It’s designed to protect small market teams from the poaching of larger and richer markets without forcing them into a more expensive long-term contract.

Bell wanted a long-term contract with more guaranteed money. After all, he’s a 27 year old running back heading into year 6 of his career at a position where the average running back lasts just 3.3 years. The owners are trying to avoid dishing out excessive guaranteed money on a long-term basis for a position player that is entering the riskiest phase of his career. Bell played a risky game of chicken for the first half of the season and then, instead of earning his $14.5 million guaranteed (or, what would have been half that for the second half of the season) in 2018 Bell decided to sit out the season and hope that he will get more guaranteed money over the long-term from a different team.

I think Bell was getting bad advice from his agent throughout this process and misplayed the strength of his hand. After all, the economics of the NFL are not good for the players. The players have collective bargaining power, but they do so against one of the strongest oligopolies in the world. This oligopoly is comprised of old rich capitalists who made all their money mastering some other craft. Part of that mastery involved winning labor negotiations, every damn day.

What do I think will happen here? I think Bell will be made an example of. Bell has set a bad precedent for the owners to allow by letting someone avoid a franchise tag. The Collective Bargaining Agreement doesn’t even account for how we can treat this situation. And the owners can’t allow a player to just avoid a tag like this because then they’ll be forced to start shelling out more guaranteed money on average when the whole point of the tag is to reduce the amount of guaranteed money that a team wants a pay one of their best players.

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