I was recently spending time with a pretty well-accomplished businessman and we got into a discussion about the business of the NFL. Basically the NFL is controlled by 32 individuals (the majority owners of each team) and it operates on both free-market and socialist terms.
Free-Market Aspects
There are many free market aspects to the NFL. Each team is its own individual asset that is privately owned. As the team becomes worth more the owners of this asset realize such profits. If the team drops in value they realize this loss. If they build a new stadium with their own capital this gets added on to the team's asset list. If they increase ticket sales this is revenue. They have to figure out how to manage salary expenses all on their own. In many ways the NFL is a capitalistic, free-market venture.
Socialist Aspects
There are also many socialist aspects to the NFL. Although each team is owned privately by an owner, these owners all get together and decide the overall direction of the NFL. While each owner has their own team's best interest at had, this doesn't mean that they won't help other teams. If another team needs a new stadium all the teams from the NFL may contribute 1/3 of those costs. So if the stadium is $1 billion they will cover $333 million, or ~$10 million each ($333 million/32 owners). Since this new stadium will increase the overall brand and ticket sales for this team it will help all the other teams... especially when you consider that all NFL product sales are split between all the owners. So if they sell a Dallas Cowboys jacket at the Dallas stadium all 32 owners split these revenues. It doesn't matter where an NFL product is sold and for what team it belongs to, they all share these revenues.
There is obviously a lot more to it, but this is just a quick overview outlining some of the free-market and socialist aspects to the NFL. Certain finances go to 1 team while other finances are split between all 32 teams.
The World
Now let's move this on to the world stage. We all know the NFL is a very profitable and well-respected business (well by some anyway, I think it's a complete distraction for most but respect the business end of it). So couldn't we find a way to take these elements of the NFL and apply them to the world? Can't we find a way to make it so each team is a country? Can't we have it so each country is owned by an individual or group and they all work together both privately and collectively? Couldn't we have it to where the nations had the best interest of other nations at hand? Why not have each nation focus on generating its own industry and revenue while sharing in profits and losses of other nations?
Obviously this is a very simplistic view and we do have many private and collectivist things we do practice between existing nations. And obviously there is the HUGE element of corruption and graft, but it doesn't seem to really work its way into the NFL like it does our political system. Perhaps the stakes aren't as high in the NFL?
Anywho, I just wanted to throw this idea out there and see if anyone else can do anything with it. I just know that the NFL is done right and those guys know exactly what they are doing. Everything runs relatively smoothly and profits are rendered year after year. Sounds pretty healthy to me.
For the first time I disagree with you adamantly and I'll explain why. The NFL is more socialist than Capitalist. Perfect example is when Rush Limbaugh, who is arguable a very knowledgeable fan of football and is indeed a very successful businessman, was denied the chance at ownership based on his political views. The NFL as a whole decided he was not allowed to have any involvement in the sport on a business level. But aside from that the NFL has a players union, which is as socialist as it gets. I will admit that unions disgust me and destroy everything they come into contact with including our country considering they had a huge part in electing the dictator wannabe we now have in office as President. Also don't forget the fact that most of the teams have financial help from the cities they reside in when building new stadiums and/or upgrading current ones. This is another socialist aspect and one that deserves no respect from a capitalist point of view.
As for the country sharing the losses and profits of other nations in the world, it is simply a bad idea, and once again, socialist to the max. Remember what Thomas Jefferson once said, "Commerce with all nations, alliance with none." Nothing could be more important for the well being and security of our nation, especially when considering we are the only true free nation in the world, though not nearly as much as we used to be.
I like to think of CEOs of large corporations (NFL included) as some of the most pathetic so called capitalists that exist. This is because most of them do not own the companies they run, though they may own a lot of stock in the company, most of them have one goal, to make the stock go up before they pull out and retire with their golden parachute with no concern of the business' future. The only CEOs that I consider solid performers are those who own their companies in full, and those who built their companies from the ground up. Most of these exceptional CEOs own private companies, and many of them would own small businesses. The most successful of them all and without a doubt the greatest businessman alive is Charles Koch, CEO and chairman of the board of Koch Industries Inc. His company is the largest privately owned company in the world at $100 billion dollars. (Of course wikipedia claims it is the second largest behind Cargill but it Cargill is not run by the owner, or at least it doesn't seem clear that it is.)
Charles Koch is a libertarian and the founder and owner of the Cato Institute which he founded with Murray Rothbard (famous Austrian economist). Koch's company invented the Market Based Management approach to running a company and he wrote a book on it which I highly recommend reading. In this book you will see how a true free market company operates and why most other companies are failures or risky at best.
I do not like the NFL so I'll admit my biased, I also don't like unions or CEOs in most cases. CEOs are exactly like politicians which is why their companies are so risky to invest in. Solid companies like Koch remain private because of the corruption involved in going public. And by the way, Koch has been threatened by a congressman that if he doesn't go public he will do everything in his power to destroy his company and career. The loving government as usual seeking financial payoff. After learning that it made me more aware of why big companies go public that do not need to, and why they get a pass in the business world to become oligopolies. Think of Google, why would they have needed to go public. Also, Facebook is going to go public. But why, they don't have to have huge buildings all over the country, they don't have to expand production facilities or anything. Thus it is fair to assume that it is purely for political reasons so the politicians can invest in them and then shape policies to allow them to grow and profit while others are not offered the same opportunity.
Excellent response as usual. I completely agree with everything you're saying. I figured I'd throw the idea out there and see what type of feedback I received.
I've always been suspect when companies go public. The whole idea of going public really doesn't make that much sense. It really doesn't. Why not get private capital to scale? Why not continue to build at a normal pace? Why does going public all of a sudden turn people into billionaires? There are obviously reasons why companies go public outside of the normal stuff we are told.
Thanks for sharing :)
I figured you were toying with the idea to spark good conversation, and perhaps a bit curious of how such a government would run. Of course, I respect your ideas and typically agree with you 100%, but I'm glad to hear you are flexible on this idea and were not yet settled on it.
CEOs usually take their companies public to gain financial support to grow at a faster pace or to afford much needed equipment facilities and such. However, there are those who are hellbent on personal status and financial gain to make a name for themselves. These I like to refer to as the elitists. They are the ones Jack Welch (former CEO of GE) explained would brag to each other (other CEOs) about having a larger private jet or limousine and the amount of media attention they receive. These public company CEOs are the ones who run their companies into the ground eventually, whether after they depart the company or during. The typical public company CEO in my opinion is not a good businessperson at all, even though Welch said most of the ones he was referring to were the best executives at their companies until they became CEOs and the power, money, and fame went to their head. But my opinion is still that they are worthless.
Don't confuse public company CEOs with entrepreneurs either. An entrepreneur is someone who is constantly inventing new ways to be productive and profitable, often dabbling in many different aspects of business, and gambling with their own money. Conversely, CEOs gamble with other people's money and do whatever is necessary to instill a favorable opinion among shareholders and other companies, in case they want to jump ship. The typical CEO got to the position by attending the right school and getting the right degree, playing politics, stabbing others in the back, kissing up, and networking. The only reason they perform well is to make themselves look good for the next position, it is not because their heart is in the right place.
As for a company going public, you're right, it doesn't make any sense at all usually, but there are exceptions. I don't believe Wal-Mart would have been successful in changing the way companies buy bulk at low prices had they not gone public and affording them to build their massive headquarters distribution center, but perhaps it could have been done over a longer time period though we'll never know.
Going public is political in some cases and perhaps just plain greedy or impatient in others. But with companies like Google, Facebook, and other internet giants that don't really manufacture anything, it is almost always political. Once they go public the politicians can invest in these companies and shape policies in their favor to grow their investment. Also, it adds more lobbyists in Washington paying off politicians with bribes. It is mostly corruption and definitely destroys many small businesses since they can no longer compete with the monster companies. It leads to an unfair playing field.
I contend that politicians and CEOs are exactly the same thing, and often they work together to shape policies such is the case with the Union thugs advising Obama. Take a look at your own workplaces and see how much politics plays in employees getting promoted. Try and think if the right person for the job is the one who is usually promoted. See if they deserve the salaries they get, and if their are others who do not play the game but deserve the positions because of their stellar abilities to do their job. There are always those extremely hard working employees that love their job and want to help the company but never make it above low level management. Then, in many cases people are hired from outside to fill the upper level management positions and the company sends out a welcome e-mail to all employees commending the new hire executives on their outstanding experience from previous companies. Yet, there are plenty of people more than fit for the job that have been working for the company loyally for many years, and they had no chance because they weren't friends with the other executives or didn't have the right college degree from the right university.
A short story of a real experience of mine. I worked for a Fortune 500 company a few years back that had just hired a famous CEO. He was ranked by Forbes as a top 10 CEO. However, he was performing terribly at our company and all of the sales reps I worked with could not stand him and wished the company would fire him. Our stock was going down the entire time I worked there, and we were not hitting our nearly impossible bonuses they set for us. Interestingly the bonus structure for the sales force changed drastically under him, yet the executives were making theirs as large as ever. Then, we found out that the CEO had a contract that granted him $15 million in bonuses a year for the 7 year contract he signed regardless of the company's performance. Isn't that nice. He gets bonuses no matter what, and in our case the stock plummeted approximately 25%. We made no bonuses and he made millions. Even more ridiculous, when he gave his speech upon taking the job he said his goal in life was to become the CEO of Pepsi, and he was planning to achieve it. Get that, he tells us thank you for the opportunity but my goal is to be hired by another company eventually.
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