NFL vs. Referees Negotiations
In its recent quick fix turned experiment-gone-wrong, the NFL experienced the most severe blow to its brand in recent memory. The replacement referee debacle came to a spearhead last Monday night when the Packers faced the Seahawks in Seattle and lost on a hail-mary effort that replacement referees inexplicably called a touchdown but was obviously an interception. Myself being a born-and-bread cheese head, it was unthinkable that my team lost the competition because of what seemed to be the stubbornness and greed of the NFL’s commissioner and burgeoning dictator, Roger Goodell, in refusing to come to terms with the locked-out referees of the past.
How could the sides not avoid this fiasco? Well that’s where connections and game theory come into play between the two sides. The NFL and referees did not see eye-to-eye on several topics, the largest of which was the referees’ pensions. The NFL wanted to replace the referee’s traditional pension plan with newer a 401K-based plan, but that would put a large financial burden on the refs to transition to a new system. The NFL also wanted to implement new systems for improving the officiating of the league in the long run. This included adding more referees and assigning referees to games based on their performance. This seems like a decent idea, but it could mean refs losing money because they are asked to sit out, or eventually losing their jobs to younger crews. Finally, the refs were looking for an increase in salary. Their current average part-time salary of about $150 thousand was well under the full-time average salary of refs in other leagues, $300-400 thousand, but they work significantly more than six months of the year, so a raise seemed reasonable.
With these three main issues on the table, how did game theory play out? How did both sides settle on a deal under intense pressure and threat of lowered television ratings? As it turns out, they each gave way in order to find equilibrium in time for this weekend’s games. The NFL increased ref’s pay to $173 thousand in 2013 and $205 thousand in 2019. They also allowed the current pension plan to remain intact until 2016, when a 401K-based plan will take over. These seem to be concessions by the NFL in exchange for better refereeing immediately and consistency in television ratings this past weekend, a main source of revenue for the NFL. On their end, the referees conceded the right to be analyzed and for new full-time refs to be hired starting in 2013, which came in exchange for their increased salary and pension plan. Finding equilibrium with the NFL also allowed for immediate payment of the referees. Overall, game theory produced an agreement that bodes well for both sides and saves the NFL season from what could have been a disaster.
-Academy8