Game Theory and NFL Expansion
The NFL is one of the largest businesses in the United States. Every Sunday from September until February is dominated by NFL games. Due to its immense popularity, many cities want their own NFL team. Teams have found success in cities as rural as Green Bay, Wisconsin and as urban as New York City. Despite the popularity of the NFL, the St. Louis Rams just experienced their lowest home opener attendance in 20 years. Pro Football Talk associates this with the team’s incessant talk about moving to LA. Given that LA is a much more enticing market than St. Louis, one is left to wonder why the team only talks about moving and has not packed its bags. On that note, why does Los Angeles, one of the largest cities in the United States, lack a NFL team while cities like Jacksonville and Nashville sport their own teams?
Presh Talwalker tackles this interesting situation using game theory and musical chairs. In his version of the game, there are more chairs than people. The chairs represent cities and players, the people who sit in the chairs, represent the NFL teams. Chairs receive money if they have a person sitting in them at the end of the round. As a result, the sitter can bargain to get money from the chair so that they have an incentive to sit in the chair. For example, if there are two open chairs, one offering the sitter 40% of the money and the other offering 60%, a sitter will choose the chair that offers more money. A similar pattern emerges with NFL teams. Since there are more cities than teams, the teams will move to cities in which they are offered a greater amount of money.
Following this pattern, it still does not make sense why LA is an empty market; they could afford to pay a NFL team a lot more than some cities, like St. Louis. According to Talwalker, what prevents teams from moving to LA is the fact that they can use the open market in LA as leverage. If a town does not want to meet a team’s higher demands, the team can threaten to move to the glorious market of LA and thus force the town to pay more to keep the team.
For further explanation I’ve created a series of games similar to those used in class for the prisoner’s dilemma. In each box the first number represents the NFL team and the second represents the town. The numbers are arbitrary measurements of how much the town/team benefits from the given arrangement. In Table 1, the NFL team has a dominant strategy to move but, in reality, they have the foresight to see that if they moved and if the city responded by not paying them they would be worse off since they would lose their ability to use LA as leverage. The town also has a dominant strategy to not pay the team but they too see that they would be worse off as a result of this action since they would lose the NFL market in their city.
| Table 1
(NFL,Town) |
Pay | Don’t Pay |
| Stay | 8,7 | 2,10 |
| Go to LA | 9,0 | 7,5 |
Since the team can see that if they move they will be worse off, they instead make use of their ability to use LA as leverage and stay in town. The town decides to keep paying since they are still benefiting from having a NFL franchise in their town. As seen in Table 2, The team can now push the town as close as they can to the point where the town would be better off without the team. By doing so, they benefit even more as a team since the town pays them even more to stay.
| Table 2
(NFL,Town) |
Pay | Don’t Pay |
| Stay | 9,6 | 2,10 |
| Go to LA | 9,0 | 7,5 |
An interesting version of the above situation is happening in St. Louis. The team’s talking about moving to LA is helping them finance a new stadium in St. Louis. The most intriguing aspect of this situation is that the Rams’ strategy is working. According to KSDK news, a local St. Louis channel, “The ST. Louis NFL stadium task force continues to leap over every hurdle, in an attempt to keep the team in St. Louis.” Maybe the St. Louis rams will stay put for a few more seasons after all.
The above corresponds with our classwork since it makes use of game theory and modifications of the prisoner’s dilemma game. Both of these topics were covered in lecture and in Chapter 6 of the textbook.
Link to articles:
http://profootballtalk.nbcsports.com/2015/09/14/smallest-home-opener-crowd-in-20-years-watches-rams-win/
Game Theory Tuesdays: Why NFL Owners Probably Don’t Want A Team In Los Angeles
http://www.ksdk.com/story/sports/nfl/rams/2015/08/19/rams-stadium-finances-st-louis-california/31965795/