David Rosenthal: recommendation

Transcript context

…It’s like the draft but with money. It is the draft with money, and it is absolutely freaking brilliant. Okay, David. I said the player auction is like the draft with money, but that’s not really giving it enough credit. The NFL draft did manage to turn itself into a huge ridiculous viewer spectacle. Big thing at Radio City Music Hall in New York and TV coverage. But the player auction is both a live spectacle and a key piece to the way that they balance the whole league. The rules for the annual player auction were nailed down even before the initial bidding for the teams happened, which is important to understand. You need to know before you bid on a team as an owner, how this whole auction process is going to work. It is tied as top priority for the most important thing to know along with how the central revenue is getting distributed. Because by far the biggest expense for any premier sports team attracting the best players in the world is player salaries. Put aside capital expenditures and potential debt payments for stadiums. That’s not part of this league. That makes sense, by the way, that player salaries should be your biggest expense because that is the most important raw ingredient to your business. So different leagues have different ways of dealing with this in different sports. We talked about this a little already, but I would say until the IPL auction innovation, what was generally regarded as the most effective way to deal with this is a hard salary cap. That’s what the NFL has. Every year, you have a dollar amount that is the same for every team. You cannot spend more than that dollar amount. It is simply not allowed. How high that dollar amount is, is the result of collective bargaining between the players union and the ownership group. Which is a very sane way to do it.…

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