NFL Lock-out

The NFL lock-out for the 2010-2011 season will be extremely affected if the NFL cancels scheduled games in the fall, especially NFL franchise cities such as Baltimore and Dallas, according to CBS talk-show host, Ed Norris. Not only will these big cities lose an exceeding amount of revenue, but local businesses in and around these franchise cities will be impinged upon as well.

                The NFL owners locked out their players mainly over issues concerning money. The owners want the players to take a smaller portion of total revenue, resulting in more income for the owners. Due to this dispute between owners and players, the demand for tickets as well as the demand for parking and food/beverages from businesses around the franchise cities will significantly decrease. This decrease in demand is due to something other than a change in price; therefore, graphically, there would be a downward shift to the left in the demand curve. The supply curve would not change because the supply of tickets, parking, food/beverages etc. is not being affected by the lock-out dilemma.  

                The chaotic NFL fans that will be denied from attending football games in the fall represent the insensitivity that these consumers have towards football. Once these football games are cancelled, the tickets are not able to be substituted for other goods, such as NBA or NHL tickets. This represents inelasticity.  Elasticity is used in economics to denote the responsiveness of one variable to changes in another. In this particular case, the fans’ response to the lock-out would show no kind of sensitivity; therefore, the tickets to the games represent inelasticity.

                The National Football League represents a monopoly. A monopoly is a firm in which a single seller has complete control over an industry. There is only one National Football League that is protected by government regulation and cannot be recreated by any other firm; the NFL represents a monopoly. Unfortunately, even though the NFL is only one firm and is one of the few monopolies that exist in the United States, hundreds of other firms and businesses will be negatively affected by the sudden interlude of this monopoly.

                These businesses in the franchise cities of Baltimore and Dallas and Oakland etc. will soon experience a lack of stipulate from football fans. Most of these firms depend strictly upon “football Sundays.” However, when the games are cancelled and the demand for these businesses’ goods decreases tremendously, the businesses are going to lose money and their amount of total revenue will decrease as well. It is very likely that these businesses could reach the shutdown point. The shutdown point comes where revenues just cover variable costs or where losses are equal to fixed costs. When the price falls below average variable costs, the firm will maximize profits (minimize its losses) by shutting down.  

Link: http://pikesville.patch.com/articles/ed-norris-nfl-labor-woes-could-penalize-economy