Tags: antonio brown | raiders | patriots

Economic Principles Explain Antonio Brown's Value to the Patriots

Economic Principles Explain Antonio Brown's Value to the Patriots
Wide Receiver Antonio Brown #17 of the New England Patriots warms up prior to the game against the Miami Dolphins at Hard Rock Stadium on September 15, 2019, in Miami, Florida. (Michael Reaves/Getty Images)

By
Monday, 16 September 2019 05:36 PM Current | Bio | Archive

Only the New England Patriots — and the teams they play — should worry about how well Antonio Brown can execute a Red Right Slot Y Banana 72 Stick. That’s football stuff, and, while it matters for your fantasy team, you should be more focused on what just played out with A.B. because it was economics plain and simple. But, first we need a little background on the situation.

For the three of you that aren’t aware of the details of this football docu-drama, Antonio Brown — arguably one of the best wide receivers ever to play the game — was traded at the end of last season from the Pittsburg Steelers to the Oakland Raiders. He signed a three year contract worth $50 million dollars with $30 million of that guaranteed — remember those numbers.

When training camp started this year, so did a series of events surrounding Brown that prevented him from fully participating in practices.

First, he got frostbite on his feet in the middle of summer in California (you can’t make this stuff up!). Next, the NFL told him that he couldn’t wear an outdated ten year old helmet and he missed weeks searching Ebay for a newer model (again, not a joke). And, after all of that was resolved, he purportedly physically threatened the Team’s general manager and began kicking footballs everywhere in a rage.

The Raiders finally decided that Oprah was better daytime entertainment and released him from the team, terminating his contract.

Within hours of his release, Brown, now a free agent, was signed by the New England Patriots.

His new contract in Foxboro will pay him about $10 million bucks and is only a one-year deal. Yes, he could still have a stellar year in spite of now having to fight the distraction of a rape and sexual assault lawsuit filed after his departure from Oakland. And yes, a great year may get him a few more years of contract extensions worth perhaps another $10 to $15 million each.

However, regardless of his on-field success at New England, over the next three years there is little chance Antonio Brown will earn the $50 million the Raiders were willing to pay him.

So, why were the Raiders willing to give him so much and the Patriots so much less? True, there is the drama, but not $40 million worth! The answer to this apparent disconnect is economics.

The Raiders needed a wide receiver and the Patriots have a whole bench full of them. Antonio Brown’s value to the Raiders — the contribution of his “production” — was much greater. Economists call this production “marginal revenue product” and it should be of concern to all of us.

Workers receive pay that is the economic value of their marginal revenue product. Why do Wall Street securities lawyers charge more per hour than small town divorce attorneys do? It’s because negotiating billion dollar contracts is worth more than deciding who gets the broken DVD player. Why do machinists make more than burger flippers? Because, building a $200 part is worth more than grilling a $2 cheese burger.

Should the minimum wage be increased? Should fast food workers be guaranteed $15 per hour? These are the wrong questions.

It isn’t about “should” someone be paid some amount — it’s about do they earn what they are paid. What is their marginal revenue product compared to their wage? Just blindly increasing the guy at the grill’s pay by several dollars an hour isn’t merited unless the price of hamburgers goes up by the same percentage, or he produces percentage-wise more burgers per hour.

There’s a lot of moving pieces in an analysis like this, but part of the reason women on average across the population are paid less than men is because they produce lower marginal revenue products due to career choice.

Women disproportionately choose careers in areas like primary education and sociology while eschewing STEM fields like engineering, math, and science. Primary education is a low marginal revenue product career versus, say, engineering. Think, what is the productive (not societal) value of a 5th grader compared to the value of building a bridge that allows hundreds of trucks to cross a river each day?

Or, put another way, what is the value of Antonio Brown to the Raiders versus his value to the Patriots?

Kevin Cochrane teaches economics and business at Colorado Mesa University in Grand Junction and is a visiting professor of economics at the University of International Relations in Beijing, China. He is a regular contributor to several national publications including the Washington Times, Washington Examiner, and American Thinker. He previously was the economic correspondent for both CBS and NBC TV affiliates in Southern California. For 27 years he formerly was a senior banking executive with a major NYSE listed bank holding company and the CEO of a national multi-bank operating company. To read more of his reports — Click Here Now.

© 2019 Newsmax. All rights reserved.

   
1Like our page
2Share
KevinCochrane
Only the New England Patriots — and the teams they play — should worry about how well Antonio Brown can execute a Red Right Slot Y Banana 72 Stick.
antonio brown, raiders, patriots
820
2019-36-16
Monday, 16 September 2019 05:36 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved