The AFL’s lesson for the global economy: changing the rules works

Fair contest: should we tinker with the rules in a free market? AAP

We all know the global economy is down the toilet. Even if we overlook the financial debacle in Greece, Spain, Iceland, Ireland – and that’s not easy – the big problem is Uncle Sam. Currently, the US Government is paying about $1.5 billion a day just to service its debt. To put this in context, the annual cost of paying the interest bill on US Government debt is more than the total savings of all American households – as the saying goes, you ain’t seen nothing yet.

Now if we shift our focus from the global economy to 140 Harbour Esplanade down at the Docklands in Melbourne, we know that early in every New Year, Adrian Anderson, the AFL’s General Manager of Football Operations, will launch the new season by announcing the rule changes for the upcoming NAB Cup and AFL seasons on behalf of the Laws of the Game Committee.

As night follows day, within the next 48 hours we will see an “open letter” to Andrew Demetriou from a much loved veteran of the game and now media personality making an impassioned plea for the AFL to stop ruining the game that he loves. Shortly thereafter, a member of the Laws of the Game Committee will call for a moratorium on rule changes (with a veiled threat to resign if they don’t) and talkback radio will go into meltdown about the way that the aforementioned committee has been “got at” because the new rules favour certain clubs and their style of play.

But outside the hysteria, the AFL has managed to get it right more often than not, by continually tweaking the game. When research from the fans showed that fans hate flooding and winding the clock down, the AFL introduced rules to make it harder and the flood disappeared. When the AFL Medical Officers’ report showed higher rates of facial and upper body injuries, rules were introduced to stop players being driven into the ground. When the video reviews of the game showed an increasing number of head high bumps, rules were brought in to protect the player with their head over the ball, with the tackler sharing some responsibility for protecting the player. When the fans told the AFL that they want more ball movement, higher scores and more contested marks, the Laws of the Game Committee responded.

Clearly they don’t always get it right, but in general, the constant adjustment of the rules works – even the new interchange rules, which seem completely counter intuitive, have worked out. The emphasis on protecting the players and continually improving the spectacle of the game has paid off in just about every metric of success for the AFL, including the value of its brand.

The global economy on the other hand, has been much more reliant on sorting itself out. Remember Enron and Arthur Anderson? The years of 2000 - 2002 saw the greatest stock market fall since the 1929 crash. We were told that new laws mandating proper corporate governance would never let this happen again (we were also told that after Michael Milken, Ivan Boesky and junk bonds, but that’s just being picky).

But this time we didn’t get 70 years – we got six. At the time of the passing of the Sarbanes Oxley Act in July 2002, which was meant to usher in a new era of accounting standards and corporate governance, the US subprime mortgage market was already worth $60 billion. So when the bottom fell out of the housing market, it wasn’t exactly a secret that high risk mortgages had been bundled up to make so-called investments grade financial products. A few years later in 2008 came the Global Financial Crisis – a bad year all around for GFC’s as Hawthorn beat Geelong to win the flag.

The lessons of the time were clearly not lost on executives at companies like AIG. After getting just over $100 billion from the US Government to stave off bankruptcy, the execs of the company refreshed themselves at retreats in California and Phoenix, and a hunting trip to the UK. Clearly reinvigorated, they started 2009 by announcing that the biggest profit loss in US history was not going to deter them from paying themselves a bit over a billion dollars in bonuses.

Despite lots of hand wringing and teeth gnashing from the US Government – now the biggest shareholder in AIG – bonuses were paid, and fortunately the bail out money from the Government meant that the bonus cheques didn’t bounce.

In a remarkable book called Fixing the Game, Professor Roger Martin, Dean of the University of Toronto’s Rotman School of Management, argues that unlike the hands-off approach which has failed so many corporate regulators, successful sports such as the NFL focus on serving the interests of the fans and the players by constantly tinkering with the rules, and taking action when they are broken.

For instance, in the early 60’s Green Bay quarterback Paul Hornung was called the “The Golden Boy”. He was the best player in the game and many of the records he set as quarterback in the Packers’ dynasty years still stand 50 years later. In 1963 NFL Commissioner Pete Rozelle suspended Paul Hornung for the entire season for betting on NFL games.

Rozelle didn’t need a spa retreat or a hunting trip and he acted decisively to send a pretty clear message to the entire NFL - that gambling by players is unacceptable and there are no exceptions, even when it was one of the most loved players in the game and most of the bets had been with friends, not betting agencies.

Rozelle also established NFL security in the same year to investigate player involvement in betting on NFL games. So the action was swift and the player implications of the growing relationship between the NFL and betting agencies were understood.

On the field, when having a slightly built quarterback with a weak arm called Joe Montana forced coach Bill Walsh to use the short passing game called the West Coast Offence which allowed the San Francisco 49ers to dominate the NFL in the 1980’s in a way that wasn’t supposed to happen under a draft and a salary cap, the NFL restored balance on the field by introducing rules to limit the impact of the 49ers.

And when the New York Giants defence lead by human wrecking ball Lawrence Taylor kept legally smashing into highly valued quarterbacks, the NFL coaches responded by recruiting the massive left tackles typified by Michael Oher in The Blind Side. But finding and training these players couldn’t happen overnight, so the NFL intervened by changing the rules to give more protection to the quarterback and more options to his receivers, making quarterback blitzes by defenders much more risky.

Of course it is arguable that there are different motivations at work. Most of the members of influential AFL bodies like the Laws of the Game Committee and the AFL Research Board are unpaid volunteers; they are motivated by the love of the game and a sense of responsibility to the owners of the game – the supporters. The AIG example would suggest that there is a very different kind of love at work, where second effort doesn’t mean trying to make up for a missed first opportunity, it just means going back for more.

So constant tinkering seems to work a lot better than a big stick followed by years of inaction, and maybe our sporting and economic interests would be better served by regulators who are willing to respond to early signs of future problems, and not wait until there is a crisis. And as we have seen, the AFL is pretty good at tinkering – players are healthier, crowds are bigger and TV audiences have grown – I only have to look at my superfund and read the financial pages to know that the economy has been largely left to fix itself and it hasn’t worked.

Of course, if Adrian Anderson was to run that global economy, that would mean that Kevin Bartlett would have to run the International Monetary Fund. After decades of everybody passing the buck, having a guy who never handballs could only be a good thing.