The NFL: A Model for Federal Regulatory Reform
By Patrick A. McLaughlin, Stephen Strosko & Jonathan Nelson
Last week, the NFL team owners met to vote on proposals for new rules. Most notably, they approved a rule prohibiting defensive players from leaping over the line of scrimmage in an attempt to block a field goal or PAT kick. This rule change is already starting a lot of discussion from fans and experts alike, both positive and negative. Many fans are quick to point out that the league’s rules have plenty of flaws. But compared to some other large organizations — particularly the federal government, which writes the largest set of rules in the country, the Code of Federal Regulations — the NFL is an example of how to get rule-making right.
As fans know, NFL rules don’t always work as intended. After the 2015 season, increased concern about concussions led the NFL to tweak a rule related to the most dangerous play in the game: the kick return. The new rule moved the starting point after touchbacks from the 20-yard line to the 25-yard line. The goal was to encourage more touchbacks, thereby reducing the full-speed collisions prevalent during kick returns.
But, in a complex and dynamic environment, rule changes can have unintended consequences. For example, before the season even started, many coaches openly discussed new strategies that resulted in more returned kicks. These new strategies probably worked — kickoff returns decreased by only 1.8 percent. Concussions on kickoffs decreased slightly — from 20 to 17 — but hamstring, ACL, and MCL injuries increased. Small changes like these often occur without any rule change at all, indicating that the new rule may not have functioned as planned. Nonetheless, at last week’s meeting, the owners voted to keep the rule for at least one more year, in the hopes that more data will better elucidate the rule’s effectiveness.
As economists who perform data-driven analysis for a living, we are naturally drawn to the NFL’s use of data to determine whether a rule change affected game dynamics. More importantly, as fans of habitual playoff absentees seem to know, data on competitive balance and annual turnover among playoff teams can deliver realistic hope that the next season will indeed be different. (Unless you are a Cleveland Browns fan; we doubt any amount of data can provide sufficient hope to overcome the pall of a meager 30 percent win rate since the franchise’s return to Cleveland in 1999.)
Despite its bureaucratic nature, the NFL’s rule-making process is a surprisingly functional example of an “adaptive rules” system. The NFL’s Competition Committee — comprising a mixture of club owners, presidents, general managers, and head coaches — goes through a fairly tedious process designed to manage the evolution of the league’s rules. The process involves collecting feedback from the teams, the players’ association, and the NFL’s farm system (i.e., the NCAA) on topics that could motivate a rule change like player safety, officiating, new technology, and competitive balance. After analyzing data, reviewing videos, and additional rounds of feedback, the committee typically proposes a few changes to the owners, who then vote on whether to implement them.
The committee anticipates that some rule changes may not work as intended, and the league also understands that some planning and analysis before making a change can increase the odds of the new rule achieving its goals. A perfect example is the 2014 change to more clearly and strictly enforce defensive interference in the secondary. As far as gameplay goes, the rule was extremely successful: It arguably reduced the number of subjective judgment calls from referees, and fans found themselves howling less often about missed calls of illegal contact or defensive holding (with the possible exception of Seahawks fans. Then again, it was the Seahawks’ Super Bowl-winning strategy that led to this rule change in the first place). Clear and objective rules tend to produce better competition, and sometimes even this fairly bureaucratic process works to root out problems with the rules.
As a point of contrast, compare NFL rules to another complex set of rules notorious for failing to adapt to new circumstances: federal regulations. Like the NFL, federal agencies also make rules, but these rules are much more far-reaching and impact a far-more complex system. While NFL rules only impact teams directly (and their fans indirectly), federal regulations impact numerous aspects of our lives, underscoring how important it is that they work as intended.
A good adaptive rules system incorporates information on how well rules are working, and gives regulators an incentive to modify or eliminate the ones that are ineffective or even counterproductive. Few large regulatory agencies actually produce such information — but the NFL does, thanks to an on-field product and stats that we can all see. And while you can’t necessarily see a rule’s effect in a complex society the way you can in the NFL, perhaps there are some lessons that federal regulators can take away from the NFL’s approach, starting with an examination of incentives.
In both the government and the NFL, rules evolve when rulemakers have a real reason to respond to feedback. The NFL is ultimately driven by revenue, and will respond to feedback from both fans (their customers) and players (their inputs of production). It may take a while — after all, this is still a bureaucracy — but we can expect the rules to eventually evolve. The review of the kickoff rule not only shows that the NFL is using data to drive their decisions, but also that such a bureaucracy is, to its credit, willing to admit mistakes.
For federal bureaucrats, the ostensible purpose of the rulemaking process is to attempt to solve problems that market forces alone may not solve, perhaps with the bonus that the new rules and related enforcement programs will increase the agency’s budget (this is Washington, after all). But, if a rule proves to be ineffective or even harmful, the agencies themselves face few, if any, consequences, and in many cases are still incentivized to continue making new rules rather than to improve the old ones. Contrast this with the NFL, in which a harmful rule could lead to a reduction in revenue and therefore elicits relatively quick correction.
Say what you will about the effects of profit-motivated owners on sports — as sports fans ourselves, we sometimes regret to see “business decisions” lead to some of our favorite players being shipped off to other teams. But the revenue focus of the league’s owners provides a constant incentive to improve its product and to proactively develop information on the effectiveness of changes to its rules. Die-hard fans, some of whom are walking NFL rulebooks, know when the rules aren’t working. And although it may be a slow and bureaucratic process, the league tends to eventually get it right. Indeed, some NFL rule changes over the past few seasons, such as the longer extra point, have added bits of intrigue to the game that a more static rulebook could never have accomplished.
Patrick McLaughlin is a senior research fellow at the Mercatus Center at George Mason University, where Stephen Strosko and Jonathan Nelson are research assistants.
