An Economist’s Solution to the Washington Football Team’s Name ControversyPosted: January 6, 2014
Recently, Dan Snyder, owner of the Washington Redskins, has taken some heat over his refusal to even consider changing the name of his football team. The name has increasingly drawn criticism from Native American groups, sports commentators, and politicians. Even President Obama expressed his concern about the name during a press conference earlier this month. Disputes involving race and ethnicity are always sensitive and Snyder’s apparent stubbornness seems to have catalyzed more frequent and strident derision in the media.
Although I don’t know with certainty what motivates Snyder, it seems plausible that he takes actions to maximize the value of his team. Evidently, Snyder believes that changing the name from Redskins to something else would decrease the value of the franchise. He is probably right. Although changing the name would create some goodwill among his critics, most fans oppose a name change and would be disappointed if Snyder caved in to the pressure. This fan disappointment might result in less revenue from merchandise and ticket sales, thus lowering the franchise’s value. On the other hand, changing the name might not cause much consternation at all among the existing fan base, and may even expand the fan base if former boycotters become loyal Washington football team supporters. In reality, it doesn’t matter what actually happens to the value of the franchise; it’s what Snyder thinks will happen. Since Snyder owns the property rights to the football team he stands to lose or gain from the resulting name change. This clear delineation of property rights may appear disadvantageous to the side that supports a name change, since Snyder can essentially ignore all the noise coming from conscientious objectors. In fact, the clear lines of ownership provide a solution to the problem.
Even if he hasn’t formally quantified it, Snyder has an estimate for how much the name change would decrease the value of his team. So I propose the following. First, Snyder publically states the amount of money he would need to change the name. The amount would probably exceed the estimated decrease in franchise value since the uncertainty in the latter would cause Snyder to ask for compensation for taking on added risk. Next, the offended parties set some sort of crowd sourcing website where people can donate to the change the name movement. The donations would be contingent on enough money being raised by the group. Once the pledges meet Snyder’s price, the donations are extracted from the participants’ bank accounts and transferred to Snyder’s. If the pledges are not sufficient to meet Snyder’s demands, the name stays unchanged. While there would need to be some process governing how the new name would be determined, this would solve the seemingly impassable bottleneck.
The logic of this solution is an application of what economists call the Coase Theorem, details of which can be found here. Basically, the insight is that the name Redskins harms some groups of people by way of moral reprehension, but changing the name harms Snyder who stands to lose in the event the franchise decreases in value. My solution asks the offended parties to put a dollar value on the harm inflicted on them by the name, just the way Snyder puts a value on the harm done to him from a name change. If more harm is done to the group as a whole from keeping the name the same exceeds the harm done to Snyder from changing the name, than the value of the donations will exceed Snyder’s asking price. In other words, if the harm to the offended groups is sufficiently high, it will be in Snyder’s best interest to change the name, even if it lowers the value of the franchise.
This proposal would not be possible several years ago. The possible number of people offended by the name Redskins may be very large and collecting donations from the generous ones would have been virtually impossible. Modern technology, especially the phenomenon of the open source movement, permits those who are morally offended to step off their pedestal and open their checkbooks. Despite his reluctance to listen to the concerns of offended groups, you can bet a businessman of Snyder’s prowess will not ignore the bottom line.