The Carolina Panthers appeared in the NFC conference finals
in 1997 to cap their second year of existence. The team that had gone from the
brainchild of Jerry Richardson to the darlings of Charlotte in its first year
became a national favorite. Some of the players have become well known among
the NFL-obsessed crowd. The seasons after 1997 unfortunately did not have the
storybook quality of 1996/1997. The next two seasons were poor, ending
in 1999 with the firing of Dom Capers as coach and the hiring of George Seifert,
formerly of the San Francisco 49ers. The 1999/2000 season started badly
but ended pretty well, giving long-suffering fans -- and owners -- something
to look forward to. The 2001/2002 season, however, was a 1-15 nightmare. It
ended with the departure of George Seifert, and the installation of John Fox
as the new coach. The Panthers went 8-8 in 2002/2003, and went to Super Bowl
38 in 2004 after an 11-5 record. They lead the South Division of the National
Football League at this point, but it's just the pre-season.
The first section of this discussion will focus upon the economics
of hiring star players to multi-million dollar contracts. Julius
Peppers in one stroke of the pen claimed the largest player contract in
Panthers history. He then had an up-and-down first season -- up for 12 games,
and then banned from play for the rest of the season due to a violation of the
league's drug policy. Despite that setback, he was named the NFL defensive rookie
of the year. I provide as a classroom exercise the constructed
case of the hiring of Julius Peppers in 2002. By following the links
of this hiring decision you will obtain the information that we will use in
class analysis. The figures reported in the case are drawn from public sources,
but the calculations should not be interpreted as those used by or reported
by the Carolina Panthers management. The pictures adorning each page are copied
from the Carolina Panthers Game Day program.
The salaries in the NFL rise in conjunction with the progressively
more lucrative contracts signed by the NFL with television networks. The NFL
currently has an 8-year, $17.6 billion contract for television programming.
Its contract with America Online, Viacom and CBS/Sportsline for Internet transmission
of games is $110 million for 5 years. According to one analyst, the day of the
$15 million/year quarterback is almost here, with Donovan McNabb of the Philadelphia
Eagles making $14 + millions last year! The hiring of players is complicated,
however, by the existence of a salary cap on the player expenditures of each
team. Follow these links to:
The city of Charlotte, North Carolina has benefited from the
presence of the Panthers, although the degree of benefit is under dispute. An
investor group has also brought a National Basketball Association team (the
Bobcats) to Charlotte, only months after the previous team (the Hornets) moved
out. The reason that the NBA is so interested? The city agreed to build
a new Coliseum with public and private funds, and the Bobcats ownership
group paid a hefty franchise
fee.
We will also perform an exercise in class to
illustrate the techniques of economic impact evaluation. For
the final exercise of this section, we will examine the direct and indirect
effects of the Panthers in the Charlotte-area economy.
Economics 051
The Economics of the Carolina Panthers