Earlier posts here and here noted the real possibility that the problems that the Harris County Sports Authority is currently experiencing in paying the debt incurred in the construction of various stadiums in Houston may be a sign of a bubble in the professional sports business that is about to burst.

S. M. Olivia of the Ludwig von Mises Institute picks up on that theme in analyzing the very real possibility that National Football League owners may elect to lock-out NFL players because of stalled negotiations over a new collective bargaining agreement:

The NFL encapsulates, perhaps better than any other single business entity, the popular conceptions — and misconceptions — about capitalism and the nature of markets. The league is the epitome of statist “crony” capitalism. Its franchise operators demand huge government subsidies for stadiums while jealously guarding its prerogatives as a “private” business. Governments (and their media enablers) largely go along with this because they’ve been led to believe the NFL’s popularity is so immense that no respectable city can go without a franchise.

Professional football is the ethanol of the entertainment industry. Since 1990, nearly every NFL franchise has either opened a new stadium, made substantial renovations to existing stadiums, or is currently in the process of obtaining a new stadium. Over this 20-year period the league’s franchises obtained over $7 billion in taxpayer subsidies raging from direct taxes to publicly backed bonds. Ten stadiums are 100% government-financed, while another 19 are at least 75% government-financed. Every single franchise receives some amount of government subsidies. [ .  .  .]

[The ongoing NFL-NFLPA dispute is]  .   .   . simple really: The owners overspent on unnecessary stadiums, and now they want the players to work more for less pay to help pay down the debt. That’s your entire labor dispute in one sentence. The league expects — nay, demand — the NFLPA to act like a local government in a stadium dispute and simply give the franchise operators what they want for little or nothing in return. Maintaining the “owners'” social standing is of paramount importance. [ .  .  .]

The NFL produces three things: stadium debt, intellectual property, and bureaucracy. None of these things should be confused with “free market” values. The league is a prime example of what happens when you mix politically influential egos with easy credit and a media environment that largely promotes economic ignorance. You have the perfect boom business.

But all booms eventually end. NFL acolytes — and they are presently the majority — will insist, as Homer Simpson once did, that “everything lasts forever.” One media writer I correspond with insisted to me recently the NFL will be even more popular in 20 years then it is today. Go back to 1991 and think about all of the businesses you could have said that about, incorrectly, at that time.

That’s not to say professional football will cease to exist, nor even that the present labor situation will yield some disaster beyond imagination. What I am saying is that all the positive, pie-in-the-sky press in the world can’t alter economic reality. The NFL isn’t just a house of cards. It’s a house of cards built atop a pile of toxic waste. The only thing keeping the house from sinking is a support structure composed of television contracts.

But the networks face their own economic challenges, and unless you can guarantee that Fox, ESPN, CBS, et al., will be stronger then they are now in 2031, then you can’t say with any confidence the NFL will survive and thrive indefinitely. The league is built on consumption, and when you adopt that model, eventually you’ll eat yourself out of your $1.3 billion house and home.

My sense is that the NFL owners will endure a public relations debacle if they force a work stoppage, particularly if they allow it to last a long time.

For one thing, the entertainment market is far different and more diverse now than it was during prior NFL work stoppages. Thus, the market for entertainment has many alternatives to the NFL.

Moreover, the market appreciates the grave injury risk that the players endure far better than it did during prior NFL work stoppages. The public is unlikely to side with wealthy owners who are attempting to force players to take more economic risk in the face of that injury risk.

Funny thing about those financial bubbles – they are far easier to see in hindsight.