Market Power

Musings by an academic economist on the power of markets and the power over markets.

Sunday, October 24, 2004

Drugs and Professional Sports

One doesn't often hear about illicit drug use in professional sports these days. Leagues have rules against illicit drug use and there are other economic pressures felt by athletes to stay away from marijuana, cocaine, and such.

Before the beginning of the current NFL season, Onterrio Smith was set to become an important part of the Minnesota Vikings offense. The second-year man out of Oregon ran for 579 yards on 107 carries in his rookie season and looked to improve on that output in 2004.

But Smith failed a drug test before the 2004 season when he tested positive for marijuana. He was suspended 4 games and will lose approximately $70,000 in forfeited pay. But the long-term cost could be much higher. In Smith's absence, rookie back Mewelde Moore has emerged as a solid bperformer, rushing for 92 yards against Houston and 109 yards against New Orleans. Mr. Smith may find it difficult to find much time to play for the Vikings if Moore stays productive and healthy. Moreover, given his past problems, other teams may shy away from signing him in the future.

Performance-enhancing drug use is another thing. Since athletic success depends on the absolute performance of the athlete as well as his/her performance relative to others in the league, there will be pressures to enhance individual performance, including enhancement through steroid use. In part because of the positional externalities associated with these drugs, leagues have rules aginst the use of these drugs as well. If caught, the player faces fines and suspensions.

This poses an interesting question - are the implicit penalties different for illicit drug use vs. performance-enhancing drug use? Consider two players who play the same position on a team. Assume player 1 uses steroids but not cocaine. Player 2 uses cocaine but not steroids. The league rules are the same for the two drugs (i.e. they face the same chances of being caught and the same penalties if caught).

Player 1's use of steroids could improve his performance while player 2's use of cocaine would not help and could hurt his performance. All else equal, we'd expect that player 1 would be able to command more playing time than 2 and would be compensated at a higher rate. In this regard, there is a difference between the implicit penalties. Since illicit drugs don't enhance performance, the implicit penalties are higher for the use of these drugs and we would expect fewer instances of their use.

Indeed, one could argue that the same competitive pressures that lead some athletes to use steroids can steer athletes away from illicit drug use.