Maximizing Profits Versus the Welfare of Former Professional Players and Coaches, Research Paper Example

Identify Ethical Paradigm

Profit Maximization versus the Welfare of Former Professional Players and Coaches

Ex: National Football League’s Pension and Disability Program

Examination of Causative and Contributory Factors

Underlying Historical Forces

Sport is as old as the history of human endeavors for extramural engagements that promised relief from or supportive of basic chores. Since the renaissance era, man has ventured into several forms of sport as a main activity or as a form of leisure. Sport developed as a result of rewarded entertainment for the elite. It derived most of its history from high social class gatherings. Until the introduction of formal education when a need was felt to introduce the same to children as early as possible, sport gatherings were the preserve of the high class and its management and attendance restricted to the high and mighty. Public schools later became deeply involved in the development of football, hockey and cricket in the Victorian and Edwardian schools of early Europe wherein sporting values were taught (Mangan, 2000). Nevertheless, it was not until a realization that people from lower classes in society could play as well or even better than the royal class that professional sport became a celebrated commission, managed by professional institutions.

Professionalism in sport was heightened by a quest for the most talented sportsmen whose chance as players would be most rewarding. Moving from a means of entertainment to a method of securing material favors in competitions, institutions (with schools basically), organized professional amateurs and sports, not only to show their prowess for better tutoring, but also to win awards for better performances. These awards included trophies and monetary rewards. The birth of the British Olympic Association (BOA) in 1904 was a step in ensuring that professionalism in sports was spearheaded by schools (Baily, 2008 Apr). Later on, other associations and institutions were formed to promote players and coaches’ welfare in a form of specialization that gave room to the former to concentrate more in their field engagements.

Further institutionalization of professional sport resulted from a need to further talents nurtured in schools. Among the first Olympic Games, it was realized that sports talent could be nurtured to become a paying job. From the rewards obtained as a result of participating in such games, both the players and their institutions realized the need for more coaching so as to perform better (Caiger, 2001). All was geared towards monetary achievements. This necessitated the quest for coaches, coaching materials and professional training grounds. While sportsmen and their coaches were required to fully concentrate on field activities, administration of the funds has over the years has been delegated to welfare organizations in an attempt to specialize. These organizations are mandated to manage teams and seek avenues through which funds can be obtained to cater for upkeep in the course of training and for present and future welfare in retirement. These arrangements remain applicable today though in a much more complex intertwinement and professionalism than never before. Every game thrives in its own legal and institutional frameworks and managed by institutions whose structures, functionality and customs differ.

Societal Values

Whereas development of professional sport has been hailed for increased enthusiasm in old games such as soccer and rugby, etcetera, several regulatory and institutional arrangements torpedo smooth transition in professional sportsmanship and coaching. The fact that most players and coaches are required to concentrate on game building and not management leaves a number of them at the whims of the welfare institutions. These institutions have in many occasions taken advantage of the players and their coaches in the name of soliciting funds for their upkeep to fleece the former of their hard earned cash (Westerbeek & Smith, 2003). Players and coaches have therefore, over the years, factored in not on the amount of their talent or experience to reap maximally from their toil, but on what amount of business deals a sports management cuts and/or the amount of dividend the management wishes to give.

Interestingly, documented evidences indicate that retiree players and coaches are most advantaged from treatment that arises during their sunset days (Masteralexis, Barr & Hums, 2004). Once considering players as their assets of productive business engagement and thus registered the latter in welfare organizations under which they would derive their pensions, such organizations have become much more bent on profit maximization. Principles of business management require that while the motive of a business must and will remain profit maximization, ethics of personnel management posit that the welfare of stakeholders must be given priority. While contentions remain regarding the extent to which profit maximization should override players and coaches’ welfare, it is important to note that fair arbitration exists only in balancing business ethics against ideologies of gainful business practice.

Dominant Ideologies

The dominant ideologies found in NLF’s business orientation vis a vis the welfare of players and coaches are capitalism and profit maximization this paradigm are capitalism and optimism bias. The NLF is a welfare organization whose survival is pegged on maximization of profits even as it struggles to meet the needs of its subscribers. Capitalism operates on the need to get the most out of members’ subscriptions under free market forces while remaining as ethical as possible in business practice. Under private ownership, a capitalistic institution is required to report collection of huge profits out of its processes. This necessitates that an institution performs within maximum limits but which minimizes focus on business ethics (Reisman, 1996).

The next dominant ideology evident in this archetype is that of optimism bias. One aspect of optimism biasness is overconfidence bias that causes a management to overestimate its degree of control while neglecting even the most obvious odds of their success (Flyvbjerg, 2003). This arises from cost estimates and benefits thereof, and the duration within which such benefits must come forth. When these aspects are not accounted for when appraisals are undertaken, the results seldom become realistic. The results are cost overruns, followed by delays in implementation and eventually, but unfortunately, shortfalls in benefits. The NLF has consistently overestimated their corporate power to gain much clout in serving retired and injured players with no meaningful reward accruing from their ventures thereafter.

Elements of Social Responsibility

Mandated Actions: It is a general practice since the end of world war to engage in pensionable contributions which safeguard their social welfare in retirement. This is a civil duty that transcends mandatory government regulation but which still, is regulated by government laws to rid aspects that could be exploitative. Contemporary US professional sports leagues are considered “interstate commerce” and thus liable to regulation by Congress (Open Congress, 2009 Apr). The National Football League (NFL) is one in many of the leagues and has been investigated in 2005 for fears of steroid use among amateur sports. This means all their activities and behavior are likely subjects of criticism and investigation by members of the Congress.

Market Actions: Competitiveness brought about by many professional bodies engaging in sports management requires NLF to belong to a capitalistic market orientation. As a way of retaining most players in the scheme and as a result of public pressure to act ethically, nevertheless, the management has been forced to maintain their salary cap for its teams at $116 million per team (Ask the Commish, 2009 Jan).  Additionally, in response to global trends to corporate responsibility, the management has focused on guaranteeing several incentives to the retired players. The latest assurance is of no reduction in their pensions and disability benefits following the results of the labor dispute and that the benefits would be guaranteed by the NFL for one, a practice that wasn’t there before.  These are steps to lure its subscriber base while also appearing progressive so as to remain relevant in the market (Associated Press, 2009 Aug).

Voluntary Actions: In a voluntary action towards restoring support of retired players to its activities, NLF is contributing up to $9 million more in benefits to the retired players than it previously did (Associated Press, 2009 Aug).  

Principles of Corporate Social Responsibility

The chief belief in social responsibility is that managers must act ethically in dealing with stakeholders and staff. The balance between profit maximization and corporate consciousness to the welfare of its stakeholders go beyond mere representation of interest but to evident ethical treatment of such welfare (Werther & Chandler, 2005). While it is obvious that retired players and coaches join the pension scheme for their own sake, it is prudent that the management of the social scheme balance the interest of the subscribers to that of the organization in its profitability endeavors without any disparity as to what must come first or who remains in business.

The second principle is the need to meet the legitimate needs of all stakeholders. The mandate of a profit-oriented organization must transcend the boundaries set by stakeholders towards attaining their interests. The needs of the staff, the interest of government and regulation and that of communities in relation to the organization must all be met for the organization to remain socially recognizable (Heal, 2008).  When the NLF denies line of duty(LOD) disability benefits or refuses appeals for the same to players permanently disabled and suffering from severe emotional and physical conditions caused by repeated head trauma and other injuries, then its response to legitimate needs of its stakeholders is compromised (Kirby, 2009 Jan).

The third principle to effective social responsibility posits that correcting social problems can be profitable in long run (Abratt & Sacks, 1998). Programs such as longer periods for LOD application, reconsideration for players who have social security disability programs disability proofs, or even a “re-opener” or eligibility for stakeholders who may have taken early pension (prior to age 55), with proof of a medical examination or Social Security determination are incentives whose long-term benefits would be rewarding both to the scheme and the stakeholders (NLF, 2008).

Alignment Categorization

The NFLPA program was established as a pension scheme for improving quality of life for injured and disadvantaged former NFL players. In addition to catering for joint replacement surgeries, the program provides resources and financial assistance based on needs of each beneficiary. Other programs incorporated in several pension and disability initiatives include provision of assisted living facilities, prescription drug card program, life insurance benefits and Medicare supplement program among others.

Structural: Structurally, NLF disability benefits program for retired players is a pension’s manager and is formally structured to represent the interests of members and the business as is outlined in the vision the Bert Bell/Pete Rozelle NFL Player Retirement Plan for disability benefits. It has a representation of players in its boards both at the NLF, the NLFPA and the Medicaid programs such as the NFL Player Care Foundation. This has ensured that the interests of players are accounted for at all times.

Cultural: Traditionally, pension schemes are joined by retirees usually at advanced ages of their career and whose contributions are intended to consolidate funds into a scheme for later retirement welfare. In sport, an injury may be a point of retirement and this is what NLF retirement benefits deal with. The culture at NLFPA is thus skewed since eligibility for such benefits must be proved by an impartial physician. This makes the program’s operability questionable. This practice therefore does not guarantee that the goals of investing in NLF’s retirement schemes are attainable.

Processes: Ethical business management requires that processes should be aligned with structure and culture of the entity and the social goals of its stakeholders. In this regard, NLF must ensure that its operations are above board. While the formal structures of the scheme appear to respond to these goals, the cultural demeanor isn’t owing to several claims that the scheme has neglected its beneficiaries (Colston, 2007July).

Ethical Principles Analysis

Principles Referenced

The first principle that refers to management at NLF is the Utilitarian ethic. As postulated by Jeremy Bentham and John Stuart Mill, utilitarianism posits that an organization should struggle to maintain “the greatest good for the greatest number” of its stakeholders (Rosen, 2003 p. 28). Quoting Goodell, “I don’t think anybody I know has done more for retired players, or players in general, than Gene Upshaw … but I understand it’s an emotional issue”, implying that the management believes that it has provided the best for its stakeholders. The former CEO, Gene Upshaw, documents having negotiated pension increases for retired players following the last four collective bargaining agreements and cited  the payment of medical bills and mortgage for Lem Barney, a one time Hall of Fame cornerback.

The second principle refers to the belief in organization ethic where deep loyalty to an organization is required to promote its collective interests. The union points to its efforts, under former CEO, for turning around an association indebted to the tune of $4 million in 1983 to its current $220 million plus in cash and assets. In light of the said accomplishments, the union does not understand why they are facing a backlash. According to the union’s former commissioner, Roger Goodell, chapter presidents must ensure that conducts detrimental to the union’s best interests are shunned (Colston, 2007 July).

Principles Violated

The first principle violated by the union’s profit maximization operations is the Doctrine of the Mean as postulated by Aristotle. In the ethical orientation, virtue is supposed to be achieved from a compromise or moderation (Chan, 1967). Arrogant and excessive behavior is totally deficient of a virtue and therefore, while profit maximization is good for the competitiveness of the organization, it is as prudent to consider the repercussions of such action without regard to the wishes of the stakeholders.

The second principle that appears to be put in jeopardy as a result of NLF’s profit maximization operations is the Care Ethic principle which finds its roots in Carol Gilligan’s Stages of Moral Development (Gilligan, 1982).  The principle posits that a person should have compassion for others, alleviate their suffering, avoid hurting when in a relationship with them and respect their dignity. Interestingly, while NLF documents having done its best to further the welfare of its stakeholders, the very stakeholders report otherwise. Depending on the truth of their emotional instincts in interpreting the union’s neglect of their welfare, the union could be held irresponsible for the very duty for which it was formed.

1. Discussion of Predominant Ethics Approach
2. Point of Concern
3. Deontological: From a point of concern, NLF management is following the law and is thus not illegal in their operations. The concerns raised by Congress to former players and coaches and to those raised by the public are, on the whole, only ethical.
4. Teleological: From a teleological point of view, priority is given to the end result of the practice and not the means through which it is achieved (Senge, 2002). When NLF focuses on profit maximization, it believes that it is doing so for the interest of the stakeholders and that the returns so acquired shall benefit the union in the long run, the backlashes notwithstanding (Colston, 2007 Jul).
5. Counterpoint
6. Deontological: From a deontological perspective, operations of welfare schemes are regulated by laws pertaining to trust funds and as documented in a series of investigations into the conduct of NLF by the Congress, it is bound to operate within such stipulations (Open Congress, 2009 Apr). Moreover, when Congressional District of California Linder Sanchez reports numerous accounts concerning mistreatment of retired players by the NFL, issues arise that provoke fundamental violations of human rights guaranteed in the First Amendment to the US constitution; the rights to equal treatment under law (Sanchez, 2009 Jan).
7. Teleological: The counterpoint is that the magnitude of unethical treatment the players are exposed to rekindle practices which, even if they don’t arouse serious legal contentions, are unethical in the long run. The actions are soaring the relationship between current stakeholders, would be retirees and the company because the periodical negative reports will cumulatively bring down the union.

 Profile of Shareholders

1. Primary Stakeholders: Primary stakeholders include union managers and the retired players who subscribe to the scheme. In the event that the management continues on profit maximization without due regard to the welfare of the players, the likely outcome is untold suffering of the players while the managers enjoy the returns. On the other hand, if the players are given top treatment without regard to sustainability of the union within the capitalistic and competitive market, the imminent closure of the union in the short run shall affect the managers (who lose their jobs) and the retirees in the long run (for not having a pension scheme to bank on during their retirement).
2. Secondary Stakeholders: The immediate secondary stakeholder in this paradigm is the government (either federal or state). In an event that the union totally fails to meet its obligations and disbands, the welfare of all retirees shall fall squarely into the hands of the federal government due to its indispensable role in guaranteeing social security to all its citizens. Other secondary stakeholders include other unions whose mandates parallel that of the NLFPA, such as the Gridiron Greats Assistance Fund (GGAF) who will either enjoy from the fallout between NLFPA and its subscribers or, depending on the outcome of the current circumstances, lose subscription due to fear among retired players of foul play in retirement benefit schemes.
3. Evaluation of primary stakeholder cognizance and sentiments to the issue: The negative cognizance of retired players towards the operations of NLFPA is farfetched. This is registered in several court cases brought against the latter by the former and as documented in enormous press releases by the primary stakeholders (Sanchez, 2009 Feb).
4. Status of Public Opinion

Assessment of Media Reaction

Examination of Unintended Consequences

1. Due Process Analysis
2. Point of Concern
3. Procedural: The focus on profit maximization is derived from the feeling amongst the management at NLF that corporate management equals profitability and therefore without appearing to be making or having made a profit, the union would be considered to have failed to keep up with competition. Its operations are thus informed by profit maximization that would enable it meet subscriber requirements and engage in meaningful survival in the social security market.
4. Substantiative: Current operations by the NLF are only regulated by social security legislation, notably the Employee Retirement Income Security Act (ERISA) of 1974, the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 and the Health Insurance Portability and Accountability Act (HIPAA) of 1996 among others which the union has fulfilled to the latter.
5. Counterpoint
6. Procedural: Procedurally, it would be countered that the fundamental purpose of social security and retirement benefit schemes is to maintain in high worth, the welfare of its subscribers even as such schemes strive to make profit out of surplus accrued from such incentives (Pedersen, 2002). In effect therefore, NLF’s justification of profit maximization before such welfare is seen not to be an appropriate process and can only be fair to the management but not the subscribers.
7. Substantive: As a counteraction to the sentiments expressed above, the constitution of NLFA guarantees that any invalidation of its articles by a competent authority within the legislature or the executive or by the judiciary, then it would be compelled to repeal the said clause for another that receives consensus. This regulation implies that room for conformity to legal provisions for ethical practice is available in this paradigm.
8. Multi-Dimensional OT Analysis
9. Point of Concern
10. Opportunities

Economical: But for the current economic recession, NFL profits are relative stable during good economic times. This always provides an opportunity for increased subscription and diversification of operations to profiting activities (Westerbeek & Smith, 2003).

Technological: NLF has great potential in video games and HD cameras. Through these amenities, the organization is exposed to more profitability due to the appeal that the amenities instill in NFL games (Madden NLF, 2009 Sept).

Political/Legal: The greatest legal strength for the League is in it adherence to stipulations regulating retirement benefit schemes such as the ERISA and HIPAA for which requirements it has not only supported but also advanced. Further, it derives its political support from engaging in charitable activities and corporate responsibilities (Kirby, 2009 Jan).

Individual Rights: Except for the economy NLF has not imposed any salary caps to its employees since 1993. This implies that the League enjoys a free economical system (Eskenazi, 1993 May).

Socio/Cultural: Socially, the league derives its admiration from a couple of activities aligned to its manifestoes guiding corporate responsibility. That the organization is associated with social activities in itself makes it a strategic charmer to social and charitable activities that improve its profitability (Werther & Chandler, 2005).

Threats

Economical: It is a fact that recession hurts all sectors of the economy, and not least, securities. When economic downturn manifests, investment is considered a secondary need and considerably lowers profitability of social schemes (Fort, 2007).

Technological: Reproduction and promotion of games through technology is an added cost to the organization. Moreover, advertisements diminish returns and make profitability drives worthless in the long run (Linder, 2008 Feb).

Political/Legal:  The strategic place that NFL occupies in the social security market makes it profitable. Eventually, this lucrative position is a threat in itself as it makes the organization look greedy (Westerbeek & Smith, 2003).

Individual Rights: That the organization operates in a free salaried market makes it vulnerable to strikes if collective bargaining agreements fail. Moreover, any attempts to cap salaries are likely to be met with similar reactions if not effectively articulated (Fort, 2007).

Socio/Cultural: Engagement in social sport exposes the organization to disputes involving misconduct among players which, on the whole have economic implications. Naturally, when a player is arrested for misconduct, not only does the organization involve in bailing out activities or have to defend the players at its own costs (Masteralexis et al., 2004). This is a minus to profitability.

Counterpoint Perspective

Opportunities

Economical: Economically, baby boomers would be a better replacement for unethical and profit oriented organization whose corporate responsibility is second to unscrupulous profitability. The healthcare plan proposed by the Obama administration, for instance, is an alternative that if enacted, would provide more available Medicaid at cheaper rates than the NLF retirees program (The White House, 2009

Technological: There are many opportunities for better cover provided in better technology, treatment and modern medicine that the organization can exploit to make its stakeholders happy (Linder, 2008 Feb).

Political/Legal: The negative ways in which the media portrays the organization helps to arouse legal backing for the retiree players (Sanchez, 2009 Jan).

Individual Rights: Retirees have several programs through which their rights have been propagated to aid in airing their suffering under the organization. The Congress has also been effective in ensuring that the rights of the players are granted (Sanchez, 2009 Jan; Open Congress, 2009 April).

Socio/Cultural: Through media focus on their plight, the retirees have been able to spread their grievances for legislative consideration (Open Congress, 2009 April).

Threats

Economical: Economically, the likelihood of owner being accentuated is less likely and uncertain. Through Obama’s healthcare plan for instance, all will have insurance and existing ones given more security. This is likely to be more expensive (Shawn, 2009 July).

Technological: The ever increasing cost of healthcare is a scare either in or outside mainstream healthcare benefit schemes. A growing threat is that technology has accentuated greed so that ventures are manipulated to enable profitability rather than corporate responsibility (Flyvbjerg, 2003).

Political/Legal: The general perception of society has it that the bigger the organization, the righter it is or the more difficult amendments can be made to it. This remains the biggest political/ legal threat to the course of former players. Equally, the union can only represent the interest of active players and there is no law requiring it to increase its pension to players at any time (Colston, 2007 July).

Individual Rights: One threat to retirees is a lavish lifestyle that encourages  excessive spending. This negates the benefits that may be received through the union. Additionally, optimism bias as manifested in hopeful investment without planning is a threat to individual spending among players and coaches (Flyvbjerg, 2003).

Socio/Cultural: There is a general belief that sports athletes  are overpaid and can thus afford social securities of their choice and should thus not cry foul if none is provided by a scheme that they may have contributed to. Furthermore, America is a materialistic society that hails the wealthy. This restricts social transformation through legislation, making the unfortunate poor poorer and the fortunate rich, richer (Westerbeek & Smith, 2003).

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