For NFL, what is the price of integrity?

September, 25, 2012
9/25/12
4:18
PM ET
Roger GoodellMatthew Emmons/US PresswireRoger Goodell is having to face an uproar by fans over the replacement officials' performance.
What is the price of losing your integrity?

NFL commissioner Roger Goodell and the league's owners are being challenged to answer that question on Tuesday after replacement referees affirmed the controversial, last-second touchdown that gave the Seattle Seahawks the win over the Green Bay Packers in Monday night's game.

While the call might have shifted up to a $1 billion for gamblers worldwide, there has been little actual cost to the league using replacement referees. Television ratings remain robust and attendance hasn't been impacted while the league continues to negotiate with the referees' union.

But just because it isn't easy to pin down an actual cost doesn't mean the league hasn't hurt itself.

"The reason why the NFL and other major sports are so popular is because major league sports are seen as a legitimate competition in which strategy and talent will win out and will not be undermined in any way," said Adam Galinsky, the Kaplan Professor of Ethics and Decisions in Management at the Kellogg School of Management at Northwestern University. "Legitimacy is what makes people consider the NFL a sport and wrestling an entertainment vehicle."

The NFL issued a statement on Tuesday afternoon, saying that the call would not be reversed, which was not met with satisfaction by fans and media members who watched the replay over and over again.

"There are two dimensions that matter when we evaluate people and institutions: competence and empathy," Galinsky said. "Right now, the NFL is failing at both dimensions. They are employing referees who don't appear to be competent and, based on how they have dealt with it, they don't appear to care about the players or the fans either."

While NFL executives have made the case that they are looking for a long-term solution, some think they don't have the right to determine the timetable anymore.

Outward pressures often force companies to act. Making bad decisions after the fact has cost companies billions of dollars.

"Nike had a problem with child labor," said R. Edward Freeman, a professor of business ethics at the Darden School of Management at the University of Virginia. "At some point, (Nike chairman) Phil Knight said, 'You know what? I don't want to be known for this.'"

Freeman says that public pressure can still force the NFL's hand even though they aren't subject to the whims of shareholders.

"The NFL is a private company but all their decisions are in the public eye," Freeman said.

The league has also gotten word out to fans that the negotiations with the referees are complicated, which includes making some referees full time and the proposal by the referees' union to start collecting a pension instead of a 401K. From a salary standpoint, the referees are asking for roughly $10 million a year, which comes out to a rounding error for a league that pulls in $10 billion in annual revenue.

"The best outcome with the greatest net benefit for the greatest number of people is for the real officials to get back on the field," said Dan Eaton, an attorney who also teaches business ethics at San Diego State. "In this case, the most ethical decision might in the end be the most profitable."

Galinsky says he believes that Monday night's game had to change the league's negotiating position. While the it's not clear that actual economic harm was done, Galinsky says at least fans believe that the old referees are more skilled. Possessing a unique skill that can't be replaced was the difference between the United Auto Workers' successful strike of General Motors in the 1930s and the failed strike tactic by the Hormel meat packers in the 1980s, who were easily substituted.

For his part, Freeman says counting the quarters saved from the replacement refs aren't worth it to the league.

"You can never cost cut your way to greatness," Freeman said. "People have tried, but it never works."

The numbers don't show the league has been affected in any way. The "SportsCenter" after "Monday Night Football" got the highest overnight ratings for the show since December 1995 and NBC's "Sunday Night Football" game drew more than 21 million fans for its first four games for the first time in seven years.

But that doesn't mean the league can wait as long as it wants to get the deal it wants.

Darren Rovell | email

ESPN.com Sports Business reporter

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