Agency Theory and Principal–Agent Alignment Masks: An Examination of Penalties in the National Football League

Abstract

Rule changes are not uncommon in most professional sports, and scholars often study the effects of such changes. Given the substantial increase in rule changes and the substantially different nature of new rules (e.g., safety driven) in the National Football League since 2005, the authors examined how coaches adapt to the changing National Football League in terms of coaching strategies and securing subsequent head coach positions in the labor market. Using agency theory, the authors identified agency misalignment when coaches employ strategies whereby incurring more penalties results in on-field success, but decreases their likelihood of obtaining future employment as a head coach. In addition, the authors found evidence that, regardless of the penalties accrued, former coaches who previously held more head coaching jobs, are Black, or are younger have higher chances of securing subsequent head coaching positions. However, these attributes do not increase team performance, indicating that coach-hiring decisions are incongruent with determinants of coach performance.

Subsequent head coach opportunities in the National Football League based on race, market size, and city segregation

“…Similar statements have been made about relatively closed networks in the coaching labor market (especially for head coaches) and the importance of retaining media exposure to remain visible (Collins, 2007;Foreman & Soebbing, 2015;Gantt, 2016). Therefore, we believe that the National Football League (NFL) team's media market size has been a neglected factor for analysis in discussing the current underrepresentation of Black coaches.…”

Race, mentoring, and effective executive hiring practices in the National Football League

“…Using the same sample, the Cover ATS % Model uses a dependent variable of the percent of games in a season that the team covered against the spread (i.e., outperformed expectations; Cover ATS %). While the Cover ATS % Model is not directly associated with any of the nine hypotheses, previous research emphasized the importance of examining performance relative to expectations, rather than raw performance alone (Foreman & Soebbing, 2015;Humphreys et al, 2016). Therefore, the Cover ATS % Model will also be used to examine Hypotheses 5 and 6 and the research question regarding the congruence between determinants of new hires and head coach success.…”

“…Understanding candidate pools is critical to understanding dismissals, which is also critical to understanding successions (Fredrickson et al, 1988;Foreman & Soebbing, 2015). Previous research using the NFL as a context to examine the effect of candidate pools on dismissals used a proxy for candidate pools (Foreman & Soebbing, 2015). We examined the relationships of both team winning percentage and individual performance rankings on actual interviews and appointments to head coach.…”

“…7). Ineffective hiring practices have been identified both in the NFL (Foreman et al, 2021) and outside of sport (Benson et al, 2019).…”

Sport business models: a stakeholder optimization approach

“…Considering the social impact of their business model is a newer idea for organizational leaders, since historically the owner's main logic was to optimize the economic value for personal gain (Hillman and Keim, 2001). By focusing on maximizing economic value, theories such as agency theory are not always sufficient in addressing social issues or sporting contexts (Bendickson et al, 2016;Foreman et al, 2020). In some instances, it is much easier for firms to identify social issues as stakeholder issues because they are setup to have relationships with stakeholders rather than relationships directly with society (Clarkson, 1995).…”