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Why Baseball IS NOT Capitalist

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Why Baseball IS NOT Capitalist

Postby eli81k » Mon Feb 16, 2004 4:32 pm

Some people seem to think it is or should be (Mookie), but that opinion is unfounded.

Reason's that baseball is in no way a capitalist business:

1. If leagues were anything like a true free market, it would be unthinkable for teasm to share revenue even to the extent that they share it now. Unthinkable to pool network television revenue. Unthinkable to pool mercahndising revenue. Unthinkable to install--and this is done with the players' approval, by the way--a luxury tax.

2. If we were really interested in a pure free market, would we allow plaers to be traded for each other? Can Sony deal Bob Dylan to Virgin Records for the Rolling Stones? Can Delta swap three pilots to TWA for two flight attendants, four skycaps, and a ticket agent to be named later? And yet trades, and even straight palyer sales, are a given in sports.

3. Where but in a sports league is there a draft of talent? Even though the draft varies in its particulars from sport to sport, the concept of the draft remains the same, with players belonging to an organization, an organization that then controls them to one extent or another--in the case of baseball in the minors and for as long as six years in the majors. That in and of itself is far more restrictive of true free-market rights than anything in the workforce today.

4. The idea of roster limitations. An analogy here is this: Can CBS tell NBC, "We only used 25 Olympc Staffers in Nagano, so you can only use 25 in Sydney. We're competitors, aren't we?" Clearly ridiculous--anywhere but in sports, where the concept is essential. In fact, if the arguement given by the MLBPA is "How are you going to tell a businessman how much he can sspend to improve his product," then how can you arbitrarily limit his workforce? Wealthy teams would love to have a 15-man pitching staff. And why not three guys just to be pinch-runners.

4. Where but in a sports league would you find the use of anexpansion draft in which existing companies , if you will, formally tkae part in helping stock new companies?

5. In sports, unlike capitialist business, territorial rights have meaning. If Burger King wants to move across the street from Micky Ds and take their chances, that just a business judgement. MLB would never allow the Royals to decide that they would be better off being the second most popular team in St. Louis (I think the Cardinals would object as well, and they would have a right to, but not in a free market).

6. In any other field it would be normal, even desirable for the weaker and less capable businesses to fall by the wayside, proof that the market was working itself out, but this is hardly the case in pro sports where a league is only as strong as its weakest franchise (Montreal) and where any team going under reflects poorly on a league's image, reputation, and overall health.

7. In a league all members compete for the same thing and seek the same ideal outcome. Not so in the business world. A cozy cafe can do well on its own terms, without having to match the city's finest steakhouse. Both can thrive and satisfy their customers. But the Pirates can't decide they intend to perpetually aim for a third place product, and that the team should not be judged in relation to what teams in other cities are putting on the field. In response to someone's proposal for two different leagues, they already have that, they're called the minor leagues.

8. In baseball, the only lasting definition of success comes on the field. Who won the championship in 1986? Easy, Detroit. Who was the most profitable that year? Who cares.

Most of the people out their thinking that their "realists" and just telling like it is when they say sports leagues are straight business need to get off their machiavelian ego-trip. If you had read anyting economists have written about the nature of sports leagues, you wouldn't offer forth that jive.

Where in the free market other than sports leagues does the public desire a natural monopoly? Perhaps utilities, but that may not qualify and many would argue their desirablity. Wonder why the AFL and NFL merged together, or why the AL and NL merged together? Everyone makes out better, fincially and otherwise, if there is only one top league. On top of that, people aren't 1/10th as interested in the second best league in a particular sport.

The NFL and NBA are thriving because they both have realized, including their big name stars, is that a salary cap just makes sense, just like roster limitations, amateur drafts, and expantion drafts. The product every top league in each sport sells and thrives on is the best competition found in that sport. Green Bay and San Antonio have had great success, but the thought of cities that largue succeding in baseball is laughed at, but why? Why have the NFL and NBA make greater gains in percentages of viewers than MLB in recent years? MLB leans more toward a free market than the other two, and we all see how well it has treated them.
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Re: Why Baseball IS NOT Capitalist

Postby DK » Mon Feb 16, 2004 4:36 pm

eli81k wrote:8. In baseball, the only lasting definition of success comes on the field. Who won the championship in 1986? Easy, Detroit. Who was the most profitable that year? Who cares.


Uh.... Er.... Um....

NYM....
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Postby denvermax » Mon Feb 16, 2004 4:39 pm

yea, 1986 the mets won. maybe your thinking about 1984 when the tigers won it all
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Postby adfsa » Mon Feb 16, 2004 4:43 pm

good job Mr. Costas. anything else you can pull out of his book. buddy?
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Postby Mookie4ever » Mon Feb 16, 2004 5:04 pm

Way to go - you can point out the obvious.
Now what is your point?

I pointed out that MLB has cornered the market and created a monopoly that is unhealthy for the game. There are anti-trust laws designed to stop monopolies because they are inherently bad for competition and the free market. It is especially bad when the holder of the monopoly is incompetent and your only choice is a bad product or no product at all.

You want us to sit back and watch the game being ruined and not try to think of ways to stop it?

A salary cap is an artificial method of controlling the market that benefits primarily the owners - tell me otherwise - or have you not gotten to that chapter yet?
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Re: Why Baseball IS NOT Capitalist

Postby lesgrant » Mon Feb 16, 2004 9:31 pm

eli81k wrote:Some people seem to think it is or should be (Mookie), but that opinion is unfounded.

Reason's that baseball is in no way a capitalist business:...


What you miss in your analysis is that each team has it’s own financial ledger. The owner’s objective is to turn a profit within his means. How is that not capitalism?

It is silly to hold entertainment/sports franchises to free trade standards which exist only in theory. There is no such thing as free trade. It’s all regulated at some level. To assert that baseball is not a capitalist animal is just false.

You mentioned that MLB, and sports leagues in general, was a monopoly. That’s not true. MLB does not have a monopoly on professional baseball in the United States. Anyone is free to start a professional baseball league. That’s why there are 2 leagues in MLB. The NFL doesn’t have a monopoly either. There have many attempts at spring football.

The media and entertainment industries have always enjoyed the favor of the courts in anti-trust suits. That’s just the law. In the entertainment sector, there is a draft it’s called casting. Your music example isn’t necessarily true either. You can buy a contract out. The transaction is obviously different but the principal is the same. Label 1 assumes the liabilities of an artist from Label 2 in exchange for the rights to record that artist. Maybe some catalog will be apart of the deal.

Other sports have seen the need to have a more communal approach to revenues. I would add the US soccer league as well. But baseball has been a business for much longer period of time than any of the leagues you mention. The scale of economics (schedule x stadium capacity) is so much broader. Each franchise has several minor league squads, many different development programs all over the world. For example, the Yankees’ brand extends far beyond MLB. They, like the Mariners, have foreign TV deals. For many people outside the US, the Yankees’ logo represents American baseball. How are you going to divide that up? You can’t. That’s one reason it won’t happen. The major market teams won’t go for it. They have assumed the lion’s share of the risk to run a team in a big market, so they will feel that the rewards are theirs.

But don’t get me wrong. EVERYONE is making money with the present system. (that’s the other reason)
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Postby ondeckb » Mon Feb 16, 2004 9:38 pm

adfsa wrote:good job Mr. Costas. anything else you can pull out of his book. buddy?


Good call....... ;-D
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Postby eli81k » Tue Feb 17, 2004 1:38 am

I referenced Fair Ball in another similar post. Figured I didn't need the redunadncy.

The salary cap (with floor) doesn't just benifit the owners, the players combined salary would rise. The stars would take hits, but the average MLBer's salary would increase, and so would the overall amount of money paid to big league players (chapter 6).

When Microsoft got sued for anti-trust viloations, there were other OS out there, its just that Arena Football counts about as much as Lotus Notes.
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Re: Why Baseball IS NOT Capitalist

Postby Cornbread Maxwell » Tue Feb 17, 2004 12:18 pm

First of all, capitalism is a theory. I am not sure of any industry that has all of the tenets of a pure free market.


eli81k wrote:Some people seem to think it is or should be (Mookie), but that opinion is unfounded.

Reason's that baseball is in no way a capitalist business:

1. If leagues were anything like a true free market, it would be unthinkable for teasm to share revenue even to the extent that they share it now. Unthinkable to pool network television revenue. Unthinkable to pool mercahndising revenue. Unthinkable to install--and this is done with the players' approval, by the way--a luxury tax.

True. But Im not sure of the point. Are you stating this as proof that baseball isnt the definition of capitalism? Then that would be true. It isnt hard to prove something isnt purely capitalist though. Its harder to prove an industry is purely free market competition.

2. If we were really interested in a pure free market, would we allow plaers to be traded for each other? Can Sony deal Bob Dylan to Virgin Records for the Rolling Stones? Can Delta swap three pilots to TWA for two flight attendants, four skycaps, and a ticket agent to be named later? And yet trades, and even straight palyer sales, are a given in sports.

Players are assets. Workers are assets. Assets have value. Where does capitalism say you cannot exchange value?

3. Where but in a sports league is there a draft of talent? Even though the draft varies in its particulars from sport to sport, the concept of the draft remains the same, with players belonging to an organization, an organization that then controls them to one extent or another--in the case of baseball in the minors and for as long as six years in the majors. That in and of itself is far more restrictive of true free-market rights than anything in the workforce today.

Actually the draft for big business occurs all the time. This is much more evident in places where the talent is deeper, i.e. institutions of higher learning. Students are recruited daily. The best and brightest have suitors lined up to "draft" them. Personally, I signed a 5 year deal with my firm. If I opt out before that time, I have to pay restitutions. Im not sure what this has to do with capitalism though.

4. The idea of roster limitations. An analogy here is this: Can CBS tell NBC, "We only used 25 Olympc Staffers in Nagano, so you can only use 25 in Sydney. We're competitors, aren't we?" Clearly ridiculous--anywhere but in sports, where the concept is essential. In fact, if the arguement given by the MLBPA is "How are you going to tell a businessman how much he can sspend to improve his product," then how can you arbitrarily limit his workforce? Wealthy teams would love to have a 15-man pitching staff. And why not three guys just to be pinch-runners.

Are you referring to capitalism or anarchy? Because the idea that Capitalism cannot exist without a shared set of rules is absurd.

4. Where but in a sports league would you find the use of anexpansion draft in which existing companies , if you will, formally tkae part in helping stock new companies?

Interestingly, this happens all the time too. Whether its through corporate welfare tax or some other form of wealth redistribution that is a part of our lives. For every tax break new businesses enjoy, another company is essentially funding it through their own taxes.

5. In sports, unlike capitialist business, territorial rights have meaning. If Burger King wants to move across the street from Micky Ds and take their chances, that just a business judgement. MLB would never allow the Royals to decide that they would be better off being the second most popular team in St. Louis (I think the Cardinals would object as well, and they would have a right to, but not in a free market).

Its a darn shame that when the Red Wings or Yankees travel, they dont have any fans at their away games. Sorry, just a little sarcasm. If you dont think the Yankees have edged into the "territorial rights" of almost every major baseball city in the league, then you need to open your eyes. Personally, I love watching the Red Wings play in other cities - I love seeing more red and white in the stands than whatever color the home team is wearing. I guess my point is the only people (teams) who let "territorial rights" actually determine the outcome of their earnings are awful business men and women. Location means less than you think. Just ask the Mariners what they earned from Ichiro last yr - then ask how much of that came directly from Seattle.

6. In any other field it would be normal, even desirable for the weaker and less capable businesses to fall by the wayside, proof that the market was working itself out, but this is hardly the case in pro sports where a league is only as strong as its weakest franchise (Montreal) and where any team going under reflects poorly on a league's image, reputation, and overall health.

Wrong. What you are talking about essentially is the formation of a monopoly or oligopoly. Thats not capitalism. The league has a wonderful amount of parity within its ranks. If you stand on the tallest mountain, sure everything looks inferior, likewise, if you are using the Yankees as the benchmark, sure, the bottom half teams are inferior. My point is, in capitalism there is a need for options, as long as those options all abide by the same rules. Sure, in capitalism there are casualties of the less competitive. Likewise in baseball. Teams move. Owners sell. But to say that the lower market teams should call it quits and combine their strengths is a more socialist idea than capitalist.

7. In a league all members compete for the same thing and seek the same ideal outcome. Not so in the business world. A cozy cafe can do well on its own terms, without having to match the city's finest steakhouse. Both can thrive and satisfy their customers. But the Pirates can't decide they intend to perpetually aim for a third place product, and that the team should not be judged in relation to what teams in other cities are putting on the field. In response to someone's proposal for two different leagues, they already have that, they're called the minor leagues.

Actually, you can put the cozy cafe and the finest steakhouse on the same field. Which one made the most money? All things being equal, a business in a capitalistic setting is around for one reason: to make money. Im not saying anything about the owners happiness. Dont confuse that. If an owner is happy finishing in 3rd every yr, I dont have a problem with it (unless he owns a team Im a fan of). Its his own fault, but it is his decision too. Same thing with the Cafe and Steakhouse owners. So we can use this as the example, lets assume the cafe profited $100 at the end of the day, and the steakhouse profited $500. Sure, both owners are happy, they have done exactly what they were aiming for. However, its also evident that one business model is more profitable than the other.

8. In baseball, the only lasting definition of success comes on the field. Who won the championship in 1986? Easy, Detroit. Who was the most profitable that year? Who cares.

Success on the field breeds success in the pocketbook.

Most of the people out their thinking that their "realists" and just telling like it is when they say sports leagues are straight business need to get off their machiavelian ego-trip. If you had read anyting economists have written about the nature of sports leagues, you wouldn't offer forth that jive.

Be carefull what kind of "economist" you are reading, especially those using sports as a basis for the benefits of socialism.
Not all econmists have my respect.


Where in the free market other than sports leagues does the public desire a natural monopoly? Perhaps utilities, but that may not qualify and many would argue their desirablity. Wonder why the AFL and NFL merged together, or why the AL and NL merged together? Everyone makes out better, fincially and otherwise, if there is only one top league. On top of that, people aren't 1/10th as interested in the second best league in a particular sport.

Arent you contradicting your own point 6 here?

The NFL and NBA are thriving because they both have realized, including their big name stars, is that a salary cap just makes sense, just like roster limitations, amateur drafts, and expantion drafts. The product every top league in each sport sells and thrives on is the best competition found in that sport. Green Bay and San Antonio have had great success, but the thought of cities that largue succeding in baseball is laughed at, but why? Why have the NFL and NBA make greater gains in percentages of viewers than MLB in recent years? MLB leans more toward a free market than the other two, and we all see how well it has treated them.

Actually, there are a lot of reasons why NFL and the NBA are thriving, but to say its because of salary caps is a big jump of logic. I bet it has a role in their success, but what size a role is debateable. Dont forget, baseball has grown in popularity since the last decade too, and it has nothing to do with salary caps.


just my 2 cents
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Postby KULCAT » Tue Feb 17, 2004 4:34 pm

I dont think a salary cap would be bad thing for baseball. But lets face it, it would be about stopping the Yankees. The Luxury threshold has worked. Boston, LA, The Mets have all stayed under it after 4 6 straigh year of increasing the payrol to matchup with "times"(granted management changes and ownerships have to do a lot with that).
I dont think MLB could ever work with the NFL rules. Ive never agree with guys NEVER having any financial stability when you sign a 6 year contract and teams can cut you the next year and not pay up the money but players have taken care of a lot of that with those huge signing bonus.
On the other hand i think the NBC model with salary cap for player contracts according to seniority could work well for the MLB. It would be more about the way you handle your money than how much youn have. Say Team A has a player thats to make the max aloud(15 mill just for the sake of it). Then the General manager clears up 15 mill from salary from his team so he cn sign that player. But whats the point of doing this if out of nowhere Team B offers up 20.
I also think if you have league max you should also have a league min.
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