Wednesday, June 30, 2010

Pittsburgh Post-Gazette acknowledges the obvious; salary cap; NFL 2011 lockout/strike

Sometimes we can better understand the situation in baseball by comparing MLB to the NFL. The NFL followed MLB into free agency, but with substantial differences. Salary caps and revenue sharing have prevented the NFL from turning into the complete free-for-all poker game that baseball has become. I will explore this subject further in greater detail, but a small item in a Pittsburgh newspaper has acknowledged what everyone seems to know, but what few say openly on a regular basis:
Many people are worried about an NFL lockout in 2011 and the long-range impact it might have on professional football. Will it leave the sport without a salary cap? Will it turn football into baseball? Heaven forbid, will it turn the Steelers into the Pirates?

Legitimate concerns.
[The remainder of the article focused on other football issues]

While I do not believe the impending strike/lockout will produce these dire results (if it happens at all), that a newspaper would make that comparison between the two sports is significant.

The Steelers have been successful (mostly) for forty years. The Pirates have endured 18 losing seasons (including 2010) in a row. Pittsburgh sportswriters and Marvin Miller apologists around the country blame the Pirates' (and other teams') failure on stupidity. Numerous general managers in a row have coincidentally been unable to evaluate talent and draft the "right" players for 18 consecutive years. That is the accepted explanation.

But yesterday the Post-Gazette contradicted the official storyline. The Post-Gazette writer has acknowledged that a salary cap is all that stands between the Steelers' winning tradition and the Pirates' recent failure.

If the accepted storyline is correct, it should not matter how high the salaries are. The Steelers are good at evaluating talent and the Pirates are bad. That is the story and the Miller apologists are sticking to it. But the Post-Gazette writer knew better (at least for a day). Marvin Miller-era free agency is at the heart of the problem. An uncapped salary structure would doom the Steelers to the Pirates' fate.

If the NFL salary cap goes away, Steeler talent scouts and management are about to get a lot more stupid. Maybe Pittsburgh should start building an even more expensive football stadium in anticipation of the day when this fear becomes a reality.

Monday, June 28, 2010

Garvey, Lopes, Russell, Cey

I sat watching some of the Yankees-Dodgers game on June 26th, as Tommy Lasorda and Reggie Jackson made an appearance in the broadcast booth. They spoke of the history of the two teams and their battles in the World Series in 77, 78 and 81. They traded barbs (mostly from Lasorda). One of the broadcasters mentioned Garvey, Lopes, Russell and Cey as the great Dodger infield of the 1970's and how they stayed together for "nine years."

1973 Topps Ron Cey

1973 Topps Lopes

How many such infields have stuck together for that long in the Marvin Miller era? We can all name the infields for our favorite teams (or some team that won the World Series), but how many have enjoyed that much longevity and stability? It is fun to honor the players of the past, but we should also learn from their example. While the Garvey-Lopes-Russell-Cey combination may be unique in history, it is less likely to be repeated in the Marvin Miller era without a tremendous expenditure of money.

1983 Topps Garvey

Marvin Miller apologists will be quick to point out that those four stuck together even after the end of free agency, while ignoring the fact that the full effects of free agency took years to percolate through baseball (and beyond). Much of the damage was not done until the anit-collusion awards of the late 1980's. Rome was not built in a day and baseball was not destroyed in a day either.

1986 Topps Russell

See these blogs for more on these players.

Sunday, June 27, 2010

Why negotiations under "free" agency are not, in fact, "free."

Do you think that today's baseball players are overpaid?

Do you think that baseball players were underpaid prior to free agency?

Do you think that the correct salary level for players lies somewhere in the middle?

If you answered "yes" or "no" to any of the above questions, you are wrong.

It is not up to voters, courts, legislators or anyone other than the free market to set salaries (or any other price). Salaries, in a free market, are set by the voluntary agreement of the participants. The Marvin Miller apologists will say that free agency made such agreement possible. Players were not "free" to negotiate until "free" agency came along. The apologists then get bogged down in a discussion of language and clauses and technicalities, all of which miss the point.

In fact, under "free" agency, freedom of contract and freedom to negotiate are illusions. Prices and salaries are not arrived at freely when -

  • one side is forced to hire the other side under penalty of fines and sanctions;
  • contracts are not always recognized (and sometimes punished);
  • the dollar amounts "agreed" upon will be subsidized by the government; and
  • one side is prevented from defining itself as it sees fit and is forced to separate into factions, each of whom must, under penalty of law, compete with each other (even before the negotiations with the other side begin).

All of these conditions have existed in Major League Baseball since the Marvin Miller era took root.

  • The owners are forced not only to hire free agents, but to bid up their salaries to some arbitrary level, or else they will be fined hundreds of millions of dollars for "collusion;"
  • Should owners attempt to contract with each other to limit or avoid a free agent bidding war, such contract will be invalidated and the owners, again, will be fined for collusion;
  • No matter how much the owners are forced to pay, local governments (backed by eventual federal bailouts) will subsidize the salaries by building (and incurring bond debt to pay for) improved stadiums capable of raising more money; and
  • Major League Baseball is treated legally as multiple individual employers with no relation to each other, instead of being able to define itself as one employer, so that the law can more easily require each arbitrarily defined "employer" to bid against each other for "free" agents.

It will take many posts to document how each of these conditions makes it impossible to consider any baseball salary truly "free." The salaries are arrived at through a combination of compulsion and bribery. The owners are compelled to pay, and then subsidized by the municipalilties and, ultimately, the taxpayers.

The players have a gun to the owners heads. [More accurately, the owners are herded into the colisseum and forced to fight each other like the gladitorial contests of ancient Rome.] The owners then get to turn that gun to the heads of the cities, who then turn it on the hapless taxpayers. The taxpayers are then told that the resulting World Series victory will restore civic pride and "revitalize downtown."

All of these factors introduce force and arbitrariness into salary negotiations. Salaries become a matter for public debate instead of simply being decided by market conditions.

It is telling that the same people who believe that "free" agency liberates contract negotiations also would have no opposition to such things as government salary boards (or a "pay czar") that would determine wages, prices or other terms left normally to the market.

Thursday, June 24, 2010

Tom Seaver and Pete Rose explain Baseball's Reserve Clause

Click here for my overview of how Marvin Miller ruined baseball.

Major League Baseball's "Reserve Clause" came to an end in 1975 as a result of an arbitration award (later upheld by the courts, resulting in a new collective bargaining agreement in 1976 that recognized free agency). Nothing has been the same for baseball since that time.

People will get bogged down arguing about the merits of that case. Marvin Miller's defenders will argue that the clause was poorly worded or misinterpreted. They will try to distract us with pointless detail while losing sight of the big issues.

So rather than plod through my own explanation of the "Reserve Clause," I show you Tom Seaver explaining it to Mike Douglas in 1977. This interview aired on July 20, 1977, little more than a month after Seaver was traded from the Mets to the Reds. Seaver sits with his new teammate, Pete Rose.

Notice how Mike Douglas first asks the question of Pete Rose, who gave a brief factual explanation (without the emotionally charged talking points) before Seaver jumped in. Douglas apparently did not know that Seaver was closer to the center of the union (having been a shop steward), and was prepared to give the party line history of the issue (or maybe Douglas knew that but wanted a simple explanation instead of Seaver's exaggerated version). Note the emotionally charged language from Seaver, who said the players were previously forced to "work" (more so than "play") for the same owner until they "died," and could not seek new employment even if they were "fired." Those characterizations were worse than mere exaggerations.

Under Seaver's characterization, the players were slaves, Seaver was Frederick Douglas, Marvin Miller was Abraham Lincoln and free agency was the underground railroad.

Mike Douglas asks a good question about whether the "big" teams are now "buying pennants." Rose's answer was that the Reds had kept almost everyone from their previous world series a year earlier. Rose was arguing that free agency would allow players to make more money without disrupting the game or giving richer clubs an advantage. Subsequent events would prove Rose's answer to be premature and would make Douglas into a prophet (even though his question mistakenly lumped the Reds with teams that would "buy pennants"). The Reds, who had played in 4 of the previous 7 world series before that interview - and who had won the previous 2 series in a row - would win only one world series over the next 33 seasons - and counting.

(Rose's answer was not completely true even as of July 1977, as star pitcher Don Gullet had already bolted for the big money with the Yankees at the end of the previous season).

Free agency would take time for its effects to be felt, even though defenders of the Miller era (@ 1975 - ???) still point to small market teams that continued to win for several years after free agency was first established. A year and a half after this interview, Rose himself would bolt the Reds for the big contract in Philadelphia.

Douglas also mentioned that free agency should be explained for the benefit of the "ladies" in the audience. "Mike Douglas" was a daytime program - a less controversial precursor to today's Oprah, etc. The audience was primarily female. That Seaver would appear and make his case in this fashion for this audience reveals the union's belief that this issue would soon impact the broader public, thus necessitating a public relations campaign.

A few months later, the Yankees would win the first of their many Steinbrenner-era world series - with help from a big dose of free agency. A year after that, the country would witness the off-the-field drama centering on which team would end up with Rose. During that same off-season, the Pittsburgh media would cover the story of Dave Parker's controversial lucrative contract, giving Pittsburghers their first big taste of the Marvin Miller era.

While Miller, Seaver and the union may have been preparing for these developments and the resulting public reaction, nothing could prepare the public for a time when -

  • many formerly great clubs would be reduced to the status of mere farm teams;

  • the new stadiums of the 1970's would be obsolete and unable to support the new salary structure;

  • municpal finances would crumble under the weight of many factors, including the continuing Marvin Miller baseball era; and

  • players, by using steroids, would trade their long-term health and the integrity of the game in exchange for some of the new money.

The loss of the "Reserve Clause" may seem to be a trivial matter, but its effect on baseball reminds me of a quote from the Ayn Rand character, Ellsworth Toohey:
Don't you find it interesting to see a huge, complicated piece of machinery, such as our society, all levers and belts and interlocking gears, the kind that looks as if one would need an army to operate it - and you find that by pressing your little finger against one spot, the one vital spot, the center of all its gravity, you can make the thing crumble into a worthless heap of scrap iron?
The Fountainhead, p. 356 (50th Anniversary edition).

Sunday, June 20, 2010

Marvin Miller Ruined Baseball - Introduction

Every so often I see films of baseball in the 1970's (and before). I am reminded of a time when the Kansas City Royals, Pittsburgh Pirates and Baltimore Orioles were more than mere farm teams for the major market teams.

I am old enough to remember a time when the Royals won their division 3 times in a row (followed by world series appearances a few years later).

I can remember the 1970's, when the Pirates were contenders year after year, with the only question being whether this would be the year that they would go all the way instead of finishing in second place (or whether they could repeat as world champions). The idea of last place was never even considered possible - much less expected.

I remember the Orioles being loaded with talent every year and seriously contending for first place. I can remember two world series between the Pirates and Orioles - a matchup that is out of the question for modern baseball fans.

Most importantly, I can remember the excitement of seeing young, talented prospects that would provide competitiveness for years to come without feeling resignation and despair at the knowledge that these prospects would soon and inevitably be playing for major market teams.

That baseball world is now a thing of the past. We live in a whole new reality. While I do not intend to focus on the details of how the players' union won its battles against the owners, the following sequence of events is important:

  1. The century old "reserve clause" was effectively eliminated in the mid-1970's, allowing players to achieve free-agent status and create bidding wars for their services;

  2. Any attempt by the owners to fight back by agreeing not to bid on players was denounced as "collusion" and resulted in arbitration victories for the players in the mid to late 1980's and expensive fines against the owners;

  3. The costs imposed by free agency and owners' legal inability to fight it resulted in increased expansion in the 1990's together with a wave of municipal financed stadium construction, replacing many relatively new baseball stadiums and plunging teams and (already precarious) cities into debt; and

  4. As baseball careers became better than winning the lottery (even for marginal players), players became willing to make deals with the devil by injecting themselves with gonadotropin (for example) in exchange for a .250 average - or sometimes even the ability to rewrite (destroy) baseball's treasured record book.

I know that is quite a mouthful. It will take more than one post to lay all of this at the feet of Marvin Miller. His defenders will protest that Miller was not even the union head when the steroid era began.; or that Miller was not the one that decided that more expensive stadiums were needed.

It is true that Miller did not commit the cities to pay the price for his free agency in the form of new stadiums. But Miller bears equal responsibility as those who did make that choice. Miller took Major League Baseball's finances over a cliff. The cities, lacking any politcal backbone, naturally followed.

It is also true that the union (like everyone else) officially opposes steroid use. I will stipulate that the union has been very cooperative in trying to find solutions (although I may revisit that issue later). But the point is that Miller set the forces in motion in the 1970's. He turned baseball into a poker game/lottery/free-for-all where contracts are meaningless and players can enjoy the fruits of taxpayers' money in exchange for taking a little juice. It makes no difference that the union might shed a few crocodile tears over the mere symptoms of this problem now.

Miller's defenders will also say, "But he changed the game!" That is exactly my point. Miller changed the game. If Miller is to take the credit for such monumental changes, he must also take responsibility for all of the consequences. The same people that want to canonize Miller for "changing" baseball end up attacking -

  • Managers for failing to win with teams devoid of high priced talent;
  • Owners for spending too little/too much;
  • Management for thinking only of the short term;
  • Players for not earning their salary/ taking steroids/ being disloyal;
  • Cities for not spending enough/spending too much on ball parks;
  • etc.

All of those groups listed above do share the blame. But they are merely rats running through the Marvin Miller maze. Sometimes they make a wrong turn. But we should not give them sole responsibility for being in the maze in the first place.

It is impossible to document all of these points in one post. It would take an entire book (or many books) to explore fully the consequences of Marvin Miller's influence. That is why he does not get the credit (blame) he deserves. We remember only the manager that can't win a division or the owner that keeps making dumb personnel moves year after year. We forget the roots of the problem. And that is why I am here: to remind us all of the real issue - to tie many of today's issues back to their root cause.

Because as long as we (the fans) forget how we got here, as long as keep hoping that our small market team has some chance to reestablish its prior greatness, as long as we keep wishing to sign that one new prospect to replace the bums that now wear the uniform, we will be the ones forever trapped in the Marvin Miller maze.