News & Politics

Greed: The Ugly American Pastime

Greed threatens to cut the 2002 major league baseball season short as players and owners go head-to-head over the bottom line.
Professional sports often reflect, and sometimes shape, important currents in American life. Race, for example: The daily indignities of racial discrimination were too easily ignored by white Americans until Jackie Robinson broke baseball's color barrier. Only when racial segregation was dramatized by the national pastime did the demand for racial justice become a visible national issue.

And so it is with major league baseball and corporate economics. The greed that fueled the stock-market bubble and crash was mirrored in major league baseball. And now greed threatens to cause a walkout (one dare not dignify it by calling it a "strike") by baseball players that would abort the baseball season just when the pennant races are heating up. The dynamics of the baseball dispute shed light on the current corporate scandals. As Yogi Berra once said, "You can observe a lot just by watching."

The issues that may lead to a September walkout include revenue sharing to minimize the financial advantage (and hence competitive edge) that big-market teams have over their small-market opponents and a "luxury tax" that, like revenue sharing, would distribute money from high-salary teams to those that can't now afford high-salaried star players.

Both the National Football League and the National Basketball Association have variations of sporting socialism. Both leagues encourage competition by divvying up media revenues and capping the total amount of money a team can pay for player salaries. Baseball, however, insists on free market economics (except of course when owners demand taxpayer money to build their private stadiums).

Mirroring the corporate world, money determines all. Big markets and rich owners determine team competitiveness. Those teams without either rarely become part of a pennant race.

Baseball players are more concerned with their salaries than they are about the competitiveness of the sport. It's the same in the corporate world where top executives expect and get more money even if their leadership stinks and their companies fail. The average salary for a major league ball player is $2.4 million. The elite get over $10 million per year; the scrubs who rarely play are guaranteed $200,000.

The corporate world has an even more inequitable disparity. According to the AFL-CIO (http://www.aflcio.org/paywatch) the average CEO for a major corporation received (in 2001) $15.5 million in total compensation, more money than the salary of all but the four highest-paid ballplayers. Just as player salaries increased even as big league revenues declined, median CEO pay grew 7% despite a 35% decline in corporate profits. In other words, merit had nothing to do with pay. Failure is financially remunerative -- more so in the corporate world than in the major leagues, though that's hard to believe.

Where does it end? What is the salary cap for greed? According to Business Week, the average CEO earns 531 times more than the average hourly paid worker. (In 1980 the ratio was 42:1, in 1990, 85:1). By contrast, Alex Rodriguez, who gets $25 million as the Texas Rangers shortstop, earns "only" 125 times the amount of the lowest-paid major league benchwarmer.

How does one justify these multi-million dollar pay packages? How does one justify the extremes in pay disparity? Sure, people will pay to see high-priced ball-players like A-Rod or Boston's Manny Ramirez, who's currently getting $20 million a year. Great athletes are gate attractions. But not enough to justify their actual worth to either a team or an owner's pocketbook. The best baseball players fail approximately seven out of every ten at-bats.

The owners can willingly pay these unjustifiable salaries by passing their costs on to the fans who, up until now, haven't seemed to care. According to www.mlbfanstrike.com, it costs $228.73 for a family of four to attend a Red Sox game at Fenway Park. This includes a decent ticket, parking, hot dogs, sodas, scorecards, baseball caps for the kids, and a couple of beers. Ten years ago, the most expensive park was in Toronto and the average cost was $106.69. In other words, the cost of attending a game has more than doubled in the past ten years.

The owners cry poverty but refuse to show the ballplayers, much less the public, their books. They take public money to build their private stadiums (and threaten to move someplace else unless the taxpayers ante up) but insist that they are private corporations when issues of financial propriety are involved. The public has subsidized both corporate and baseball greed. But will we tolerate another baseball stoppage? Will we tolerate more corporate scandals?

There are two ways to curb this incredible greed. One is to insist that salaries be capped, if not by merit then at least by public pressure. Corporate pay packages, like exorbitant sport salaries, ought to be taxed. Taxed so high (say, over the first million or two) that there is no incentive to demand such obscene pay packages.

For New Englanders, a baseball walkout will hit close to home. Though it grieves me to say it, the Boston Red Sox stand a good chance of making the World Series. The race is close and their players are healthy; Yankee closer Mariano Rivera is not. It's long been said that the Bosox's fabled failures in post-season play were a result of the "Bambino's Curse." Until 1920 the Red Sox were the most successful team in baseball. That year, the Sox owner, Harry Frazee, in need of money, sold Babe Ruth to the Yankees for $100,000. The Yankees, who until then had never won a World Series, went on to win 26; the Red Sox never won another one. It was greed that motivated the Babe's sale and it is greed that motivates the current baseball dispute. It's greed that also motivates corporate economics. Until this country deals with greed, the economy, like the Red Sox, will always be prone to error and loss.

Marty Jezer writes from Brattleboro, Vermont and welcomes comments at [email protected].
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