Real Cost of Sports and Who’s Paying for it

Sports have graduated in the last half of the twentieth century from hobbies or pastimes into the pure, unadulterated pursuit of profit. In short, shorts have become a commodity to be exploited as far as the market will allow. The history of American sports has seen this process play out in a stepwise fashion; every several years developments come about that enable the enterprise to expand and increase profits. The latest changes in business that have allowed sports to enlarge have been globalization and communications technologies. Clearly, these two go hand in hand to some extent. Still, both have contributed to the acceleration of the commodification of sports; they have aided its degeneration from a pastime, into the form we see today.

If you were to ask the average American what they thought was wrong with professional sports today they would likely tell you that the amount of money athletes make is simply grotesque. After all, we live in an age where an eighteen-year-old kid can rake in ten million dollars a year for putting a ball through a hole (and that’s not to mention the endorsement deals). Meanwhile, a city garbage man counts himself lucky to earn ten dollars an hour for performing a task much more essential to the functioning of society. So, how did such a drastic disparity come about? Well, it is a funny consequence of the free market economy and the flashy spectacle we call sports. However, it’s crucial to keep in mind that the athletes are not to blame. They are not, necessarily, greedy or overpaid but what actually caused their drastic pay increase over the past forty years was the realization of their true market value. The setting that professional sports are currently in, economically, means that these player salaries are merely the tip of the iceberg when it comes to the commodification of these sports.

Sports have become not only international spectacles, but they are increasingly seen as a possible avenue by which children can escape poverty and become rich. These are relatively new advancements. Prior to competing sports leagues and players strikes an athlete truly did make approximately as much as a garbage man — though they were far more well-known. The 19th and early 20th century sports were played almost entirely for the aim of good and high-level competition. The 19th century English middle classes played and watched sports for this purpose. However, it did not take long for organized teams and owners to realize the incredible capacity for profit that sports had.

First, it is important to recognize that sports owners are a very “small and interconnected group.” (Kahn, 76). This means that relative to other markets sports owners have a fairly strong ability to band together and hold player salaries below marginal revenue product. This is what we call a monopsony — there is an abundance of players wanting to sell their services but the only buyers are the small group of team owners; and in many cases “players have the option of negotiating with only one team.” (Kahn, 76). This gives owners unprecedented power. From this information alone it should be expected that professional athletes earn far less than their actual value. However, this is not the whole story.

There have been a number of instances in history where players’ options were no-longer limited to the small number of existing owners; this was a result of rival spots leagues. The two major periods when rival leagues emerged in American history was “from 1876 to 1920, when there was a scramble of professional baseball leagues forming, merging, and dissolving,” and, “from the late 1960’s to the early 1980’s when new leagues were born in basketball, hockey, and football.” (Kahn, 76).

Originally, with the birth of the National League, team owners attempted to keep salaries low by enacting the “reserve clause” in 1879. Essentially, this was a clause in each player’s contract stipulating that they were permanently bound to the team that had first acquired them. (Tygiel, 112). This was a major coup for owners who were able to keep pay well below actual worth and vastly increase their profits. However, “the lower salaries may have contributed to the birth of a new league in 1882, the American Association.” (Kahn, 77). Before the formation of the American Association baseball players averaged $1,375 a year, but by 1891 this had increased to $3,500 (Kahn, 77). The dissolving of the American Association in 1892 brought salaries back to what they had been ten years earlier.

Similarly, when the American League was founded in 1901 athletes’ salaries increased again, only to fall back in 1903 when the two leagues joined for the World Series. During the 1913 and 1915 seasons the Federal League appeared and attracted many dissatisfied players. A sharp spike in overall player salaries also characterized this period, but this too was short-lived (Rosentraub, 84). By December of 1915 all but one of the Federal League franchises had either been bought-out of dissolved. The remaining franchise, from Baltimore, took the National League to the Supreme Court charging that they had “conspired with some owners in the Federal League to both monopolize baseball and convince other Federal League franchise owners to abandon the league.” (Rosentraub, 85). Yet, the Supreme Court ruled “in 1922 and again in 1953, that baseball was exempt from antitrust laws, and that position was affirmed by the judiciary in 1970. But a mechanism was set in motion that would eventually” change professional sports forever (Calhoun, 151). For a time all athletes in the NFL, NHL, NBA, and Major League Baseball were bound to the team that had acquired them and earned much less than they were truly worth. This began to change in late 1960’s when credible rival leagues were founded in both basketball and hockey (Calhoun, 194).

In 1967 the American Basketball Association (ABA) was founded and rivaled the NBA in both salary and quality of play. By 1976 four ABA teams were absorbed into the NBA which briefly brought players’ pay down (Calhoun, 224). As a result, the NBA players association “challenged the merger on antitrust grounds, but then withdrew its lawsuit as a result of a settlement which granted free agency rights to NBA players.” (Kahn 78).

Up until 1976 every player in each of the four major sports were rooted to their original team — athletes were “not allowed to become free agents, who could sell their services to any team.” (Kahn, 80). This ended when the Major League Baseball Association — the players’ union in MLB — bargained with league owners using an outside arbitrator in 1975. The arbitrator determined that the reserve clause could not hold players for more than one year. This sent shock waves though all of baseball. Soon the league granted athletes free agency in the interest of setting formal restrictions upon it (Kahn, 81). Basketball players also achieved free agency in the same year through the ABA lawsuit. Football players had a more difficult time. As late as 1989 the Eighth Circuit Court of Appeals ruled that NFL owners were exempt for antitrust laws (Cosell, 187). But, the players eventually prevailed and now enjoy a free agency agreement with the league.

Football players may make tremendous amounts of money today for playing a game, but this does not mean that they are not entitled to their share of the owners’ profits. The simple fact is that team owners should not wield the incredible power over the lives of their workers they once did before the free agency era. Howard Cosell notes that, “If you can block and tackle in Detroit, you can block and tackle in Green Bay or Dallas just as well. There is no need to have a system whereby twenty-eight people dictate where you live and work and raise a family, just because it suits them financially.” (Cosell, 178).

Globalization has gone hand in hand with the continual expansion of sports — now on a global scale. Not only are teams able to recruit players from around the world, but their fan base can spread to wherever television can reach. Because of television, sports are no longer in existence merely to sell tickets, but instead, to sell thousands of corollary products. This means that a child playing baseball in Japan wants a Mark McGuire jersey to play it in, Upper Deck trading cards, and Icy Hot Sports Cream when he pulls a muscle. Realistically, these products have nothing to do with baseball; yet, they are essential to its owners, seeking to generate more profits. As a result, children around the world will grow up associating products with sports.

With the advent of free agency professional athletes in America began to earn far more than any ordinary worker in society could ever realistically hope for. Most people hailed this as the demise of franchise dynasties, team loyalty, and saw it as the liquidation of all great teams across all leagues. Yet, these aspects of professional sports were merely consequences of the greedy practices proliferated by team owners — they should not be mourned. Sports must be recognized as the big money industry it is; it cannot hide forever behind the mask of fair play and cheap entertainment. Sport “is a commercialized amusement business.” (Tygiel, 109).

The social consequences of this history of sports are rather powerful. Essentially, the lessons that were inherent to the original conceptions of sports — fair play, competition, learning of skills — have been replaced with the necessity to win. This trend stretches down from professional sports to grade school. Because sports are seen as a path by which to achieve the dream of economic freedom, parents and coaches continually push children to win at all costs. Steroid use is one visible consequence of this more broad social trend: “High school students easily obtain steroids, often from dealers who are friends, classmates, and sometimes varsity athletes.” (Dallas Morning News, 2005). Also, high school coaches have, typically, been shown to take minimal action once such drug problems come to their attention (Dallas Morning News, 2005). This is routinely attributed to the fact that they are in a position where their jobs depend upon success, and steroids are commonly viewed as a path to that success. Accordingly, the lessons children learn about sports surround the idea that the best and fastest way to win is the best. Sports are no longer a limited hobby of the middle class, but are backed by ticket sales, endorsement deals, and are broadcast around the globe.

Howard Cosell writes, “People frequently ask me if the players of today are deserving of the astronomical salaries. Realistically, they aren’t, but in our society, a person deserves what he can command. . . . And if Tom Cruise can negotiate $30 million for a movie, and if Jack Nicholson can demand $40 million for making Batman, who’s to say that it’s absurd for an athlete to make $3 million or $5 million a year? In reality, we know they’re not worth it, but if the marketplace allows it, so be it.” (Cosell, 214). The money involved in professional sports today may be ridiculous, or even outrageous, but as long as people are willing to pay to watch the best athletes go head to head it is difficult to claim that it is not in some way deserved. Nevertheless, the image of sports is likely to never return to what it was in its early years.

Works Cited:

1. Calhoun, K., & Gorman, J. (1994). The Name of the Game. New York, New York: John Wiley & Sons, Inc.

2. Cosell, H., & Whitfield, S. (1991). What’s Wrong with Sports. New York, New York: Simon & Schuster.

3. Dallas Morning News. “Steroids Readily Available.” Dallas Morning News, Sunday, Feb. 6, 2005.

4. Kahn, Lawrence M. (2000). “The Sports Business as a Labor Market Laboratory.” The Journal of Economic Perspectives, Vol. 14, No. 3, 75-94.

4. Rosentraub, Mark S. (1999). Major League Losers: the Real Cost of Sports and Who’s Paying for it. New York, New York: Basic Books.

5. Tygiel, Jules. (1991). “A Very Peculiar Business.” Reviews in American History, Vol. 19, No. 1, 109-115.

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