Owners don’t have to fear free agency
October 4, 1987
Pro football is shut down, which it should be until baseball reaches its October apogee. Football owners, with time on their hands, should note that the national pastime has vindicated the national premise: Freedom works.
Football’s controversy concerns free agency—the right of players to sell their services in a free market when their contracts expire. Football players want that right; team owners object.
Baseball players won that right on Christmas Eve, 1975, and now have won an arbitrator’s ruling that owners recently colluded to negate that right. In 1985, after years of fevered spending for free agents, the owners’ bidding came to a screeching stop. Essentially this happened: 26 economic entities suddenly and simultaneously altered their behavior radically and in the same way. Collusion, you say? My, you are a suspicious one.
The wonder is: How could 26 owners have expected to get away with it? Perhaps they did not expect to.
Don Fehr, head of the players’ association, thinks the owners may have wanted to “change the dynamics” of baseball bargaining and expected that any penalty would approximate what they would have paid in rising salaries. But, he says, owners are in a bind as 1987’s free agents come on the market.
If in the wake of the arbitrator’s ruling the owners resume competitive bidding, that changed behavior will validate the ruling. But if in the face of the ruling they continue the behavior that earned the ruling, they will make themselves vulnerable to severe penalties.
Free agency is an idea attuned to the contemporary ethos of expanded individual choice. And football owners should learn from baseball that free agency is not something that need be feared. With free agency, owners have nothing to fear but themselves.
Baseball owners had two fears about it. They thought they might go mad and bid up salaries irrationally. And they thought free agency might result in the unshakable dominance of teams in the biggest markets: High attendance and broadcasting revenues would enable Los Angeles and New York teams to skim the cream off every batch of free agents, and those teams would monopolize division championships.
Some owners did go mad and their excesses pulled up all salaries, partly because of arbitration. In that procedure, an eligible player demands X, his team offers Y, and the arbitrator cannot split the difference. He must pick one sum or the other.
Many owners are not in baseball because they believe it is the most efficient way to increase their wealth. Rather, they are motivated by animal spirits—competiveness, the quest for fame, fascination with the game. Having noneconomic motives, they are not slaves of economic rationality. They often convince themselves that one more free agent would put their teams in the playoffs, thereby paying for that player and much else.
Average salaries rose steadily and spectacularly, from $51,000 in 1976 to $143,756 in 1980 to $412,520 in 1986, then slipped this year to approximately $395,000. But the owners’ national television revenues (there also are other broadcasting revenues) will rise from just under $25 million a year 1976-79 to an average of $180 million a year 1984-89, peaking in 1989 at more than $230 million.
Furthermore, competitive balance, far from disappearing, is better than ever and has produced attendance records. The St. Louis Cardinals, serving one of baseball’s smallest markets, are about to become, with the New York Mets, the second and third teams to draw more than three million in a season. (The Los Angeles Dodgers have done that often.)
From 1977, the first season fully affected by free agency, through 1986, 21 of the 26 teams won divisional titles, a higher rate of turnover among winners than before free agency. Since the 1977 and 1978 Yankees won consecutive World Series, no team has won even two consecutive division titles (not counting the idiotic split season caused by the 1981 strike).
One of baseball’s buccaneers, Ted Turner of the Atlanta Braves, has thrown money at his team’s problems, and what has he bought? In 10 seasons (1977-86), the Braves have won one divisional title. In their nine seasons, they furnished a cumulative 180 games out of first, a dismal average of 20 games a year. Free agency, like freedom generally, gives ample scope for folly. And free agency has proved that money without wisdom is not much of a weapon.
The “pal-ocracy” (baseball writer Tom Boswell’s word) that used to run baseball was forced by free agency to make room for entrepreneurial skills. Expanded freedom has rewarded, and hence has elicited, intelligent behavior. Football owners can learn to live with that.