Will Athletes Finally Reject Code of Silence?

Major League Baseball’s suspension of 12 players for using performance enhancing drugs reminds us again that a Code of Silence among athletes protect and abets illegal and unfair drug usage. Players in clubhouses generally knew who cheats; but everyone keeps silent.

 Fellow athletes know that using performance-enhancing drugs is illegal; they know users put the rest of them at a disadvantage in competition; they know using stops other younger players from playing; they know these enhanced players denigrate the game’s integrity. They know it is wrong, but they remain silent. Their silence undermines integrity as they collaborate in the cheating and scandals.

 

Until this Code of Silence dies, this cheating and unfair advantage will continue.

Let’s be honest. In the search for advantage in a brutal and competitive landscape, some players will cheat. This happens in any profession in a competitive world with real stakes. Every profession, sports included, has to self-regulate to limit the cheating and advantages that accrue to the cheaters.

The two ways to discourage cheating involve:

1)   Change the risk/reward calculation of the person tempted to cheat. The equation balances the probability of getting caught and the projected severity of the punishment against the gain in production, salary and longevity. 

2)   Change the culture of support or silence among teammates and fellow professional. If this culture is a “no snitch culture, athletes will not report and tolerate the use of performance enhancing technologies. When fellow professionals do not speak up, this makes hiding it easier and tilts the risk/reward calculus towards using.

Any sport seeking to discourage performance-enhancing technologies must have a rigorous, comprehensive and up to date testing system. To be accepted it requires due process to protect athlete rights, and serious and consistent penalties that players will accept as fair. This is a hard and requires evolving techniques to deal with the stealth and technologies of the cheaters. Strong programs need the support of professionals, in this case, athletes, to ensure wide compliance, a culture that supports it and avoids litigation.

This is where so many sports failed. The hostility between athletes and owners or regulating bodies generates a we versus them approach. Teammates band together against the “other.” This we/they intensifies the natural dynamic of any team to band together to support each other. The protective bonding grows from athletes’ desire to protect each other’s private life from the prying and reckless inquiries of the media.

This hostility is deepened in union policy and a history of owners who have colluded against players in baseball. The hostility of unions to strong drug testing programs reflected this distrust and the players’ legitimate fear that owners would misuse the testing to target them. Only in the last seven years have unions and management comes together to agree on stronger protocols, confidentiality protections and appeal processes. Both sides recognized that the credibility of the game itself had come under attack. But the Code remained intact and almost all the discovery of cheaters occurred with testing or investigations, none involved peers reporting users.

Leaving aside the travesty of modern cycling and the bankruptcy of sprints with its Ben Johnson’s and Marian Jones, no major sport has been so afflicted by performance-enhancing technologies as baseball. An entire era and all the accomplishments of that time are contaminated by wide use. This usage was common knowledge among other players, but everyone remained silent and collaborated in the era’s dishonesty; everyone but the reviled Jose Conseco. As Curt Schilling pointed out his accusations turned out to be accurate.

This Code of Silence can nullify strong testing programs. The testing programs need players to reject the Code. The Code of Silence among professionals reflects shared values and keeping each other’s back. It reflects everyone’s awareness that no one is pure and that the media will tear careers apart on the slightest excuse. It may even reflect an awareness that players feel they are benefitting from having the cheaters on their team at the moment or the fear that at some point in the future a player might want to use PEDs to augment their own declining career.

In many ways, however, modern professional sports do not have teams in the traditional sense. Teams turnover occurs every three to four years. Players are regularly cut, traded or sent to the minor leagues. During the course of a year, a baseball team can have a thirty percent turn over. The Code of Silence has its most power on teams, but has been embraced by the entire profession as players move so often now. This extension to the entire league makes even less moral sense because once you are on another team, the player you know who cheats will hurt you by his enhanced performance.

This Code possesses great moral weight as a “no snitch” rule among players. However, it strikes poses serious moral threats to the game itself and to players’ own integrity and career chances. Use of performance-enhancing technologies violates the integrity of the game, violates the integrity of the players who remain silent and collaborate in its use. The Code permits use and this hurts the silent players by shielding athletes who as opponents will have a decided advantage over honest players who do not use.

The Code’s power is impressive because players hurt their self-interest and violate their own commitment to the game’s integrity by remaining silence. The no snitch rule, us against them, and having each other’s back all push athletes to remain silent or “live and let live.” The problem here is that this is not live and let live.

Letting live means letting users prey on other players, including you. It harms all honest players. It also harms the future of the league because scouts cannot accurately assess talent if minor leaguers are using performance enhancers.

Silence and protecting performance enhancing users denies younger players a chance to get into games. It also keeps younger players who deserve a chance in the minors when enhanced athletes stay in the major leagues by virtue of enhanced performance. Silence indulges users. This behavior is wrong and hurts people. It is not live and let live.

Finally enhanced athletes as teammates and friends because they must lie all the time. PED users lie to fans and carve out performance records that are lies. But they also lie to themselves. We know from psychology that anyone who tells him or she a narrative long enough can come to believe it to be true. Self-deceivers lose their identity and live a lie given how much time they spend lying to themselves. Marion Jones, Ben Johnson, Alex Rodriquez, Mark MacGwire all could probably pass lie detector test because they had convinced themselves of the truth of their charade.

I hope that the cracks in the code are widening with the last round of exposures. The deceit of Ryan Braun is especially important. Braun is a widely liked and marketed star. He had publically apologized and swore to fans, teammates and owners that he was not enhancing his performance. He swore to athletes who regarded themselves as his friend and protector like Aaron Rodgers the quarterback of the Packers who claimed he would bet one year of his salary on Braun being clean.

Players, coaches and owners feel betrayed at a very personal level by Braun’s actions. The lies of 12 other players compounds and ripples across the major leagues. The deceit required poisons team cohesion and friendships. It also taints the achievement of every honest star that might fight the perception he or she is using.

If the Code is broken it can occur in three ways:

1. Some players will whistle blow quietly but effectively. One of the issues that has hurt all investigations is the militant silence of the players towards other players on these issues. This needs to end.
2. Players need to shun and shame the abusers and enhancers. This will take effort in the locker rooms and in union meetings and in discussions. Peer pressure can discourage would be users and at least ensure that past users can’t just pretend it never happened and return to normal. Peer pressure and force can be as powerful as occasional whistle blowing.
3. The most powerful change in player attitude can play out with strong union support for permitting contracts to be broken and renegotiated with abusers. The union could also negotiate two strike rules against athletes who get caught a second time; this avoids the false positive issues. Both these approaches will take real constraints upon the owners who players fear will use drug issues to abort bad or foolish long-term contracts. But a change in player attitudes can play out with changed and harsher penalties in the contracts.      

Up to this point fellow athletes have sacrificed their own integrity and their own career prospects by abiding by a Code of Silence to protect cheaters and enhancers. This silence helps keep young players on the bench and in the minor. It disadvantages every player who must play against the performance enhancers. It makes the game a joke to those who love it and play it. It is time for players to reject the code and whistle blow, ostracize the users and push to change the penalties.

A Tale of Three Sports & their Unions-Part 1 & 2

Professional sports leagues require unions. Only a voluntary contractual agreement with organized players permits the apparatus of modern professional sports. Common apparel deals and common pool distributions as well as salary caps, required minimum expenditures on salaries and revenue sharing all need these agreements to protect a league from anti-trust challenges. The contracts permit drafts, compensation limits and trades to occur without restraint of trade challenges. Modern professional sport leagues deploy these devices to several vital goals:1)guarantee profit and return on investment; 2) maintain some competitive balance across big and small market teams; 3) police drug use; 4) give bad teams a chance to become better and construct balance competition over time. Despite each owners desire to win at all costs, they have a joint interests to steward steward a profitable sport with high quality games and competitive hopes for teams and fans.

 

Despite the central role of unions and their continuing and unique power, two labor negotiations broke down in acrimony—one lead the union to dissolve and players to sue the league, the other has lead to an impasse that may lose the season. Baseball, on the other hand, with little fanfare, just did a “handshake” agreement to extend labor peace to 20 years. I think these different outcomes flow from both the culture created between owners and players and the structure of incentives the contracts focused upon. In particular football and basketball narrowed in on a zero sum view of revenue tied to salary caps while baseball used luxury taxes and revenue sharing to address the chasm between small and large market teams.

Most team owners are unwaveringly entrepreneurial and aggressively libertarian in their politics. They hate having a strong union. In addition they tend to be very personally invested in the status and fate of their teams. This resistance coupled with periodic attempts to break the unions have blighted professional sports with thirty years of lockouts, strikes and bitter recrimination, reaching its height in the disastrous baseball 1997 seven month baseball strike that lead to a cancelled World Series or hockey losing an entire season in 2004-2005.

All professional sports are afflicted by the trend of large market owners buying up the best talent. Left on their own most sports would degrade to permanent oligarchies with permanent winners and losers and very frustrated and lost fans. It would also degrade the talent competition where one small group of teams would regularly trounce others based upon bought talent. Many of the union authorized mechanisms on revenue and drafts are to protect owners from destroying their sport through the dynamics of inequality in revenue as how to allocate costs among players.

In the last seven months the National Football League, the National Basketball Association and Major League Baseball had their collective bargain agreements expire. The NFL involved a four-month lock out, ugly negotiations and recriminations and immense public pressure to settle. The NBA negotiations have imploded with the NBA verging on a lost season. Baseball, which has the longest and most bitter history, has a handshake agreement to put a new agreement in place without a lockout or strike four months before the start of spring training.

Why the difference? All the negotiations involved complex and unique aspects but the chasms exist over percentage of revenue dedicated to owners and players as well as devices such as salary caps and luxury taxes to save owners from themselves and sustain some competitive balance and quality product for fans and media.

What interests me is that two sports along with hockey have used salary caps to address the issue of escalating salaries and competitive equity. To me this has always made sense, and it drives me batty that baseball has never used one. Baseball permits oligarchs to dominate talent by letting teams develop players and then the oligarchs like Boston, Philadelphia and New York buy that talent when they become free agents. The irony is that the two leagues with salary caps have generated two different economic and competitive cultures that lead to the labor chaos. Yet baseball has eschewed the rational approach, but evolved this deeper peace and even a common venture model.

While unions are dying everywhere in the United States, they thrive in professional sports because of the monopoly and monopsony of the leagues and the very limited and highly skills population from which players develop. The contacts also insulate the enterprise from many anti-trust and restraint of trade charges. So why the immense differences in outcomes of the last three negotiations?

The issue driving owners remains as always maximizing profit, long term investment and maximizing their freedom and status from being owners. Given whom the owners are, they strongly prefer not to have unions or long-term agreements with their employees.

As an example, the bitterness and contractual brinksmanship in football makes the least sense. Professional football has become the most popular and profitable professional sports enterprise in the United States. If owners are to be believed, only two teams are losing money.  Attendance and contracts rise yearly. The Super Bowl like March Madness has permuted into a cultural institution. The major device to generate quality of fan interest and quality of product has been a percentage split of revenue with players and a relatively hard salary cap.

With no guaranteed salaries, the football teams can seem to pay outlandish salaries but guaranteed salaries mean little. The real money has migrated to extremely high rookie bonuses and singing bonuses. This in turn softened the salary cap considerably. This hypothetical equality is augmented by some marginal revenue sharing to prop up smaller market teams who have trouble even reaching the salary cap minimum, but more than a few teams, as in baseball have not even spent their revenue sharing money on talent or salaries.

Part II will examine how the history and incentive approach influenced the approach and outcomes of these three labor negotiations.

Part II

So how did an economically and media successful enterprise like professional football get dragged to the abyss and almost lose its season. Really bad negotiating tactics, animosity and mistrust between the negotiating teams hurt. The players believe correctly that they play the most dangerous and life threatening sport in the world besides boxing. They resent the owners cavalier cover-ups and drive for money by piling on more games at the risk of their health. The owners seemed totally deaf to these concerns driving the enmity. The real drive of the owners grew from a small group of very powerful owners who wanted to change the share split with players to maximize their large investments.

This should have been easy to resolve. The economic policies distributed playoff teams far and wide as well as guaranteeing that many unsuccessful teams could turn themselves around within one to two years. Parity in playoff access had become the norm in the NFL; it worked and inspired fanatical fan and media support. Despite all this and very strong incentives to settle peacefully, the culture of animosity and resentment of players and owners and power of the hard line owners lead to the four month lockout and a new contract at the last minute.

The players actually gained considerable advantages around health and safety issue with limits on practice and full pad time and new pensions for older players. The owners gained a more friendly percentage distribution but had to build in requirements that teams that receive revenue sharing must spend a very high percentage on salaries rather than use for profit and starve their talent pool. The salary cap remained harder than before. More  limits upon rookie compensation will lead to more rational risk spending and increase the money balance to veterans. It is not ot a bad deal that could have been struck much earlier. It was worked out after bitter negotiations that reaffirmed a culture of antagonism and rogue owners till wishing unions would disappear.

The fact that the unions did use their Armageddon play and they did disband to challenge the ownership and competitive balance structure shocked everyone, including the players. It emboldened the NBA players, and cast a shadow upon the very similar but different negotiations of the NBA.

The NBA is a mess compared to the NFL. Assuming you can ever believe owners, it claims 22 teams of 30 lost over 300 million dollars. The league had steadily lost cachet, and media interest and attendance had edge downward for a decade with a slight blip last year. The incipient pro soccer league actually passed the NBA in per game attendance. The talent level remained superb, the skill level mediocre, and the too long season and grotesque playoff schedule where half the teams make it diminishes mid season games to the point of meaninglessness. The quality of play reflected it.

The NBA’s soft cap with too many exceptions had become nonsensical only really affecting young players. The league had developed salary ratios of 3 or 4 to 1 despite a cap. Unlike the NFL, the championships remained clustered within a small number of teams with mini-dynasties. The endless playoffs at the end of an insignificant and low TV rated season, generated little interest until the very end. The NBA desperately needs a hard cap or strong revenue sharing to ensure both a quality product and some reasonable level of profits, otherwise the cycle will continue. The losses, the bitterness, the off field culture of the league heightened already bitter anger between the two sides, and neither was willing to compromise despite being well within a ball park. In negotiating terms they had hardened their positions rather than looking to their interests. Unlike the NFL where calls for President Obama’s intervention rang out, very little public pressure arose to demand a settlement. For many folks the NBA season could disappear and no one would notice or care.

The NBA has another huge problem. For many fans, college basketball and March Madness provided an easy substitute. If the NBA did not play, it hardly mattered to many basketball fans because from November through March, they could watch passionate and interesting basketball with far better TV distribution than the NBA has. This substitute effect for the NBA reflects rising college ratings and interest along side slowly declining NBA attendance and wide spread indifference.  The NBA culture and negotiations the focus upon zero sum issues and a strong substitute mean the league and players are making themselves irrelevant.

Baseball has had the longest and worst history including a cancelled world series, a nullified reserve clause and collusion actions. Yet this month a new contract will be signed with little fanfare or brittleness. In fact, baseball over the last twenty years has evolved into something resembling a partnership arrangement rather than the adversarial relation of the other sports.

Much of this grows from the abiding fan loyalty and comfort with the sine wave progress of teams and seasons. It grows because baseball essentially owns uncontested market territory from April through September. It grows from a remarkably successful economic model that generates profits, limited but effective revenue sharing from luxury taxes and stable or increasing attendance even as baseball has sunk into the shadow of football in terms of sports interest and wealth.

I wonder how much of this evolves from baseball not having a salary cap and living with incredible inequality in expenditures among teams. Maybe the lack of cap and guaranteed expenditure percentages displace the negotiations in a way that enables them to occur without being seen as zero sum games. I think the lack of a cap but very powerful luxury taxes permits the rich to spend freely but at the same time pay to subsidize others. This softens the libertarian and don't tread on me beliefs of many of the owners. Maybe a league that almost destroyed itself in 1997 and permitted itself to be humiliated by drug scandals collectively knew it could not afford the conflict.

Baseball moves much more slowly than football or basketball in talent development and team transformation. This leads owners to a longer-term view to begin with. But paradoxically baseball has had championships distributed across the widest array of teams of any sport, far more than NBA and more than the NFL.

This distribution of championships should not occur but it does for two odd reasons. First, baseball teams draft college players or invest in international or high school players and can keep them under professional contract for six years. This means that most teams keep players until their late twenties. The problem with baseball occurs when the rich teams simply buy up the best players from smaller market teams.

The catch and irony is that these rich teams must now give six to seven year contracts to players in their early thirties or late twenties, a totally absurd risk calculation. The average players peak years are 23-31, after that they steadily and and inexorably decline in skill and production. This means the rich teams are locking into huge contracts for two to four years of peak performance while the other teams got five years of peak performance years at much less money. This has resulted in older and slower rich teams who perform far more erratically than their salaries would suggest because of the age and long term contract factor. At the same time the sheer inequality has driven teams to be more innovative in player evaluation and scouting to offset these differences.

Oddly enough the bitter history seems to have generated a sense of partnership.This has been augmented by their Commissioner actually learning from past failures rather than magnifying them like basketball's David Stern.  It leads to a “handshake” contract but also mutual willingness to address issues like signing bonuses and earlier availability for arbitration as well as moving teams from leagues or adding an extra wild card team. It also leads both sides to realize the integrity of the enterprise depends upon aggressive testing and to create cutting edge technology and requirements to test for human growth hormone.This supplements mandates that players must now wear a new helmet to protect them from 100 mph fastballs.  Both sides realize they have vested interest in the reputation and physical integrity of the sport.

I think the fact the baseball achieves most of their competitive balance goals through luxury taxes rather than caps with exceptions makes the negotiations less bitter. The powerful and personally invested owners do have more freedom but they pay a heavy cost of up to 75 to 100 percent tax when they go over the agreed upon limits. The issues do not feel like zero sum games but rather permit owners to act if they are willing to pay the costs. This will now be extended to address the issues of huge rookie costs that are hurting everyone. The luxury tax money then gets redistributed. I don’t like it but the logic has worked to produce competition and balance when it should not.

Three sports. Two wars, one reached a treaty based upon the sheer money both would lose; one is on the verge of imploding for a decade over embittered relations and an economic model that does not work. One lives in hard-nosed comity because they learned their lesson and has made an incentive and penalty economic system that should not work but actually produce real competition. The culture ensnaring the two sides and the focus of economic relations had as much to do with these outcomes as the real issues involved.

A Tale of Three Sports and their Unions-Part 1

Professional sports leagues require unions. Only a voluntary contractual agreement with organized players permits the apparatus of modern professional sports. Common apparel deals and common pool distributions as well as salary caps, required minimum expenditures on salaries and revenue sharing all need these agreements to protect a league from anti-trust challenges. The contracts permit drafts, compensation limits and trades to occur without restraint of trade challenges. Modern professional sport leagues deploy these devices to several vital goals:1)guarantee profit and return on investment; 2) maintain some competitive balance across big and small market teams; 3) police drug use; 4) give bad teams a chance to become better and construct balance competition over time. Despite each owners desire to win at all costs, they have a joint interests to steward steward a profitable sport with high quality games and competitive hopes for teams and fans.

 

Despite the central role of unions and their continuing and unique power, two labor negotiations broke down in acrimony—one lead the union to dissolve and players to sue the league, the other has lead to an impasse that may lose the season. Baseball, on the other hand, with little fanfare, just did a “handshake” agreement to extend labor peace to 20 years. I think these different outcomes flow from both the culture created between owners and players and the structure of incentives the contracts focused upon. In particular football and basketball narrowed in on a zero sum view of revenue tied to salary caps while baseball used luxury taxes and revenue sharing to address the chasm between small and large market teams.

Most team owners are unwaveringly entrepreneurial and aggressively libertarian in their politics. They hate having a strong union. In addition they tend to be very personally invested in the status and fate of their teams. This resistance coupled with periodic attempts to break the unions have blighted professional sports with thirty years of lockouts, strikes and bitter recrimination, reaching its height in the disastrous baseball 1997 seven month baseball strike that lead to a cancelled World Series or hockey losing an entire season in 2004-2005.

All professional sports are afflicted by the trend of large market owners buying up the best talent. Left on their own most sports would degrade to permanent oligarchies with permanent winners and losers and very frustrated and lost fans. It would also degrade the talent competition where one small group of teams would regularly trounce others based upon bought talent. Many of the union authorized mechanisms on revenue and drafts are to protect owners from destroying their sport through the dynamics of inequality in revenue as how to allocate costs among players.

In the last seven months the National Football League, the National Basketball Association and Major League Baseball had their collective bargain agreements expire. The NFL involved a four-month lock out, ugly negotiations and recriminations and immense public pressure to settle. The NBA negotiations have imploded with the NBA verging on a lost season. Baseball, which has the longest and most bitter history, has a handshake agreement to put a new agreement in place without a lockout or strike four months before the start of spring training.

Why the difference? All the negotiations involved complex and unique aspects but the chasms exist over percentage of revenue dedicated to owners and players as well as devices such as salary caps and luxury taxes to save owners from themselves and sustain some competitive balance and quality product for fans and media.

What interests me is that two sports along with hockey have used salary caps to address the issue of escalating salaries and competitive equity. To me this has always made sense, and it drives me batty that baseball has never used one. Baseball permits oligarchs to dominate talent by letting teams develop players and then the oligarchs like Boston, Philadelphia and New York buy that talent when they become free agents. The irony is that the two leagues with salary caps have generated two different economic and competitive cultures that lead to the labor chaos. Yet baseball has eschewed the rational approach, but evolved this deeper peace and even a common venture model.

While unions are dying everywhere in the United States, they thrive in professional sports because of the monopoly and monopsony of the leagues and the very limited and highly skills population from which players develop. The contacts also insulate the enterprise from many anti-trust and restraint of trade charges. So why the immense differences in outcomes of the last three negotiations?

The issue driving owners remains as always maximizing profit, long term investment and maximizing their freedom and status from being owners. Given whom the owners are, they strongly prefer not to have unions or long-term agreements with their employees.

As an example, the bitterness and contractual brinksmanship in football makes the least sense. Professional football has become the most popular and profitable professional sports enterprise in the United States. If owners are to be believed, only two teams are losing money.  Attendance and contracts rise yearly. The Super Bowl like March Madness has permuted into a cultural institution. The major device to generate quality of fan interest and quality of product has been a percentage split of revenue with players and a relatively hard salary cap.

With no guaranteed salaries, the football teams can seem to pay outlandish salaries but guaranteed salaries mean little. The real money has migrated to extremely high rookie bonuses and singing bonuses. This in turn softened the salary cap considerably. This hypothetical equality is augmented by some marginal revenue sharing to prop up smaller market teams who have trouble even reaching the salary cap minimum, but more than a few teams, as in baseball have not even spent their revenue sharing money on talent or salaries.

Part II will examine how the history and incentive approach influenced the approach and outcomes of these three labor negotiations.

Why Sports Unions Succeed and Others Fail I & II

The Paradox of Modern Sports Union Success

Unions are dying in the United States. Less than 8 percent of the private sector work force is unionized. So why do unions flourish so successfully in professional sports?

Well it is not because the owners like them. Both professional football and basketball owners are trying to destroy their unions with lockouts. Both will fail, and the owners know it even as the football lockout enters its fourth month and will be resolved soon.

The owners hate the unions; I mean they hate the unions. Many of the owners are self-made wealthy using the teams as forms of ego gratification or extensions of their own Ayn Rand self images as self-made individualists. They will do anything and have tried everything including collusion to destroy the unions, but they fail. Why?

I think the reasons sports unions succeed derive from the very unique shape of the labor market that makes it relatively immune to the global forces that undermine unions all over the world.

The global market enables employers to shift jobs to lower wage countries. Borders mean little, and even technical jobs can be outsources at will an connected via the internet. If owners don’t shift jobs abroad, they can always shift to the south or southwest where government war on unions will ensure lower wages, benefits and working conditions. The shape of the labor market in sports limits these options for owners.

Traditional unions depend upon their ability to organize workers and get workers to perceive that a common good can be achieved by negotiating wages and working conditions together. A common good gets disturbed across all union members. The gain is greater for all workers over the long run than if workers negotiated individually for their contracts. This is the key; if the union stays together, the long term benefits are huge, but if they fall apart, then the benefits fail them.

The benefits of a union revolve around guaranteed wages for work. But the combined power also generates benefits and work rules around safety, none of which individuals on their own could gain. Left on their own,  individual workers would end up with lower benefits, lower wages or job security and less safety over the life of the contract—this is exactly what has happened in the modern American private sector.

So why do sports unions work?

The first and more ironic point is that the owners actually gain an immense legal advantage from having unions to negotiate. This enables owners to get things like salary caps, entry salaries but above all transferrable contracts that can be traded within the league or cartel. The negotiated contract protects the owners and their cartel from potential anti-trust and restraint of trade challenges. The contract protects certain aspects of the game that permit some level playing field and the patterns of player investment and trades that the teams depend upon.

The professional unions move to decertify themselves removed this cover for the superstructure of the sports and their profitability. This enabled the union members to launch a series of law suites that would destroy the profit structure as well as the competitive balance of the leagues upon which the profitability depends. This is doubly important for basketball and football because both depend upon salary caps which could not be sustained without a strong union agreement.

So against their better judgment, the owners need and accept but hate the unions.

Part II will examine the exceptional form that unionization takes in professional sport to adapt principles of unions with the need for compensation for superstarts.

The recent settlement of the NFL lockout simply reminds the owners that they cannot conduct their business without a union of their players. At a deep level, the professional sport unions flourish because the number of elite athletes who can play professional sports is vanishingly small.  A small level of depth exists in the labor markets to permit some reasonable substitution for medium or low range skill players. The baseball statistic of value over replacement (VORP) suggests this.

The replacement level is so high and the number of replacements so limited, however, that the drop off of play would be precipitous. There is no reserve army of the unemployed to take their place and you cannot move place bound teams at will to other countries with lower wage scales.

Second, the players are highly skilled and the skills take a long time to develop. Most of the investment in skills comes from the individuals who forgo other options to achieve that exceptional skill. The player also takes a very high risk because very few people succeed so they have forgone other opportunities. The  players want to get maximum gains in the shortest time because pro careers especially in football and basketball average 3-4 years. So players have a very strong incentive to maximize their gains in a very short time of professional play and to band together to achieve this.

Third, only a small number of owners compete for the players; this permits cartel like behavior that can escape court scrutiny with legal contracts with unions.

This small group and limited substitution pool makes the value of the workers very high, doubly so because on the margins the addition of a couple players can profoundly impact the success of a team. So the union involves relatively little cost day-to-day cost to the players, and workers are socialized into the union at a very early age. The unions focus upon limiting entry, early salary scales, common mobile benefit pools and retirement benefits works well for players. The contracts also enable owners to have reserve clauses and trades and salary caps that game or owners needs to create some form of parity.

This common gain involves two major sacrifices by the players: the need to contribute money to a common strike fund and, second, the requirement to go on strike or endure a lockout if necessary to protect the common goods.

Sports unions, then, have a huge advantage over traditional unions. The members possess incredibly rare talents that take huge personal investment to develop over time. This means that they cannot easily be replaced by workers or technology. Despite the myth of movies like The Replacements, elite professional athletes cannot be substituted en masse and still provide a powerful, skilled and entertaining sport and spectacle. The inability to outsource, replace or move to a different venue means the owners are stuck with an ultra small elite and irreplaceable group of highly skilled elite employees.

Now two huge revisions have been made to traditional union values that promote egalitarian and limited wage differentials. First, athletes sign contracts that permit the teams/owners to trade the contract and trade them. This is incredibly rare; imagine Google trading an employee to Facebook!! The closest to this might be noncompeting contracts that some highly skilled employees sign. This enables a mini-market to occur across teams but players benefit from the loss of control of place of employment with strong portable pensions and benefits that build a substratum under all players. It also benefits everyone by creating strong minimum salaries and step increases.

The second major change from traditional unions is the free agency. Traditionally unions have been hostile to merit based compensation arguing that it undercuts solidarity and sets members against one another. This has been an Achilles heal for unions.

Professional sports unions solves this dilemma by permitting individuals to become free agents after set periods of time. The initial apprentice years have tracked salaries after bonuses, then after having served this time, free agency releases a player from the team and permits the player to sign with any other team. Now some restrictions exists in football, hockey and basketball about how many and levels of agency signing, but the point is that this permits players to have the advantages of unions—solidarity, portable benefits, strong control of entry salaries—with the advantages of strong merit based or market payments to players after they have served an apprentice period.

Another lingering aspect that makes unions strong by increasing the value of the players is that modern sports teams market themselves largely through star power or faces of the team. Teams invest immense money in their brands but they depend heavily upon a few hyped players with their faces and names splattered all over the city or nation to create a unique brand and bridge the emotional range from corporate team shells to fan association with the team.

One final point seals their stature. In economics many goods are vulnerable to competition because they can be substituted for. So if you take away my house, I can move to an apartment or condo. In professional sports, there are no easy substitute goods. It is interesting that many football fans will not find basketball a suitable substitute for football. Likewise baseball and hockey core fans will not regard the other sports as substitutes. So along with the limited labor market and difficulty to replace skills, lies the other problem that most sports cannot be substituted for by other sports. When a sports team leaves a town, people who watched that sport don't migrate to others; they might follow the sport on TV, find another team to root for, or simply lose interest. This cements the unique bargaining power of the elite athletes.

The success of modern sport unions depends upon player possessing a unique set of skills that counteract the anti-union pressures of a global market. I can’t think of anywhere else it would work.