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Tue

27

Nov

2007

$275 Million To Play Baseball? When Is Enough, Enough?
Tuesday, 27 November 2007 08:56
by Kellia Ramares
Being rich is not wrong if you come by your wealth ethically, though it is not the sign of God's favor that Calvinists and their progeny take it to be. I advocate more people having the chance to be rich. As a T-shirt in sold in Berkeley says, "There is no disgrace in being poor, but it's damned inconvenient." And for people who don't have the funds to obtain adequate health care, food, or housing, poverty can be damned deadly. I really have no use for those "progressives" who make a fetish of poverty. What good is a political and economic philosophy if it can't sustain its adherents in the real world?
"Money is one of the most ingenious inventions of mankind, as it helps the exchange of goods and services and overcomes the limits of barter, that is, the direct exchange of goods and services. For example, if you live in a village which relies entirely on barter, and you produce works of art but there is nobody to exchange your art work with except the undertaker, you will soon have to change your occupation or leave. Thus, money creates the possibility for specialization, which is the basis of civilization." --Dr. Margrit Kennedy "(1)

Money has enabled so much specialization in our civilization that some people get to make their livings playing baseball. And one of these baseball players has lately made me think about the proper role of money in individual lives and in society.

Alex Rodriguez, who has played third base for the New York Yankees since 2004, opted out of his ten-year contract with three years remaining on it. The announcement was made by his agent, Scott Boras, during the last game of the World Series. Major League Baseball has a rule against teams making major announcements during the World Series, but the rule does not apply to individual players. Still, the announcement was considered a big faux pas in the baseball world. Rodriguez and Boras drew a lot of heat for the timing of this announcement and Boras issued an apology.

But all I could think of when I heard about the apology was that it was merely another step in a highly choreographed dance; there is an adage in the PR world that even bad publicity is better than no publicity at all. And indeed, in the days immediately following the World Series, the championship and its winner, the Boston Red Sox, seemed to be overshadowed by news that wasn't really news. Just about everyone expected Rodriguez to opt out of the contract. Sports journalists had been discussing the likelihood of the opt-out on and off since spring training.

A quick summary for those of you who don't keep up with baseball: Alex Rodriguez is generally considered to be the best player in the game. He had a monster year in 2007, hitting 54 homers, driving in 156 runs, scoring 143 runs, and stealing 24 bases in 28 attempts.(2) But his performance in the playoffs left much to be desired. This year, he hit .267 in the league division series compared to .314 during the regular season and he hit one solo homer while striking out six times.(3) The Yankees made a quick exit out of this year's playoffs and have not won the World Series since Rodriguez has been with them. The Yankees are the most successful franchise in the history of professional sports. They have won 26 championships, the most recent in 2000, and they consider their season a failure if they don't win the World Series.

In 2001, A-Rod, as he's called, signed a record contract with the Texas Rangers. It called for him to make $252 million over the course of 10 years. That's slightly more than a quarter billion dollars and was exactly twice the amount for which basketball star Kevin Garnett had signed with the Minnesota Timberwolves. At the time Garnett signed his deal, he was the highest paid athlete in team sports.(4) Rodriguez was traded to the Yankees in 2004, with the Rangers agreeing to pay part of the contract. They are now relieved of most of that obligation because Rodriguez opted out.

The opt-out clause gave Rodriguez the opportunity to become a free agent at the end of this season, provided that he notified the Yankees of his intent within 10 days of the end of the World Series. Ordinarily, such clause is understandable in a contract that long; it would give Rodriguez protection against the possibility that the market would jump way ahead of him over the course of 10 years. That the best player in the game should have the highest salary seems to be a proper expectation in an allegedly meritocratic capitalist system. But the contract also had a clause requiring that Rodriguez always be the highest paid player in baseball.(5) So if someone leapfrogged him, which was doubtful because of the size and length of the contract, all Rodriguez would've had to do was to go back to the Yankees for a raise in compliance with the "highest pay" clause. The ability to become a free agent on top of that gave him the ability to shop his services so that he could get an even bigger deal, regardless of the fact that he has the game's biggest deal currently, and had in the contract a guarantee that he would always have the biggest deal.

On Friday, November 16, the New York Daily News reported that Rodriguez and the Yankees have agreed to the framework of a contract that would pay the third baseman $275 million over the next ten years. The deal, not yet finalized as of this writing, would be the biggest contract ever signed by a major leaguer, breaking the record set in 2001 by - Alex Rodriguez.(6)

The Yankees appeared to be principled at first. When word of the opt-out became public, Hank Steinbrenner, who is running the Yankees' day-to-day operations, said the Yankees would not pursue Rodriguez as a free agent.(7) They could have said no when mutual friends from Goldman Sachs approached with word of A-Rod's interest in talking to the Yankees; no one was holding a gun to their heads. The principled attitude soon changed.

It looks as though the reasoning expressed by Jim Caple, writing for ESPN Magazine, won out when Rodriguez, on the advice of none other than Warren Buffett, reached out to the Yankees on his own. (Reportedly the Steinbrenner family, principal owners of the Yankees, would not talk if Boras was in the room, an assertion they have denied because owners are not allowed to talk directly to a player about contracts with the intent of circumventing the player's representation.(8) In any event, Boras will do the paperwork to finalize any deal). Caple said, "Sixty-one percent of you who responded to our Page 2 poll on Tuesday wouldn't want baseball's best player on your favorite team? You'd be disappointed if your team signed a (soon-to-be) three-time MVP and Gold Glove winner who can play third base or shortstop? You don't want a player who could become the all-time home run king? If that's really true, I have another poll question for you: Do you feel this way because your drug problem is that severe, or because the American educational system is that bad? Or do you simply listen to too much sports talk radio?"(9) The Yankees may be many things, but nuts, at least according to Caple's definition of that term, is not one of them.

As for Boras, he appears to be the loser in this episode. He did not get for A-Rod, whom he's represented since A-Rod was 16, the $350 million he told the Yankees they would have to offer in order to meet with his client. The deal isn't even for $300 million, which a lot of people figured would be the asking price, though as of this writing, a final agreement has yet to be reached on an incentive clause, which the Yankees are calling a historical achievement clause, based on A-Rod's eventually becoming the next all-time home run king. Such a clause may have A-Rod reaching that nice round figure when all is said and done. But, in all likelihood, the current dust-up between Boras and the Yankees will soon be forgotten. For all the complaining about Boras, it's not as if the owners have put him on a blacklist. If teams want his players, they deal with him. There is some reticence among teams when they're dealing with a Boras client who has just turned professional, but even then there is very little of that. Some teams, notably the Boston Red Sox, claim good relations with him. Owners know that Boras is the agent players sign with when money is their chief object. And not just any player can sign with him. He only accepts the players whom he projects will be the elite major leaguers. So on it goes, even though it appears that Boras overestimated the market for A-Rod, and Detroit Tigers pitcher Kenny Rogers has decided to negotiate what is likely to be the final contract of his long pitching career without Boras.(10)

While various sports pundits in pixels and print were busy discussing the etiquette of the opt-out, a discussion that within 48 hours turned to the subject of which teams would bid for A-Rod's services, I kept thinking about another question: "When is enough enough?"

It's easy to write off pro sports contracts as things that have nothing to do with the "real" world the rest of us live in (unless we see some connection between exorbitant player salaries and the skyrocketing ticket prices that are putting sports entertainment out of the reach of many Americans). As F. Scott Fitzgerald wrote: "The rich are very different from you and me."

But while A-Rod can be seen as the extreme in baseball financial dealings, he functions in a larger context. To wit: the New York Times article in which it was reported that the last trader on an annual list of the 100 top moneymakers made $50 million last year, and the number one trader on Wall Street made $1.5 billion.(11) By those standards, a contract that would pay Rodriguez $35 million a year for a decade is small potatoes.

Even sports writers who may be rankled at Rodriguez' avarice are quick to defend his right to be avaricious. Buster Olney, in an article for ESPN Magazine, wrote, "It is his prerogative to move on, of course. He has the right to make as much money as he can."(12) I read that as a kind of disclaimer on Olney's part. He accuses A-Rod of putting himself above the game, of needing to be bigger than the game-a no-no in Olney's book. He talks about the difficulties Rodriguez' next team (which now turns out to be his old team) will have in dealing with him. He criticizes the announcement of the opt-out during the World Series game. But Olney does not challenge one of the fundamentals of our capitalist society -- the "right" of the rich to get richer.

Likewise, Richard Justice, in writing a sports commentary for AOL, questioned whether A-Rod was worth $300 million when, according to Forbes, seven major league teams were not worth that much. But then he went on to say, "No one should ever fault A-Rod or Boras for taking full advantage of baseball's economic system."(13) If that's true, then why have I read column after column finding some fault with Rodriguez looking for an even bigger deal than he has now?

You can't have it both ways, America. You can't call A-Rod and Boras greedy and worse and still uphold the system under which they legally operate. Rodriguez and Boras, two men who operate in a fairly small segment of the U.S. economy, are the current whipping boys/poster boys for the greed that has been the modus operandi in this disintegrating colonial empire since it was itself a small collection of colonies. "My Friend, the Yankees fan" thinks that's because one is a Latino and the other a Greek immigrant. "The real wealth in this country is scared out of their wits of class warfare and types like A-Sod [sic] that flaunt their wealth make them very uneasy," she wrote in a recent email to me.

So a lot of people believe that Alex Rodriguez has the right to make as much money as he can no matter what inconvenience or worse it causes the team he plays for or baseball as a whole; he just shouldn't have been so gauche about it. But can you be anything but gauche in that situation? Even announcing the opt-out after the World Series would have been only slightly less gauche than what actually happened.

Still, to focus on etiquette is to miss a larger point. This story is a signal to the nation to ask itself: Does someone who has a legal right to do something also have the moral right to do it? I can hear all of the apologists for greed now: it's the American way; it's a business; the owners are way richer than any of the players, even A-Rod; people make far more in other industries; why shouldn't he, he's the best, etc. etc. There are undoubtedly some people who believe A-Rod's outrageous salary demands benefit all major leaguers, now and in the future; they are a tide that will raise all boats because his contract sets a standard for the market from which all other salaries will be calculated.

But sometimes "I can" doesn't equal "I should." I don't think anyone whose financial demands can warp his industry has the "right" to make as much money as he can. Think again about the title of Olney's article: "A-Rod putting himself above the game." If we are going to call ourselves "civilized", we've got to stop thinking that we are above the game.

The atmosphere that we live in these days, the one that prompted Olney and Justice to make their remarks in defense of the American economic system, probably with as little thought as they would have given to the remark that "the sky is blue," has high school pitchers and their parents looking for Tommy John surgery as the route to college scholarships and pro contracts. It leads to players using performance-enhancing drugs. It feeds the bloated egos of people like Alex Rodriguez and Scott Boras. And outside of the sports world, it gives us the hubris of the people who destroyed Enron, and the hubris of the people who are destroying America.

The single-minded pursuit of money blinds a person to the fact that a task is seldom, if ever, accomplished alone. And by this I don't mean that A-Rod had Boras as an accomplice in the hijacking of the sports pages lately. I mean that whatever we do in life requires the participation of others-even the Unabomber biked into town for a sack of flour now and then-and the inordinate demands of one person, or one group of people, in a project can ruin the process. Alex Rodriguez was demanding a sum of money that would be 20-35% of the payroll of some teams.(14) What kind of effect would that have on a team that has other needs to fill? I'm not even talking about jealousy here. Rather, could a team have adequate funds to acquire the best other players available to fill their other needs? Maybe the Yankees coulWhat kind of effect would that have on a team that has other needs to fill? I'm not even talking about jealousy here. Rather, could a team have adequate funds to acquire the best other players available to fill their other needs? Maybe the Yankees could, but a lot of others can't, which is why the market for A-Rod's services was much smaller than Boras figured. No enterprise, even the Yankees, is a bottomless pit of wealth. Though business is not always exactly a zero-sum game, when a person gets more, chances are someone else is either getting less or at least not getting more also. We see this very prominently in the growing disparity between CEO pay and the average worker's pay. CEOs of large U.S. companies last year made as much money in one day on the job as average workers made over the entire year, according to a report issued by the Institute for Policy Studies and United for a Fair Economy in August of 2007(15)

These top executives averaged $10.8 million in total compensation, over 364 times the pay of the average American worker. What do these executives do to earn that kind of disparity? It seems to me that the higher up the corporate ladder one goes, the farther removed one is from the processes that are supposed to be the raison d'etre of the business. When was the last time Bill Gates wrote a marketable piece of code? Yet how much more does he make than the average Microsoft programmer? And the greater the disparity in wealth between the average citizen and the elites, the less personally invested in the business or the society the average person will be. Maybe that's part of the reason people are not more outraged that the news is consumed with trivia about Paris Hilton and O.J. Simpson while we have climate change, the shredding of the Constitution, illegal, expensive and escalating wars, Peak Oil etc. to deal with.

Can we really afford such psychological disinvestment at this point in history? Being rich is not wrong if you come by your wealth ethically, though it is not the sign of God's favor that Calvinists and their progeny take it to be. I advocate more people having the chance to be rich. As a T-shirt in sold in Berkeley says, "There is no disgrace in being poor, but it's damned inconvenient." And for people who don't have the funds to obtain adequate health care, food, or housing, poverty can be damned deadly. I really have no use for those "progressives" who make a fetish of poverty. What good is a political and economic philosophy if it can't sustain its adherents in the real world? But again, I say, when is enough enough?

There are three basic things you should do with money: Spend it, save it and give it away. There is a fourth thing you can do with money that is the troubling aspect of wealth: you can measure your self-worth, or the worth of other people, by how much you or the other people have. There's where the greed and the class-ism come in. That's where envy comes in, even among people of the same class. The value of human beings (and the environment) is no longer inherent when it is measured by externals such as money and material goods.

And when value is no longer inherent, human beings (and the environment) become disposable, as we see in war. The irony of extreme wealth is that the more money one makes, the less valuable it becomes. Let's say you have enough to buy all the things you could possibly want, you've assured financial security for your family, even the next two or three generations, and you've set up whatever charitable giving you are going to do. After that, any more becomes basically useless. The marginal utility of money decreases as taxes increase - (we hope, under a progressive tax system), you've run out of things to buy and do with it, and you've given away your fair share. The only value left to money at that point is as ego food. And that is a ridiculous and empty dish indeed.

Those who search for self-esteem in wealth are playing a fool's game. He who dies with the most toys wins, but he's still dead and he can't take it with him. Journalist Kéllia Ramares maintains a blog on the Major League Baseball web site. It is called Down The Left Field Line: Life, Baseball & Eric Byrnes.

1. Kennedy, Margrit Dr., Interest and Inflation Free Money: Creating an exchange medium that works for everybody and protects the earth. New Society Publishers, (British Columbia, Canada, 1995) p. 1.

2. Link

3. Link

4. Justice, Richard, "A-Rod, Great Player - Bad Investment." AOL, November 8, 2007.

5. Ribowsky, Mark, The Complete History of the Home Run. Citadel Press (New York, 2003) p. 332.

6. Feisand, Mark, Madden, Bill and Red, Christian, "A-Rod, Yankees agree to terms on $275 million deal." New York Daily News, November 16, 2007.

7. Curry, Jack and Kepner, Tyler, "For Rodriguez, Yankees, it's all but over." New York Times, October 30, 2007.

8. "Yanks, A-Rod close to multi-year deal," MLB.com, November 15, 2007.

9.Caple, Jim, "If you don't want A-Rod, you're nuts," ESPN.com, November 14, 2007.

10. ESPN News Services, "Lefty Rogers fires agent Boras, will represent himself." ESPN.com, November 16, 2007.

11. Belson, Ken, "Rodriguez not greedy by standard of Wall Street." New York Times, October 30, 2007.

12. Olney, Buster, "A-Rod putting himself above the game." ESPN.com, October 29, 2007.

13. Justice, Richard, "A-Rod great player, bad investment." AOL.Com filed under MLB, November 8, 2007.

14. Olney, op. cit.

15.Institute for Policy Studies and United for a Fair Economy, "Executive Excess 2007: The staggering social cost of U.S. Business leadership."

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Dick Williams said:

0
A guy who hasn't gotten close to the fourth thing you can do with money
I think the fact that no comments have been posted actually is a comment--a comment on the short attention spans of most folks who are interested in baseball-related items. I wonder how many people even made it through more than a few paragraphs of the article before jumping to some other website to check on the latest doings of Paris and O. J.
 
November 27, 2007
Votes: +0

Eric Walker said:

0
One in 8 million
It is something from unfair to simply ridiculous to lump an Alex Rodriguez up with corporate executives. There is no one in the known universe who can do the things that Rodriguez can do--what executive can honestly say any such thing? Executives become successful, and thereby rich, more by luck than skill, no matter what they themselves might claim. Rodriguez's manifest and undeniable abilities make him worht something, a something that can--see Zimbalest's book Baseball and Billions--be plausibly calculated in a true business sense, at least to a decent first approximation. Baseball is (sad to say) a business, however much some of its owners invest in ego as well as dollars; the New York Yankees make a profit, and it is their reckoning, whether explicit or implicit, that by re-signing Rodriguez at his price they will make more than if they did not re-sign him.

Who is at fault how? Should the Yankees have deliberately and knowingly opted for making less money (and being less pleasing to their ownership and customer base, the fans)? Should Rodriguez have deliberately and knowingly opted to make less money than he could, or perhaps to shave his head and join a Zen monastery? Why?

Of course there are things seriously wrong with contemporary values, and money is not everything. Even in the limited world of baseball, there are players who knowingly take less money because they prefer to be on this particular team rather than that one: that is a tradeoff, or, to see it another way, they have bought something they wanted with the money that is the difference in available contracts. Rodriguez either wanted to be on the Yankees or had no strong feelings about any given team, so there was need for him to "buy" onto this or that team.

If we pull back to the larger picture, where are we supposed to place the blame for baseball being a big-money sport? The game did not leap into broadcasting: it had to be pulled kicking and screaming, even back to the advent of radio. It was only after the fact, that ownsership found that the media would pay stupendous amounts for broadcast rights. Is that the players' fault? No. Is that the owners' fault? They have a lot to answer for about many things, but that is not one. Is it the broadcasters' fault? No, they were simply buying at what was and is to them a fair price a commodity that they can re-sell at a profit. Is it the public's fault? How? For being willing to watch so much baseball on television? Are we as a people supposed to don hair shirts and stop watching our favorite game because our watching enables large amounts of money to flow elsewhere? Pfui.

There are, roughly, six billion people in the world. There are, exactly, 750 of them who can play baseball well enough to be on a major-league roster. If I am working my calculator correctly, that means that the needful skill is possessed by about one in every eight million people. What is that worth?

Talk to me about the ratios between executive salaries and worker in business and I'm all ears. Talk to me about baseball being sinful for making lots of money for the fortunate few who can play it skillfully and I'm out of the room, fast.
 
November 27, 2007
Votes: +0

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