SPORTS JOINS THE UNION
By PAUL WEILER
The following excerpt is taken from Paul Weiler's recent book "Leveling
the Playing Field." (Copyright 2000 by the President and Fellows of Harvard
College.) In "Leveling the Playing Field," he examines the current
concerns with professional sports - from the moral issues posed by player behavior
on and off the field to the legal and economic issues presented by the transformation
of professional sports into a lucrative industry. In this excerpt, Professor
Weiler describes the role of unionization as a factor in the dramatic increase
in professional athletes' salaries since the 1970s.
-- The Editors
Understandably, Americans have trouble empathizing with the labor cause of major league players who claim to be underpaid for performing in a game that everyone else has always played for fun. By the end of the 1990s the average major league player was earning over $1.4 million a year, 35 times the $41,000 average of 25 years earlier. (These overall averages are calculated by adjusting each league's own average by both its number of teams and the size of its rosters.) The athletes' real salaries, after controlling for inflation, had risen nearly tenfold. During that same period the real hourly earnings of the average American worker who pays to watch these millionaire players had gone down by about 5 percent.
Athletes are not the only ones who have experienced such a surge in both absolute and relative earnings. The last quarter-century has witnessed a dramatic change in the American economy: it is now one in which "the winner takes the lion's share." Even Michael Jordan's 1997-98 total of $80 million in basketball salary and endorsement fees was dwarfed by the $200 million that Oprah Winfrey makes annually in the broader entertainment industry. Chief executive officers of major U.S. corporations are now averaging $5 million in total pay, nearly 200 times what the ordinary employee is making.
A large part of this explosion in executive earnings comes in the form of company stock options. This same period has seen an unprecedented rise in stock prices, with the Dow Jones Index moving from under 1,000 to above 11,000 (a 300 percent gain in real value). And the value of sports franchises has climbed even faster than that of general corporate stock. For example, George Steinbrenner and his partners bought the Yankees for $10 million in 1973, and they received a valuation of $600 million in their 1999 merger deal with the New Jersey Nets. But while in the general business world the rise in stock prices and executive earnings was propelled in part by a decline in real hourly pay for 120 million working Americans, exactly the opposite trend has taken place with players' real earnings, now up nearly 1,000 percent.
Baseball provides a revealing glimpse of the trends in players' pay over the last half-century. In 1947 the average baseball player earned $11,000 a year, a little more than four times the pay of the average American worker. In 1967 the average player earned $19,000, about 3.5 times the $5,500 average for workers. In 1973 baseball salaries had jumped to $36,000, but workers too had generally experienced a large gain (to $9,500), leaving the player-worker ratio still a little under the 1947 level. But by 1999 the average baseball player was earning $1.57 million, while the average worker earned just $28,000: a ratio of 56 to one. So although the gap between CEOs' and workers' earnings is still much larger, the ratio of baseball players' pay to that of workers has been rising much faster.
One explanation for these salary gains by professional athletes is an institution that is available both to players and to other workers, though not to CEOs: the labor union. Viewers of the 1996 movie Jerry Maguire were left with the impression that it was the agent, played by Tom Cruise, who was able to show Cuba Gooding, as his football player client, the money. In the real worlds of football, baseball, and other sports, it is the union leaders like Gene Upshaw and Don Fehr who must be given the credit (or, by some, the blame).
That was once equally true for ordinary American workers. By the late 1940s the wages and benefits of approximately 40 percent of the private-sector work force were negotiated by their union representatives at the bargaining table with employers. In the period 1947-1973 the American economy was experiencing an unprecedented 3 percent annual increase in productivity, and the leverage of collective bargaining enabled the ordinary employee to secure a somewhat larger share of this expanding gross national product: real pay per hour worked approximately doubled during those years. But since the early 1970s union representation of American workers has plummeted to less than 10 percent of the private sector. While during that same period annual growth in productivity has also dropped, from 3 percent to 1 percent, even that more modest economic growth rate should have permitted a rise of nearly 30 percent in real pay. Yet the average employee's real hourly pay actually dropped by around 5 percent during that time, thus permitting financial returns for investors and executives to soar.
In the late 1940s neither baseball nor any of the emerging major sports were unionized; this explains in part why the players' share of total baseball revenue fell to less than 13 percent by 1956. The players did create their own associations in the mid-1950s to try to discuss various issues such as minimum salaries and retirement pensions with the owners. However, Bob Feller, Bob Cousy, and other leaders of those initial organizing efforts took great pains to ensure that these bodies were not real unions seeking to challenge owners' control over the sports labor market. Eventually, in the late 1960s,the players moved toward full unionism in order to secure real concessions on benefits. But it was not until the early 1970s that the players' unions focused on the owners' long-time reserve systems and the way they shaped the players market. It was this collective action by players that set off the salary spiral that has transformed professional sports since that time.