Roger Noll and Frank Ryan on the business of sport

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Roger Noll of California Institute of Technology, and Frank Ryan, former football star, discuss sport as big business.

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I mean it start off with you Rodger and ask you about this book government and the sports business. What is it? You're out to do. In American society. There is a great deal of Mythology and sentimentality surrounding the operations of sports. Most people don't like to think of it in terms of the business. And in fact, the management of sports Enterprises often say it only they can understand the intricate operations of the industry. Big part of the book was to treat with respect to sentimentality. And the mythology is something that I share. In fact Frank Ryan throw the football 65 yards and I like to see even baseball games that does that mean that your sports shouldn't be criticized for the institutions that the one can believe that the sports is a worthwhile activity at the professional level one can enjoy your artistic nature of the game. But at the same time one, can you use conventional tools of Economic and legal analysis to look at the institutional operations of the industry and suggest ways in which those institutional operations could be changed so that the industry would do a better job of providing Sports to the sports fan not afraid that you are now a A mathematician Euler PhD in in in math that do you remain the football fan and a sports fan general watching whether various new Endeavors and sports her are coming up and I generally have a positive view towards these things. I think that most of the changes that I've seen the most of the ripples in the in the water have have had a overall net effect of good for a long time. The player was regarded as a kind of slave wasn't he had in fact, I think the word Niger was use with and they were white or black and I wouldn't call it when somebody on somebody else and only he can I can sell them or by Amanda and the individual Professional football owner does not own player. He constrains where that player can operate as a player. Do you limited to football for some reason I think of the of the constraints in baseball or even stronger and I'm not really familiar with what the the the player management relationships are in and other sports like basketball any Rodger. Can I make a great deal about the differences in their systems that baseball in theory at least baseball has a unlimited Reserve System with what did they used to say once a player signs a contract. He is a must for ever be playing for that team unless that team chooses to let him go or to trade him. Well in that like you still think Frank that my choice of words was incorrect and loaded the term to describe a situation and Tales of use it well, that's so let that mean I don't have to agree with the players either. I think that the the appropriate way to look at the player reservation system whether it is the baseball system or the relatively liberal the most liberal of all the systems is the one in basketball and then you have stages in between for the other sport Subway to say that players are the professional Major League level are people with exceptional gifts. They're like movie stars or even good radio broadcasters are people who have a particular talent for pleasing other people unlike the situation in the other entertainment Industries. They operate an Institutional environment which prevents them from capturing the full economic value of that gift. If there is no Reserve System among the motion picture studios for controlling the income of Paul Newman. There is nothing to prevent James Michener from collecting a full value of his next novel. However, when a ball player like Henry Aaron or a football player like Frank Ryan Rises to the top of his profession, he does not get the full economic value inherent in that talent because the teams in the League's are prevented by league rules from competing for his Services. He must bargain as on a one-to-one basis with the team that holds his contract and that isn't slavery by any stretch because they are not they are paid very highway just totally far above than the way is necessary to keep them healthy enough to be able to play their sport. But at the same time their Mobility is limited. Prep support but Rogers sing a player signs a contract. I'm thinking now particular professional football players with managed not to perform over. Of time when that contract expires, it must be renegotiated and there's now a mechanism that exist within the professional football league to negotiate with another owner. So that in fact the owner original owner does not control completely the Affairs of the player hate he can leave now, I thinking baseball practice little bit stronger and all I could to offer there is that the the baseball player who signs a lifetime contract is probably ill-advised begin with you're talking about a hundred percent of baseball players that are you How do you to do is get out of a psychologically difficult position or or get out of a situation in which you are being grossly underpaid in relation to other football players are similar ability, but because of the Rozelle rule, which means that the that the team that signs you away from another team must compensate the original team because of that that conversation use a player still prevented from receiving his full value of professional athletes particular football and baseball are both paid too much and paid too little paid too much because certain individual Stars such as Henry Aaron have kind of upfront salary said that the demonstrate the value of the worthiness of a team on the other hand the the rookie or the less hair. Sheldon Player can be exploited by management and I'm ready. I'm reminded. I'm not sure if it's entirely relevant Babe Ruth said when he was told that the he was making more money then and the president United States and he replied will I had a better year than he did want with perhaps exploit across-the-board whether they were the good stars are the the mediocre player. I don't think that's how many times you're getting knocked down and you should know. How are you ever going to let me see if my NFL contract will allow me to say I was making over $100,000 when I Quit will you must have been getting knocked down a lot for that but you you want to come in on this business of what I thought you said I suspect that if you were going to measure the the difference between what the market salary would be and what the actual salary is in professional sports that the marginal player gets very much is very closer to getting what he is worth it quote unquote in terms of his economic value to the team and I kind of fell through a mathematical statistics. One of the chapters in the book goes into the the factors that determine the value of a player to a team and an estimating statistical relationship between attendance of games and the quality of the team including a visit the presence of Superstar players in professional baseball, for example, since you referred to Henry Aaron, We defined a star in baseball as someone who had played on five all-star teams. And I one of these factors that we used to explain the attendance of games with the number of such Stars playing on a team and we came to the conclusion that among their well the number of stars you get from this measure is is a little more than 114. So there were on the order of 30 stars and professional baseball through our analysis with we came to the conclusion that those 30 players on average are worth over $200,000 a piece to their teams in terms of the net increase gate receipts that they caused by playing. Well, there are not 30 baseball players earning $200,000 and what that leads you to conclude. Is that a player like Henry Aaron despite the fact he's been pay being paid $250,000 a year is in fact worth a lot more than that in all probability because players who you would you would not recognize quite so clearly would still average on the on average be worth two hundred. After Henry Aaron hit his record-breaking home run something like 25% of the fans that got up and didn't watch the rest of the game. And and and the next game he played in was not particularly. Well attended when Sandy Koufax was the end of his career the Dodgers average seven or eight thousand fans a game or when Sandy Koufax was pitching and when everybody else was pitching it is simply true that the that just like the movies where people go to see Paul Newman or Robert Redford as much as they go to see a movie called The saying that won an Academy Award the same thing is true in baseball that. A very substantial fraction of the fans in a baseball game are there to see Henry Aaron or or one of the other current Superstars, they are not there to watch the contest for say as the Aaron incident that demonstrates by the end of that game. The fans were empty. I'm about to fight you talked about defining a star somebody's playing Five All-Star game. One of the things that that your book does. The first time is you are using the social scientist tools on Sports. It is in fact the first time well there have been some some isolated examples of professor at the University of Massachusetts for the name of Simon rotenberg. As far as I know. It was the first person to use economic analysis to analyze professional sports. He wrote an article about 20 years ago in which it was a theoretical piece in which he was able to demonstrate that the presence of the reserve Clause would not contribute anything to the balance of competition, which is the traditional argument that has been used to defend the restrictions on moving players on teams in competition for players that defense by the League's always been that if if if individual owners were permitted to hire players will A few Rich owners who have a great thirst for winning with a higher all the good players and Win Every Game by scores of 142 to 3 or something of that order and I love how we could have repeated in the book in a far more sophisticated fashion by two people who wrote chapters the Book of James Kirk and Muhammad Al hoderi did the same kind of model and what they did it say, if one assumes that amount I want to try some to maximize the profitability of his operations. Then there is no reason to become of that great strength as a team because the the fan interest in the team diminishes its a team gets too strong that is to say if a team gets so strong that every single game is one-sided fans lose interest that on Sunday about Yankees were going through their final year after year as well the point being I think the important Point Frank is that if something happens like the Yankees, it will happen independent existence of Reserve Clause Yankees became a dominant force in the American League during a. In which the the really the Carpathia the ball players has a minimum amount of strength. They have ever had was no snow draft that the selected the baseball players in those days where they sit there were other clubs in the American League that were sexually ask acting as Farm teams for the Yankees that they were what's what the reserve Clause does. It says that the person who shall capture the the benefit the economic value of the player will be the owner and not the player and one way the owner can capture that is to sell the player to another team. In fact, that is what happens in baseball on the order of 50 player. The year in professional baseball are sold their contracts are sold from one team to another and the way that the Yankees wear that where it remained a perennial Powerhouse in the forties and fifties and early sixties was buying players from the less well-off teams like St. Louis Browns and the Kansas City Athletics. The same thing is true. Now of the Dodgers that the Dodgers are probably about the best managed team in professional baseball and they'd one way they they continually are closed with clothes in a pennant race. But but rarely running away with it is because they very carefully measure the strength of their team and when I get to go to all they go out and ate their requirement players car just want to make sure they don't get to Good Samaritan in Norway in themselves. But the league the American League at the time of the Yankee Dynasty started was a far more popular league in terms of attendance in the National League. By the time the Yankee Dennis dynasty was coming to a close the national league was drawing 50% more fans in the American League Play goner by the Yankees were drawing very well. They were not drawing well at all. And also as soon as the Mets became anything like an interesting baseball team over at Shea Stadium tool to watch the message. I want to pick you up more competition the league shortstops and populating professional baseball shortstops. Then it's to the Branch Rickey really is is a man who who really change the face of baseball by developing the farm system in first with the st. Louis Cardinals. And then with the Brooklyn Dodgers he developed very strong Farm systems where the did not only did those Farm systems make those two teams strong relative to the rest of the league, but they provided a substantial source of income for those teams in the selling of players to other teams. And if one in the late 50s early 60s, if one went around the league and looked at Major League rosters only find Dodger infielders on virtually every team in which Ricky or some other management Mogul said, we've got to make our team a little bit worse than it is right. Now. Imagine what the fans will think can you read into it? Can you think of it exactly what you think? I hate you maintain right about the cases in the late 50s. When the Kansas City Athletics were we're providing the Yankees with a steady supply of outfielders. Oh, yeah. Okay. That's the point that but I'm saying that if you're on top and if you've got these good athletes and if you've got money, you're not going to give them away just for the good and you're saying that that competition is the be-all and the end-all and that then that the the Dodgers and maybe some other teams were we're giving away some of their age in order to have more competition. I don't think it's giving it away as managing the team in such a way that it's a contender not running away with things. I think that's that's the key and the only real exception to that in the history of baseball has been the only case of the team that perpetually sought to win the league by as many games as possible with the Yankees and it succeeded and and undermining the financial health of the team and the league So doing an acquired competition, they were other motives for selling players and trading players, but they weren't it was not the motive to improve the quality might have happened naturally competitions league and the motive to sell a player because he's worth more in the open market. Then he is playing for the team are identical this to say if you say if you can get $300,000 for the contract of a player and you look at his value to your own team or what you thinking of as that value is well how many extra games and we going to win because of him how many extra fans are going to come to the game because we have We're on the roster. And you say well if that's worth $300,000. Now, what is that $300,000 measures will that measures the value of that same player on somebody else's roster in terms of games won in terms of fans brought to the park because he can get a higher price and his value to you is exactly the same as to sell him because he will increase the competitive balance really don't think that we have not spelled out here in our conversation so far but it is spelled out in in the book is that there is no complete correlation between the Excellence of a team and the excellent of the business that team does that in fact a winning team does it can be expected to do better business at the box-office been a losing team? But there is a point Beyond which if they improve themselves even more the about to improve your team be on that level will have higher cost in terms of more. Where is Ohio salaries and it will have decreased revenues because fans will lose interest in the team. If you're winning record is 10% higher than you can predict a a thousand more fans per game. Right we do that for all of the all the sport actually is to estimate the relationship between the winning record and the attendance at the game and one fact. Nobody ever wins. A Harper said their games within the realm of the years that we investigated. There are no team won. So frequently that we could detect a turn down in in their attendance is a consequence of their of the winning. There was nobody in the. That we were at analyzing which is LASIK surgery 70s that ran away with their league. So completely was nothing like the Yankee Dominus it's going on at that. I need a professional hockey temperature. He is a regional sport. But everyone knows that the in Canada or in Boston some places that tend to be cold weather places. People are insane about hockey at the same time. Where did you use that word advisedly? Insane? Do you think they really are insane? It will talk to you about how I was using that and literary sense some ice if they get all excited about it. That's the that's the way they want to turn on. Let them turn on that way. What I was talking about is that the intensity of Interest the desirability of watching a hockey game to the sports fan in the area appears to be really enormous in a few of these cities the when I was a graduate student at Harvard in the early 60s, the Boston Bruins were really atrocious hockey team. They were we're at the bottom the National Hockey League. Yeah, and at the same time the Boston Celtics, we're winning everything in the National Basketball Association, but the Boston Bruins were sold out every single game in the Boston Garden. No matter who the Celtics were playing you could you can always get a ticket and they were averaging five or six thousand fans the game fewer than the Boston Bruins. Not at all. All it says is it does a lot of demand for hockey and there's not much demand for basketball in Boston. Now, the reason for the temperature variable answer some of the other things that are really standing in for real differences in these various estimate is to set set to try to correlate this intensity of Interest try to figure out why is hockey in New York and Boston Chicago places like that, but at the same time on television hockey cannot draw flies, in fact, one of the more fascinating features of hockey on television is it it is gets slightly lower audience ratings and televised fishing NBC had a disaster last year when I put the Stanley Cup Playoffs on prime-time television, it literally drove the audience away in droves. Well, How can you give your capture this what we've decided that it's likely that the hockey is has specialized Regional interest. And so when we put this temperature variable into this equation, we found that in fact, it is true that end in cold weather climates the attendance at hockey games is much greater than in warm-weather climates. I suspect that arises from the presence of amateur Sport and see that the people are socialized to some extent I supposed to like a sport in their childhood and then the South and the West Coast. Children not brought up to play hockey. Whereas in in cold weather climates, they are brought up to play hockey and consequently their understanding of the game and I understand the game is probably much higher. What do you mean when you say only in hockey can the public that is to say that fans be measured relative to the playoff race is one of the things that we tried to do was with capture the the effect on attendance in hockey. Of their peculiar playoff system which which was that you guys, you know this the Stanley Cup playoffs are really the objective of the hockey season, not the regular-season the other sports in the playoff mechanism, but only in hockey, can you really measure its effect in football most all seats are sold in a season ticket basis so that you wouldn't get any additional additional attendance during the course of the season because the team was or was not in contention for the playoffs by the time that the time you learn that your team is going to be a contender for the playoffs. It's too late to make a decision about buying tickets. I think it has to be met before the season start for the season starts because I told our season-ticket faces rally is there ever a doubt as to who's going to make the playoffs in the in the in the season the just fart that's just finished. There was one playoff spot that wasn't out at the end of season. That was the Representative from the western division of the National Basketball Association, why was going to be Los Angeles to San Francisco? But aside from that there wasn't a single playoff spot that was in doubt by the first of the year. The same thing is true normally in special back muscle there again, there isn't a closeness of competition to get into the playoffs. You pretty much know whether your team has a chance by the time to buy a few weeks after season starts, but in hockey because the teams in the center of the league or are better balance than in basketball and because there is there are some tickets available there not a season ticket bases. You can measure the sensitivity of attendance to close this in the race and one of the amazing factors that we found was it it is probably better for you to be in contention for fourth place in contention for first place. That is that is right on the borderline between making the playoffs and not making the playoffs the fans are more. The turnout NFL team is winning the league for somehow that generates interest in the team to have it be have a great deal of uncertainty attached if whether it is going to actually make the playoffs Frankie everything save a hockey goalie hockey when I was a kid in Somerset Furs popularity football, who is mr. Hockey is the fastest growing sport today in North America. It is the fastest growing if you measure it by the extent of Amateur Hockey, but it never is growing from nothing. There are far fewer amateurs playing hockey then playing any of the other for the other any other three major professional sports coming what somebody got belted popular to that with our statistical tools. I don't know how it is. Somewhat easy easy to say four teams in a given sport in a given League the given competitive Arrangement how will the teams differ in their attractiveness that is relatively easy to do and that's what some of the board the book what is extremely difficult to do and I am certainly not qualified to do it. Play I tried to explain why people find a particular sport more or less attractive than another the drawing car the play the phrase can be measured. What can you extrapolate from hockey to explain what's going on? In other sports too? Well, I think the one thing that comes through loud and clear from all of the work that we did. Is it a sport in which you can have close races and uncertainty of who the eventual Champion will be. It's going to be more popular and a sport in which you do not have that. That circumstance again being subjected to that before you ejected to to Rodger saying that that that owners and managers will strive for that kind of white Supreme. Create the economic serum that rogerinho announced earlier that equates there to give to other players with the sense of doing good for the holy the National Football League because there is a repayment on a player leaves one teen they've been naturally expect to get something back and there's a regulation there but in in baseball in the form of influence. You know the the sports fan who picks up this book because he wants to read about sports is going to have some rather heavy going. This is a a formula the Rogers got somewhere that is designed to predict what the attendance of a Major League baseball game will be if there is a Negro picture and I think also if it's a doubleheader in July or something like that petition and the you know something about math and I don't know what my question is here. But what what what happens when you got all these kinds of these numbers right off the top this looks like some type of weighted sum And it certainly is a model for some theory that that supports that. I'm not so sure how how far you can go with with formula how much more appreciate the types of serums that that Rodger announced that I referred to just a minute ago at mathematics is limited only so far you can go with Matt. This isn't math and see what the page that you handed to Frank is a statistical analysis the numbers in that in that are are not drive through Manhattan mathematical manipulation from the mid-air. What it what happened. Was that perhaps I'm not as much as a whole lot. I wouldn't call this mathematics either. What the formula does is tell you on the average how many fans attended the baseball game in an actual season? I forget which particular season it was but it was in the late 1960s advisory NFL 2574 which of the team that won the st. Louis Cardinals. Then you have a series of differences from from 24574 depending upon which other team that was is a tenant you were measuring so it says 24574 + 4473 San Francisco what that means is it if the team you interested in the San Francisco instead of St. Louis at their average attendance for the year was the sum of 24574 + 4473. It does just for each of the teams in the league. Which team it was it was playing whether you were what we're in the year you were playing one of the doubleheader or not where there was an eye camera add a game for there was a weekend game. And finally at the end you have one of the hometown starting picture with black or white. The purpose of this is to find out did attendance on average differ when the hometown picture was black compared to when he was quite the reason for this is the only aspect of the starting lineup is publicizing Advance in baseball is in fact who the starting pitcher will be if you look into in the morning paper, so they don't publicize resume the fan knows that that's that's afraid that it that is that is implicit sizing it in testing to see if it comes out to be the case. So we then say okay if a fan wanted to discriminate Which game to attend on the basis of the race of the players involved he could at least in principle find out the race of the starting pitcher. So by adding this other variable was the starting pitcher black or white to the attendance model. We get a result that slightly less than 2,000 fans per game fewer will show up on nights or days when a black is the starting pitcher for the home team instead of a quiet there for a black is worthless in monetary terms to a baseball result world population of a black pictures has much fewer good pictures and who wants to go out and see a bad picture. Unfortunately the data on performance of pictures and the price for baseball says the opposite that blacks on average perform better than whites and in the case of pictures, there is another table in the book, which show is that The are measured by earned run average or one loss percentage or power pitching ratio, which is the ratio of strikes the walkouts that the black pictures are better than white pictures on average in professional baseball. So that in fact the is also true that black pictures are more frequently found on better teams. So all those things would predict that if there was no discrimination at all that the black player actually to increase attendance because he's better and in your book is claiming that this theory is born out by the fact that owners take cognizance of this Reality by playing by paying black players of equal ability less the author of this and I he this is not the only piece of evidence that he brings to Bear. He also did a very detailed and complicated statistical analysis of the salary structure. Baseball when she collected information on the salaries of about 160 players and he tried he try to explain differences among players and salaries on the basis of their performance. Are there batting average? They're number of home runs are Fielding percentage. They're stolen bases and numerous other measures of the quality of the player including the number of years of experience. He had any found that if one takes two players of identical abilities measured by all these indexes of their qualities and one is black and one is quite the player earns more. He also found that the minimum entry requirements to maintain a position on a Major League roster for hire for blacks and poor whites in the words, the minimum batting average that a black shortstop has to have in order to stay on the team is higher than the minimum batting average with your wife's heart stop when you have to have and the presumed Involve active discrimination by owners could be the reasons that are offered in the chapter in our first of all that in fact fans do discriminate that is say attendance is lower. If there are more blacks on a team wasn't there one time Pittsburgh field is human which the entire sky was black and in fact historically Pittsburgh has had more blocks on his roster than other teams. Yes, the other possible explanation revolves around the reserve clause and that is when they players wages determined by a bargaining process in which there is no competition. That is the outcome depends in part on his skills. But it also depends in part upon his bargaining abilities and bargaining strength the the black player because of educational a disadvantage is relative why it's because of Less lucrative employment opportunities outside of sport has a much weaker bargaining position than the white player why players are more likely to have been to college and they're more likely to have the good job opportunities outside of a baseball intriguing guy investigation by by Scully and it's he he cut the pictures of all the black baseball players out of Ebony magazine Ebony magazine has pictures of all the black major league baseball players and he gave them to his statistics class when he was teaching a class in statistics in the class rate the players on their degree of Blackness, and he found that there isn't a significant and consistent relationship that the that the further away a blah player is from from home plate the blacker he gets that the players who were given the highest rank. In degree of Blacklist, they were almost invariably outfielders. Whereas the players that were more why you talking about color came closer to looking like they were white or more likely to be pictures infielders and catchers. And then again, he keeps she says this is another reflection and in his mind at least in one possible explanation of it could be against a discrimination because the the ones that are surrounding the the infield and that you probably know the argument being that they get too close to the player hits the fan the more likely he is to be able light skin color which would indicate again this other thing. We talked a minute ago about in terms of pictures that that that fans would prefer to watch white players. Mystics are investigating would it be if it's found to be true if it is truth will have any effect on professional sports. In fact the source of all this lies in the sports fans. That means it has a very deep personal and psychological basis in in the nature of a large number of people in American society. I can't imagine that that anything could be could be done at an organizational level in professional baseball player Randy the things that you have said Rodger help to explain why so few professional quarterbacks are black. Well, I don't have an explanation for that tall and I'm sure that there are racial overtones somewhere embedded in the reasoning. And I am encouraged that breakthroughs have been made and balances are starting to to be achieved. Do you have any statistics the Rodger and how far far away from another interesting statistic there if there weren't many black senators? Maybe that's because you're a lot of white quarterbacks. I don't know but here on the basis of what we've been saying about about baseball. It spins conceivable. I I have my doubts about that because I think the the identity of the player is more Anonymous looking at a black players on the field and in football, it may be more subtle and that it's a management or a coaches and influence at the start of petitions these players out who has the most thankless jobs in football. I guess. It's the guys who get knocked down a lot and to never get to see the football. Black white ratio and then those jobs. Well, I don't have any statistics. What's your what's your feeling population would be higher there than the other kind of job. You might find in a relatively higher in the outside receiver positions and the defensive back position for the running backs. I don't think I can go to comment on this cuz I don't have any statistics. Oh I support anything I might say we've been talking about a book called government the government of the United States government or any other play in in regulating professional leagues and I am particularly when you have an international sports such as hockey. What role can I play? Well, I've already played a role that government has been responsible for loss of the restrictive practices that prevent Sports and it turns out the one that I think is most important we haven't even talked about which is the the territorial exclusivity of franchises. And the the the League's policies with regard to expansion into movements that the the what government has said nothing. The overturn a the baseball exemption from the antitrust laws which in the words of one Supreme Court justice has been said was not Justice Holmes finest hour the baseball stands alone and that his been exempt now from antitrust laws ever since the 1921 decision standard Forest. What exactly does it mean when you say the baseball is Exempted? What do I can baseball do that? The the grocery store owner on the corner or Sports in general can do baseball is slightly better off in other sports. Let me before I answer that I want to mention one other point first and that is that the baseball exemption arises from a court case that has been passively accepted by the Congress. But Congress is actively participated in two other exemptions one was in the sports broadcasting act in 1962 in which Congress allowed. Teams to negotiate together as a unit right and to compete with one another in the sale of broadcasting rights and the other was the 1966 legislation which gave the professional football leagues the right to merge without the merger having an antitrust implications. Now what this means is first of all unlike the corner grocery store. They can have this strict control over the movement of their employees from from from employer to employee or they can set they can separate the market for players. The number of players in two distinct categories in each team has an exclusive right to bargain with the players in that category. Second thing that they can do is they can decide there's only one grocery store in town. They can create a monopoly is that if they are they expand their own league so slowly that there are numerous cities available for professional sports teams professional sport, which they operate then they always have that the new legal before eating lately. But still that is a very very loose check because of the established position of the of the existing way to get to get to its greater public acceptance and the the the also the the role the sportswriters which they they are always very conservative about the about the prospects of a new league and its quality of play. So it takes a while to start a new league the game font that accept it's usually three or four years and the franchise is in a new leg or simply dispersed by the former's of the newly that's right. He has a tremendous incentive to put as many teams and strong and places that have enough support for teams. That is it can so that when new legs are formed as a tremendous increase in the number of teams. They even for the old lady to begin expanding also which is been the case in in in in in hockey and and and basketball and what role should the government play afro here are talking about some people who want to make a dollar. All right. Now I should the government play any role at all except to say you can't have an important question. Now, let's let's discuss what the government could do. One thing the government can do is rely upon the antitrust laws, which of course we've been doing for 50 years and then heading this way and I just I just doesn't work except it's the only the only place with the antitrust laws have worked in in promoting the expansion of sports is that when new leagues do for him when he sole exception of the federal league in the end in And that between 1950 and 1950 19 20. With that with so that's all exception little leagues have always been successful in getting started by hiring away players in the established laws protect them in that regard but aside from the new league problem. There's just no way that you're going to have say a baseball team in Washington DC as a consequence of antitrust action Washington DC is a city which could support a baseball team that has people and has at least three groups that I'm aware of. No it didn't they went away but didn't have anything to do with me. That's a terribly important point that you raised about why they go away. The point is there are fewer baseball teams than there are places where baseball teams ought to be and that's why I like the Washington and Sandy Lego competing for the Padres are Washington and Arlington Texas competing for the senators or in the old minute Minneapolis Washington competition for the Senators. The point is it is it is so difficult to get another one and one of their City can support a team or not is not the issue. The issue is whether in the short run and owner can do better for two or three years somewhere else because owners attend to Saltines quite frequently particular the newer cars by owners, who were they are mainly to take advantage of the tax loopholes teams proliferate when new leagues come into being whether the the talent is not overly diluted and as a result the sports suffers and the fan sufferance. Call an instance when the quality of Talent on established professional teams was diluted by giving mediocre players to the incoming clubs gross income and clubs set for talent for a number of years, but that's the price they pay to get into the into the lake. So you don't do you think that the sport is harmed that the fans are harmed that the game is arm somehow by by expansion. Not at all. I think that if the economics warranty why not is a matter of fact the expansion of the National Football League led to the current playoff Arrangement where there is a layer playoff affect and I think that's made it terribly more interesting. Where is before when you had fewer teams. It wasn't really quite the compulsion to go towards that type of playoff Arrangement but suggest in his book and I'm not sure whether he's saying this is his choice or whether it's just a possibility is that government might step in and put a adapter or a limit on the amount of money a new league can offer a player to jump. In other words. We recently had a case. I think it was Larry Csonka who went from making something like $80,000 to something like a million dollars and that's a factor of 12 + and what Rodger has said in his conclusions in the versions of luck is that they might have an interesting effect of the government said well, you can't do it by a more than twice. That's that's not what the book says. The books did does not say that is that a new league can't do that? What it says is if Frank is right that there exists owners of the world who if you given the opportunity will hire every single good player in the sport at the way to deal with that is to do it directly in a manner that balances the special strengths of teams. And the way to do that is to say that no teams total salary payments to all its players on its roster can be more than 50% above the league average out what the 50% number does for you is provide a large enough cushion so that there's plenty of room for growth and player salaries. Do not put an overall damper on this hours of players because 50% of last year's average is still and it's much better than the annual rate of growth of player salaries. What that would do is mean to the given owner simply couldn't monopolize all the $200,000 a year players because he couldn't afford it wouldn't be within the budget limitation and that was that was the way we felt it would be a far more effective way for controlling the the balance of equality among teams, if that if you wanted to do that, then would be the current system of of option causes and Reserve classes and all the way either of you see the possibilities of government stepping into much to sports. Well, I think it would be unfortunate if it was over regulated, but I really can't I can't comment because I don't have any vision and nines. I've just what the government would do. I'm not really up on that have I would say that the the current arrangement in the National Football League has won which is come up with well-balanced teams and somebody else who happens to have a lot of money or some friends with a lot of money but my own leg and you'll get into competition between the legs and that's been the the thing that's giving a good boost is player salary since 1968 about the National Football League and there's nothing sacrosanct about the American League or the national league in baseball. Although many people seem to believe that there is I don't I don't know. I don't think that I don't think the people in general believe that they're there is anything any great sanctity involved in the existing institutions. I think well, I'd like the way if so, then I give it a normal degree of congratulations to the owners to sell that kind of thing. You see any movement anywhere for a new a new baseball. We planned call the World Baseball Association. They all call themselves world but no end date with one of the things they have in mind is to have a truly International League. It turns out the world Football League originally had that planned to but somehow it didn't materialize. I think that there are enormous. Problems in in in getting that started but now you get into intergovernmental problems. Don't I agree with whizzle? Well, I think Franca Express on skepticism. Although he didn't go into it in great detail about the tremendous amount of government regulation of sports operations. I think that any adjective you want to apply to the notion of establishing a federal Regulatory Commission for professional sports. I would be appropriate silly ridiculous in general regulations. Federal level doesn't work very well anyway, but in any event, I need the dollars involved the relatively small but the emotions involve the relatively large is an impossibility and it's an impossible assignment. I was certainly not recommend anyone they ever accept the job is the federal regulatory. Sports are you encouraged by the fact that social scientists are now beginning to train their tools. They're tools of scrutiny on the sports, which they really live and then large part of have not done before that. The players are beginning to a take matters into their own hands and there have been strikes that things are changing. I I hope so that that we won't see professional sports played on an artificial turf inside a dome stadium with artificial atmosphere computers calling the play and the economic. Thank you very much gentlemen, we've been talking with Rodger Knoll who is a professor of Economics at the California Institute of Technology and who is responsible. He's the editor of a book just Government and the sports business is a book that I think sports fans will want to was certainly look through all that some of it as I said before is that heavy and the Frank run has been our other guests Frank is now director of the house of Congress information systems and the course, he's the best known I think not for not for that. But for the fact that he was an All-Star quarterback with the Los Angeles Rams at Cleveland Browns and the Washington Redskins channel would like you very much for a an interesting I think unusual discussion.


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