Wednesday, June 08, 2011

From Each According to his Ability, to Each According to his Service Time in the Majors

Tommy Hanson's outstanding performance against the Marlins last night drove home a point for me: the Braves' salaries are inversely related to their performance. Jair Jurrjens sports a league-leading 1.75 ERA and is being paid $3.25M.* Tommy Hanson's 2.59 ERA gets him $456,500. Conversely, Tim Hudson and Derek Lowe are being paid $9M and $15M and they both have ERAs a tick over four. If baseball players were paid in a truly free market, then Jurrjens and Hanson would be significantly more valuable than Hudson and Lowe, especially in light of the fact that they are younger. This would have been true even before the season (moreso for Hanson than for Jurrjens, as Jair had an injury-riddled 2010).

* - Jurrjens' ERA is unsustainable at its current microscopic level, but he is doing such a good job of preventing homers and refraining from walks that it's reasonable to think that he'll keep pitching at a high level for the Braves this year, even with a pedestrian 5.5 K/9 ratio.

A true free market does not exist because of the collective bargaining agreement between MLB and the players' union, which forces players to play for six years before they achieve free agency and three years before they are even arbitration eligible. This system makes sense in that it encourages teams to invest in their farm systems, knowing that the players they produce will be captive assets for more than a half a decade, but we shouldn't kid ourselves that baseball players are paid their true worth on an open market.

I bring up the imbalance between pay and performance because it's relevant in the discussion about paying college football players. The argument against the current system (and I have made this argument) is that players generate trmendous revenue for their schools, but they are not rewarded with a cut of the revenue, except in scrip from the company store. A free education may be valuable to some players, but for others, life in a lecture hall is just not their highest and best use. However, college sports are not unique in that they have rules preventing players from capturing the value that they create. American pro sports have similar rules, although there is a difference in scale. It's one thing to be paid six- or seven-figure salaries when you deserve eight; it's another to be paid in a barter system when you deserve thousands or millions of dollars.

There is an additional analogy to be made between college and pro sports compenation: both rely on a deferred compensation element. In baseball, young players perform for lower salaries, knowing that good performances will lead to a payday down the road. Tommy Hanson knows that he's playing for a relative pittance now, but he is positioning himself for a massive deal in 2-3 years, a deal that will be especially big because he won't have to compete against pitchers who come after him because those guys will be restricted from entering the market in the same way that Hanson is now. Likewise, college football players play for classes and room & board in the hopes that their performances will lead to NFL riches. The college system seems less equitable because Ohio State and Alabama don't end up having to pay out the deferred compensation, whereas the Braves will have to do so for Hanson and Jurrjens (or their replacements if Jair and/or Tommy leave). That said, the point remains that the NCAA's amateurism rules seem antiquated, but they are not without parallels in American pro sports. This is not a situation like English footie in days of yore when clubs could not pay their players and the players had no expectation of ever cashing in. The payout may be delayed, but it's not denied.


Anonymous said...

The MLB, NBA, and NFL players essentially trade their complaints against restraints against trade (e.g. salary caps, maximum salaries, restrictive arbitration, drafts (aka group boycotts),etc.) for a massive percentage of revenue. How that revenue is divvied up between the players is pretty much up to them. The base, though, is a pure free market system, and the owners are forced to give something of value to the players to avoid it. And there are fewer distortions: sure, Tommy Hanson is relatively underpaid, but he isn't getting paid .06% of his coach's salary, unlike Denard.

Nate said...

I'm curious if a viable version of the XFL could thrive by recruiting rosters of 18-22 year old athletes who would be willing to play for pay instead of lecture halls. If the league actually formed on the philosophic principle that NCAA football is an economic infringement of rights, then could it not build small leage (12-14 teams) of decent talent that could play in the NFL off-season? Seems like it could work for NCAA basketball too.

One way in which this alternate league might thrive would be to offer a superior brand of football, which it could do through unlimited practice schedules. Right now, American soccer players who decide to go to college are making the worst decision possible, because at 18 their overseas counterparts are already contracted to a professional team and consequently playing more and learning much more. Why would the same not be true for other sports?

Of course, the allure of college football may have less to do with the quality of the sport than the solidly entrenched cultural traditions it evokes in its followers. To continue with the soccer analogy, more people watch the World Cup even though it offers a level of play that is less interesting and exciting to watch than the soccer played by the top club teams in the world, and this is because it's fun to view things in a nationalistic perspective. I suspect the same can be said for college football and basketball. I remember an old coach of mine who went to North Carolina, and despite it being a basketball school, he used to say there is nothing better in the world than going to a college football game on a crisp fall day.