Superstars as Slaves

At first glance the philosophical issue seems clear. What lover of liberty could possibly oppose as American a concept as “free agency”? Its proponents call for a free market in player services where team owners bid against each other for players, certainly a worthy-sounding goal.

Closer examination, however, reveals the slippery ways in which economists, journalists, labor negotiators, and others use terms like “freedom” and “free market.” What seemed to be a moral crusade for high principle boils down to a squabble between labor and management over how to divide the pie.

In professional team sports such as baseball and football, players generally negotiate their own salaries with ballclubs. Their unions negotiate with the league a “basic agreement” covering such items as pensions, minimum salaries, and conditions under which players can move from one team to another.

In their call for free agency, football players’ representatives merely mean that they want a contract with the NFL which lets each player—or, at least, players who have spent a certain number of years in the league—peddle his services to as many competing teams as possible. Owners, on the other hand, want an agreement which lets them cooperate to curb rivalry and contain salaries. Players feel they can get a better deal when owners compete; owners feel they can get a better deal when they don’t.

A New Phenomenon

Widespread free agency is a relatively new phenomenon in professional team sports. Until the 1970s, leagues usually succeeded in keeping players from negotiating with teams other than the one for which they played the previous season. Owners limited player mobility in two types of ways.

The preferred method was a clause in the player’s contract giving his team an option to renew his contract for the following year. When the contract was renewed, so was the option, so it was effectively a perpetual option. The “reserve clause” in baseball worked this way until a labor arbitrator ruled in 1975 that the option was good for only one year.

The second method was to let at least some players negotiate with several teams but then make a team which signs another’s player give the other team compensation in the form of other players, rights to select other players in the future (“draft choices”), or cash. The NFL adopted such a compensation plan, named the “Rozelle Rule” after NFL Commissioner Pete Rozelle, after the Supreme Court decided in 1957 that its baseball-like reserve system violated the antitrust laws. Baseball was saved from a similar fate only through a series of anomalous rulings which to this day make it the only sport with an antitrust exemption.

The Supreme Court declared the Rozelle Rule illegal in several cases during the mid-1970s. The football players’ union’s current call for free agency reflects a desire to regain some of the mobility players bargained away in negotiations following these court decisions.

Both types of limits on player mobility were effective only when all major leagues agreed to abide by them. A league usually could not prevent players from “jumping” to upstart leagues which did not abide by such agreements, like the American Football League or the American Basketball Association in the 1960s. Of course, reserve clauses also could not prevent players from quitting their sport and going into another line of work.

Slavery?

Nevertheless, owners’ agreements to curb competition for players have from the earliest days provoked cries of “slavery” from critics. Baseball received the most criticism because it is the oldest professional team sport and its reserve system served as a striking example of such rules in all sports. Baseball adopted its first reserve rule in 1880; each team could name five players with which no others were permitted to negotiate for the upcoming season. On August 12, 1880, the Cincinnati Enquirer complained, “What right has the League to say to any player where he shall play next year? The days of slavery are over.”^[1]

Frederic Johnson, attorney for a player who sued organized baseball in 1949 over the reserve clause, argued that the clause violated the 14th Amendment’s protection of “the individual citizen against state power in his quest for livelihood.”^[2] Comparing the reserve system to slavery, he asserted that the government permitted baseball to “employ the services of the vast majority of its players under contract without just compensaton.”^[3]

In 1960, historian Harold Seymour commented that baseball’s “restrictive labor practices . . . are hardly in keeping with traditional American belief in freedom of individual opportunity, free enterprise, and competition. They do not square with the basic American [ideal] that people should be free to work for whom they please, offer their services to the highest bidder, and enter any business they wish.”^[4] Former Senator Sam Ervin frequently thundered against “peonage” in professional sports from the Senate floor and committee rostrums.

Or Voluntary?

Yet it is dangerous to equate sports leagues’ labor practices, past or present, with slavery. Players’ contracts are regularly bought, sold, and traded, providing a superficial resemblance to slavery. However, even though ownership of teams by different individuals is necessary to ensure public confidence in the integrity of athletic competition, teams actually function as a single firm—the league—producing an entertainment product—competition for the league championship. Therefore, transfer of player contracts is really analogous to transfer of an employee from one division of General Motors to another.

Barriers to player mobility are the result of a voluntary agreement between team owners. Players are free to accept these conditions or to seek employment elsewhere; team owners cannot prevent them from doing so.

It is true that players’ earnings in their next most remunerative occupations are likely far below what they can earn as professional athletes. In addition, restrictive agreements among team owners traditionally have pushed down salaries by giving the owners greater bargaining leverage with individual players. Lowering salaries in this manner has historically been one of the owners’ most important stated goals in adopting these kinds of arrangements.

Conventional notions of economics even say that team owners collectively act as a “monopsonist,” a single buyer of players’ services, and that this is economically inefficient—a suggestion to which Representative Robert McClory reacted in 1972 by pointing out that players’ unions can act as a monopoly.^[5]

These facts explain why players want owners to bid for their services and why they have often brought suit under the antitrust laws to have owners’ agreements voided. But they do not show that players’ rights have been violated. Those who argue that they do confuse wealth with liberty.

What’s a “Free” Market?

This confusion of slavery with freedom arises in large part because of two conflicting meanings commonly attached to the term “free market.”

On the one hand, economists use the term to describe an “auction” situation in which there are many buyers and sellers with no longstanding business relationships or long-term contracts. Resources are allocated and reallocated from one day to the next by continuous bidding between market participants.

This definition of market is commonly contrasted to an “organization” or “hierarchy” in which someone or some group makes a plan and then carries it out. A business firm is one such type of organization. Resources which the firm already owns are allocated to different parts of the firm by conscious decision of the owners. The firm is, however, still subject to the discipline of the outside market, for it must also buy some resources and sell its products there.

However useful these definitions might be for economists, it does not follow that they are equally useful for the ethicist attempting to discover rights violations by ascertaining which kinds of actions are voluntary and which are involuntary. These latter terms must be defined by an ethical theory.^[6] The ethical meaning of “free market” is the network of exchange relationships which exist when no market participants are permitted to coerce others. Organizations and institutions such as business firms and labor unions are perfectly unobjectionable as 1ong as the exchanges in which they engage involve no force or fraud.

By this standard, “free agency” is not morally superior to reserve systems or other restrictive agreements among team owners, even if it does imply a shift of bargaining power from owners to players. Both free agency and reserve systems are voluntary agreements.

Let’s leave the owners and players alone to figure out what each other’s efforts are worth, subject as always to the fans’ veto in the form of refusal to buy tickets. Save the righteous indignation for the all too many government actions which are truly violations of individual liberty.

1.   Quoted in Harold Seymour, Baseball: The Early Years (New York: Oxford University Press, 1960), p. 112.

2.   Frederic Johnson, “Baseball, Professional Sports and the Antitrust Acts,” Antitrust Bulletin 2 (Sept.-Dec. 1957), p. 682.

3.   Ibid.. p. 697.

4.   Seymour, pp. 83-84.

5.   U.S. Congress. House, Committee on the Judiciary, Antitrust Subcommittee, The Antitrust Laws and Organized Professional Team Sports, Hearings 92 Cong., 2d. Sess. (Washington: USGPO, 1972), p. 267.

6.   For a thorough and highly readable explication of this point, see Jack High, “Is Economics Independent of Ethics?”. Reason Papers No. 10 (Spring 1985), pp. 3-16.