In the Gear Teeth of Industry

Alex Gordon has a big decision to make with his contract this winter. (via Charles Sollars)

Alex Gordon has a big decision to make with his contract this winter. (via Charles Sollars)

Baseball is an industry. It’s not the most important industry in a world dominated by them, but it is one of the most conspicuous  thanks to the economic hyperbole it has (in)famously produced. While many of the game’s most notable laborers are almost unfathomably rich, that has not always been the case. And even today, many employees of major league teams are paid unfair wages.

Instead of an “inferno of exploitation,” the modern MLB laborer is subject to a much more subtle squeeze by the hand of ownership. Even the most mundane major league transactions are choked with nuance and bureaucratic parology. Most players who reach the majors never have to worry about money again, but every cost-cutting victory on behalf of team ownership has an effect on the macroeconomy of baseball. It certainly doesn’t matter much if a guy like Giancarlo Stanton makes $324 million or $325 million. However, a contract like Stanton’s raises the ceiling of player compensation, and relatively, the floor. Or at least it’s supposed to.

In theory, everyone is supposed to move up a story when a deal like Stanton’s is signed, but in reality, the room is just getting taller and the floor is just as dirty as it ever was. And sometimes, the elevated economic status of the game’s marquee laborers causes them to make a decision in which they cannot truly win — ultimately, a laborer’s decision. Sometimes, the finer points become dull along the way.

For example, Alex Gordon signed an extension with the Kansas City Royals in 2012. At the time, it was well received. In retrospect, it looks divinely inspired. Gordon has been one of the best players in the game since 2011. The extension clearly has been a huge win for the Royals, which means it more than likely has been a considerable loss for the players at the bottom of the organizational food chain.

Based on his on-field production, Gordon should have earned much, much more than he has over the last four seasons. FanGraphs’ Dollars estimates Gordon has been worth $167.7 million (and climbing) since 2011. He has only* earned $38.9 million over that stretch, meaning the Royals have managed to procure a surplus value of $128.8 million from Gordon alone. That surplus could be a counterbalancing factor if it were reinvested in labor from the bottom up, but baseball is an industry, not a fairy tale.

(*Naturally, some fans automatically will see these massive sums of money and all the sympathy in their bodies will drain out of them in one long, slobbery raspberry. However, as it has been stated many times before, these numbers are all relative. Yes, Gordon is unbelievably rich, but there are people — like Royals owner David Glass — actively trying to make sure players like Gordon are as mildly rich as possible so they can be even more gluttonously rich. It’s a super-saturated economy, but again, the players are still essentially “the working class,” especially the players whose names you may or may not know in the low minors and in academies across Latin America.

Of course, when it comes to the super-rich beneficiaries of the game on either side, it would make much, much more sense if the two sides took a reasonable, agreed-upon amount of the profits and funneled the remaining majority back into their communities. But since that is never going to happen, it barely seems worth mentioning.)

As most Royals fans know, Gordon’s extension was worth $37.5 million and could end after this season. He has a player option that would allow him to stay in Kansas City, and he has said on several occasions he’d like to stay with the Royals. Is that pandering to the fan base or does he really want to stay? The latter makes sense. Kansas City is the closest thing to a hometown team the Nebraska native could have in the majors. And they stuck with him through some tough times, but does he really want to stay in Kansas City if it means taking less money? And even if he does, will the perpetual war between ownership and the players union allow him to do so? Or will he be caught in the churn of competing agendas, forced to choose which side to contest?

The players have been trying their best to thwart the owners’ attempts to exploit them since professional baseball was born. The inception of The Players League and the Brotherhood of Professional Base Ball Players in the 1880s led to a dispute that nearly resulted in significant change with regard to the draconian, yet now-dissolved reserve clause. But after Monte Ward’s venture failed, the Reserve Clause remained unmolested for 85 more years — until Curt Flood and the rest of the players finally were able to kill it in 1975.

Since then, player salaries have grown so much over the last 40 years, many fans feel as though the players actually earn too much. However, as Nathaniel Grow pointed out back in March, it’s all relative. The players make only a percentage of the game’s overall revenue — and that revenue has been swelling faster than Archie Bradley’s cheek, but the players’ share of it hasn’t.

After the reserve clause finally died, a true free agent market followed. And in the hyperbole of baseball’s economy, the market has become another character, almost living and breathing, apart from its actors. It swallows everything. For example, you can actually buy David Ortiz’s beard clippings or Tom Seaver’s used toothpick. Someone actually bought that. Maybe it was an investment of some kind, or maybe the Reds bought it so they could try to clone Seaver from the DNA he left behind. Who knows? The point is, you can buy anything.

As far as the market’s primary commodities are concerned, things have gotten extremely complicated. To drive up the the median salary, every player is encouraged by the players union to seek the most money possible, no matter the scenario. When fans hear about players taking a “hometown discount” to stay with a team they enjoy playing for — even though the club might not have the financial flexibility to offer a deal competitive with the open market — they tend to champion these players as selfless heroes.

In actuality, players (like Cliff Lee ca. 2010) are acting in the best interests of team ownership by doing so — and subsequently stunting the potential earnings power of the next group of free agents (and the next, and the next, and so on). In other words, they are acting selfishly — as far as the MLBPA is concerned. Ownership has always used every ounce of its capital obesity to lean on the players and collect as much of the profits as possible while arguably contributing very little by “owning” the team.

Unfortunately, this creates a very real “damned if you do, damned if you don’t” scenario for modern free agents. They can either act solely in their own best interests and risk aiding the owners in their efforts to suppress player wages, or they can sign the most lucrative deal possible for the greater good. It seems like an oxymoron, and it most certainly is in some cases. Many times, the most lucrative deal is the most appealing for free agents for obvious reasons. However, the MLBPA has been able to produce a sense of obligation. And it has done so with good reason. Without a strong union, free agency might not even exist.

A Hardball Times Update
Goodbye for now.

The players’ cut of the profits they produce — arguably without the necessity of ownership — is declining. It has dropped from 56 percent in 2002 to 38 percent today, according to Grow. The luxury tax itself might not be the most circumstantial issue overall since the tax itself might have caused some collateral benefit to small- and mid-market clubs due to revenue sharing. However, Grow’s article is a fantastic example of one of the small steps ownership has taken to lessen the players’ share of profits. The article illustrates the fact that the MLBPA is currently losing the war against ownership, even if Grow focuses only on one of the battles of that war for the sake of the clarity and concision of his article.

The decline in the players’ share of the profits is seen by some as a natural fluctuation of labor negotiations. Others see it as a monolithic force leaning on those beneath it; a force that only draws its weight back voluntarily and strategically, so as not to crush its opposition entirely; a corpulent, all-swallowing flab that offers only the illusion of control.

The reality of the exploitation of laborers at the major league level is not exactly gut-wrenching. The league minimum is about 12 times higher than the average person’s yearly income. Gordon himself is going to retire a 30- or 40-something multi-millionaire. So what’s the big deal, right?

The big deal arises in the ripples that spread out from the transactions that “set the market” at the very top of the economic food chain of baseball. Those ripples undulate in every direction, but they are most readily apparent, and severe, in Latin America.

Some go as far as to call the league’s presence in the Dominican Republic a “sweatshop system.” Players from Latin America are famously signed at the age of 16 with great regularity. Essentially, teams are taking advantage of a system of rules that treat Latin American players — technically, Latin American children — as second-class citizens. And in the spirit of profit, they skimp on rudimentary necessities such as certified athletic trainers or even doctors. These players are young and impressionable, and more often than not they are desperate to have a chance at making money for their families. Things are slowly changing, but it might not be for the better.

It’s an old trope, but baseball is a business. And this is the nature of business. Anywhere costs can be cut without corresponding backlash and the resulting threat of diminished profits, they are cut — or never invested in to begin with. Baseball is a multi-billion dollar industry, and while finding surplus value is a huge part of the off-field competition that unequivocally adds to the intrigue of the game, the rational baseline of simple human compassion that does not yet exist leaves a translucent film over the mind-twisting opulence and on-demand, HD highlights at the pinnacle of the game.

All of this comes full circle when players from these Latin American countries are offered, and oftentimes accept, early extensions. Latinos are almost exclusively the target demographic for these types of aggressive contracts since the threat of poverty lurks on the other side of the dotted line. On the other hand, American-born players have an infrastructure beneath them to break their fall if they turn down an early extension and fail. Players born in the states also have more regulated representation, and they negotiate in their own countries, speaking their own language. It’s an unquestionable advantage. But players from the Dominican Republic — where the poverty rate is around 40 percent — don’t have the same kind of security in place if baseball doesn’t work out.

So where does Alex Gordon fit into all of this? The MLBPA is certain to pressure Gordon into declining his $12.5 million player option after the season. Even if he wants to do the exact opposite, Gordon likely will be made to feel as though he is betraying the union by allowing the Royals to retain him for such a relatively paltry sum. And they will do so with good reason. If the owners weren’t constantly trying to undermine the union’s efforts to carve out a more appropriate cut of the profits for the men that actually produce the product generating these unimaginable sums of money, they wouldn’t be MLB owners.

Gordon can make up his own mind, of course. Neither side actually can force him to choose one way or the other, but the decision is not as simple as who can promise the most. Ultimately, his decision will only delay the inevitable, since he still will be a free agent after 2016 even if he exercises his player option. In the end, it’s just one battle in a hundred-year war between players and ownership, but his choice still will affect the future of labor relations.

Royals fans would love it if Gordon stayed. And they’d love it if he stayed for $12.5 million because it would mean the team could spend more money on other players and maybe be a better team. However, some fans will be forced to ask themselves if they hate exploitation more than they love watching the Royals win. It’s probably a pretty close call, and it would be a lot easier to root for the fun baseball team over the cold, uber-capitalistic labor union, but unfortunately, these are the circumstances created by the owners — and the results trickle down from the superstars to the third-world work academies in Latin America. Many won’t care if Gordon makes a few million less and his “owner” makes a few billion more. But eventually, it affects people a lot like you — and when it reaches the bottom, it’s less of a trickle and more of a vapor.

If Kansas City has to say goodbye to Gordon because of these circumstances, it would be almost unanimously disliked by the fan base. However, it would present Royals fans with a few somewhat profound and interesting questions. Namely:

Do you care more about the Royals’ record more than you care about their players getting a fair shake?

And:

Do you love the Royals more than you love the game of baseball itself?

Gordon is caught in between two rapidly churning forces that need one another to propel the game of baseball forward. His control over his own fate is being crushed between the gear teeth of the industry.

He’ll be fine, of course. But his superficial battle is an exhibition of the ultimate struggle between the competing forces of industry in general. And even though his decision might seem like the trivial deliberation of a spoiled millionaire, his choice will be a factor in the future of the economy of baseball.

References & Resources

  • Special thanks to Josh Ward and Max Rieper.


Tyler Drenon is a freelance writer and graphic designer living in the southwest corner of Missouri. He has written for VICE, The Classical and SB Nation. Follow him on twitter @basteball.
8 Comments
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Jim S.
7 years ago

Great thinking. Great writing.

Tyler Drenon
7 years ago
Reply to  Jim S.

Thanks, Jim.

evo34
7 years ago

Laughable. Owners are “exploiting” mediocre MLB vets by paying them $10-$15M/year *guaranteed* regardless of performance or injury? The MLBPA has the industry by the balls. No salary cap + long-term fully guaranteed contracts => lack of competitiveness. Compare this so-called exploitation to what exists in other major sports, where athletes are risking not only their careers but often their lives every game, just to be paid a couple million a year as an at-will employee. Night and day.
Also, it should be noted that a good chunk of Gordon’s estimated value is based on highly questionable defensive metrics.

Greg Simons
7 years ago
Reply to  evo34

@evo34 – Please offer some evidence of this “lack of competitiveness.”

Just because NFL and NHL owners have players risking their long-term health – physical and mental – on every play on non-guaranteed contracts (at least for the NFL) doesn’t mean MLB players should be content with a declining share of revenues.

Dave Kingman
6 years ago

This is at least the 3rd column this clown has written about “greed”, “exploitation”, blah blah blah. We are enjoying an entertainment event, where players from communist countries (e.g. Cuba, Venezuela) risk their lives for the opportunity to be exploited by the big, bad owners and Scott Boras.

They are free to form their own league in North Korea, Bolivia or Kazakhstan and pay themselves whatever they want to. That way they won’t be “exploited”.

Drenon, you are welcome to tag along as an advisor. You seem to know all about how economies work, and what % of what line on an income statement should be apportioned to grown men who hit a ball with a stock.

Go for it. Report back in 10 years on how it’s going.

Tyler Drenon
6 years ago
Reply to  Dave Kingman

It just gets old hearing people complain about how much money the players make. The owners make far more and contribute far less. For me, baseball’s economy is an extremely apparent and easily understandable example of how large portions of the American economy operate. When it comes to baseball players, they aren’t taken advantage of as much as laborers in other industries — although some are clearly being exploited — but, despite the difference in proportion, the end result is the same: The Super Rich profit off of the labor of others and contribute very little value themselves.

I know it can be difficult to put things in perspective because the players at the pinnacle of the game make unfathomable amounts of money, but allowing your thoughts to bottleneck there results in a pretty simplistic view of the entirety of the situation. I’m not economic expert. I’m just tired of hearing about how greedy the players are when the owners are just as much at fault and they contribute much less to the game itself. They are also far fewer in number than the players and all of the owners are extremely insulated from risk the way a minor leaguer or a kid from the Dominican Republic could or would never be.

I understand where you’re coming from, and I agree with you to some extent, but it seems to me like you’re giving the owners a pass on the same criticisms you have targeted at the players — and at least the players do something cool. All the owners do is reach into your pocket while you’re at “their” ball park.

I assume we’ll just have to agree to disagree. However, if you are offering to fly me to the DR to watch baseball, I gladly accept your offer.

sambojangles
6 years ago

This was a great article that got me thinking about the business of baseball in a new way. I just want to add another conflict to consider:

The MLBPA has a duty to act in the interest of its players. It’s represented, naturally, by the most senior players in the league, for the most part, as many organizations are. These players have “paid their dues” in the minor leagues and entry level contracts. They benefit from the big free agent contracts that guys like Scherzer and Stanton got, and Gordon will. The huge contracts are enabled, in part, by the rules the MLBPA agrees to regarding the draft, entry-level contracts, and arbitration. The youngest players, across all of baseball (not just MLB) are generally underpaid (in my opinion) and their bargaining power is reduced by waiting for free agency. The problem is the young players, including players not even drafted yet, don’t have an equal voice within the MLBPA. I would like to see some more equitable contracts. The fact that one player on a team is making 20x what others are on the same team just seems a little out of balance, to me, and it’s because of the design of the CBA, and the MLBPA getting what it wants for it’s oldest, most famous and most influential players.

Yehoshua Friedman
6 years ago

Tyler, I appreciate your insights. Part of the problem is that fans want two contradictory things. They want players to be the best in the world, and they want them to play for the pure love of the game and live like them and be their buddies. Can’t be done. That said, on to the business of baseball. The business of baseball runs like every other business, with the elements of capital, labor, markets and specific rules governing each. The owners currently have a license to print money, but that may change as the government runs up the national debt and internationally destroys the country by hurting its friends and helping its enemies. Then you may get baseball in the US under similar conditions to third world countries. That might be amusing, but the rest of life won’t be.