September 1, 2002

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Today's NewsPast
WeekPast 30
DaysPast 90 DaysPast YearSince
1996

BACKTALK

Baseball Could Learn From
Australia
By JUSTIN WOLFERSand
ANDREW LEIGH

ith the threatened baseball strike averted
in the bottom of the ninth, fans are relieved but somewhat
disillusioned with the national pastime. Is the fierce
competition that we enjoy in the ballpark likely to always
spill over to negotiations over pay? Or is it simply a
reflection of players paying more attention to dollars than
sense?

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A major sports scandal in Australia last week provides an
interesting benchmark against which to judge the motivations
of American baseball players.

Rugby league fans Down Under also had a gut-wrenching week,
following revelations that the Sydney-based Bulldogs, a team
picked by many to win this year's rugby league championship,
had systematically violated the salary cap. The team had
funneled player payments through third-party entities and club
boosters. It emerged that the club spent nearly a fifth more
on player payments than the system allows.

The players appear to know nothing about these violations,
and there is no suggestion of impropriety beyond the team's
management. Yet "Doggiegate," as the Australians are calling
it, has resulted in the Bulldogs' being stripped of any credit
for their successful season to date, and they have been
relegated to the bottom of the league. With the finals series
only two weeks away, this has also robbed the Bulldogs of any
chance of postseason glory.

The reaction of Australia's rugby league players stands in
stark contrast to the position adopted by Major League
Baseball players. Bulldogs players, led by their captain,
Steve Price, pleaded to take a pay cut to comply with the
salary cap, in the hope that it offers them a chance to
compete in the postseason.

"It's a shock to us like it is to everybody else," Price
said on Aug. 21, claiming ignorance of the player-pay scandal.
"Players will take pay cuts if we have to."

The 21-year-old Mark O'Meley agreed. "I just love footy,"
he said. "I'd be devastated not to play in the finals." He
added, "I'd be prepared to take a pay cut to play in the
finals."

By contrast, the threatened baseball strike was intended by
the players union to maximize only their bargaining power. By
waiting until the pennant races and ultimately the World
Series were on the line, the players managed to boost their
bargaining power at the possible expense of the
postseason.

In effect, baseball's stars bet that their fans, who
ultimately provide the owners with their profits, care more
about the postseason than they do. Having forced the
abandonment of the 1994 World Series, we all knew this was no
empty threat. And the fact that the owners worked furiously to
resolve this dispute by Friday shows that they also understood
this.

The response from sports fans in Australia and the United
States reveals the very different effects that the two
scandals — player overpayments and the threatened strike —
have had on supporters of the two sports. Bulldogs fans are
clearly shocked at the way in which the team's management
behaved, but it says something about the innate sense of fair
play among Australians that an online poll at the club's Web
site found that nearly half of Bulldogs fans surveyed believed
that the punishment meted out to the club was fair.

By contrast, baseball's work stoppages seem to have wearied
American baseball fans, and although there was a small
anti-stoppage protest movement, fans seem resigned to the
possibility of further labor strife, and regarded its
resolution as an unexpected surprise. While the overpayment
scandal led the Bulldogs board to resign en masse, both Bud
Selig and Donald Fehr, the two main protagonists from the 1994
baseball strike, continue to lead their respective
organizations.

The current Australian scandal also raises some very
practical issues for baseball's negotiators.

A primary stumbling block in the baseball negotiations has
been the issue of the so-called luxury tax. This tax is in
many respects similar to the rugby league salary cap, except
that rather than simply banning spending above a certain
level, these higher payments are to be taxed so that rich
clubs can buy less talent for their dollar.

The overpayment scandal in Australia points to the
likelihood of similar infractions in baseball's future. The
tough question for those who propose to regulate payments to
baseball players is: How would a luxury tax in baseball be
enforced? Will Bud Selig be willing to go as far as Australian
rugby league officials and ban transgressors from the
postseason? Would the players union support his decision, or
could enforcing the rules potentially lead to more labor
strife?

Even in its darkest hour, Australian rugby league players
are showing the sort of sporting passion that American
baseball fans yearn for. As Bulldogs Coach Steve Folkes said
of his team: "They want to play football. It's not about
money. It's about success."

For all its "Field of Dreams" mythology, the mighty dollar
remains central to much of modern baseball.

Few have echoed the recent sentiment of one sportsman: "The
money, I can deal without. Baseball, I can't." The player?
Baseball's $252 million dollar man, Alex Rodriguez.

Justin Wolfers is an assistant professor of economics
at Stanford Business School. Andrew Leigh is a fellow with the
Malcolm Wiener Center for Social Policy at Harvard. Both are
expatriate Australians.

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