DRI-266 for week of 1-20-13: Drug-Taking Sports Stars: Is the Problem Morals or Incentives?

An Access Advertising EconBrief:

Drug-Taking Sports Stars: Is the Problem Morals or Incentives?

The recent confession by Tour de France winner and cancer-survivor Lance Armstrong that he took performance-enhancing drugs while competing is the latest of many revelations of illicit drug-taking by sports heroes of this or the previous generation. For the most part, public reaction has been highly adverse. For example, pitcher Roger Clemens and home-run hitters Barry Bonds and Sammy Sosa were all denied admittance to baseball’s Hall of Fame despite playing credentials that should have assured them instant acceptance by voters.

On the surface, these phenomena may seem straightforward. Athletes ostensibly compete on their physical merits. Use of specified drugs such as steroids (in baseball and football) and chemical blood-additives designed to increase endurance (in cycling) are banned because this is deemed an artificial enhancement of performance. In addition, the proscribed drugs are declared dangerous to the health and well-being of the athletes themselves. The players violated the rules and should suffer punishment (Armstrong’s loss of Tour de France titles and Olympic medal) and psychic pain (public censure and denial of post-career honors).

Closer inspection clouds every part of this picture. It also reveals many more pairs of shoulders on which to heap blame for these outcomes. Some of them rest on the

bodies of sports owners and managers. Millions more belong to sports fans.

The “Cheating” Athlete

It might be tempting to assume that drug-taking athletes are cheating because they acquire an unfair advantage. But a study of the record in cycling, for example, suggests that Lance Armstrong began blood doping in “self-defense;” i.e., in order not to lose by default to competitors who were already treating their blood. The history of competitive cycling since 1972 records a plethora of positive drug tests and admissions of drug use, mostly illicit but sometimes legal. (In 1984, The U.S. team employed blood transfusions as a device to improve stamina; the following year, the U.S. Olympic Committee declared the practice illegal.) Hardly a year in the last four decades has passed without multiple revelations of this sort.

Moreover, Armstrong’s televised confession to Oprah Winfrey portrayed him as the “ringleader” of a group of blood-doping cyclists (his USPS teammates). Thus, he gained no competitive advantage over them. From his perspective, he was striving for parity with foreign teams for whom doping was commonplace. And when everybody is cheating, there is no “unfair” advantage conferred, unless you view variations in the doping process itself as advantageous.

If there is no injury done to the competitive nature of the contest, then sports consumers are not injured by athletes’ behavior – or rather, they are not injured qua consumers. Apparently, athletes’ behavior as role models is at issue. Fans are so shocked and disappointed by Lance Armstrong’s oft-repeated denials of wrongdoing that they demand recompense in the form of financial and social punishment. But this position places an impossible burden on the athlete. It clearly doesn’t apply to the lesser competitors who cheated before Armstrong did but who weren’t cancer survivors or photogenic enough to attain “role model” status. The athlete is punished for doing his job too well and because he has attained celebrity status.

The clinching argument against the moralistic approach is that it cannot possibly work. Look at it from the athlete’s viewpoint. By cheating, he is in a “heads I win, tails I break even” position. What was Lance Armstrong’s alternative? “Not cheating” would have reduced him to also-ran status. He would never have gone on Oprah because he would never have had occasion to do so. Don’t be tempted to think that having to spill your guts on Oprah’s program is the ultimate in personal humiliation. Being unknown would have been worse than anything he has undergone lately. Cheating at least gave him his many moments in the sun, plus world fame for as long as his luck held – and remember, he had the chance that it would hold for the rest of his life.

Current indignation against Armstrong asks us to simultaneously believe that: (a) with hundreds of millions of dollars at stake, athletes will (b) stoically refuse to serve their individual and team interest by “cheating,” (b) thus insuring that their athletic endeavors will end in comparative failure and obscurity, even though (c) they are likely to escape immediate detection and may well avoid detection indefinitely. This defies credulity.

The Tacit Role of Owners and Managers

Nobody has alleged that athletes were ordered to take steroids or performance-enhancing drugs. A reflexive assumption might be that this absolves sports team owners, managers and promoters of blame for the scandals. Depending on how we define the notion of “blame” in this case, that may not be true.

One might well maintain that the decision to introduce chemical substances into one’s body – whether for medical or other reasons – is a decision resting with the individual alone. This stand has a lot to recommend it – legally, morally and practically. But it is not the one we actually take. The law does not leave such decisions to individual judgment and conscience, nor do sports teams treat it as a matter of indifference. Of course, teams have a vested interest in the physical health and performance of athletes, so they have a legitimate reason for establishing drug-testing and policing policies. With modern athletic labor markets featuring players’ unions and free agency, the interests of athletes with respect to these policies are supposedly represented.

In fact, management has let down athletes not through its actions but through a failure to act. Athletes face an inherent incentive to take certain drugs and management faces an incentive to tacitly allow this, whatever its stated policies may be. If the actions of Armstrong, Clemens, Bonds, Sosa, et al are problematic – that is, if they are legally and/or morally wrong and worth discouraging – then the onus rests with the rule makers to design a credible system of disincentives and preventions that truly prevents performance-drug taking by athletes. The law may look lightly on a failure to act, but economics takes account of alternatives to action, since these may be the costs and benefits that motivate the actions of individual producers and consumers.

Management benefits from the productivity of labor; in effect, that is what companies buy (or rent) when they hire workers. Steroids or performance-enhancing drugs increase productivity. (While there is debate on this point, it is mostly over the magnitude of this effect, not its existence. If these drugs did not enhance performance, athletes wouldn’t take them.) They may well have deleterious effects on the health of the user, but these only show up later, after the athlete’s productive career is over. Management does not take these effects into account. (In contrast, smoking marijuana or cocaine may well damage the athlete’s current performance, so management has every reason to proscribe these activities.)

When baseball players began using steroids, team owners and managers had every reason to suspect the truth but little reason to act on it. A surfeit of home runs would do attendance a world of good. If the steroids made little difference in performance, then no harm would be done – well, not for years, anyway, until the players’ health began to deteriorate. By the way, the same thing is true about non-drug training, conditioning and technical innovations that increase speed, power, strength and the number of concussions and other injuries. To the extent that improvements in popularity and revenue outweigh higher team medical bills, incentives favor yielding to these trends rather than fighting them.

It is true that policies are in place now to prevent, or at least expose, illicit use of performance drugs by athletes. But those procedures don’t work. Armstrong has now admitted to doping during each of his seven Tour de France victories. Blood doping is universally acknowledged to be part of “the culture of cycling.” The history of drug testing in baseball is a history of denial, positive drug tests, suspension, reinstatement, recidivism and repetition ad infinitum.

Sympathizing with management as innocent victims of cheating by athletes requires us to believe that (a) management was unaware of cheating even though the essence of their role demanded that they know of it, and (b) management disapproved of cheating even though they stood to gain from it. This parlay is wildly unlikely.

The Role of Sports Fans

Having viewed the matter from the perspective of athletes and owners/managers, we must now shift focus to fans. The notion that fans have any responsibility for outcomes may strike many as quaint – after all, fans are the consumers whose desires are being fulfilled. It is athlete’s (and owner/manager’s) job to satisfy the fans, surely, not vice-versa.

That much is true enough. Fans have no legal or moral obligation to feel sorry for or even contemplate the fix players are in. Fans have the right to criticize erring athletes in any way. But we should consider the propriety of that criticism.

Having leaned heavily on the Armstrong case, let’s turn to the example of Barry Bonds and Sammy Sosa. After 1994, major-league baseball was reeling from the fans’ adverse reaction to the players’ late-season labor walkout that year. In 1994, the World Series was cancelled for the first time since 1904. Attendance subsequently fell off the table. At this point, most teams were still heavily reliant on turnstile revenue for the bulk of their income – unlike today when skyrocketing license fees from broadcast rights and product sales have supplanted attendance as the dominant income source. Thus, owners were desperate to lure fans back into stadia.

And, by an astonishing coincidence, something very strange began happening in 1995. Players started hitting home runs. Lots of players. Formerly weak-hitting infielders suddenly started hitting 20-25 homers per year. Solid power hitters started hitting over 40 homers per year. And the 50 home-run barrier – previously the exclusive preserve of the game’s great sluggers – suddenly became paper-thin and permeable. Between 1965 and 1990, only three players hit more than 50 home runs in a season. Beginning with Albert Belle in 1995, it suddenly became commonplace. A journeyman power hitter named Mark McGuire, whose best total was 49 in his rookie year but whose power totals had declined thereafter, reversed course explosively to hit 52, 58, 70 and 65 homers between 1996 and 1999.

The culmination came in 1998. A little-known Chicago Cub named Sammy Sosa, who had never previously hit more than 40 home runs, began chasing the sacrosanct 60-home-run mark previously reached only by Babe Ruth (60 in 1927) and (in a slightly longer season) Roger Maris (61 in 1961). Matching him stride for stride was McGuire, formerly of the Oakland Athletics, now a St. Louis Cardinal. McGuire ended up with 70, Sosa with 66, so both men smashed the previous records to smithereens.

Further stretching coincidence to the breaking point, both Sosa and McGuire both put on over 50 pounds of muscle prior to donning their power suits. Adding muscle mass is the primary attraction of steroid use.

As fans, what were we to make of this series of events? In the 1920s, when New York Yankees Babe Ruth and Lou Gehrig were dueling for home-run leadership of baseball’s American League, they were physical marvels whose combined home run totals often exceeded those of any other team in the league. Indeed, in 1921, Ruth’s 59 homers alone were more than any team in the American League other than the Yankees. But after 1995, home runs multiplied like bacteria in a Petri dish. It was too much to swallow to believe that everybody had simultaneously metamorphosed into a power hitter at once.

But, incredibly, that is what almost everybody did believe. The few voices of doubt were drowned out in the crescendo of cheers for McGuire and Sosa. Fans had demonstrated conclusively that they preferred a thrilling, entertaining lie to mundane truth. That is, they preferred watching steroid-bulked stars bash out home runs to facing up to the fact that the home-run derby had been contrived. “Fans,” in this context, includes the sportswriters who were ideally placed to observe and evaluate the players “before” and “after” their drug use.

This makes the current tone of shock and disapproval seem disingenuous, to say the least. In law, there is a principle requiring a plaintiff to show that he sought to mitigate damages in order to retain eligibility for full recovery. Here, in order to register sympathy for fans and disapproval of steroid-using athletes, there should be a showing of damage suffered by the fans and specification of the rational alternative open to the guilty athlete.

The incentives are equally one-sided for owners and managers. Revenue is suffering. “Not cheating” – e.g., explicitly recognizing and punishing drug use – leaves them out in the cold, with only their integrity to keep them warm. “Cheating” gives them their fans back and their lost revenue returns. The likelihood that this money will be clawed back later is effectively nonexistent. To an economist, it is easy to predict how management will behave.

Sympathizing with fans demands that we believe that fans never suspected the existence of cheating concurrent with its incidence – and that their innocence was justified and reasonable. It seems clear that fans were innocent, but naively so. That is, they did not take reasonable precautions to safeguard their innocence with a little skepticism, logic and investigation. Any clear-eyed observer knew that cheating was occurring in cycling and baseball.

A Victimless “Crime?”

When I steal bread from somebody else, my consumption rises and the victim’s falls; I am increasing my welfare by decreasing theirs. It is much harder to find that sort of crime in the actions of drug-taking athletes. If there is any physical harm perpetrated, they do it to themselves. This may not be admirable but it is scarcely criminal.

The benefits to “society” from performance-drug taking by athletes are obvious. Fans went crazy during the McGuire-Sosa home-run duel of 1998; attendance went through the roof throughout baseball. Even some people who did not like baseball or who knew little or nothing about the game followed the race to 60 home runs and beyond. It is reasonable to believe that if people really rejected performance drugs as a means to this end, they would have objected at the time. Their claims of betrayal 15 years after the fact mean little.

We have noted that performance-drug taking does not affect competitive outcomes when everybody is doing it – and the incentives pulled insistently in that direction. The real harm done to competition was to intertemporal competition – between today’s players and those of yesteryear, between the drug-taking athlete and the record book. Baseball, in particular, has nurtured a longtime love affair with tradition and the greats of days gone by. The Babe Ruths, Ty Cobbs and Lou Gehrigs suffer an intrinsic disadvantage from being dead and unable to improve on the records they hold, while each generation gets another crack at them using better nutrition, better training methods and better living through chemistry.

The problem is that sorting out proper from improper ways of record-breaking amounts to historical protectionism. It cheats present-day consumers of thrills to protect the dead. It is the duty of historians to burnish the memories of the past. They can do it without the adverse economic fallout that comes with protectionism.

Fans are the consumers of the sports product. Consumption is the end-in-view behind all economic activity and consumer will is sovereign in markets. Fans deserve to get the sports product they want. But the evidence suggests that they want contradictory things. On the one hand, they want the thrilling product produced by drug-taking athletes. On the other hand, they want to nourish the fantasy that athletes are all-American boys, a la Jack Armstrong. Fans can want in one hand and spit in the other, but they can simultaneously enjoy both of these things only temporarily.

Owners, managers and promoters are the people best placed to evaluate consumer objections in the sports market; their livelihoods depend on giving fans what they want. If management detects true opposition to performance drugs, it should institute credible measures to forestall their use by players. That is, it should not only prevent drug use but plausibly advertise its willingness and ability to forestall it. Up to this point, credibility has been lacking. We must assume this is because management believes that fans want the excitement performance drugs create more than fans want drug-free sport.

The French philosopher La Rochefoucauld called hypocrisy the tribute that vice pays to virtue. The mere fact that people behave hypocritically does not mean that they really want vice outlawed and virtue made mandatory. The combination of lavish praise for past drug takers and sententious lectures sent their way today is about as convincing as dying declarations of regret by inveterate smokers who demand that cigarettes be banned. In their youth, their cigarettes could have been withheld only by prying them from their cold, dead fingers.

The proverbial man on the street is apt to react bitterly to the Lance Armstrong scandal: “What really gripes me about it is the way he lied and lied all those years.” But the essence of the Lance Armstrong narrative is the fairy-tale outcome of Lance Armstrong, cancer-survivor who became a champion athlete. The only way Armstrong could achieve it was by cheating and the only way he could preserve it was by lying. Absent those, there never would have been a Lance Armstrong story in the first place. And the evidence suggests that the athletic dishonesty was collective, not purely individual.

The evidence on its face says that the public wants the excitement of sports. But most people seem to want it in the form of a fairy tale, in which the base commercial motivations of everyday life are absent or, to be more precise, present but disregarded for noble reasons. That is impossible because it is precisely those base commercial motivations that ensure the thrilling excitement in the first place.

Sports are no different from any other human enterprise. They require the motivations, pricing valuation and information discovery of markets in order to function well. The self-interested motivations and incentives of human behavior drive marketplace activity. The pretense of separation between sport and commerce is delusive. And the realization of delusion is invariably painful. Athletes are now feeling the brunt of our pain.

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