DRI-275 for week of 9-28-14: Touchdown-Celebration Prayer: Time for Separation of Church and Red Zone?

An Access Advertising EconBrief:

Touchdown-Celebration Prayer: Time for Separation of Church and Red Zone?

Fans of the National Football League (NFL) have become inured to the spectacle of celebrations conducted by players who score a touchdown. These actions have assumed a variety of forms, ranging from ordinary excesses of joy and enthusiasm like jumping up and down to esoteric rituals like spiking or dunking the football over the goalpost. Perhaps the most common form is some sort of gyration or celebratory dance. The practice originated among certain players whose fame depended at least as much on their self-promotional zeal as upon their athletic prowess – Deion Sanders, formerly of the Dallas Cowboys, comes particularly to mind.

Older readers will appreciate the striking contrast between this modern attitude and that exhibited by legendary stars of yesteryear like Jim Brown of the Cleveland Browns and Johnny Unitas of the Baltimore Colts. Brown, who may have been the greatest running back of all time, was slow to assume his stance prior to the center snap of the football and even slower to rise after being tackled when running the ball. His demeanor was impassive. He conserved his energy and saved his exertions for the time between the snap and the referee’s whistle signaling the end of a play. Did this account for the fact that his average-yards-gained per carry was the highest of any Hall of Fame runner?

Unitas was similarly deadpan on the field. As quarterback for the Colts, he terrified opponents and awed teammates with the knack for leading his team from behind in the closing seconds of a game. But fans could never have guessed by looking at him whether he had just been sacked for a loss or thrown the winning touchdown pass as time expired. If any of his teammates had ever done anything as gauche as celebrating a long run or spectacular catch, they would have been frozen solid by the icy stare known throughout the NFL as the “Unitas look.”

In the so-called “greatest football game ever played” – the 1958 NFL championship game between the Baltimore Colts and the New York Giants – Unitas provided the prelude to victory by completing a daring sideline pass to tight end Jim Mutcheller in the Giants’ one-yard line in sudden-death overtime. At the post-game press conference, a reporter ventured to question Unitas’s play-calling decision: “That was a pretty dangerous pass, wasn’t it? What if it had been intercepted?” The reporter was the first televised victim of “the look.” “When you know what you’re doing,” Unitas replied without needing to raise his voice, “they’re not intercepted.”

Nowadays many players feel obligated to supplement the audio and visual record of play supplied by television by advertising what has just happened. The newest wrinkle on this style of irrepressible self-expression is praying in the end zone after scoring a touchdown.

The Abdullah Case and Ensuing Fallout

In the fourth quarter of a game between the Kansas City Chief and New England Patriots at Arrowhead Stadium on September 29, 2014, New England quarterback Tom Brady completed a pass to Kansas City safety Husein Abdullah. Abdullah traversed the 39 yards to the New England end zone, where he dropped to his knees in prayer.

End-zone touchdown celebrations are now so commonplace that rules have been drafted to cover them. One of those rules forbids celebrating while “on the ground.” The referees invoked this rule, penalizing the Chiefs 15 yards on the ensuing kickoff for “unsportsmanlike conduct.”

That did not end the matter, though. Two days later, the NFL’s league office announced that the official decision had been in error. Why? It seems that “there are exceptions made for religious expressions,” according to NFL vice-president for football communications Michael Signora. But the referees may have been confused by Abdullah’s body language; he slid on his knees rather than simply kneeling down. Probably sensing an opportune moment, the well-known organization CAIR (Council on American-Islamic Relations) lodged an objection to the original ruling. According to an article in the Kansas City Star (“NFL Admitting Error on Abdullah Flag,” October 1, 2014, by Tod Palmer), “Abdullah is a devout Muslim.” The CAIR spokesman urged the league office to “clarify the policy” so as to “avoid the appearance of a double standard” for Muslims and non-Muslims.

The sensitivities of Americans have been abraded by over a half-century of controversy over the separation of church and state. Now the debate over public religious observance has invaded the football field or, more specifically, the end zone. Will theologians have to be on call for replay decisions by officials? Should the NFL nail a thesis on the separation of church and red zone to the main gate of its stadiums? Is all this really necessary?

The Economics of Player Celebration 

Does associating end-zone prayer with celebration seem odd? Abdullah himself referred to his action as “prostrat[ing] myself to God.” Still, the religious faithful at their devotions are often called “celebrants.” In any case, the attributes of prayer and those of celebration are virtually identical in this particular context, which allows us to apply economic principles to both types of action. Both interrupt the normal flow of play and divert attention away from the game and to the celebrant. A case exists that each kind of action might either please or annoy a football fan.

One interesting thing about this example is the diametric tacks taken by the economist and the non-economist. The non-economist feels compelled to ascertain whether prayer itself is “good” or “bad.” A particularly discriminating non-economist might put that to one side and focus on whether or not prayer is a good thing in this particular context; e.g., on a football field with hundreds of millions of spectators. The economist may or may not feel qualified to supply answers to those questions, but does not care about the answers because they needn’t be answered by any particular individual. Markets exist to answer questions that individuals cannot or should not answer. 

Professional football is an intangible product supplied by the National Football League and its member franchises (teams) to consumers (fans). That product consists primarily, but not solely, of competitive athletic performance. A rhetorical question posed previously in this space asked: If O. J. Simpson were still in full flower of his athletic skills, would he be working as a running back in the NFL, all other things equal? The obvious answer is no, because football fans do not want to watch murderers play professional football, no matter how talented they may be.

The advent of touchdown celebration allows us to add another qualifying example to our definition of the pro-football product. To the degree that some fans enjoy and even encourage end-zone celebrations, it is clear that they derive satisfaction (or utility, in economic jargon) from this practice. That means that the pro-football product is defined as “competitive athletic performance plus entertainment.”

This is not merely an ad hoc formulation cobbled together by an economist for a column. In the same edition of the same Sports section of the Kansas City Star as the story of the NFL’s recantation of the penalty on Abdullah, the adjacent story is a profile of Chiefs’ cornerback Sean Smith. Study Smith’s comments about his flamboyant style of play and the attitude of Chiefs’ coaches to the on-field exhibition of his personality.

“‘I think (the Miami game) gave the coaches a chance to see that when I’m able to go out there and just be myself and let my personality hang out there, not only do I play well, but people feed off my energy,’ Smith said.” [Quoting reporter Terez A. Paylor] “‘Smith, like his other more animated teammates, appreciates Coach Andy Reid’s philosophy. He encourages his players to play with passion and let their personalities shine through on the field, and Smith has embraced that approach this season.'”[Back to Smith again] “‘Coach emphasizes to let your personality show, go out there and cut loose, and be yourself and have fun…That’s something I definitely took personal. I’ve been a very enthusiastic guy. I like going out there and having fun and putting a smile on people’s faces.'”

This constitutes an implicit endorsement by a player and head coach, as cited by a beat reporter, of the economic model developed above.

Does this mean that end-zone celebrations are a good thing? Does it mean that players have a right to indulge them? Does it justify the NFL’s policy? Or condemn it? The answers to these questions are various forms of “no.” End-zone celebrations are one more input into the productive process, no better or worse a priori than any other. They may or may not be appropriate. Players have no “right” to indulge in them because players do not control the production process – the team does. The NFL is the franchisor; it has the right to control end-zone celebrations only if they affect its ability to provide the right competitive environment for the teams and not when only team profitability is at stake.

A last key question may be the one most frequently asked when this issue arises in public controversy. What about the player’s “right” of free religious observance?

Why Freedom of Religion Does Not Guarantee the Right to Celebrate in the End Zone 

Freedom is defined as the absence of external constraint. It does not guarantee the power to achieve one’s aims over opposition; in particular, it does not confer rights. A right can be enjoyed only when it does not abrogate the exercise of somebody else’s right. A contract is a voluntary agreement that imposes legal duties on both (all) parties to it.

These definitions lay the groundwork for our understanding of prayer in the end zone.

Husein Abdullah is an employee of the Kansas City Chiefs football team. He helps produce professional football entertainment but he does not control the mix of inputs into that product. The team decides who the other players will be, what style of football the team will play, what offensive plays the team will run, what defensive sets the team will employ, who the coaches, assistant coaches and trainers will be. If the team chooses all these inputs into the production of professional football entertainment, why should it not also control the nature of end-zone celebrations? Of course, the team may opt for spontaneity by giving free rein to players’ imaginations, just as conventional entertainers in show business may opt for improvisation over a scripted performance. Still, the team will almost certainly forbid players from celebrating by making obscene gestures to opposing players, revealing intimate body parts to fans and performing other acts virtually guaranteed to offend fans rather than entertaining them.

So we should hardly be astonished if the team should choose to regulate an action as potentially sensitive or embarrassing as an act of religious observance – should we? And, speaking as students of economic logic, we can make no objection to that – can we?

How about Husein Abdullah? Or, for that matter, any religious celebrant of any religious denomination? Is he being treated unfairly? Are his rights being violated?

No. As an employee of the team, Abdullah works at the direction of the team and for its benefit. The fact that Abdullah is engaging in a religious observance in this particular case is irrelevant. Abdullah certainly has freedom of religion. He has freedom of speech, too, but that doesn’t give him the right to say anything and everything under the sun in his capacity as an employee with no fear of repercussion.

Suppose Abdullah were an employee working in an office building. Does he have the “right” to pray at the top of his lungs while wandering around and between the desks of his fellow employees? No, he has no right to disrupt the workplace in this fashion even with the excuse that freedom of religion allows him the right of religious observance. Similarly, his “right” to pray in the end zone is circumscribed by team policy.

Does this mean that the Abdullahs of the world are inevitably booked for disappointment in their longing to prostrate themselves before God in the end zone? There is no reason to think so. We know, for instance, that celebrations were once frowned upon and suppressed yet are now practically de rigeur. There seems no way to predict what twists and turns this penchant for celebration will take because there is no way to predict how the tastes of the public will change.

Are we afraid that “discrimination” against unpopular minority groups (Muslims, for example) will proliferate? No, we are not, because in this context the term discrimination loses its familiar colloquial meaning. There is no arbitrary exercise of power against a group because no business has a duty to employ all inputs to an equal degree. Instead, businesses have a duty to their owners and consumers to employ inputs based on productivity precisely by discriminating in favor of the more productive and against the less productive. Whether the inputs are engaging in religious observance, speech or any other activity does not matter. If a player can produce a productive form of celebration, this will make money for his team and provide the player with a celebratory meal ticket. If not, the player will lose the privilege of celebrating in the end zone. Business is not about what the boss wants or what employees want – it is about what consumers want. Economists characterize this principle as consumer sovereignty.

If a player demands a right to pray in the end zone, what he is really demanding is not freedom, nor is an exercise of a valid right. Rather, it is the power to abrogate his duty to his employer at whim. As often emphasized in this space, this confusion of freedom and power suffered by the general public has been repeatedly exploited to political advantage by the left wing.

The Absurd Position in Which the NFL Finds Itself

The framework for analysis outlined above is simple and logical. It is an outgrowth of the system by which we divide labor to produce and exchange goods and services. The pellucid clarity of this system stands out in brilliant contrast to the existing framework under which the NFL currently operates.

The NFL currently has rules governing player celebrations. These rules are part of the code that governs play on the field. Violations are punished with penalties such as the one Abdullah earned for the Chiefs. Consequently, the rules must be mastered, interpreted and applied by the referees. Inevitably, as with all sports decisions made by referees or umpires, subjective perceptions and interpretations cause mistakes and controversy. (The distinction between kneeling and sliding to his knees probably reminded Abdullah of the judging on Dancing With the Stars.) Meanwhile, the entities whose interests are most directly affected – team ownership and management – must sit back and await the chance to appeal any wrongful decision later.

And the fans – the people for whose benefit the system operates – don’t get any direct say in this administrative process. Whereas in a competitive market, input from fans directly determines the nature and extent of player celebrations, the regulated market gives immediate control to the administrative mechanism of the NFL. This allows the entertainment part of the product to contaminate the competitive part when penalties are levied for unsportsmanlike conduct, whereas under a competitive system the team handles problems of unsuitable celebration outside of the context of the competitive contest.

That’s not all to object to about top-down regulation of end zone celebration by the NFL. In fact, it may not even be the worst. The Abdullah case illustrates the political hazards of the top-down approach. The NFL began by wanting to suppress inappropriate celebration, which is surely not objectionable in and of itself. By doing the regulating itself instead of leaving it to the market, the NFL left itself open to the pressures of every special interest with an ax to grind. Because the NFL has no special interest in the profits of any one team, it has no incentive to favor popular celebration. Because the NFL is a bureaucratic organization, it is open to influence by every special interest with an ax to grind, CAIR being the most recent to step up to the grinder.

Suddenly, the NFL finds it can’t simply ban a form of celebration it doesn’t approve of (by “any player on the ground”) because that would run afoul of “religious observance.” Imagine – religious observance interfering with the conduct of a football game, when previously the only thing the two had in common was Sunday. And the minute the NFL starts making an exception for “religious observance,” it then has to confront the issue of different – and conflicting – religions. Wonderful – the two things attendees at a dinner party are never supposed to mention are politics and religion, and both are now elbowing their way into the end zone. What next? Will Stars of David start popping up on player helmets as an expression of their “right of free speech?” If only the fans had the power to throw a flag against the NFL for interference!

The General Principle at Work Here 

Americans have forgotten the value of allowing markets to decide basic questions. A recent Wall Street Journal op-ed commented offhandedly that we have lost confidence in free markets as a result of the Great Recession. If so, this is a monumental irony, since that event was caused by the interference with and subordination of the market process. It is not clear how much of the current attitude originates with a loss of faith and how much with simple ignorance. Regardless of the source, we must reverse this attitude to have any hope of survival, let alone prosperity. We know markets work because the world in general and the U.S. in particular would never have reached their present state of prosperity unless markets were as effective as free-market economists claim they are. The pretense that regulated, administrative markets are a vehicle for perfect “social justice” is not merely a sham – it is a recipe for tyranny. Administrators possess neither the comprehensive information nor the omniscient sense of fairness necessary to decide whose celebrations to allow, which ones to ban and what standard to apply to all.

The best thing about the example of touchdown celebrations is that they provide a side-by-side illustration of free markets and regulated administrative markets. The free market is player celebrations as they evolved in recent years, encouraged by fan response and governed by individual teams. The Kansas City Star excerpts show in so many words that this market exists and the evidence of our senses shows that this market works just as economic logic predicts that it will. And our ever-more-dismal experience with top-down, bureaucratic NFL regulation shows that rule by fiat and by ventriloquists in the chattering classes is an escalating failure.

What about the older fans who are appalled by player celebrations and long for the good old days of strong, silent, heroic players like Brown and Unitas? Why, we’ll just have to find a team that suits our tastes – or found one.

DRI-300 for week of 5-25-14: The Key Figure in the Evolution of Economics in Sports: Bill Veeck, Jr.

An Access Advertising EconBrief:

The Key Figure in the Evolution of Economics in Sports: Bill Veeck, Jr.

Last week, we overturned the conventional thinking on sports and economics by showing key examples of the economic principles guiding the business operation of baseball teams in baseball’s first century of operation. Now we come to a watershed in the economic history of sports – the career of Bill Veeck, Jr. This self-described hustler took the economics of baseball business to a higher level. His life altered the course of baseball and sports in America irrevocably.

The Career of Bill Veeck

William Veeck, Sr., was a Chicago sportswriter who expressed his opinions about the management of the Chicago Cubs forcefully in his newspaper column. Cubs’ owner William Wrigley, Jr., took Veeck, Sr., at his word and offered him the title of team president. Bill, Jr. spent his boyhood at the ballpark as popcorn vendor and clubhouse boy. It is said that 13-year-old Bill originated the plan to plant ivy on the walls of Wrigley Field. Upon William’s death in 1933, Bill left KenyonCollege and took over the position of Treasurer.

In 1942, Bill and former Cubs player Charley Grimm scraped up and borrowed money to buy the minor-league Milwaukee Brewers. Milwaukee was the laboratory in which Veeck developed and tested his theories for owning and running a baseball team. Later, these were applied in absentia by Grimm and others. Veeck joined the Army during World War II and spent the war in Europe as part of an artillery battalion. A recoiling artillery piece crushed his leg, necessitating the amputation of first his foot, then the leg above the knee. Ultimately, Veeck would undergo 36 operations on the leg. He was fitted for a wooden leg, which he equipped with a hold that served as an ashtray for his ever-present cigarette.

Veeck never paused to cry over his misfortune. In 1946, he got up an owner’s group using innovative financial arrangements and purchased the Cleveland Indians major-league franchise. The Indians had mostly occupied the second division of the American League since their World Series championship in 1920. They divided their games between tiny LeaguePark (capacity under 20,000 people) and (on Sundays and special occasions) spacious Municipal Stadium (capacity: 78,000+).

Veeck made Municipal Stadium the team’s permanent home, thereby tripling the team’s revenue potential at a stroke. Of course, he then had to fill all the empty seats surrounding the team sitting in the dugout, so Veeck applied the razzle-dazzle marketing techniques he had pioneered in Milwaukee. Cleveland’s attendance rose to 1.4 million in 1946 and 1.6 million in 1947. Veeck also established a permanent radio broadcast for all of Cleveland’s games, both home and on the road. The rights to broadcast those games gave him another source of revenue.

In 1947, Veeck broke the color line in the American League by acquiring power-hitting black outfielder Larry Doby. In 1948, Veeck defied the advice of baseball experts by buying the contract of the premier pitcher in the Negro Leagues since the 1920s, Satchel Paige. Paige’s reputed age was 42, making him probably the oldest rookie in major-league baseball history. He has already overcome serious arm trouble and was universally considered to be well beyond his most productive years as a pitcher. But Veeck added him to a staff that already included Bob Feller, Bob Lemon and Gene Bearden. Paige made a valuable contribution as a spot starting pitcher and reliever and the Indians’ pitching staff was the best in baseball that year. Veeck had earlier announced the trade of player-manager Lou Boudreau to the St. Louis Browns. The fans protested the trade of the popular Boudreau so strenuously that Veeck reversed his earlier decision and instead gave Boudreau a two-year contract. Boudreau reacted by hitting .355, winning the American League’s Most Valuable Player award. He led the Indians to their first pennant in 28 years. (Cleveland tied the Boston Red Sox during the regular season and won a single-game playoff, 8-3, with Bearden pitching and Boudreau hitting two home runs.) In the World Series, Cleveland triumphed in six games.

For the season, the Indians attracted 2.6 million fans, which stood as a major-league attendance record for 14 years. Even today, almost 70 years later in a country whose population has nearly doubled since then, this would be excellent attendance. In 1948, night baseball games has been around for only a decade and Veeck’s achievement began the transformation of baseball into the country’s leading family pastime. 1948 was the apex of Bill Veeck’s career as a baseball-team owner.

Veeck did not stick around Cleveland long enough to reap extensive rewards from his astuteness. In order to pay the freight on a divorce in 1950, Veeck sold his interest in the team. The next year, he bought the worst team in baseball, the St. Louis Browns. Veeck set out to improve the team’s financial fortunes by doing something that major-league baseball ownership frowned on – competing economically with the other major-league franchise in town, the powerful St. Louis Cardinals.

Veeck’s high-powered marketing efforts included hiring a midget, three-foot eight-inch-tall Eddie Gaedel, to appear in an official game. (Gaedel drew a walk in his only plate appearance.) Another notable Veeck promotion was “Grandstand Managers’ Day.” The Browns’ manager took the day off while a team employee held up placards holding strategic actions such as “Bunt,” “Take,” “Squeeze,” “Hit and Run,” etc. The fans’ applause was the selecting factor in choosing among strategies. (The Browns won, 5-3.) Veeck succeeded in upgrading both the team and attendance, but was unsuccessful in running the Cardinals out of town. He sold the Browns in 1952 and made an abortive attempt to acquire the Philadelphia Athletics before taking a sabbatical from the game for several years.

In 1959, Veeck put together another innovative financial package to acquire a majority interest in the Chicago White Sox from its longtime owners, the Comiskey family. Here his business and financial innovation peaked. Once more, a Veeck team broke attendance records as White Sox attendance reached a historic high of 1.4 million, rising to 1.6 million the following year. Once more, Veeck put a pennant-winning team on the field, as the White Sox bested the powerful Yankees during the regular season before succumbing to the Los Angeles Dodgers in the World Series.

And once more, Veeck couldn’t stand prosperity. He sold the White Sox in 1961 and left baseball, taking over ownership of Suffolk Downs racetrack. He wrote the first of three books, a bestseller entitled Veeck As In Wreck, in which he outlined his personal philosophy of business and life (he described himself as a “hustler”) and criticized the owners and administrators of major-league baseball for their lack of innovation, disregard of fan well-being and unwillingness to contemplate change. At the end of the book, he predicted his return to baseball.

That prediction was fulfilled in 1975 with his re-purchase of the White Sox. This came at the precise moment when the advent of player free agency was changing the game in ways Veeck himself had supported; he, fellow owner and former player Hank Greenburg and future Hall of Fame player Jackie Robinson were the only three people in the industry to testify in favor of free agency. Ironically, it doomed Veeck’s tenure as owner since he was poorly placed to compete for the best baseball talent with major-league baseball’s richest owners.

Veeck’s marketing and management methods enjoyed some success in this, his last hurrah as a baseball owner, but not enough to earn him the riches we have come to associate with sports ownership. Once again, he sold out after a few years and spent his declining years in Chicago as a Cubs fan. He died of lung cancer in 1986.

In 1991, Bill Veeck became one of a few owners elected to baseball’s Hall of Fame. Two sets of innovations accounted for this salute. The better-known are the long list of tactics and gimmicks that changed the practice of sports marketing forever. Less well known but even more significant are the financial innovations introduced by Bill Veeck.

Bill Veeck’s Marketing Innovations

Beginning with his first venture as a baseball-team owner, the minor-league Milwaukee Brewers, Bill Veeck unloaded a torrent of marketing measures on his fans. Rather than viewing these as mere tactics, we should regard them as a coherent overall strategy. Prior to Veeck, baseball owners would unveil the occasional marketing gimmick, usually designed to profit from a special occasion or circumstance. But Veeck had a consistent, discernible method behind the marketing madness that became his trademark. He followed a two-pronged plan: (1) Turn the baseball fans within his geographic area into regular, hard-core customers; and (2) Mold baseball’s public image into that of a family pastime analogous to the role then occupied by the motion picture.

In order to accomplish these twin objectives, Veeck needed to achieve several subordinate objectives. The first of these was to get fans out to the ballpark. Veeck was not a rich man; in order to gain ownership of a baseball team, he needed to do it on the cheap. This required not only that he enlist co-owners but also that they go after less successful teams available at low prices. This meant that Veeck was always working out of a hole, having to build up a fan base from scratch. If ever there was a man for that job, he was the one.

In Milwaukee, Veeck perfected the concept of the gimmick giveaway. In order to promote baseball to families, Veeck faced the problem of attracting women to what had previously been a male pastime. He approached the issue aggressively by offering orchids to all women who attended the game on Orchid Night. During World War II, scarcity and rationing were the order of the day, so Veeck offered nylon stockings to female fans. A lucky fan won three pigeons at a subsequent Brewers game; another later won a 200-lb. cake of ice. (This took place prior to home refrigeration.) Later in the season, a fan was the beneficiary of a horse.

Weddings and birthdays are venerable special-occasion opportunities for businesses, but Veeck took this concept to new heights (or, some sniffed, depths). He staged weddings at home plate. On Manager Charley Grimm’s birthday, he sent a cake from which emerged a badly needed left-handed pitcher.

Today, ballparks offer a veritable international buffet of food choices. But prior to Bill Veeck, the “peanuts and Cracker Jack” of the song “Take Me Out to the Ball Game” comprehensively summarized the menu choices open to the fans. Veeck began the transition toward a wide range of snacks by introducing hot dogs, hamburgers and beer.

By the time Veeck arrived in Cleveland, he had learned how to attract fans. Now he had to master the art of keeping them. The most characteristic and revealing of all Bill Veeck’s marketing measures was Fan Appreciation Night. Veeck considered himself at one with his fans. He responded to critics who claimed his actions were in bad taste by claiming that his tastes were aligned with those of his fans – what appealed to him would also appeal to them. Veeck encouraged fans to bring their families to the ballpark by subtly suggesting that Indians fans were part of one great big extended family, with himself as patriarch.

Veeck came to Chicago after spending a few years away from the game. With his emotional and creative batteries recharged, Veeck unleashed a succession of new innovations that continued to revolutionize baseball marketing. The White Sox were the first team to print player names on the back of their home uniforms, a practice now followed by almost all major-league teams. Veeck provided fireworks displays on special occasions like July 4th. He also considered a White Sox home run a special occasion, because he pioneered the exploding scoreboard, which detonated an explosive firework when a home-team player cleared the fences. (In retaliation, Yankees’ manager Casey Stengel had his players light sparklers and parade outside the visitors’ dugout when Mickey Mantle homered against the Sox.) Actually, Veeck had a point because the White Sox won games with pitching, defense and base running; their power-hitting was the worst in the American League. More prosaically, Veeck also introduced electronic scoreboards to replace manually manipulated ones.

The second round of Veeck’s doubleheader as White Sox owner was his last hurrah as an owner. His health and stamina were waning, but he still found the energy to stage a Bicentennial Day at the park in 1976 and personally play the role of the peg-legged fifer in a Revolutionary War tableau. He added more innovations that have since become standard in the major leagues, such as a box containing fresh baseballs rising from underground behind home plate to replenish the umpire’s supply; and an electric blower to blow dirt off home plate. Veeck twice reactivated veteran coach Minnie Minoso long enough to allow the 50-plus Minoso to become the first ballplayer to play during five different decades.

Bill Veeck’s Financial Innovations

Bill Veeck was the greatest marketing genius in the history of American sports. Yet his financial innovations had an even greater impact on the sports and daily lives of Americans.

Veeck turned the Milwaukee Brewers into a successful minor-league franchise that won three America Association pennants in five years. He booked a $275,000 profit on his sale of the team and returned after World War II with this stake. But in order to afford a major-league franchise, Veeck still had to employ creative finance.

Veeck formed a common-stock debenture partnership to buy the Cleveland Indians. Each member put up a comparatively modest share of financial capital. The remainder of the purchase price was borrowed; the borrowing formed the debenture. The team itself was the lender, so that the partners could take (otherwise taxable) income from the team in the form of (non-taxable) repayment of the loans. This combination of leverage and tax avoidance greatly increased the return on investment. As economist James Quirk documented exhaustively, sports had heretofore offered rather mediocre rates of return, particularly for small- and middle-market-sized franchises. Veeck’s technique supplied part of the pattern for future franchise ownership: leverage and tax avoidance within a corporate framework.

In 1959, Bill Veeck supplied the lever that turned the world of professional sports on its axis. He reasoned that professional athletes are an asset to team owners in the same way as are (say) plant and equipment are to other business owners. Their physical talents and abilities deteriorate over time in the same way as machines wear out. So why shouldn’t team owners be able to claim a depreciation allowance on players as business owners do on capital assets? Of course, owners don’t own players in the same way as businesses do plant and equipment; it is the contracts (or, more precisely, contractual right to services) that the team owners own. But the principle is the same… isn’t it?

Veeck convinced the Internal Revenue Service that it was. This paved the way for what is now known as the “Roster Depreciation Allowance.” Upon purchase of a sports team, the purchaser can deduct the full purchase price as a business expense – under the heading of depreciation – over a 15-year period. Owners commonly keep two sets of books, one for business purposes that omits the deduction and one for public and IRS inspection including the deduction. It is interesting to note that, while businesses usually strive to turn the best possible profit-face toward the public, sports businesses are now so dependent on public subsidies that they minimize the public perception of their profit to exaggerate their need for the subsidies.

As students of economics, what do we make of the Roster Depreciation Allowance and Bill Veeck’s financial impact on professional sports? There is no doubt that player abilities do depreciate over time. Insofar as human capital is analogous to non-human capital, this means that we can conceptually assign a role to player depreciation in baseball and in sports generally.

The operative word in the previous sentence is “conceptually.” In practice, there is no perfect formula for calculating depreciation in business generally because no system of real-world cost accounting can correspond to the theoretically correct economic conception of “cost.” That caveat goes double – or triple or quadruple – when applied to player depreciation. A sports team consists of players whose abilities are declining – along with other players whose abilities are increasing. The rates of increase and decrease vary for each player. There is no way to “mark to market” all these changes in any objective way; we cannot even attempt such a task without spending inordinate amounts of time and money. So, instead, we use a great big blunt instrument like the “Roster Depreciation Allowance” and pretend that we are solving the problem. But have we made things better than they would be without any depreciation allowance at all – or worse? A priori, we cannot even know.

The ideal solution would be to simply allow businesses that prefer the depreciation accounting tool to use it. If they prosper, it must be because that form of accounting improves their operations on net balance. If not, the accounting method will fall into disuse. Alas, that is not what happens. Depreciation allowances like the Roster Depreciation Allowance are used in order to legally avoid taxes. And this is the clue to the solution to the problem.

The political left wing angrily claims that sports-team owners are avoiding taxes that the rest of us are somehow paying. The right wing claims that more and more lavish depreciation allowances will usher in more productivity and prosperity. Both sides are missing the point. The problem is not depreciation per se. The problem is taxes. Because both left and right now support big government, both take taxation for granted. Framing the issue in terms of an age-old punchline, both sides agree on what government is and are now arguing only about the price. Yet if taxation did not exist, the motivation for employing any uneconomic form of depreciation would be absent.

Bill Veeck could be said to have ushered in the modern era of public subsidies for sports teams, even though he would undoubtedly have thoroughly disapproved of those subsidies. His impact was not only accidental but also superficial, as we just showed. Somehow, it seems not only ironic but also fitting that Veeck himself apparently did not benefit from IRS approval of the Roster Depreciation Allowance. In order to qualify for it, 80% ownership in the team was a necessary precondition. Veeck himself advertised his 54% stake in the White Sox, going so far as to invite reporters to enjoy “54% of a cup of coffee” with him. Veeck was hugely unpopular with his fellow owners, never more than with Charles Comiskey of the White Sox, whose family had owned the team since the 19th century before Veeck’s group acquired a majority interest. Comiskey refused to allow Veeck to obtain the additional shares necessary to qualify for the tax benefit.

Using Economics to Improve the Team on the Field: the Last Link in the Chain

In baseball’s first century, team owners routinely used economic logic in the operation of the business end of baseball, which in turn often affected the performance of the team on the field. Since team performance is the most important element representing the “product” that fans buy when they support a sports franchise, fans were affected by the actions of team owners. Usually, these effects were adverse. This was true even though the interests of team owners and fans were ultimately aligned by the principle of voluntary exchange; if the owner’s product does not please fans, they will reject it and the owner will go broke.

Bill Veeck recognized the alignment of interests between fan and owner. He sought to serve the interests of the fan while serving his own. He strove to increase the quality of the produce fans received in every conceivable way by concentrating particularly on the non-performance aspects of the sports experience. He gave the fans numerous kinds of “fringe benefits” associated with game attendance. He made attendance a family oriented, family-friendly experience. He created a psychological bond between team and fans. He did all these things while increasing his stadium capacities, creating radio broadcast rights as a revenue source and using leverage and tax avoidance to improve his rate of return on investment.

That does not mean that Veeck ignored the necessity of putting a winning team on the field. Quite the contrary; Veeck’s teams always improved competitive performance markedly. The Milwaukee Brewers won three league pennants during his ownership. The Cleveland Indians won their first World Series Championship in 28 years within three years of his arrival. The Chicago White Sox won their first America League pennant in 40 years in his first year of ownership. Even the hapless St. Louis Browns improved their play under his stewardship.

Veeck was a student of baseball. He was not a slave to traditional methods and was perfectly willing to admit mistakes and change course when circumstances seemed to dictate it. In certain areas, his operations were a forerunner of today’s economic theory of baseball. But it cannot be said that Bill Veeck cracked the code of applying economic logic to the problem of improving team performance on the field.

From a purely business standpoint, this was his only failure as a baseball-team owner. Considering the magnitude of his achievements, we can hardly hold this limited failure against him. It was over a decade after his death when that code finally was cracked and economics finally assumed its full and rightful status in the field of professional sports. That episode will constitute the final installment in our ongoing history.