Levin steps up to bat for small guys

Yale's President partners with Will, Mitchell, and Volcker on MLB Blue Ribbon Committee.

"Baseball is part of the fiber of American life, and it must, by nature, appeal to and reflect the accessibility that is one of this society's great virtues. Classes and institutions are not closed off in a democracy and thus baseball must not be either." So claimed A. Bartlett Giamatti, SY '60, GRD '64, a former Yale President who also served as Commissioner of Major League Baseball (MLB), in an interview published in Life magazine in 1988.

KATE MORAN/YH President Richard Levin answering questions at the press conference announcing the Blue Ribbon Committee's findings.

Giamatti's words have probably held a particular weight in the mind of University President Richard Levin, GRD '74, over the past year and half. During his term as Commissioner, Giamatti was particularly concerned with "social justice" issues and made a point of hiring minorities as coaches, managers, and administrative executives; Levin has likewise been occupied with restoring fairness and equal opportunity to the game of baseball. A well-respected economist, Levin was appointed in February 1999 to a four-person panel—the Blue Ribbon Task Force, as it was called—put together by current Commissioner Bud Selig to address the growing disparities in revenue and payrolls among Major League teams.

Among baseball fans, it is common knowledge that not all teams are created equal. The New York Yankees, for example, have a payroll of about $115 million including benefits, while other teams, such as the Minnesota Twins and the Florida Marlins, barely reach $20 million and simply cannot afford to sign top-name players. By no coincidence, the Yankees have won three out of the last four World Series. Levin's task, then, was to work alongside fellow panelists Paul Volcker, George F. Will, and former Senate Majority Leader George J. Mitchell to offer suggestions for narrowing the gap between baseball's "haves" and "have-nots."

The task force

On Fri., July 14, reporters and baseball officials gathered in a conference room tucked away on the seventh floor of the Waldorf-Astoria Hotel to hear the Blue Ribbon panel present the conclusions of its study. For the prevoius 18 months, Levin and his colleagues had scrutinized the financial records of each of the 30 Major League teams, analyzing the relationship between the size of franchises' payrolls and revenue, and their success on the field.

According to Levin, each of the four panelists brought valuable background experience to the study. Volcker, the former Chairman of the Federal Reserve, is an internationally-known economist; Will has written several books on professional baseball, including the best-seller Men at Work; Mitchell, who worked extensively on the Northern Ireland peace process, possesses "impressive skills as a writer and drafter of careful language." Hardly an upstart, Levin himself had previously served as an advisor to Giamatti and his successor, Fay Vincent, in the late '80s and early '90s. "I worked as a consultant at a time when the Commissioner's office wanted advice on possible mechanisms that could be used to restructure the economics of player compensation," he said. "I looked at a variety of solutions, including the salary cap, though I was not in favor of that."

Levin and his colleagues distilled their diverse knowledge of baseball down to one simple conclusion: "Baseball's current economic system has created a caste system in which only high revenue and high payroll clubs have a realistic opportunity to reach the post-season," Mitchell said. "That is not in the best interest of baseball fans, clubs, or players." Since 1994, they said, when the players' strike shortened the season, every single postseason game has been won by teams with payrolls in the top 50 percent, and nine out of 10 teams that played in the World Series had payrolls in the highest 25 percent. In an even more staggering announcement, the panel claimed that only three out of 30 franchises—the Yankees, the Colorado Rockies, and the Cleveland Indians—were profitable over the past five years; all other clubs sustained significant operating losses.

Blue Ribbon solution

How to even out this "competitive imbalance" among franchises? Levin and his colleagues suggested, first, that MLB levy a 50 percent tax on clubs whose payroll exceeds $84 million and encouraged all teams to set their minimum payroll at $40 million. Second, they recommended that all clubs pool at least 40 percent of their local revenue, which consists of money earned from ticket sales, local television and radio fees, local advertising, and ballpark concessions. In addition to revenue sharing, the panel advocated the use of a central "Commissioner's Pool" to allocate money to low-revenue teams that met the $40 million payroll minimum. Among several other suggestions, they also suggested that some franchises consider relocation to cities that can offer better stadiums and higher ticket sales. "We recommended against shutting down franchises," Levin commented. "But we did recommend relocation in cases of cities that aren't going to support teams." He referred to several "obvious candidates," which must include the Montreal Expos and Minnesota Twins.

Pros and cons

According to Levin, MLB was open to the panel's proposals. "The Commissioner is quite supportive and enthusiastic," he said. "I think the great majority of owners are favorable, though different owners have different reservations. I think players were pleased the report didn't suggest a salary cap. We wanted to provide realistic ideas for owners and players to come together."

For all of the positive reception, especially from the Commissioner, the panel's report did receive inevitable critiques from the press. In an interview on ESPN this past summer, Marvin Miller, the former Executive Director of the MLB Players' Association, offered scathing criticism: "I'm not impressed with the proposals. I had hoped that there might be some original ideas. And I had hoped that the report would be a lot more scholarly than it is." He went on to question the panel's basic research methods, claiming, "I'm troubled by the fact that the panel chose to make its case by using the industry's figures, [provided by the owners], which are very selective figures...You know, the owners have always been reluctant to turn over any kind of figures, even when they were obligated to do so, because they know that they would be analyzed and subject to a lot of scrutiny...Apparently the owners' figures are what the panel is relying on."

Levin subsequently dismissed Miller's criticisms, answering that he was "completely off-base." According to Levin, "the data that [Miller is] questioning is profitability. We didn't rely on it. The thrust of our analysis and our recommendations is focused on the link between the size of the market of each team and its payroll and the link between these and competitive success. If you spend more on players, you're going to win. We muster a lot of evidence to support that."

Andrew Zimblist, an economics professor at Smith College and author of Baseball and Billions, leveled criticisms similar to Miller's in a recent article in the Sports Business Journal: "The Blue Ribbon report unquestionably loses some credibility by uncritically regurgitating ownership claims of ubiquitous financial woes." He goes on to say, however, that "these and other shortcomings have little to do with the main thrust of the report's analysis." In a personal interview, he added that "I think a large part of [the report] is sound. I think the arguments they make on revenue sharing are all quite sensible. It's not as penetrating or as thorough as it could be, but there's still some valuable things in it." Whether the Committee's proposals are implemented or not, Levin and his colleagues succeeded in heigtening awareness about inequality in baseball, something at which Yale Presidents excel.

Graphic by Sarah England.

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