Fiscal Sanity: Article Analysis

Jayson Stark, ESPN columnist, presents an interesting argument of the downfall of baseball after free agency. He uses sarcasm and slight humor to introduce the reader to the topic of free agency and uses the argument style of comparison and contrast to predict what today might have held had there been no free agency. But within his column, player agent Tom Reich states, “The people who criticize free agency to easily today don’t realize how bad baseball was twenty-five years ago” (Stark). It is Stark who realizes that the talent of the game has improved, but the overall passion in each player may have decreased.

Anyone who has been involved in an organized sport, whether it is backyard football or a high school sports team, knows that these sports all have organizations that are responsible for setting rules, determining conditions of play, and penalizing individuals who infringe the rules. Some of the organizations like the National Football league and the MLB are familiar to most people, the rules they follow are not generally understood by anyone who is not closely associated with the sport. Most fans and sport critics assume that what is happening inside these organizations are of little concern to them. However, this is not the case. In the MLB, the New York Yankees spend an excessive amount of money every year to obtain big name players. A

The Mechanism Contract dealing in Major League Baseball requires a mechanism, a basic “formula” of how to go about the contracting process. In this case, agents and MLB managers follow a form of the Sub-game Perfect Mechanism when negotiating player contracts. Sub-game Perfect Mechanism (SPM) utilizes Sub-game Perfect Nash Equilibria to reach equilibrium between agents. Sub-game Perfect Mechanism involves a “game” between two agents, known as players.

Every year, it becomes more obvious that many sports in America have problems. For years, Hockey has been criticized for its excessive violence. The National Football League has also been scrutinized for this reason as well as the fact that many of the top players have constantly been in trouble with the law. Major League Baseball is no different. The situation with baseball is more complicated, and is not only ruining the game itself, but also drawing millions of fans away from the sport. The biggest problem is with the high salaries paid to athletes. These salaries are taking the competitiveness out of several sports, especially baseball, where there is no salary cap. Action must be taken

What this breaks down to is that a player with less than three years experience has to settle for whatever the team that owns his rights as a player offers him. A player with more than three years but less than six years experience in the majors can file for an independent arbitration meeting if he feels that he is worth more than the contract that he signed when he was in his first three years in the majors. The arbitrator then decides if the player is worth more money or if he is not worth more money. Finally, after a person has spent six full seasons in the major leagues he is then eligible for free agency which means he is capable of going where the money takes him and that is what most of these players do. Whether that is right or wrong nobody knows, but the fact of the matter is that free agency is causing problems in baseball.

For many years the collective bargaining agreements for professional baseball teams limited the areas of negotiations to primarily salary, insurance, and pensions. Then in 1970, a new provision provided for a tripartite grievance arbitration panel to replace the commissioner as the last step in resolving disputes. The modern era of professional sports and collective bargaining began in the mid-1970s. Arbitration of salary disputes in baseball was first provided in the 1973 agreement. The arbitrator, however, must choose the final salary offer of either the player or the team without any compromise. The 1976 baseball agreement first allowed players to become free agents, after six years of service, and limited to newer players status, under which teams reserve the sole right to negotiate a contract with the player. The reserve clause is a most unusual labor management principle in that it takes from players a basic right enjoyed by other American workers to sell their services to any employer. The 1970s was a decade that saw the MLBPA make its most significant gains at the bargaining table. The three most important changes to the economic system in MLB were the establishment of a grievance arbitration panel, the institution of free agency, and the start of salary arbitration (Rascher,

For prospects that are forced into the minor leagues for development, the road to the majors has proven a grueling process and the majority of players never make it to the major leagues. Extremely low salaries and bonuses in the minor leagues has become an ongoing, controversial topic between MLB commissioner Bud Selig and minor league players 17. A fast food worker makes between $15,000 and $18,000 a year, which is two or three times as large as minor league players’ average salary, so minor league players are forced to have multiple jobs throughout the year 18. The majority of minor league players lie below the federal poverty level and while MLB salaries are rapidly increasing, minor leagues salaries remain constant. The MLB receives exemptions

In one of the most profitable industries in America, the National Basketball Association has increased in popularity and in revenue since their incorporation. With these growths, stardom and income have increased exponentially for the players. As the value of the players have risen, the salary cap has followed. Although the salary cap has risen, star players continue to feel like they are worth more on the free market than they are being paid. LeBron James, for example, is invaluable to the NBA’s bottom line. Yet, because of the salary cap, he gets paid around the same as Grizzly’s guard Mike Conley who is not considered a top-five point guard in the NBA. Although the NBA salary cap is in-place to promote competitive balance between the large and small clubs, the result is talent rich teams can keep getting richer because of low relative maximum player contracts

College athletics is a very diverse organization involving a lot of students, mainly as the players, and non-students such as officials, coaches and others. The leading governing body for college athletics is the National Collegiate Athletic Association, NCAA. College sports is itself a big industry involving sponsorships, TV networks, endorsements, retail products and marketing. But in spite of it being a big business, the players are not compensated for the work they deliver. This opens up two opinions: should players be paid, or should they not? Kristi Dosh’s article, “The Problems With Paying College Athletes”, (UNCLEAR)discusses where the coaches’ money come from to pay student athletes. On the other hand, Mark Cassell’s article, “College Athletes Should Be Able To Negotiate Compensation”, debates how athletes should be able to negotiate their compensation. This paper will evaluate the evidence of both Dosh and Cassell in order to determine which argument is more effective.

Whether it be baseball, football, soccer, or basketball, sports are appreciated not only in America, but all over the world. One of these sports that is particularly popular in America is Football. The immense crowds of people who sit at a stadium or on the couch to watch a game never fail to recognize every single play on the field; however, many fans pay little to no attention to one of the most important components of the game, the player-association relationship. When signing a contract with an NFL team an NFL player is effectively dedicating his life to his new organization. His duty is to play for his team in order to make the organization money, and money they make. In the NFL last year “each team received $226.4 million” (Brady 1).

Fiscal Policy can be explained in many ways, for example. Fiscal policy is the use of the government budget to affect an economy. When the government decides on the taxes that it collects, the transfer payments it gives out, or the goods and services that it purchases, it is engaging in fiscal policy. The primary economic impact of any change in the government budget is felt by particular groups—a tax cut for families with children, for example, raises the disposable income of such families. Discussions of fiscal policy, however, usually focus on the effect of changes in the government budget on the overall economy—on such macroeconomic variables as GNP and unemployment and inflation.

A long term fiscal sustainability plan is to have an economic growth plan. Too often we narrow down between addressing the fiscal challenges and growing the economy. If properly structured, they are equally supported. The fiscal imbalance not only threatens the health of the economy, but it also confines the capability of future generations to meet the challenges that cannot be predicted. Economic growth is crucial, but that alone cannot solve the deficit and debt issues. Programs like Social Security, Medicare and health care programs grow faster when the economy grows which counteracts some of the deficit decrease benefits of the economic growth. One of the options for deficit reduction is to redesign the tax system. One side believes that

The economy fluctuations in today’s world have become one of the most important factors in determining the direction of an economy growth. Non-stable economy can harm and slow the development and growing rate of a nation. There are many tools to stabilize the economy and reduce the frequency and the altitude of economic fluctuations. Among these tools are the fiscal policy and monetary policy. This report discusses the fiscal policy and why the governments use this too to stabilize the economy and encounter the economic fluctuations.

The inefficiencies discussed in the previous section are not the only sources of inefficiencies in the labor market for professional sports, but they do appear to be the most prevalent and most impactful. These inefficiencies discussed appear to be more impactful on players, observed in the form of inefficient determinates of MRP in most of the big four sports leagues, free agency restrictions, and the uniform rookie draft. The owners do not go without being effected by inefficiencies witnessed by predicament organizations face when signing aging stars to lengthy, high paying contracts. The fantastic thing about these inefficiencies mentioned is that there appears to be ways to correct for them. Correcting for the inefficient MRP models and

Analyzing the inefficiencies of the labor market for professional sports begins by exploring how professional athlete’s salaries are determined. Wages in any labor market are predominately attributed to an individual’s marginal revenue product. There are several issues that arise across different the different sports leagues when determining a player’s MRP. The most obvious and notable issue is how MRP is determined. The exploration of MRP is the prime example of this problem.