Boston Forever?

Many have commented lately on the recent ascendance of Boston's professional sports teams. The Red Sox reign as champions, the Patriots have put together something of a dynasty and are on the (likely) verge of a perfect season, and even the lowly Celtics have posted the NBA's best record at the half-way mark. These things come in cycles, we're told, so Boston fans better enjoy it while they can.

True, much of life comes in waves, and for sure the three (major) Boston sports teams have all peaked simultaneously. But is it necessarily the case that this peak is a fortuity? Is it plain luck that Boston now features the nation's best squads? What if it's not luck?

It's not luck. It's law. Boston's teams are among the best this year and, if the laws of sports have anything to do with it, will remain among the best, maybe forever. How does the law contribute to Bostonian dominance? Here's how:

1. The best article in the history of sports law was not written by a lawyer. Simon Rottenberg, a professor of economics, writing several years before Ronald Coase gave us his supposedly seminal paper (which paper was the primary basis for Coase's Nobel award), wrote "The Baseball Player's Labor Market," published in the Journal of Political Economy (1956). This is a great paper and a wonderful read. Basically Rottenberg's idea is that the initial assignment of property rights has no impact on resource allocation, all in reference to baseball players. To quote the paper, "It seems, indeed, to be true that a market in which freedom is limited by a reserve rule such as that which now governs the baseball labor market distributes players among teams about as a free market would." In other words, the rule of law (assigning property rights) doesn't matter; players will end up on teams that more highly value their services regardless of what particular restriction exists on the transfer of their contracts. (The idea that the law doesn't matter is dangerous thinking, if "danger" is defined as me losing my job teaching law.)

2. By the way, contrary to popular belief, there is no Nobel Prize in Economics. The Economics prize was first awarded nearly 70 years after that in the other disciplines, and bears a different name (and is signified by a different medallion) than the other prizes. See the full account in Wikipedia, here. (I include this point to settle a bet; I won!) Also by the way, Coase's paper, called The Problem of Social Cost, stands as the most-cited academic article in the history of legal scholarship. Coase of course was also not a lawyer. The fact that both Coase and Rottenberg were not lawyers is pure coincidence, unlike Boston's sports dominance.

3. So Rottenberg's Theorem (as TSLP will henceforth call it) suggests that, when figuring out which teams have the best players (and thus the most wins) , we should try to figure out which teams most highly value those players. The law either is irrelevant to the distribution of players (one strong reading of Rottenberg's Theorem) or at best should grease the skids to bring about the transfer of players to their "best" teams as cheaply and costlessly as possible. Do we see this? Do we see the rules of sport helping to bring the best players to the best markets?

4. Start with major league baseball. MLB has several rules that encourage parity among teams: the worst teams draft first, the poorest teams receive revenue sharing, the highest-payroll teams pay a luxury tax. Some of these "parity rules" backfire, however. Losing teams get premium draft choices, true, but these teams are prohibited from trading those choices. This rule is supposed to help ensure that these teams get great players, but it actually diminishes the value of those draft choices. Poor teams often have to pass on the best draftees in favor of lesser players who are more signable. (The high cost of the best draftees would require the poor teams to risk too much money on one player.) Other MLB practices also counteract the parity goal. Teams share revenue and some pay a tax, but baseball's lack of a salary cap allows teams to increase their payroll without limit. Although MLB has a league-wide television contract in which all share, teams are allowed to sell television and radio broadcasts of their games locally, thus providing a huge revenue boost to teams in large, fan-crazy markets.

The final rule that in the end helps the best players go to the biggest markets is the (commissioner's) rule, stemming from Bowie Kuhn's 1976 decision to void the sale of several Oakland A's stars to the Yankees and Red Sox, that prohibits including more than a few million dollars in any player transaction. This rule keeps the poor teams down. Instead of being able to sell their young stars for cash (something like the 50 million dollars the Red Sox coughed up for the contract rights to star pitcher Daisuke Matsuzaka of the Japanese league) which could then be invested in established major league players, poor clubs are obliged to take back most of their trade revenue in the form of risky minor league players. The cash limitations only further impoverish the poor teams. Nice, if the Sox are in Tampa Bay and need to pile up some wins.

5. Let's assume the people who run MLB are not stupid. It seems pretty clear that the various rules of the game basically ensure that baseball hotbeds like New York and Boston will be able to capitalize on their economic advantages. These rules also make it difficult for the poorer-market teams to stand in their way. Indeed, why wouldn't MLB want to have strong teams in big markets like Boston and New York? Don't all the teams profit, if indirectly, from the Yankees' big profits, both from revenue sharing and from large gates when New York is in town? Baseball would be crazy to run its league any other way.

6. To shorten this up (the internet is nearly full), similar sets of rules are afoot in the NBA, thus again helping to ensure that winning teams are to be found in the best markets. The NBA has a "soft" salary cap and a steep luxury tax in place to help maintain competitive balance. Nevertheless, wealthy teams can spend over the tax threshold if they are willing to pay. Thus, exceeding the tax line provides an explicit and tacitly approved method for the wealthy teams to generate competitive advantages. (The Celtics, naturally, went well over the tax threshold in acquiring its many star players this off-season, especially with respect to James Posey, a valuable substitute player whose entire contract is "taxable" at twice its amount.) Now of course the fact that the NBA has more limits than MLB makes it harder for the wealthy teams to translate their wealth advantages into wins. (As I write, the New York Knicks provide some evidence of this, although I'm sure a winning streak will start any day now.) How is the NBA served by having a bad team in New York but a strong one in New Orleans, where no one comes? Here's the problem with Rottenberg's Theorem: it's correct, but it does require low transaction costs for players to wind up on the team that values them most. The NBA is full of transaction costs, namely the rule that unnecessarily limits trades according to the salaries of the players traded, requiring rough equivalency. The NBA also precludes the trade of draft picks in consecutive years. This is crazy. Look for the NBA to iron out these transaction costs by eliminating some of these impediments to trades. We'll get a winner in New York somehow.

7. Yes, even the parity-crazed NFL has its Rottenberg examples. A rigid, hard salary cap, even-steven revenue sharing, exclusive national contracts the proceeds of which are equally divided, league-wide merchandising, etc., yet still, the wealthy teams do have opportunities to exploit their wealth. How? Teams may get the same revenue, but they vary in their value of the franchises. The Cowboys and Patriots, for instance, have a much greater franchise value than do the Cardinals or the Rams. Robert Kraft and Jerry Jones cannot, under the strictures of the cap, offer players all that much more in salary than their competitors. But they can offer benefits that are uncapped, such as superior training facilities, stadium quality and comfort, and, most importantly, coaching acumen. Coaching salaries are uncapped, so teams can compete for players in that market. Owners know that, despite the requirements that they share much of their revenue, their investments will still pay off in increased franchise values. As franchise values continue to skyrocket, look for owners of the most valuable franchises to continue to acquire the most valuable players.

8. For a long time it's been accepted as a given in the world of sports law scholarship that league games are a joint good, and that both teams to a contest benefit financially from close competition. Fans wouldn't come to games, the argument ran, unless both teams had a roughly equal chance of winning. Boston's stunning success questions that bromide. Parity may be overstated.

9. It's often thought that the snazzy NFL represents the future of sports, supplanting the NBA in the wake of Michael Jordan's retirement. Maybe not; think again of the claimed need for parity. Of all the sports, baseball would seem to be most in need of close competition. Baseball stages many games over a long season, with teams typically visiting the home team for a three- or four-game set of matches. That's a lot of baseball to sell. Yet among the major sports, baseball has the fewest parity rules. (Perhaps some level of parity is inherent in the game itself, as even the best teams win only about 60% of the time.) Perhaps it's MLB, the much maligned, antiquated old grandpa of the modern sports, that has it about right: it has set up its rules in such a way as to make pretty sure that strong teams are fielded nearly every season in its best markets. The NFL, on the other hand, with the most parity rules, may be the league least in need of parity. The Patriots just won 100% of their games, while at the same time becoming the NFL's dominant television feature. I thought we needed parity because everyone would be bored otherwise? Not so; instead of parity among teams, what may be more important is that the biggest markets have the best teams.

10. Bostonians love sports, and will pay to watch them. Economics matters; sometimes rules don't. Look for Boston to field winners for a long, long time.

Why Study Sports Law?

Recently over at some of my favorite websites geared to sports economists, an interesting discussion arose over whether or not and why a trained economist should spend his days studying sports. The biggest downside to the study of sports is that, apparently for an academic economist, the subject of sports economics veers dangerously close to career suicide. The upside? Here are the initial thoughts, posted by economist Justin Wolfers on the Marginal Revolution site. Although you can judge for yourself, Wolfers basically says sports is interesting, fun, culturally significant and (probably most importantly) produces lots of decision-points that are transparent and thus ripe for study. (Wolfers also says sports-lingo is great for classroom analogies, but this sort of thing is considered a problem in law teaching, not a virtue.) Other economist-bloggers have weighed in. See here, here (suggesting that, because sports research is fun, others think it can't be work) and here (sports economics is instructive).

That's fine for sports economists. But more importantly, what about me? Should an academic lawyer study sports? Is it okay to have fun at work? In other words, will I make tenure?

1. First, some frank career advice for want-to-be sports law professors. If you are poking around for a job as a law professor, either as a newbie or a lateral transfer, it is clearly to the better if you do not sell yourself as a specialist in sports law. The best bets? Unless you're a hugely well-credentialed faculty candidate, go for one of the business areas, such as commercial law, securities law or taxation. These are always need subjects for law schools and most professors don't want to teach them. If you think you can swim with the big fish and are willing to court failure (or banishment to a low-tiered law school), then go ahead and declare yourself ready to write in federal courts or constitutional law or criminal procedure. Fun areas, lots to read and write, but everyone is here or wants to be here. A candidate in constitutional law, for instance, competes for a position both with other novice candidates and with entrenched professors who have long had their covetous eye on that open course. Finally, if you don't have the credentials for one of the big ponds and just can't in good conscience bring yourself to teach business law, you might try to get lucky with a hot "boutique" subject, such as intellectual property or environmental law. Although you'll have precious few potential job openings, you will get a favorable reception and face diminished competition. But representing yourself as a specialist in sports law? Sports law is a very small boutique, but it's not hot. No big fishes swim here: most of the sports law scholarship is descriptive at best. No law faculty in America, in assessing its needs for the coming hiring season, will put sports law on the list. Career suicide? You can't kill a career you won't even get started.

2. So how did I come to sports law? I spent the first half of my career (that's assuming I live to at least 100) specializing in criminal procedure, writing the long articles for the big publications. Great field, until the O.J. Simpson verdict coupled with a series of Supreme Court decisions on the federal sentencing guidelines killed my faith in the system (that would be OJ) and my interest in sentencing law (that would be the Supremes). I went from caring deeply to not at all. What to do? I considered resigning my post and returning to my first professional love (litigation practice: I like to argue), but cooler brain regions prevailed, so I decided to cast about for a new academic field. Feminist jurisprudence seemed full-up, so here I am, thanks to an agreeable dean and a lifelong interest in sports. I suspect my story is not unusual: many tenured-up professors like me sneak in to sports law from the side door. For beginning law professors who want to write about sports law, often they will hide their true interest, promising overworked hiring committees a lifetime's interest in business law or civil procedure or something. Sports law is presented as an insignificant part of the teaching package, only to become the primary focus of scholarship a little down the road, when one hopes hiring committees have lost their institutional memory and have no members in common with the tenure committee. So these professors sneak in too.

No one comes through the front door into academic sports law.

3. So why do it at all? Why devote your career to teaching, studying and writing sports law? We lawyers cannot simply piggyback on the economists here. Lawyers study law, we don't model human behavior (we just presume it), and so sports presents no special opportunity to cull data. Even worse, the collection of rules and statutes that apply solely to sports (such as Title IX) that are properly described as "sports law" are few and unrelated. Law professors usually refer (quite inexactly) to all kinds of legal doctrines as "sports law" to the extent those legal doctrines affect sports (such as the application of antitrust law to sports leagues). Thus sports law in this looser sense is little more than the application of all of law (theoretically) to sports situations. A legal subject that theoretically includes all of law is no subject at all. So to profess to make "sports law" one's particular field of study usually means, for most law professors, that they study some distinct area of law (antitrust, labor, first amendment) as that distinct area applies to sports issues. These folks are not really studying and professing sports law, not as it might be, as a separate and intellectually coherent body of law. To profess sports law per se, in a conception that imagines it as a distinct body of law, requires some substantial justification.

4. Here's my justification: I profess sports law because it needs it. Sports law is exactly what its critics charge: an incoherent, undeveloped, underwritten, poorly described afterthought in the law school curriculum. There is no "sports law" because no one's done the work to adequately develop it. Perhaps its current plight suggests that no coherence is possible, that sports law is and will remain a discrete series of issues resistant to abstraction and generalization. But the same might have once been said of the law of commerce or the law of the environment. There seems to be enough similarity in the organization of our sports leagues and even the structure of our games to generate a similar uniformity of structure in the relevant legal doctrine. Sports leagues and competitions entail a unique blend of cooperation and competition and thus might deserve a unique set of legal doctrines. It may take me well past my 100th birthday to make progress, but I do hope to be part of the effort to create the law of sports.

5. And sports is fun.