Vol. 10 No. 10 (October 2000) p. 528-531.

THE MONEY PITCH: BASEBALL FREE AGENCY AND SALARY ARBITRATION by Roger I. Abrams. Philadelphia: Temple University Press, 2000. 218 pp. $27.50. ISBN 1-56639-774-X.

Reviewed by Lawrence Baum, Department of Political Science, Ohio State University.

A good many people at academic institutions have written about baseball. There are teacher-novelists such as Mark Harris. (Harris's BANG THE DRUM SLOWLY was turned into an excellent movie, but THE SOUTHPAW was an even better novel.) Historians write biographies of players and histories of the game itself. Also, legal scholars, sociologists, and economists increasingly study baseball along with other sports from their own disciplinary perspectives.

I suspect that academics are drawn to baseball chiefly by their interest in the game; for scholar-fans, it is a lot more fun to write about baseball than about most other subjects. However, it is not difficult to justify such work, because baseball is one arena in which to probe issues of interest to scholars.

Roger Abrams is Dean of the Northeastern University School of Law, and he has written extensively on labor arbitration. He is also a lifelong baseball fan, and he has served as a salary arbitrator in baseball. In 1998 he published LEGAL BASES: BASEBALL AND THE LAW, which examined several legal conflicts in baseball history. THE MONEY PITCH, his second baseball book, focuses on the processes that set the salaries of major-league players. Although published by a university press, the book is aimed primarily at a popular audience. Abrams draws a good deal on economic theory, including game theory, but he presents elements of theory in a way that is quite accessible to the non-expert. For that matter, the book should be accessible to readers with little prior knowledge of baseball.

Abrams begins with a chapter of historical background on baseball salaries, one in which he discusses the sequence of events in the late nineteenth and earlier twentieth centuries that produced the traditional salary system for players. In that system, players simply negotiated salaries with their team. Chapter 2 examines salary patterns today, putting them in the context of the complex system that currently exists: depending on his seniority, preferences, and other conditions, a player (1) negotiates salary with the team that holds rights to his services, (2) goes to arbitration, with an arbitrator choosing between the player's and the team's salary proposals, or (3) becomes a free agent, negotiating with any teams (including his current team) that are interested in his services.

Chapters 3 and 4 discuss the economics of player salaries and the participants in the processes that determine salaries, primarily under the current system. (In addition to the players and team owners, Abrams discusses player agents and the players' union.) These chapters are rich in

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data and detail, and they provide a very good picture of baseball's salary system.

The four chapters that follow look more closely at the actual operation of baseball's salary systems. Chapter 5 discusses what would have happened if Roy Hobbs--hero of Bernard Malamud's novel THE NATURAL and the ensuing movie with Robert Redford--had negotiated a contract with the New York Knights after his heroics. Chapter 6 focuses on negotiations conducted over the years by Ty Cobb, one of baseball's greatest players but definitely not a hero. Chapters 7 and 8 look more broadly at the operation of salary arbitration and free agency. Chapter 9, on "Player Attitude and Disloyalty," veers a bit from the book's primary concerns to examine player movement from team to team.

The book is well written and interesting. As the chapter on Roy Hobbs indicates, Abrams uses illustrative material very well. The book has a wealth of information, and even readers who know a good deal about baseball as a sport and business will learn new things. For example, Abrams's description of his own experience as an arbitrator provides a good vantage point on the arbitration process. And he employs economic concepts effectively to help in understanding the salary-setting processes discussed in the book.

As would be expected in a book written for a general audience, THE MONEY PITCH does not have a comprehensive framework in economic theory. Nor is information relating to the book's concerns analyzed as extensively or as systematically as it might be. But Abrams provides source notes and a bibliography that guide readers to other sources on baseball history and economics, many of them written for scholars. And his book provides a good deal of theoretical and empirical material that is relevant to scholars.

For me, the most interesting of the book's concerns is the revolution in players' salaries that resulted from rule changes. For most of the twentieth century, major-league players were not paid especially well. According to one set of calculations (Weiler 2000, 119), the mean player salary was around four times the average salary of workers in the U.S. between 1947 and 1973 -- hardly poverty wages, but far less than the players' value to their employers. And players' short careers meant that many of them did end up in poor economic straits later on. But their pay rose dramatically in the last quarter of that century, and by 1999 their average was reported to be fifty-six times that of the average worker. That change underlines how severely the players' salaries were depressed for most of baseball history. Why was the players' pay kept low for so long, and what happened to bring about its increase?

As Abrams shows, the long-time depression of players' salaries reflected the ability of team owners to prevent competition for players' services. Under the "reserve system," players were required to sign contracts that bound them to their teams permanently unless they were traded or released, so their bargaining power was greatly reduced. Occasionally a rival league would arise, temporarily increasing players' bargaining power. However, such leagues were attacked and destroyed. The American League was too strong to destroy, so the preexisting National League merged with it at the beginning of the twentieth century.

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Baseball's reserve system would seem to violate the federal antitrust laws. However, in a five-paragraph opinion by Justice Holmes in 1922, the Court held that major-league baseball was not engaged in interstate commerce and thus was not subject to the antitrust laws. In 1953 the Court revisited the question. Even though the Court's reinterpretation of the commerce clause after 1936 had made it clear that the antitrust laws could be applied to baseball, the Court reaffirmed its 1922 decision in a one-paragraph per curiam opinion. The Court's reasoning was that Congress had not seen fit to overrule the 1922 decision, so the Court should not disturb settled law on its own. The Court once again reaffirmed its position in a much longer opinion by Justice Blackmun in FLOOD v. KUHN (1972), an opinion that rhapsodized about the great players of past eras and then upheld the system that had allowed most of those players to be paid a fraction of what they could have earned in a free market.

In 1998 Congress finally acted to eliminate the part of baseball's exemption from the antitrust laws that applied to the employment of major- league players, but by then the old salary system had been overthrown. Acting within the existing exemption, the players weakened the reserve system and greatly enhanced their bargaining power through the establishment of salary arbitration and -- more important -- free agency. The sort-of have- nots had become haves. How did they do so?

One part of the answer is that the traditional system was in disequilibrium because of the gap between players' salaries and what they could have obtained in open competition for their services. Perhaps it was inevitable that the system eventually would break down. However, team owners had maintained the reserve system against challenges for a long time. That the players were finally successful in the late twentieth century might be explained by three additional factors:

1. The players, and especially the leaders among them, showed greater solidarity, foresight, and negotiating skill than they had in the past. Threatened by owners and faced with largely hostile fans and sportswriters, the players still pressed forward with strikes and other actions to strengthen their position. In all likelihood, increasing levels of education among players had something to do with this development.

2. The team owners made a series of bad judgments, in part because of their hostility to proposed changes in their traditionally dominant position. One crucial error came when the owners could not prevent the establishment of free agency: they then demanded that only a limited number of players be eligible for free agency in any given year, a demand whose delighted acceptance by the players strengthened the bargaining position of those who WERE eligible for free agency and ultimately benefitted all players.

3. The players were lucky. Among other things, they were fortunate to have a very skillful union head, Marvin Miller. They were also fortunate to win some critical decisions by baseball's internal arbitrators, decisions that could have gone the other way.

Abrams summarizes the relevant sequence of events, which is discussed at greater length in other sources (e.g., Helyar 1994). He also provides a clear picture of the current system for salary setting, one that mixes two- party negotiation with arbitration within a framework that was established through a combination of negotiation and

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arbitration. This combination of mechanisms for dispute resolution is intriguing.

The role of litigation in the players' overthrow of the traditional salary system is also intriguing. Certainly courts exerted an impact. FLOOD v. KUHN (1972), though unfavorable to the players, was one catalyst for change, and two federal courts upheld the arbitrator's decision that created the first significant breach in the reserve system. Later, a 1995 federal district court decision backed the players and the National Labor Relations Board by blocking the owners' efforts to reverse some of the players' gains. Nonetheless, the courts had only a limited part in the dismantling of the reserve system, more limited than the part they had played in maintaining it.

Baseball is an unusual setting for relations between workers and management; among other things, the great success of baseball players in improving their position over the last quarter century is atypical of the economy as a whole. Still, baseball provides a useful setting for inquirythe intersection of law and economics in the labor market. Abrams has much to say about that subject, and he says it in a readable way. Whether or not that subject is one of their academic concerns, subscribers to this list who are interested in baseball are likely to enjoy the book.


FLOOD v. KUHN. 1972. 407 U.S. 258.

Helyar, John. 1994. LORDS OF THE REALM: THE REAL HISTORY OF BASEBALL. New York: Villard Books.

Weiler, Paul C. 2000. LEVELING THE PLAYING FIELD: HOW THE LAW CAN MAKE SPORTS BETTER FOR FANS. Cambridge: Harvard University Press.

Copyright 2000 by the author