The Baseball Players' Labor Market

SINCE its inception in the 1870's, organized baseball has developed a market for baseball players and their services in which there is less than perfect freedom to buy and sell. In this paper I shall discuss analytically a number of market problems which are interesting because of some unusual characteristics of the baseball labor market and the organization of the baseball industry. In the labor market, monopsony is more frank and explicit and less imperfect than in the more common case, in other industries, of covert antipirating agreements. The nature of the industry is such that competitors must be of approximately equal "size" if any are to be successful; this seems to be a unique attribute of professional competitive sports. Before passing to the analytical questions, however, I must describe the structure of the industry and the rules of the market. The structure and the rules of the market for baseball players and their services are defined in seven documents which constitute the constitutional papers of the baseball industry. These documents are the Constitution of the National League of Professional Baseball Clubs, the Constitution of the American League of Professional Baseball Clubs, the Major League Agreement, the M ajor League Rules, the Maj or-M inor League Agreement, the Major-Minor League Rules, and the Agreement of the National Association of Professional Baseball Leagues (the minor leagues). 2 The documents specify the procedures for their own amendment, and they are amended from time to time. They are enormously complex. This complexity arises, in part, from the ingenuity of club owners and business managers in doing violence to the purposes of the rules while obeying their letter. Let a rule be established proscribing a practice and inhibiting gainful action, and teams find some substitute for it, and an amended rule emerges. Complexity also arises from the effort to compromise inconsistent interests within baseball. Takeni all together, the documents I Am indebted to my colleagues and the students of the Department of Economics at the University of Chicago for challenging discussions of this topic which I have had with them. I must lay claim, however, to any errors the paper still contains. Although I have referred to a large number of different sources in the considerable literature on baseball, I have found no document so valuable by far as the Hearings before the Subcommittee on Study of Mfonopoly Power of the Committee on the Judiciary of the House of Representatives (82d Cong., 1st sess.), Serial No. 1, Part 6: Organized Baseball (Washington, D.C.: Government Printing Office, 1952). The materials collected in this volume are massive and are indispensable for the understanding of the economics of this market. The volume will be cited henceforth, for brevity, as "Celler Hearings," after Congressman Emanuel Celler, the committee chairman. The companion piece to the hearings of the subcommittee is its report, Organized Baseball: Report of the Subcommittee on Study of AMonopoly Power of the Committee on the Judiciary, Pursuant to El. Res. 95, House of Representatives (82d Cong., 2d sess. [WXashinigtoii, D.C.: Governienit Prinitioig Office, 1952J). IThis (locUiiie1it ill lee referred to heniceforth as "C(elter Report." 2 The Baseball Blue Book, 1955 (Fort Wayne, (1.: lBureau of the Bflue Book, 1955).