George H Sage. Handbook of Sports Studies. Editor: Jay Coakley & Eric Dunning. 2000. Sage Publishing.
Meanings of Political Economy
The term political economy comes from two Greek words, polis, which means a city as a political unit, and oikonomia, denoting the management of a household. Use of the two words together began first during the feudal period in Western Europe and were used to describe the study of managing the revenues and expenditures of feudal monarchs. Since political affairs were in the hands of the monarchs and landed aristocracy, revenues and expenditures were obviously both political and economic matters (Clark, 1991; Staniland, 1985).
For the past 250 years, political economy has been used as a term to express the interdependence of political and economic phenomena. Gondwe (1992) explains that political economy is characterized by a ‘study of people in the social process of producing and distributing the means of their own reproduction, in a given social environment or geographical domain, under rules promulgated and enforced by a political state’ (p. 12). From a political economy perspective, economic and socio-political issues are too closely interrelated to be analyzed independently of one another, so an effort is made to accept the interrelatedness of politics and economics. Moreover, political economic analyses typically go beyond issues of efficiency to address basic moral issues of social justice, equity and the public good. Thus, the field of political economy has always been a much broader field than the conventional study of either economics or political science (Caporaso and Levine, 1992; Hibbs, 1987).
Three very broad paradigms have contended, and still contend, for prominence—classical political economy, neoclassical economics and radical political economy. That these very different perspectives have persisted over time illustrates the pervasive contested ideological motif underlying them.
Classical Political Economy
During the latter part of the eighteenth century Adam Smith, one of the writers on political economy during that era, wrote what became the foundation document for a school of thought called classical political economy. In his treatise An Inquiry Into the Nature and Causes of the Wealth of Nations ( 1993), Smith proposed a new socio-economic system to replace what remained of feudalism. For Smith, a good society allowed everyone, at least in theory, the opportunity to pursue his or her self-interest. His vision of an ideal society was one in which competition in the marketplace prevailed, with a minimum amount of government direction or control. He postulated an ‘invisible hand’ of nature which made sure that as each individual was pursuing his or her own self-interest the interest of society was simultaneously being served. Smith’s so-called ‘laws of the market’ played an important role in legitimating the principle of laissez-faire capitalism—the doctrine that government should not interfere with commerce (Spiegel, 1991).
Classical political economy waned during the nineteenth century, with the emergence of the new discipline of modern economics. For disciples of what became known as neoclassical economics, the term ‘political’ in political economy was no longer useful and therefore should be dropped in economic analyses.
Neoclassical economics was conceived of as a value-free scientific discipline, a natural science, like physics, using the same ‘scientific’ methodology. Neo-economists adopted the standardized technical vocabulary of the natural sciences and based their theories on positive propositions in the same manner as other positive sciences, eschewing value judgements, public advocacy and non-economic issues (Gondwe, 1992; Heilbroner, 1996; Jevons,  1970; Marshall,  1953).
Radical Political Economy
In parallel with classical political economy, another group of eighteenth- and nineteenth-century political economists agreed with the classical political economists’ challenge to the power of the state in commerce, but they saw a conflict between the growing power of laissez-faire capitalism and the democratic aspirations embodied in the Enlightenment. This early radicalism was basically a reaction to the wretched social and economic conditions of the working class which grew out of the industrialization process of Western Europe (Sherman, 1987).
The most influential radical political economist of the latter nineteenth century was Karl Marx. He constructed an impressive theoretical critique of capitalism. Whereas classical political economists defended the autonomy of capital as necessary for protecting individual freedom from domination by government and aristocrats, ‘Marx argued that the power of capital subverted the ability of citizens to shape their society in accordance with their democratically determined collective interests. In short, the freedom of capital meant a loss of freedom for people’ (Clark, 1991: 58). For Marx, government should be constituted to serve the collective interests of citizens. And government is legitimate only when it is democratically established and based on widespread participation, and publicly accountable (Marx, 1970, 1975).
Ideology and Political Economy
Three ideologies dominate discussions about political economy—liberal, conservative and radical. These three ideologies are discussed below as competing models of social order. Ideology is a set of ideas, concepts and rationalizations that a group of people use to legitimate and justify their beliefs and behavior.
Liberal Ideology and Political Economy Liberal ideology is associated with the ideas of the Enlightenment. Initially, it stood for individual freedom and rights against the arbitrary power of the state, the church and other people. According to this early, or classical, liberal view, the good society was one that permits individuals to freely pursue their private interests without institutional controls, and government was best when it governed the least. Classical political economy, then, stressed individualism, self-interest, free trade and the security of property.
Conservative Ideology and Political Economy Whereas classical political economy was formed as part of the liberal revolution of the Enlightenment, other political economists of the nineteenth century were skeptical of liberalism. They were alarmed by what they considered the erosion of the old social order that was sweeping Western Europe in the nineteenth century. The basis of feudal society had been stability, mutual expectations and duties, and a sense of belonging to a stable social unit. Liberal ideas emphasizing individual freedom, secularism and constitutional democracy were destroying the old structures of authority and emotional bonds that had united individuals and communities. So conservative voices mounted a defense of traditional society, using the stability of medieval society as their model. What was required, conservatives believed, was a strengthening of traditional values and institutions, grounding them in either divine wisdom or the authority of institutions such as the church, the patriarchal family and the local community (Clark, 1991).
Neoclassical economics, which had superseded classical political economy by the beginning of the twentieth century, increasingly tilted toward a compatibility with conservative tenets.
Radical Ideology and Political Economy Although there were several radical thinkers who preceded Karl Marx, the origins of radicalism as a political economic ideology can be traced to Marx’s writings. Radical ideology viewed capitalist society as fundamentally flawed and needing to be totally reconstructed. Where classical liberals and conservatives viewed capitalism as synonymous with freedom and individual initiative, radical ideology argued that this freedom is a fallacy where workers are concerned. Radical thought contended that the capitalist economy is an arena of exploitation of the working class by a more powerful and wealthy capitalist class, and workers’ freedom of choice between working for a capitalist and not doing so actually translated into the freedom to choose between living and starving (Sherman, 1987).
As for the government, radicals saw it as an arena in which the capitalist class also dominated. Karl Marx argued that capital rather than government is the real ruler of society (Marx, 1973, 1975). The radical ideological vision of a reconstructed society included a vigorous commitment to egalitarianism in the process of governing. Everyone should have an opportunity to participate in the institutions governing their lives and should share in the benefits and outputs of those institutions.
The State and Political Economy
In spite of the different visions of political economy, the state has been involved in every type of market economy for the past 200 years, and its role has continued to greatly expand (Peterson, 1991). In the literature of political economy, two contrasting views of the power of the state in capitalist democracies have been identified: pluralism and elitism. In the pluralist view, capitalist democracies are not dominated by a ruling class, but instead by many different interest groups. Power, pluralists argue, is not held by one group but by a diverse set of social institutions, organizations and interest groups embodying the beliefs, values and world-views of the citizens. This model asserts that power is exerted by a multitude of interests whose countervailing centers of power check each other to prevent abusive power and agenda-setting by any one group. Thus, according to pluralism, although groups are not necessarily equal in terms of power, no particular groups are able to dominate the decision-making process (Dahl, 1961).
Furthermore, pluralists see the state as attaining consensus and preserving social order through a continuous sequence of bargaining processes. The state, then, is regarded as a benign and neutral set of agencies that have no direct involvement in either furthering or eradicating divisions and inequalities.
According to the elitist view, the state is controlled by a small number of persons whose backgrounds, characteristics and values are similar. These people are well educated, mostly white and Protestant, and they are part of the wealthy classes of society. Elites are a relatively homogenous group and their basic interest is the maintenance and advancement of the capitalist economic system (Mills, 1956). As they ‘wield power and govern, they do so by balancing their own economic interests with the general welfare’ (Peterson, 1991: 36; see also Domhoff, 1990; Mills, 1956; Parenti, 1995).
To elaborate on that last point, the state plays an indispensable role in ensuring the reproduction of capitalist social relations, and the powers of the state are used to sustain the general institutional framework of capitalist enterprise. This is not to say that the state merely acts at the command of corporate capitalism. Elites must give and take, negotiate and compromise; but their balance of power is never threatened.
The Political Economy of Mass Sports
Sport has become one of the most popular forms of cultural practice in the modern world. In this section, the focus is on the political economy of mass sports, which has often involved public policy on behalf of providing for people’s leisure needs. Existing scholarship on this topic emphasizes that one of the major contested issues has been on whether the state should intervene in sporting practices or whether such matters should be left to the private sector.
Prior to the Industrial Revolution, there was little in the way of organized sporting practices. This is not to say there were no informal sports, for there were and they stretched back into antiquity. Social conditions changed with industrial expansion, setting the stage for the rise of modern sport. Population shifted from rural to urban areas, work was transformed from home trades and individualized occupations to a large-scale industrial mode of production. Dramatic changes occurred in the daily life of the working classes as they accommodated to factory exigencies, the long work day and urban living. As larger numbers of people congregated in the cities with their wretched living conditions, there was neither space nor the opportunity to enjoy traditional forms of leisure. The working classes found not only the means of production confiscated by the capitalist class but the time and place for leisure as well (Clarke and Critcher, 1985; Gruneau, 1999; Hargreaves, 1986; Thompson, 1968, 1974).
Concerns about the lack of healthy leisure opportunities were publicly expressed by the press, medical practitioners, educators, social reformers and even capitalists, who saw the detrimental effects of industrial working life on health, family life and job performance. However, except for a few sporadic religious and local community efforts, little was done to provide for the leisure needs of industrial laborers during the first half of the nineteenth century. Laissez-faire capitalism, based on classical political economy perspectives, saw no need for intervention by the state to provide for the leisure needs of people (Butsch, 1990).
It was not until the latter decades of the nineteenth century and the early twentieth century, when the rise of collectivism and shifts in the relationship of the state to civil society began to take hold, that access to public leisure facilities became a terrain of class struggle. Industrialization and urbanization created numerous social problems, and public-spirited citizens and social agencies began to seriously ponder remedies for the health and physical needs of citizens.
Gradually, governments begin to play a more active role in sport and leisure for the masses. Beginning in the mid-nineteenth century, many local governments, through legislative intervention, funding and administrative control, began setting aside large areas of land and building city parks and playgrounds for the use of their citizens. Most provided playgrounds for young children, bicycling courses, bridleways for horse riding and open fields for competitive sports for adults. A few even had swimming baths (Adelman, 1986; Hardy, 1982; Hargreaves, 1986; Riess, 1989). Speaking about the United States, Goodman (1979) asserted that ‘by 1905 almost everyone concerned with social reform was concerned with play and almost every reform organization was involved in assisting the rise of organized play in one form or another’ (p. 61).
The creation of a public park and playground system marked a significant chapter in the history of many cities. Moreover, it showed that beyond serving capitalist interests, the state could be an instrument of reform and change (Hardy, 1982; Hargreaves, 1986; Paxson, 1974; Riess, 1989). Neoclassical economists and capitalist interests were divided over this development. On the one hand, there was a belief that the market should provide for the sporting and leisure needs of people; on the other hand, there was a recognition that large masses of people could never be accommodated by a private sector sport and leisure industry, and physically active leisure did enhance health and common ideals, so some state intervention was supported by the capitalist class. Still, the economic ideology of the time was a principal constraint on more dynamic public policies on behalf of leisure needs.
In Great Britain, the United States and Canada, the prosperous years after the First World War and the depression of the 1930s were especially important periods in the political economy of sport. In the 1920s, shorter working hours and higher wages resulted in increased discretionary time and the financial wherewithal for an increasing proportion of the population to play sports and other leisure activities. Various reforms were won from the state through campaigns and struggles of community action groups and organized labor. Despite the political conservativism and the dominance of neoclassical economic views, public support of sporting activities for the masses continued at an unprecedented rate, especially at the local governmental levels (Betts, 1974; Jones, 1988; Morrow et al., 1989). In the United States the number of cities that established municipal recreation programs increased from 41 in 1906 to 350 in 1914 and to 945 in 1929. The economic ideology of laissez-faire and an individual ethic was gradually weakening. This was manifested through greater access to public parks and public sports venues (Betts, 1974).
The Great Depression of the 1930s, with its accompanying massive unemployment, humiliation and fear, left millions of people with little money for the basic necessities of life, let alone discretionary money for leisure pursuits. However, it was during this decade that the US government made its most dramatic intervention into sport. Franklin D. Roosevelt, elected in 1932 in the depths of the depression, immediately created several types of programs to relieve the massive unemployment. One of these programs was the Civilian Conservation Corps (CCC). The work of the CCC was mainly aimed at conservation and forest protection, but as part of this program the men improved national and state parks, built swimming pools and other sport facilities (Betts, 1974).
Another of Roosevelt’s programs was carried out through several agencies, including the Works Progress Administration (WPA), begun in 1935 under the Emergency Relief Appropriation Act. WPA projects were of great variety but included sport stadiums, swimming pools, gymnasiums and tennis courts. In Kansas alone, 344 public buildings were erected, including auditoriums, swimming pools and gymnasiums (Betts, 1974).
Also part of the Emergency Relief Appropriation Act was the National Youth Administration (NYA), which provided part-time work to high school and college students and to former students between the ages of 18 and 25. NYA participants built and repaired sport stadiums, swimming pools, tennis courts and other recreational facilities. At the time the United States entered the Second World War, more than ten federal agencies sponsored recreation or sport-related programs and services.
Since the Second World War, governments throughout the world have taken an increasing role in sport and physical recreation of all kinds and at all levels, from local to international. Two examples in the United States are Title IX of the Educational Amendments Act of 1972, which requires gender equity in all sports and physical education programs in educational institutions receiving federal government money, and the Healthy People 2000 campaign sponsored by the US Department of Health and Human Services. In Canada, the ‘Active Living Campaign’ focuses on a healthier lifestyle for all Canadians and is aided by government funding.
The Political Economy of School Sports
Public support for education was a contentious issue in Western countries throughout most of the nineteenth century. Classical political economy advocates felt that public education was anti-republican and a violation of individual rights. In the United States, it was not until the 1874 Kalamazoo Decision by the Supreme Court of Michigan that decisive support for public high schools was secured. The Kalamazoo Decision set off a flurry of state legislation on behalf of public high schools; by the beginning of the twentieth century a public system of high school education was in place throughout the United States.
As formal education grew throughout the world, various extra-curricular activities, such as debate teams and student government, began to grow. One of the activities that quickly gained a commanding popularity among secondary school students was interschool sports. It was in the public schools of Britain during the early nineteenth century where interschool sports began. Though the schools were called ‘public schools’, they were not state supported; they were private (Mangan, 1981; Mangan and Walvin, 1987).
By the late nineteenth century, secondary school students in several Western countries were playing interschool sports. In the Boston area, high schools were fielding football teams and had formed an Interscholastic Football Association. In New York City a public Schools League was started in 1903, and by 1910 other cities had developed similar leagues (Hardy, 1982; Jable, 1979). By the 1920s, high school sport was firmly under the control of school authorities, with teams supervised by coaches hired as full-time faculty.
In capitalist states by the early twentieth century political and economic interests came to accept the idea that public education could actually advance capitalist interests. It was believed that school sports in particular could develop in students the lessons of teamwork, self-sacrifice, discipline and values that were transferable from the playing field to a productive life in the new industrial order. This form of sport was praised as an important medium for instilling young participants with common ideals, common modes of thought, cooperation and social cohesion in the service of the instrumental culture of capitalism. School sports, thus, were seen as an educational medium for transmitting advanced capitalist ideology in the name of building character (Mangan, 1986; Mangan and Walvin, 1987; Miracle, 1985; O’Hanlon, 1980; Spring, 1974).
The Political Economy of Intercollegiate Sports
Although intercollegiate sports are played in many countries of the world, the focus in this section will be on the United States because the political and economic aspects of this form of sport are most salient there. But before turning directly to collegiate sport, a brief commentary about the political economy of higher education in the United States is necessary.
In America, an alliance has been formed between capitalist enterprise, the state and higher education. The federal government contributes to the capitalist system and to higher education in the form of research contracts and grants; it also funds federal programs to aid higher education. Higher education, then, is essentially socialized primarily because state and federal governments own, operate, or finance most of the resources: buildings, laboratories, libraries, computer centers and faculties.
In turn, public higher education increasingly serves government agencies and corporate capitalism by providing training, skills and knowledge which are vital to the capitalist system. New technology advances so quickly that capitalist enterprise requires a highly educated and specialized workforce, not only to assist planning and decision-making, but to carry out its operations. Higher education supplies the industrial system with technological know-how at nominal cost to capitalist enterprise (Peterson, 1991; Soley, 1994; Sommer, 1995).
Intercollegiate sports began in the United States during the mid-nineteenth century, a time of rapid industrialization as well as rapid growth in higher education. Collegiate sports were founded through student initiative, unassisted and unsupported by faculties, administration or alumni (Smith, 1988). The original form of governance was modeled after the well-established sports in the private secondary schools of England (Mangan, 1981). Control was in student hands until faculty and administrations gradually wrested it away from students near the beginning of the twentieth century (Sage, 1998).
During the first half of the twentieth century intercollegiate sport grew in popularity, especially football and basketball. Gradually, economic considerations became more important, as college football games began to draw thousands of spectators to newly built stadiums, and basketball was played in larger and larger arenas. Although commercialized collegiate sport was a growing industry during the first half of the twentieth century, political and economic forces changed the very character of college sport in the post-Second World War period (Sage, 1998; Smith, 1988).
Television rights contracts, aggressive marketing, expanded schedules, proliferation of tournaments and bowl games and nationwide scheduling of events have all combined to incorporate ‘big-time’ intercollegiate sports into one of the most popular components of the financially successful commodified sports industry. Hart-Nibbrig and Cottingham (1986) analyzed the political economic factors that have shaped the evolution of college sport, and they contend that ‘college sports are now closely tied to the market system, they are an extension of and reflection of modern, late twentieth-century American capitalism’ (p. 2).
Contemporary ‘big-time’ college sport is a business enterprise—a part of the entertainment industry. But the official ideology of universities and their controlling organization, the NCAA, is that college sport is amateur sport. Universities and the NCAA evoke the amateur ideology to justify not paying student-athletes a wage or salary for their labor as athlete-entertainers. Instead, student-athletes are awarded what is euphemistically called a ‘scholarship’. Thus, the college sport establishment uses a highly valued source of human capital—a college education, which can actually be obtained at a public university at a moderate cost—as the sole compensation for athletes.
The amateur ideology employed by ‘big-time’ college sports is not based on any interest in amateurism per se. Valorization of amateurism is merely a stratagem to avoid paying the athletes a legitimate wage. In reality, the scholarship is fundamentally a work contract. Colleges are really hiring athletes as entertainers, for that is what the productive enterprise is—sport entertainment. The claim that educational purposes preclude salaried compensation for athletic performance is testimony to the extensive attempts of the collegiate sport establishment to avoid its financial responsibilities. Athletic scholarships are actually a form of economic exploitation, the establishment of a wage below the poverty level for student-athletes—entertainers who directly produce millions of dollars for athletic departments (Byers, 1995; Sage, 1998).
The benefits of this system of wage-fixing for the NCAA and the universities are quite evident: the lower the wages, the greater the profits. Paying the workforce as little as possible is what every business enterprise strives to do. The NCAA and major universities have mastered this principle (Sage, 1987, 1998). Moreover, state and federal governments have protected this system of worker exploitation.
The Political Economy of Professional Sports
Little in the way of professional sport existed in the first two-thirds of the nineteenth century. Prize fights and horse races were staged by entrepreneurs who charged admission to the events and paid boxers, horse owners and jockeys for their performances. But these events were sporadic, attracted small crowds and gained little media attention. However, during the latter three decades of the nineteenth century a combination of expanding industrialization and urbanization, enhanced by the revolutionary transformation in communication, transportation and other technological advances, provided the social structural framework for the development of professional sport.
The prosperous years before the First World War and the tumultuous 1920s were especially important periods in the rise of professional sport. The growth of cities, shorter working hours and higher wages were important social forces that combined with numerous other conditions to promote the expansion of professional sport.
The depression years were particularly hard for professional sport, but the industry rebounded quickly after the Second World War, and it has been one of the most financially successful industries for the past 50 years, penetrating every sphere of social life and becoming one of the most popular cultural practices. Professional sport has been transformed into a huge, commodified industry that more and more dominates everyday life in advanced capitalist countries. Young (1986) captures the essence of this trend: ‘The most significant structural change in modern sports is the gradual and continuing commodification of sports. This means that the social, psychological, physical, and cultural uses of sport are assimilated to the commercial needs of advanced monopoly capital’ (p. 12).
Worldwide, the professional sport industry has multiplied into a variety of organizations and occupations. First, a significant portion of the sporting industry is organized as profit-maximizing enterprises. Here, capital investors own, organize and control a sports business with a goal toward capital accumulation. An example of this is the professional team sport industry, composed of franchise owners, athletes, coaches and ancillary workers (Furst, 1971; Gruneau and Whitson, 1993; Quirk and Fort, 1992).
A second form of professional sport is organized with all of the trappings of a commercial enterprise but does not function strictly for profit because the sports teams have non-profit status granted by the government. The objective of these organizations is to balance the books so as to seem to be breaking even. In order to maintain a non-profit status, these programs must give the appearance—in their accounting practices—of not making a profit. In reality, many of these organizations are profitable, but the profits are hidden in the accounting. Examples of this in the United States are high school and intercollegiate athletics programs and some elite amateur programs (Byers, 1995; Yaeger, 1991).
Thirdly, the professional sport industry creates a market for associated goods and services, so numerous businesses accumulate capital indirectly by providing those goods and services. Some examples of this are the sporting goods industry (mostly manufacturers and retailers), the sport component of the mass media (including television, newspapers and magazines), businesses that benefit from sport events (hotels, airlines, restaurants) and advertisers (those buying sport advertising or sponsoring events). A less clear example is gambling; although one’s immediate response may be that gambling and sport are unrelated, this is not the case. Billions of dollars are legally and illegally wagered annually on sporting events.
As a capitalist enterprise, professional team ownership is privatized and is structured to maximize profit. Indeed, the premise of capital accumulation is the foundation on which this industry is built. As members of the capitalist class, team owners have consistently favored a minimum of government interference, while at the same time they have lobbied and received unique and favorable national and local government protection. Since its beginnings, professional team sport has benefited from actions of the state, sometimes by favorable legislation, other times by favorable court rulings. Johnson and Frey (1985) have observed that ‘government policy as implemented through legislation, court decisions, and bureaucratic rules and regulations is [an] … important variable in defining the nature and dynamics of American sport’ (p. ix).
In the United States, the major means by which the state has protected the investments of professional team owners and has advanced capital accumulation have been the courts and Congressional legislation. From its beginnings, the professional sport industry has benefited from favorable court decisions that have enabled owners to monopolize their industry, and in cases where their power has been threatened they have joined forces with the courts to crush opposition. Thus, between their own power of ownership, personal wealth, legislative and judicial support, the owners’ monopoly of professional team sports allows them several means of capital accumulation (Beamish, 1988; Quirk and Fort, 1992; Sage, 1998; Zimbalist, 1992).
Cartelization and Monopoly
A persisting focus in studies of political economy is on economic structures, relations of production and political systems that protect economic formations. These political economic processes are evident in analyses of the professional team sports industry. Professional team sports leagues operate as cartels. A cartel is a group of firms that organize together to control production, sales and wages within an industry. In the case of professional team sports, the cartel members are the owners of the various team franchises. The actual consequences of cartelized industries are varied and complex, depending upon such factors as the commodity produced and sold and the amount of the market actually under the control of the cartel. But in most cases the negative consequences impact labor and consumers most heavily. With respect to labor, cartels are able to hold down wages, and with respect to consumers, cartels typically restrict production and control sales and thus can set prices as high as they wish. The major benefits accrue to owners of individual firms through the maximization of joint profits (Quirk and Fort, 1992; Sage, 1998; Wilson, 1994).
During the formative stages of the first American professional team sport, baseball, team owners and promoters competed with each other in an open market, vying for athletes and spectators. But it became evident to a few promoters and potential owners of professional baseball teams that such competition was counterproductive to the interests of controlling sport labor and capital accumulation. They realized that labor and consumer issues could be better stabilized and joint profits more consistently realized by a collective, or cartel. Schimmel, Ingham and Howell (1993) note that ‘this economic concentration and cartelization scenario has been played out not only in baseball, but also in basketball, football, hockey and soccer’ (p. 214). Commenting on the organization of professional team sports, Freedman (1987) noted they ‘have in general operated apart from normal business considerations, and their rules of business conduct have not been subject to governmental scrutiny to the same extent as any ordinary business’ (p. 31).
Although cartels violate the intent of antitrust laws and are illegal in most businesses, Congress and the courts have consistently protected professional sports from antitrust accusations and have upheld the main economic relationships that derive from the cartel structure, namely monopoly and monopsony. A monopoly is a one-seller market, and in pro team sports franchises are protected from competition because the number of franchises is controlled by the team owners in all of the leagues; new franchises are not allowed to locate in, or relocate to, a given territory without approval of the owners.
Advantages of Monopoly for Franchise Owners Several advantages result from the monopoly position which the owners hold. First, by controlling the number of franchises within a league, the owners make them scarce commodities, which means their worth tends to appreciate. Applications for new franchises must secure the permission of three-quarters of the existing owners in a particular league. The scarcity of existing franchises and the difficulty of securing permission for a new franchise drive up the cost of expansion franchises. Owners divide the expansion fees generated when new franchises are created by them. The only alternative for someone who wants to establish a professional sport franchise is to start a new league (Harris, 1987; Quirk and Fort, 1992; Shropshire, 1995; Zimbalist, 1992).
A second advantage professional team sports enjoy from their monopoly position is protection from competition, which eliminates price wars and frees owners to set ticket prices as high as they believe the market will bear, thus maximizing their profits. It also enables each league to negotiate television contracts for the entire league without violating antitrust laws; indeed, this is protected in the United States by Congressional action in the 1961 Sports Broadcast Act (P.L. 87-331) (Wilson, 1994).
Some elaboration on the relationships between professional team sports and the television industry is needed to clarify the advantages of the monopoly position to pro sports. Professional sport and television have become mutual beneficiaries in one of capitalism’s most lucrative associations. Professional sport leagues sell television networks the rights to broadcast league games; the networks then sell advertising to corporations who are selling a product and wish to advertise it. Because so many people are interested in professional sports, it is a natural setting for advertising.
Television networks are willing to spend enormous sums of money to secure broadcasting rights because they know they can then sell advertising profitably to corporations who in turn use ‘the drama and power of sports to generate [consumer] demand and to realize a profit for advanced monopoly capital’ (Young, 1986: 20). League-wide negotiation affords tremendous financial advantages to leagues, enabling them to secure much larger TV pacts then would be possible if each team negotiated its own TV contract (Quirk and Fort, 1992; Wilson, 1994).
Permitting each league to limit the number of franchises provides a third advantage to the monopoly power of the leagues. It enables owners to extract various forms of public subsidy from cities and states. Monuments to socializing the costs and privatizing the profits in professional sport are the numerous sport stadiums and arenas that have been built at public expense for the use of professional teams. About 80 per cent or over 40 of these imposing facilities have been built or renovated at taxpayer expense in cities across the US and Canada during the past 30 years, generally through revenue bonds issued by state, county or city governments (Cagan and de Mause, 1998; Danielson, 1997; Noll and Zimbalist, 1997; Rosentraub, 1999).
The reason that few pro sports team owners own the facilities in which their teams play is that when the government owns them, the owners are relieved of the burden of property taxes, insurance and maintenance costs, not to mention construction. Owners pay rent on the facilities, of course, but this usually covers only a fraction of overall operating expenses. Local taxpayers actually wind up subsidizing professional team owners (Rosentraub, 1999; Shropshire, 1995).
Another reason for team owners not owning their facilities is that it makes it much easier for them to move franchises to other cities should they become unhappy with existing financial arrangements (one sports writer called this the ‘strip-mining’ of cities). In the 1980s, three NFL owners actually made such a move (Oakland Raiders to Los Angeles, the Baltimore Colts to Indianapolis, and the St Louis Cardinals to Phoenix), and the incidence of owner ‘extortion’ appears to be increasing. Indeed, in 1995-96 alone four NFL franchises were moved: Los Angeles Rams to St Louis, Los Angeles Raiders to Oakland, Cleveland Browns to Baltimore, and Houston Oilers to Nashville (Baim, 1994; Ingham and Hardy, 1984; Sage, 1993; Schimmel et al., 1993; Zimbalist, 1992).
Socializing the costs and privatizing the profits in sport are not limited to sport facilities. A fourth example of the advantages of monopoly is the tax subsidy both sport franchises and private, non-sport businesses receive through the purchase of game tickets by corporations because they can be deducted from taxes as a business expense. A large proportion of the season tickets for professional sports are purchased by businesses. In effect, then, taxpayers are subsidizing the cost for corporate executives and their friends to see professional sport contests. When this deduction was threatened by the Internal Revenue Service, professional sports and businesses combined their lobbying efforts to retain the subsidy (Sage, 1998).
Capital accumulation also accrues to professional sports owners through other tax breaks. Owners of professional franchises are given a number of ways to minimize taxable profits. One example is the depreciation of players. Most of the assets of a professional sports team are its players, so most of the cost of a franchise is player contracts. Owners can depreciate players the way farmers depreciate cattle and corporations depreciate company cars; the professional athletes’ status is that of property. No other business in the United States depreciates the value of human beings as part of its business costs. The obvious beneficiaries of such tax breaks are the wealthy team owners (Sage, 1998).
Advantages of Monopsony for Franchise Owners A practice that economists call monopsony, which means a one-buyer market, was adopted when the founders of Major League baseball were establishing cartelized operations in professional baseball. All Major League baseball owners used a provision in every player’s contract—the reserve clause—to enable the owners to control the player’s job mobility. Once a player signed a contract with a club, that team had exclusive rights over him; he was no longer free to negotiate with other teams because his contract had a clause that ‘reserved’ his services to his original team for the succeeding year. The reserve clause specified that the owner had the exclusive right to renew the player’s contract annually, and thus the player was bound perpetually to negotiate with only one club; he became its property and could even be sold to another club without his own consent. Monopsony, in this case, was designed to control the costs of players by restricting interteam bidding. Other professional team sports never enjoyed formal exemption from antitrust laws, but they used other policies restricting player movement. In each case, the player’s freedom of movement was restricted by some type of reservation system (Freedman, 1987; Lowenfish, 1991; Zimbalist, 1992).
Resentment against the reserve clause was persistent from its beginnings, and twice challenges to its constitutionality reached the US Supreme Court. In 1922 the Court ruled in favor of the baseball owners, contending in essence that Major League baseball was a sport, not a business, and therefore was entitled to immunity from antitrust laws. Freedman (1987) has summarized the court’s action in this way: ‘Professional baseball … was granted an exemption from the application of the federal antitrust laws upon the ground that this professional sport was not engaged in interstate commerce or trade, and furthermore baseball was in essence not a commercial activity’ (p. 32). Again in 1972 when it was challenged, the court favored letting the 1922 decision stand. It was not until 1976 that the courts finally struck down the reserve clause, substituting in its place a limited player mobility plan (Lowenfish, 1991).
The social relations of capitalism are played out in professional sport just as they are in other industries where capitalism prevails. Those who own the means of production, the team owners, hire athletes who, in effect, sell their skilled labor power for a wage. The amount owners pay athletes is always less than what they expect to make in revenue. Underpaid human labor is the key ingredient to the capitalist mode of production. However, in the process of selling their labor, athletes lose control over the ‘product’ they create—the competitive contest—they become alienated from their own expenditure of energy. In characterizing social relations of pro athletes as employees, Beamish (1982) said:
As a form of activity that is completely subsumed under capitalist relations, professional athletes … work under a historically specific set of production relations. Athletes do not own or control the means of producing their athletic labor-power. They have no access to professional leagues other than through the sale of their labor-power to existing franchise owners. (pp. 177-8)
To mitigate working conditions under capitalism, workers join unions to deal collectively, rather than individually, with management. Such organization began in the mid-nineteenth century, originally to represent the interests of trade and industrial workers with regard to increased wages, shorter hours, safer and more humane working conditions and benefits such as health plans. Just like trade and labor workers, the response of professional athletes to monopsony, abridgement of individual rights and other job restrictions has been unionization, collective bargaining and strikes (Jennings, 1990; Lowenfish, 1991; Staudohar, 1986).
Player unions and collective bargaining have had some significant successes, but unionization has met with significant resistance from owners. They have used their considerable personal wealth and influence in Congress and the courts to minimize the effectiveness of the player unions; the unions have not possessed equivalent legal and legislative clout to secure many of their needs (Jennings, 1990).
Global Political Economy and Sport
A significant transformation in the world order has been under way during the past half century which can be characterized as a growing political, economic and cultural interdependence among the world’s nations. The word most popularly used to characterize the comprehensive features of this process is ‘globalization,’ which Robertson (1992) says ‘refers both to the compression of the world and the intensification of consciousness of the world as a whole’ (p. 8; see also Waters, 1995).
In economics, the embracement of a market-based economy by developed and many developing nations, as well as former centrally planned economies, and the opening of international markets around the world have created what is increasingly being called a global economy. Transnational corporations (TNCs) based in developed countries are the major forces contributing to this growing global economy. These gigantic companies integrate their administrative and production systems worldwide through rationalized economic activities, modern bureaucratic organization, advanced communications networks, and scientific data calculations (Dunning, 1992; Stubbs and Underhill, 1994; World Bank, 1995).
TNCs are tilting the national economies of their home country away from basic industries and transferring the labor-intensive phases of production to Third World nations (Barnet and Cavanagh, 1994; Berberoglu, 1992; Grunwald and Flamm, 1985; Lorraine and Potter, 1993; Staudohar and Brown, 1987). Foreign investment by transnational corporations has eliminated nearly 12 million manufacturing jobs in industrialized countries between 1977 and 1995. Between 1963 and 1995, the proportion of the world’s manufacturing exports accounted for by Third World nations increased from 4.3 to 14 per cent. At present, over one-third of the earnings of the 200 largest US transnationals are from revenues of their offshore subsidiaries (Barnet and Cavanagh, 1994; Sklar, 1994).
TNCs are closely linked to the political apparatus of the country in which they are incorporated as well as to the other nations of their production and distribution operations. Political-economic agreements between nations, such as the European Union, GATT, NAFTA and others, commit nations to integration and interdependence. Political leaders in developed countries tend to believe that national interests are favorably served by the foreign expansion of transnational corporations. Political leaders in underdeveloped countries negotiate for favorable investment and trade agreements with cohorts in developed countries in hopes of improving their own economies as well as consolidating their own political ambitions. Thus a complementarity of interests exists between transnational corporations and governments in both developed and undeveloped countries (Arrighi, 1994; Berberoglu, 1992; Sherman, 1987).
Several theories have been proposed to attempt to account for the emergence, expansion and functioning of the international political economy—dual economy theory, dependency theory, world systems theory, Marxist theory. The theories range from those regarding the modern world economy as a natural consequence of a universal movement of economic forces toward higher levels of economic efficiency and global interdependence to ‘imperialist industrialization’ approaches which concentrate directly on the relations of production under imperialism and focus on the class nature of imperialist exploitation (Berberoglu, 1992; Sherman, 1987).
One way in which the globalized economy expands is through cultural products, such as music, art, sport and the mass media, especially film and television, which flow around the world to enhance the integration and interdependence tendencies in the world order. Films and music are produced, marketed, sold and consumed throughout the world, and top movie stars and musicians are world-wide celebrities. Large international sporting events are often mentioned as evidence of a global culture. Worldwide television audiences watch the Olympic Games, (Football) World Cup and French Open Tennis Tournament, to name only a few of the most popular international events. Real and Mechikoff (1992) claim that ‘the largest number of people ever in human history to engage in one activity at the same time are the viewers watching the Olympic Games and World Cup’ (p. 324).
Several trends highlight the interconnections between sports development and the global economy. For example: the growth and spread of commodified sport during the past century, the founding of international sports organizations, a worldwide approval of rules governing specific sports, increasing competition between national teams, regional championship events, such as the European Championships, Commonwealth Games, Pan American Games, Asian Games, numerous world championships and, of course, the Olympic Games. All of these events exhibit the key elements of political economy: production, distribution and consumption. All employ athletes from throughout the world, draw spectators the world over, attract advertisers of products made throughout the world and shape global sport consumer behavior. These, and others, highlight the growth of globalization in sports.
Sporting Goods Production in the Global Economy
One aspect of the global economy is an international capital system and division of labor known as ‘export-oriented industrialization’, which is organized and driven by transnational corporations and their subsidiaries. In this system, product research, development and design typically take place in developed countries while the labor-intensive, assembly-line phases of product manufacture are relegated to Third World nations. The finished product is then exported for distribution in developed countries of the world. This system was originally employed by American companies in response to growing competition for American markets. It has now been adopted by transnational firms headquartered in Western Europe, Japan and elsewhere where consumer goods are sold on the world market (Barnet and Cavanagh, 1994; Berberoglu, 1992; Browne and Sims, 1993; Ward, 1990).
Shifting production from developed to underdeveloped countries is a strategy used by transnational corporations for several reasons: wages are lower and worker benefits fewer; the workforce is not likely to be organized, and if it is organized, it is less likely to be assertive; management can exert clear control over the work process, with few or no restrictions on hiring, firing, or reassigning workers; workplace health and safety regulations are less stringent or poorly enforced; the cost of protecting the environment and community health and safety are lower due to weak or poorly enforced regulations (Herman, 1994; Tiano, 1990).
Consequences of Export-Oriented Industrialization for Workers in the Developed and Third World Nations
Moving plants and operations to Third World countries is a way for corporations to boost profits, but for workers and their communities in developed countries the consequences are usually grim. Closed plants, unemployed workers, community disintegration and a variety of related afflictions that undermine a nation’s social fabric are the results of globalizing manufacturing. Increased rates of suicide, homicide, heart disease, alcoholism, mental illness, domestic violence and family breakup have been linked to the stress of unemployment when plants are closed and productive operations moved offshore. Entire communities become economically depressed when corporations relocate in foreign countries (Browne and Sims, 1993; Kamel, 1990; Perrucci et al., 1988; Scheer, 1994; Sklar, 1994; Staudohar and Brown, 1987).Export processing industrialization has transformed the political economy of Third World countries. Historically, Third World nations specialized in the export of raw materials and agricultural goods; now, countries involved in export-oriented industrialization specialize in export of manufactured goods. For example, manufactured goods presently account for 55 per cent of all Mexican exports, 75 per cent of all Brazilian exports, 92 per cent of all Taiwanese exports, and 96 per cent of all South Korean exports (Berberoglu, 1987, 1992; Dunning, 1992; Lorraine and Potter, 1993; ‘Who owns …’, 1994).
For workers in the Third World, transnational investment in assembly production has carried with it some heavy burdens: wages so low workers cannot provide for their basic needs, unjust and inhuman working conditions, sexual exploitation, social disruption, distorted economic development. Moreover, attempts to organize labor unions are often violently suppressed by government soldiers. Workplace democracy and worker rights are non-existent. Health and safety in the workplace are often unregulated, as are pollution and other environmental protections (Herman, 1993; Ogle, 1990; Slater, 1991; Timm and Collingsworth, 1995). Thus, the neocolonial system of unequal economic and political relationships among the First and Third World countries described by Wallerstein’s (1974, 1979, 1984) world-system model of global development seems to have relevance.
Export-Oriented Industrialization and the Manufacture of Sporting Goods Equipment
Sporting goods manufacturing is not dislocated from other forms of production. It is, instead, interwoven with the process of accelerated globalization; indeed, one of the aspects of globalization is the transnationalization of sports goods manufacturing. Economist Robert Reich (1991) illustrates this point: ‘Precision ice hockey equipment is designed in Sweden, financed in Canada, and assembled in Cleveland and Denmark for distribution in North America and Europe, respectively out of alloys whose molecular structure was researched and patented in Delaware and fabricated in Japan’ (p. 112).Sporting goods and equipment corporations in developed countries have also turned to the Third World because an endless supply of cheap labor makes it profitable and because foreign and trade policies provide the corporations with financial incentives. In the sporting goods and equipment industry, manufacturers who produce all of their products domestically are now a minority in an industry that has become increasingly dominated by imports.
Space does not permit any comprehensive treatment of the globalization of the manufacturing of sporting goods, but I shall describe two examples: the manufacture of sports footwear and apparel and the manufacture of Major League baseballs. It is important for the reader to understand that there are hundreds of other sporting goods manufacturers operating in Third World countries.
Making Sports Footwear and Apparel in Asia
Many sporting goods and equipment manufacturers have ‘run away’ to numerous low-wage export-processing and assembling zones across the world, but nowhere has this phenomenon been more tangible than in Asia. Nike and Reebok are the world’s largest suppliers of sports footwear and apparel. Nike is the market leader in the United States, with a 32 per cent market share (King, 1994; Quinn and Hilmer, 1994). Most of Nike and Reebok footwear and apparel are now made in factories in various countries of Asia. In all of the Nike and Reebok factories in Asia, women under the age of 25 from rural areas make up two-thirds of the total number of employees in these factories. It is their low wages and long hours which make Nike and Reebok commercially successful. As production of consumer goods becomes increasingly globalized, exploitation of women becomes globalized as well (Ballinger, 1992; Brookes and Madden, 1995; Wolf, 1992; Wyss and Balakrishnan, 1993).A typical worker in the Indonesian plants that make Reebok and Nike products works for 19 cents an hour; workers in their plants routinely put in ten-and-a-half-hour days, six days a week, with forced overtime two to three times per week. When compulsory overtime is thrown in, a worker’s monthly income is about $50. By Indonesian standards, that monthly wage is about 30 per cent less than the ‘minimum physical needs’ for a married person with one child (Ballinger, 1992; Ingi Labor Working Group, 1991).
Low wages and long hours are the main ingredients of the Nike’s and Reebok’s success, but the contribution of another cost-saving measure cannot be underestimated: minimal investment in safe working conditions. The typical Reebok and Nike worker labors in poorly ventilated buildings in stifling heat. Laws requiring industrial safety are almost useless in practice because employers do not follow the rules and regulations set out in the laws. There is a lack of proper knowledge of work-induced health hazards, and there is a lack of trained professionals and proper equipment to prevent and to treat work-related injuries. Not surprisingly, the results of cutting costs on safety and workers’ health have been dreadful (Brookes and Madden, 1995; Wolf, 1992).
The record on workers’ rights is horrible as well. Independent unions are not permitted, and labor organizers are routinely attacked, beaten and fired from their jobs. Nike and Reebok worker protests have been met with on-the-sport dismissals and managerial indifference (‘Government punishes’, 1995; Timm and Collingsworth, 1995).
Making Major League Baseballs in the Caribbean and Central America
Rawlings Sporting Goods Co., headquartered in St Louis, has manufactured the baseballs used in Major League baseball for over 40 years. Prior to 1953, all Rawlings baseballs were manufactured in a plant in St Louis with unionized labor. In that year, to reduce labor costs, Rawlings shifted manufacturing to Licking, Missouri. At first the Licking plant was nonunion, but in 1956 it was organized by the Amalgamated Clothing and Textile Workers Union. The union immediately began efforts to improve wages and working conditions, so Rawlings began looking around for an alternative manufacturing site (‘Keep your eye’, 1990).In 1964 Rawlings moved its baseball manufacturing to an offshore location in Puerto Rico. But when the initial tax ‘holidays’ for foreign investors ran out and minimum wage laws were implemented in Puerto Rico, many companies—including Rawlings Sporting Goods—left to exploit even cheaper labor in other countries. In 1969 Rawlings closed its Puerto Rican baseball manufacturing plant and relocated in Haiti, the poorest country in the Western hemisphere and one of the 25 poorest in the world.
Haiti was the ideal setting for Rawlings offshore baseball assembly operation: there were generous tax holidays, a franchise granting tariff exemption, the only legal trade unions were those run by the government. Strikes were illegal, and the minimum wage was so low that a majority of Haitians could not derive anything that might reasonably be called a ‘living’ from the assembly plants. Haitians who made baseballs for Rawlings earned less that $3 per day; the weekly average wage was $18. DeWind and Kinley (1988) noted: ‘Far from creating a way out of poverty, the industry’s wages provide the basis for only an impoverished standard of living’ (p. 118).
In November 1990 the Rawlings plant in Haiti was suddenly closed. All baseball manufacturing was moved to a Rawlings plant in Costa Rica. This move represented the fourth time baseball production had been relocated in the past 30 years. In a press release announcing its departure from Haiti, the company said the closing of the plant was due to Haiti’s ‘unstable political climate’.
Rawlings opened a newly constructed plant in Turrialba, Costa Rica in January 1990. About 600 people, most of them women, are formally employed in the Turrialba facilities. The majority of the workers are ‘sewers’ who must stitch 30-35 baseballs to earn $5-6 a day. The work week is 48 hours long. Approximately 300 Costa Rican women also sew baseballs in their homes, earning 15 cents per ball (Sage, 1994; Wirpsa, 1990).
Nike’s, Reebok’s and Rawlings’ export processing operations have indeed achieved commercial success, but they have been built by following a model which places profits over worker needs, a labor policy that violates the human rights of workers and that results in pervasive and often cruel suppression of those workers. Thus, for workers in sporting goods and equipment manufacturing in the Third World, there is overwhelming evidence that transnational investment in assembly production carries with it some heavy burdens (Sage, 1999).
These are only a few of the many examples of sporting goods export-oriented industrialization. Although a handful of Third World countries have benefited from the globalization process, and have made significant progress in industrialization and trade, the overall gap between First World and Third World nations keeps widening (Arrighi, 1991; United Nations, 1992). According to The World Bank (1995),
the ratio of income per capita in the richest to that in the poorest countries has increased from eleven in 1870, to thirty-eight in 1960, and to fifty-two in 1985. This divergent relationship between growth performance and the initial level of income per capita not only applies to those extreme cases but is empirically valid on average over a sample of 117 countries. (p. 53)