The Ills of Labor Unions, Part I: Baseball

by Ray Keating

The Keating Files – June 10, 2020

Confession is good for the soul. So, here goes: This free market economist was once a card-carry member of the Teamsters Union.  Wow, I feel better getting that off my chest.

Anyway, some might ask: What’s the problem with labor unions? Plenty, and assorted current events – including squabbling over a plan to bring back baseball – expose the ills of labor unions.

First, it’s important to understand the basic economics of labor unions. That is, labor unions overwhelmingly are about seeking to maximize the compensation of union members and to monopolize employment in an industry or business under a union, while also pushing to minimize the work being performed by those union members. Hmmm, and how does that work out? Of course, it’s a recipe for reduced competitiveness, lost business, lower profits, less investment in unionized businesses, and lost opportunities and jobs for union members over the long run.

Indeed, keep in mind that labor union membership in the early 1950s stood at about 33 percent of employed U.S. workers, and that tumbled to 10.3 percent in 2019. Even more striking has been the decline into irrelevance for unions in the private sector, with private sector union membership falling from 21.2 percent in 1979 to 6.2 percent in 2019.

As investment moves away from unionized businesses, productivity is reduced, which means less earnings for workers and lost profits for owners. Labor unions operate under the mistaken Marxist assumption that workers and business owners are at odds. But in reality, workers and owners rise and fall together. 

For example, investments made by owners in facilities, tools, technology and other innovations enhance productivity, which boosts both workers earnings and business profits. In addition, when owners and workers are focused on providing excellent products and customer service, both owners and workers benefit.

This is all Economic 101 and Business 101. But labor unions specialize in ignoring such basic lessons.

On the baseball front, Major League Baseball’s team owners and the Major League Baseball Players Association are working at odds – rather than together – to bring baseball back this season. 

Golly, what a surprise. Baseball’s owners and the union have been less than friendly over the years. So, with NASCAR back, the PGA Tour restarting this weekend, the NBA moving ahead with its plan to complete its season in Walt Disney World starting in late July, and the NHL trying to get back on the ice, baseball owners and players publicly bicker. 

What’s the beef? Naturally, the MLBPA is trying to squeeze every last cent out of an abbreviated season for its members in the face of grim financial circumstances.

The owners also are at fault for not being able to see early on in this pandemic shutdown that they might be playing without fans this season, and the resulting financial hit. But after the owners woke up to this harsh economic reality, the MLBPA has exhibited no interest in giving a damn, unwilling to revisit a March agreement for fully prorated salaries. Proposals go back and forth – with CBS Sports reporting that the MLBPA tossed out the latest plan for an 89-game season and expanded playoffs – but strife reigns. 

Meanwhile, baseball fans suffer, and so does the baseball brand and its goodwill – and that, of course, is bad for baseball and the players. This coronavirus pandemic presented an opportunity for the MLBPA to put aside its archaic union thinking, and do what’s right for fans, for the game, for the business of baseball, and for the long-run well-being of its members. But, no. 

It’s a strange thing that one can make the case that the strongest private sector union left in America is the MLBPA – a union representing wealthy athletes that play baseball for a living. Well, if anyone needs a union it would be men playing a children’s game for lots of money – right?

By the way, MLB can implement a season of its own choosing, and there have been rumblings about less than 50 games. That wouldn’t be a big hit with fans – though many would take anything – and the owners would risk further angering the vaunted MLBPA with the current collective bargaining agreement expiring in December 2021.

Team owners and players still have an opportunity to recognize that their fates are tied together. They could step forward in unity to bring back baseball at a time when the country needs it, and by doing so, while taking a short-term financial hit, improve the brand of baseball for the benefit of the game, its customers (the fans), the owners, and the players. It would be smart business, but labor unions have nothing to do with smart business.

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Ray Keating is a columnist, economist, podcaster and entrepreneur.  You can order his new book Behind Enemy Lines: Conservative Communiques from Left-Wing New York from Amazon or signed books at RayKeatingOnline.com. His other recent nonfiction book is Free Trade Rocks! 10 Points on International Trade Everyone Should Know. Keating also is a novelist. His latest novels are  The Traitor: A Pastor Stephen Grant Novel, which is the 12^th book in the series, and the second edition of Root of All Evil? A Pastor Stephen Grant Novel with a new Author Introduction. The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

Also, tune in to Ray Keating’s podcasts – the PRESS CLUB C Podcast and the Free Enterprise in Three Minutes Podcast 

PRESS CLUB C Podcast with Ray Keating – Episode #5: Interview with Thom Brennaman – TV Play-by-Play for the Cincinnati Reds & FOX NFL

Ray Keating once again upgrades the podcast with a great guest. Thom Brennaman, Cincinnati Reds play-by-play TV announcer and play-by-play announcer for the NFL on FOX, is that special guest. 

Thom and Ray talk about Brennaman’s broadcast experience and some of his fellow Reds announcers; the NFL’s noteworthy accomplishments with this year’s draft; NASCAR getting out front on re-opening among major sports; what lies ahead for baseball; and what the Reds were up to in the offseason and what the team promises to look like whenever the first pitch is tossed out for MLB season. Thom also plays “Tell Me Your Favorites” and talks about some matters beyond sports. Despite being a ridiculous Reds fan, Ray manages to act professionally. Enjoy the conversation!

Click here or on the graphic above.

The Road Ahead for NASCAR

by Ray Keating

The Keating Files – February 18, 2020

Officially, I’m not a car guy. I changed my oil once years ago, and also swapped out a headlight on a single occasion. And when needed, I’ve jumped a battery. That’s about it when under the hood.

Photo: Courtesy of Daytona International Speedway

However, in recent years, I’ve gained an appreciation for cars. My interests run along the lines of speed, design, the business and history of automobiles, and how car culture has changed over the decades.

What about you? Are you a car guy or gal? Judging by NASCAR ratings and attendance, it appears that there are far fewer now than a little over a decade ago.

For example, the viewership for the 2019 Daytona 500 came in at 9.17 million (a 5.3 rating), which was the lowest looking at data going back to 1979. The peak was hit in 2006 at 19.4 million viewers (an 11.3 rating). Of course, we can’t really compare this year’s Daytona 500, given that rain pushed most of the race from Sunday to Monday (Feb 17^th).

And while the 2020 Daytona 500 reported a sellout in terms of tickets for the fifth year in a row, it must also be noted that those sell outs came after seating at the Daytona International Speedway was cut by 46,000 to 101,000. Reducing seating or available seats for NASCAR races has been anything but unique over the past decade or so.

Of course, NASCAR still matters in the sports business universe, not to mention beyond, as evidenced by President Trump making an appearance at the Daytona 500 this year. But the question is: How much does it matter and what’s about the future?

For a time in the early 2000s, the term “NASCAR dads” emerged to accompany or contrast with “soccer moms.” Both terms, though, have largely disappeared from political discourse. 

Also, the number of NASCAR sponsors has declined, not surprisingly, along with the decline in the NASCAR fan base.

It’s also not surprising to see NASCAR’s audience declining given the overall fragmentation proceeding in the overall entertainment marketplace. For example, the same phenomenon has been going on for movies, network television, and so on. And it’s not going to stop anytime soon.

What to do? First and foremost, keep your fan base engaged, interested and excited, and of course, build it where and when you can.

NASCAR has made some positive changes in recent times. For example, new views and angles – including in-car cameras and drone shots – along with improved graphics have enhanced the television experience. This should continue to be enhanced and improved. Indeed, it’s critical given that NASCAR is similar to football in that the television experience is far superior to the stadium or track experience in terms of viewing the action.

At the same time, NASCAR needs to make some changes to improve the general outlook for the future.

First, there’s a necessity to move beyond the oval racetrack to more road courses and even street racing. Left turns week after week are just monotonous, and seeing stock cars racing through closed off streets in a U.S. city would be darn cool.

Second, at the track, other forms of entertainment need to be ramped up during each NASCAR weekend, i.e., more concerts, shows and whatever else can be tried.

Third, with cord cutting, NASCAR must improve its online streaming options, especially in terms of affordability. Along these lines, new video technology needs to keep pushing ahead, including offering viewers a deeper dive into the pits, including close up views and more analysis of pit stops during the race, and more about who the people are in the pits and beyond in terms of each racing team.

Fourth, in the 1990s and 2000s, NASCAR made some bets on expanding their market outside the South. Nothing wrong with that per se. But at the same time, it seems like NASCAR lost a chunk of its base. It fumbled its brand, and at the same time, created fewer new, highly devoted fans than anticipated (see earlier reference to increasingly fragmented entertainment market). NASCAR had a rebel feel to it, being born out of bootlegging. Getting some of that feel back into its brand can be a plus that helps to set NASCAR apart in the sports marketplace.

Fifth, in terms of younger generations, yes, far fewer people grow up working on their own cars these days, and therefore, fewer traditional car guys and gals are being developed, which, of course, were the foundation of the NASCAR fanbase in the past. But there’s still the speed, the atmosphere, enhanced video and more to make sure the sport gets passed along to the next generation.

NASCAR isn’t going anywhere. There’s a tremendous amount of money to be made via television or streaming, for example. The sport just needs to get a better handle on its market and brand, and then promote it relentlessly. And NASCAR has never been shy about promotion, so that’s a positive. Perhaps the current and future car guy or gal is more – dare I say it? – like me, not necessarily under the hood but looking for excitement and strategy in the pits and at 200 freaking miles per hour.

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Ray Keating is a columnist, an economist, a novelist (his latest novels are The Traitor: A Pastor Stephen Grant Novel, which is the 12^thbook in the series, and the second edition of Root of All Evil? A Pastor Stephen Grant Novel with a new Author Introduction), a nonfiction author (among his recent works is Free Trade Rocks! 10 Points on International Trade Everyone Should Know), a podcaster, and an entrepreneur. The views expressed here are his own.