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Chapter Four. Pay for Play: The Development of the Baseball and Soccer Labor Markets
- Brookings Institution Press
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Alex Rodriguez and David Beckham have a lot in common. Both were born in the summer of 1975 and both were precocious talents, A-Rod debuting for the Seattle Mariners at age 18, while Becks first played for Manchester United at age 17. Of course, both are prodigiously skilled athletes. But in addition, both have film-star looks and squeaky-clean private lives, which make them among the most attractive billboards in advertising.1 Both earn sums of money that are almost unimaginable to their fans. Rodriguez signed a world-record ten-year $252 million deal (plus bonuses) in December 2000 and is currently said to make over $50 million a year, including endorsements . Beckham was estimated in 2004 to be the highest-earning soccer star in the world with an annual income of around $30 million. And in 2003 both played for clubs that decided they no longer wanted them. The Texas Rangers couldn’t afford to keep up the payments on A-Rod’s contract and, after an extended but ultimately unsuccessful courtship with the Red Sox, traded him to the Yankees on February 17, 2004. By contrast, Manchester United, which generated more revenue than any other team in the 84 chapter four Pay for Play The Development of the Baseball and Soccer Labor Markets 04 8258-6 chap4 2/10/05 1:01 PM Page 84 Pay for Play 85 world that year, could easily afford to pay Beckham’s relatively modest $8 million salary. There were, though, a number of reasons for wanting to offload him. He had had several well-reported bust-ups with the team’s manager, Sir Alex Ferguson, who had even benched Beckham for several games; his celebrity wife, former Spice Girl Posh (Victoria Adams), was reported to want to move away from Manchester; and some said the quality of his play did not match his superstar image. But another reason was that the Manchester United business wanted to cash in. On June 17, 2003, it was announced that Real Madrid had done a deal with Manchester United that could end up yielding $45 million for the English soccer club. According to newspaper accounts, Beckham would receive the same $8 million salary he had been getting. So what was Manchester United being paid for? In soccer, unlike baseball, when a player is traded the old employment contract is torn up and a new one is signed.2 At the transfer date in 2003, Beckham had nearly two years to run on his old contract, and the transfer fee was compensation to Manchester United for tearing up this contract. To anyone who has grown up with the soccer system this is normal business, but to a baseball fan this must seem peculiar. For a start, it’s not obvious that Manchester United needed any compensation . Sure, the team lost a great player, but when the contract was torn up, so was its obligation to pay him his salary. Certainly, neither Manchester United nor any other soccer club would admit to paying players less than they were worth. Yet the logic of the transfer fee as compensation to the club giving up the player suggests just this: the player must be getting paid less than the value he produces. Players over the age of 23 now have freedom of contract in soccer, so when they sign a deal the only way they can get paid less than what they are worth is if they have a lousy agent, which no one has ever said of David Beckham.3 Moreover, Manchester United’s directors were willing to trade Beckham and made no great play of wanting to keep him, so it’s not clear how they thought they were losing out. A different way of looking at the question is to ask why Real Madrid was willing to pay so much to Beckham’s former employers at Manchester United. Beckham’s new contract is for four years and so is worth about $32 million—just over 40 percent of the total value of the deal. Why wouldn’t Barcelona, a club that was desperate to buy Beckham, offer him more money and offer less to Manchester United? As owner of the contract, 04 8258-6 chap4 2/10/05 1:01 PM Page 85 [54.175.5.131] Project MUSE (2024-03-29 07:22 GMT) 86 National Pastime Manchester United might sue if Beckham joined another club without its agreement. Then Manchester United could...