Clicking on banner ads enables JWR to constantly improve
Jewish World Review August 29, 2002/ 21 Elul, 5762

Lawrence Kudlow

JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Michael Barone
Mona Charen
Linda Chavez
Ann Coulter
Greg Crosby
Larry Elder
Don Feder
Suzanne Fields
Paul Greenberg
Bob Greene
Betsy Hart
Nat Hentoff
David Horowitz
Marianne Jennings
Michael Kelly
Mort Kondracke
Ch. Krauthammer
Lawrence Kudlow
Dr. Laura
John Leo
David Limbaugh
Michelle Malkin
Chris Matthews
Michael Medved
Kathleen Parker
Wes Pruden
Sam Schulman
Amity Shlaes
Tony Snow
Thomas Sowell
Cal Thomas
Jonathan S. Tobin
Ben Wattenberg
George Will
Bruce Williams
Walter Williams
Mort Zuckerman

Consumer Reports

A Bronx cheer for the owners | Yankee-hating has long been a part of our national pastime of baseball, especially when the Bronx Bombers dominate the game -- as they have since the mid-1990s. Recall an earlier time of pinstripe excellence during the 1950s when the best-selling book, "The Year the Yankees Lost the Pennant," was followed by the smash-Broadway musical Damn Yankees and a hit movie with the same name. Yankee-hating was in vogue even then.

Today, the baseball owners, guilty of class-warfare thinking, would love to take actions that would severely damage the great Yankee franchise. In the process, they would also cripple the standing of the game and the game's players.

Owners want a new revenue-sharing plan that allegedly would take more money from the rich teams and redistribute it to the poor ones. They would also institute an unbelievable 50 percent luxury tax on teams with high payrolls.

In today's soft economy, if anyone in Washington proposed a 50 percent tax on luxury goods the general public would instantly label them out of their minds. Yet the owners carry on with just such a tax-the-rich campaign. It's a scheme that would make Al Gore blush.

In so doing, the owners would do to the baseball economy what a similar luxury tax would do to the gross domestic product of the United States. They'd cripple it. More, if anyone cares to look at the facts, the rich teams they would tax frequently fail. Yes, the New York Yankees and Atlanta Braves have dominated the game of late, but that's a result of good management on the field and in the front office. Plenty of other "rich teams" have fared poorly.

Think of the major-media-market Los Angeles Dodgers. Or the Boston Red Sox. Or the other perennial losers in prime locations like Philadelphia, Baltimore, Detroit and Chicago. The Cubs and the White Sox fail miserably each year, but it's the owners and management -- and not the Yankees -- who are to blame.

The Cubs, in particular, report poor economic performance. But that's a sham. The team's excess revenues are upstreamed to the Tribune Company, which owns the Cubs, rather than back into the team. League-wide, teams use phony accounting that would rival what we saw out of Enron.

Why should poorly managed teams be subsidized anyway? When sinking companies in Japan and elsewhere in the Pacific Rim were subsidized the economists labeled it industrial targeting. In baseball, it's nothing more than crony capitalism. If a failing team goes under, then let it go under.

Texas owner Tom Hicks, perhaps the most vocal opponent of George Steinbrenner and his Yankees, is a crony with his hand out. He took excellent advantage of the annual free-agent crop when he brought phenomenon Alex Rodriguez on board. But he has only himself to blame for giving A-Rod a burdensome $250 million contract that has translated into another last-place finish for the Rangers. Here, and elsewhere, owner ineptitude is the culprit -- not player salaries that luxury taxes and revenue-sharing socialism intend to limit.

And what would the owners do with the extra cash flow? Well, they would not even rule that luxury-tax revenues must be reinvested in their teams. Instead, they're grabbing a quick buck at the expense of the game.

This is a key point with respect to the Yankees. This franchise has built a phenomenal farm system that has produced current stars in Jorge Posada, Alfonso Soriano, Derek Jeter and Bernie Williams. That's what wins championships -- vision and player development. Not luxury taxes. For all his idiosyncracies, George Steinbrenner should be a model -- not a goat.

And since when does America punish success? Taxing success will generate less of it; on the road, the Yanks routinely draw much bigger crowds than second-rate home teams typically bring to their ballparks. Blaming the Yankees is akin to blaming rich Americans for injecting capital in job- and wealth-creating start-up businesses.

A dearth of taxes is not what ails baseball, but the selfishness of owners. They'd prefer to pick the pockets of fans and players -- most of whom have only 12 or 15 years to earn a lifetime's living -- than let poorly managed teams go under. Of the 849 players in major league baseball, 222, or one-quarter of the league, were born abroad. Nearly 10 percent are from the Dominican Republic, followed by Puerto Rico and Venezuela. They won't get lucrative advertising contracts or high-paying jobs after retirement. The lily-white-bread baseball-owner fraternity seems never to think about the money that Latin players send home to their families and their downtrodden countries.

Today there are six small-market teams in contention for the playoffs. The newly created Arizona Diamondbacks could well take a second straight World Series. Or perhaps the Yankees will reign supreme again. "You've gotta have heart," went the old Broadway song. That plus good management and a free-market playing field is the equation for success in baseball -- and the rest of the business world for that matter.

JWR contributor Lawrence Kudlow is chief economist for CNBC. He is the author of American Abundance: The New Economic & Moral Prosperity. Send your comments about his column by clicking here.


Kudlow Archives

©2001, Lawrence Kudlow