Competition and Salaries in Professional Sports

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Time and time again fans have uttered the old "competition is great for everyone" argument, and we all know where that comes from. No one is stupid enough to suggest that a second major pro football league or pro basketball league would be great for anyone (or that they should even be attempted). No, the "competition is great for everyone" concept comes from the world of professional wrestling, and there is a very special reason for that.

Jason Amadi made this statement (emphasis mine) in a recent piece at MMA Torch critiquing the analogy between pro wrestling's Monday Night Wars in the 90's and the current situation between the UFC and Strikeforce.

History shows, however, that competition proves lucrative for at least one segment of the sports world - the players.  In a piece at the baseball blog Sabernomics, JC Bradbury looked at the professional baseball salaries during the Federal League years. (Check out the link for a line graph of this data.)

Before the Federal League became a major league, the AL and NL showed healthy salary growth, which is consistent with their average annual attendance growth of 4.5% from 1901–1913. During the FL’s inaugural season in 1914, there was a drastic spike in salary growth. 1915 also showed a 27% rise in salaries, which is the third-greatest change in the sample. In 1916, after the league disbanded, salaries rose only a paltry 7%; and in 1917, salaries fell by 3%—the only negative year in the sample. In 1918 and 1919, salary growth was 16% and 11%, muted compared to what it was before and after the entrance of the FL.

At the basketball blog Hoops Hype, David Friedman led with this little tidbit when he detailed the competition between the ABA and NBA:

The economics of pro basketball exploded in the 1970s. The average player salary rose from $35,000 in 1970 to $180,000 a decade later and franchise values went up more than 600% in the same period. The major cause of the skyrocketing salaries was the competition between the NBA and the ABA for star players.

The competition between the leagues was so lucrative that Oscar Robertson filed a class action antitrust lawsuit when the NBA and ABA agreed to merge in 1970. 

Hall of Fame linebacker Willie Lanier lamented the NFL-AFL merger of 1966:

Lanier wishes they had waited a year to strike a deal — or that there had been a filibuster on Capitol Hill as the agreement worked its way through congressional approval.

"The merger bill was tied to a tax bill as a rider," Lanier says. "I was just hoping that there would be a long enough delay that it wouldn't happen that year."

...

When the leagues merged, Lanier, who starred for the Chiefs from 1967-77, lost the chance to negotiate with AFL and NFL teams because there was just one draft.

"Timing," Lanier says with a chuckle, "is everything."

The comparison of MMA to stick-and-ball sports is always a tenuous one, and this topic is no different.  An argument could be made that the talent that makes up the NFL, MLB, NBA, and NHL benefited from the structure and sustainability of one monolithic organization than the fractured talent pools of an alternative universe.  However, the spectacular rise in player salaries, while correlated with the success of the respective organization, would not have been possible without the emergence of powerful unions, who established a pseudo-market on the basis of a player's right to free agency.

Individual sports like tennis, golf, and bowling offer no better comparison either.  Athletes don't sign contracts to play for the ATP or the PGA; they become members of the tour and compete for predetermined prize pools.  And even that didn't stop tennis players from wrestling control of the world tour from directors in 1988.

When it comes to collective bargaining, to the chagrin of Mr. Amadi, pro wrestling provides the best, if imperfect, comparison.  Vince McMahon has thwarted the unionization of wrestlers since the 80's with a very simple strategy: keep the top names happy.  Hulk Hogan wasn't just the top star in pro wrestling for a decade.  He became McMahon's de facto strikebreaker.

The same strategy will (and has) worked for the UFC.  A fighters union will never have teeth without the likes of Brock Lesnar and Georges St-Pierre, and losing marginal talent like Sam Stout or Rory Markham over labor disputes will have little, if any, effect on Zuffa's bottom line.  Just ask Jon Fitch.

Without collective bargaining, an alternate destination for employment with proper funding and exposure provides a fighter with negotiating leverage normally reserved for those with possession of shiny gold belts.  With network and premium cable TV deals and a proven willingness to splash money on talent, Strikeforce has provided a viable venture for those outside of House Zuffa.

Read the rest in the full entry.

One of the under appreciated aspects of the James Toney circus is the effect Strikeforce had on negotiations.  Toney was a side show in the MMA world after he stalked Dana White following UFC 108.  It surprised many that White had any interest - let alone began negotiations, but when Toney complained about a lowball offer, most thought the issue was put to rest.

Six weeks later, Toney has a contract.  What changed?  In an interview with Yahoo's Kevin Iole, Dana White said, "We were sitting around finishing the deal and talking and he told me that he’d been talking to Strikeforce. He said they were talking to him about a fight with Herschel Walker. James said to me, ‘Do you know what I’d do to that [expletive]?’"

Was Toney actually in talks with Scott Coker and company?  The answer is irrelevant.  All Toney had to do was put the idea of Toney fighting on CBS for his Rival of the Month and immediately increased his value to the UFC.

Ultimately, Strikeforce will be joined with Zuffa in some way within the next five years, whether it be merging, co-promotion, or picking the meat from a dead skeleton.  Combat sports cannot afford two large, competing organizations isolated from each other.  In the meantime, fighters should take advantage of the current business climate.  Once the dust has settled, it's not bound to be riled up again.

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