Professional Sports in the 21st Century

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Robert Manfred and Gene Orza
Robert Manfred, executive vice president of Labor Relations & Human Resources for Major League Baseball, left, and Gene Orza, associate general counsel of the Major League Baseball Players Association, spoke extensively about revenue sharing in baseball.

Some of the top experts and practitioners from the world of sports gathered at Duke Law School on April 14 to discuss topics such as controlling the costs of running a professional franchise, minority participation in sports management, and the increasingly international nature of sports in America. The conference, called “Challenges and Opportunities for Professional Sports in the 21st Century,” was sponsored by the Law School's Center for Sports Law and Policy.

Paul Haagen, professor of law and co-director of the Center, organized the conference with help from Law students Teddy Werner ’03 and Eddie Moss ’02.

The panelists, several of whom are Duke Law graduates, ranged from player representatives and coaches to league officials, team owners or former owners. They included:

  • Tom Werner, chairman and owner of the Boston Red Sox;
  • Robert Manfred, executive vice president of Labor Relations & Human Resources for Major League Baseball;
  • Gene Orza, associate general counsel of the Major League Baseball Players Association;
  • Mike Krzyzewski, Hall of Fame coach of the Duke Blue Devils men’s basketball team;
  • Arn Tellem, president of SFX Basketball, executive vice president of SFX Baseball and the former general counsel of the Los Angeles Clippers;
  • Lon Babby, partner and head of the sports representation group at Williams & Connolly, Washington DC and the former general counsel of the Baltimore Orioles;
  • Ken Rosenthal, senior writer at The Sporting News;
  • Len Simon L’73, partner at Milberg Weiss Bershad Hynes & Lerach, San Diego and owner of the Lake Elsinore Storm (San Diego Padres Single-A team), and;
  • Bobby Sharma L’98, director of legal & business affairs for the National Basketball Development League.
Tom Werner
Tom Werner, chairman and owner of the Boston Red Sox, explained that supply and demand are a major factor in ticket prices at professional sporting events.

“The Conference was a great success,” said Haagen. “I had hoped that we at Duke could create an opportunity for the very talented people who are intimately involved in the day-to-day running of professional sports to step back and reflect on their industry. We did.”  

Discussion centered on how the professional sports leagues could promote competitive balance among and the financial viability of the their member clubs; what teams and leagues can and should do to encourage the inclusion of minorities in management positions; and what the increasing globalization of the sports marketplace will mean for North American professional sports leagues.

The panelists agreed that no single model of cost control was appropriate for all sports. Whatever strategy is adopted needs to be consistent with the culture and economics of that sport.

Most of the panelists agreed that last year’s labor agreement between Major League Baseball’s players and owners, which called for a “luxury tax” to supplement revenue sharing between richer and poorer teams, would make for a more competitive sport. “I think the amount of revenue sharing we do has contributed mightily to competitive balance,” Orza said.

But he and other participants noted that wealthier teams, such as the New York Yankees, still have vast advantages. Estimates put New York’s payroll in the $150 million range this year, with some teams spending only a half or a quarter of that figure despite revenue sharing. That payroll advantage allows the Yankees and few other wealthy organizations to create deep, powerful teams that can withstand injuries and other episodes of bad luck, Orza said.

Paul Haagen
Paul Haagen, professor of law, organized the conference.

“There is no question the Yankees possess advantages the Kansas City Royals could never even dream of,” Rosenthal said, adding that Major League Baseball could take additional steps to even the financial playing field. “There still are some things that can be done to squeeze it — to get the higher teams closer to the lower teams.”

The radically different approach of the NBA, noted Tellem and Babby, may not solve the competitive balance problem any more effectively. In fact, largely because of its salary cap structure, the NBA may lock non-competitive teams into a cycle of poor performance as they struggle to overcome problems such as injuries and under-performing players. 

On the issue of rising ticket prices, Tom Werner said his Red Sox must balance the needs of fielding a competitive team — which is in the same division as the Yankees — with pressure to control costs for fans. The average price of attending a game at Boston’s Fenway Park is now the highest in baseball by some estimates. “We’re certainly aware of growing concerns,” he said. “We want to make sure the average family can afford to come to Fenway Park.”

Regarding diversity in sports, panelists asserted that the race of managers and owners should better reflect the makeup of the communities teams inhabit. However, they disagreed over whether commissioners’ offices or other authorities should require any particular racial quotas.

Mike Krzyzewsk
Mike Krzyzewski, Hall of Fame coach of the Duke Blue Devils mens basketball team, commented on diversity in sports and the internationalization of sports.

Manfred said he was happy to see the number of minority managers and executives rise in baseball but added that the commissioner’s office does not have the authority to tell teams whom they can hire. “We’re not in a position to dictate,” he said.

Tellem and Orza suggested that leagues should consider various incentives or even penalties to encourage diversity in hiring, with Sharma cautioning that leagues must take great care in their choice of incentives. Allocating draft picks based on diversity goals, for example, could improperly and immediately affect on-field competition.

When the panel turned to the issue of American sports becoming international sports, Krzyzewski noted that the creation of the 1992 U.S. Olympic basketball team, of which he was an assistant coach, cemented the NBA as worldwide organization. “That was one of the major moves in all of sport in terms of creating a worldwide market,” he said.

Baseball, Manfred noted, already has a heavily international labor force. “In cooperation with the players association, we are actively exploring creative ways of extending our markets beyond the U.S.,” he said.