Inning 8: International Pastimes

American sports leagues—like many other American businesses—used to focus almost entirely on the domestic market. Most of the players were homegrown, too.

But since the 1980s, the NBA, NFL, NHL, and Major League Baseball have developed a more global outlook and a decidedly international flavor:

• More than 6.2 billion people inhabit planet earth, and sometimes it seems as if half of them are wearing NBA apparel. The league has done a masterful job of moving into the global marketplace.

• Pro football is trying to broaden its international appeal with the six-team NFL Europe. A respectable crowd of 32,000 showed up to watch the Berlin Thunder vanquish the Barcelona Dragons in World Bowl IX.

• After the Soviet Union collapsed, hockey players from Russia and the former Eastern Bloc moved to the NHL, where they became a major presence. Five Russians helped the Detroit Red Wings win the 1997 Stanley Cup—the city’s first in 42 years.

• During the 2002 baseball season, 222 players from 15 foreign countries, Puerto Rico, and the U.S. Virgin Islands were listed on major league rosters. They drew new fans to the ballpark and attracted a sizable international TV audience.

A.Domestic Talent Shortage?

Fact: The percentage of foreign-born major league baseball players more than doubled from 11.3 percent in 1988 to 26.1 percent in 1998.

Why are there so many foreign-born players in America’s national pastime?

The shortage of homegrown baseball talent has a lot to do with it. Many of the best American athletes are opting for careers in the NBA or the NFL, where they don’t have to wait as long to earn top money.

Caribbean Basin countries are a major talent pool for professional baseball. Photo courtesy of Geography and Map Division, Library of Congress.

Young baseball players often spend years in the minor leagues before they enjoy a big payday. It’s a grueling apprenticeship of long bus rides, short money, and depressing apartments. And maybe worst of all, there’s the uncertainty that an injury or a bad break might end a young minor leaguer’s career before he ever makes it to “The Show.”

By comparison, basketball and football players have an easier time. They serve their apprenticeships in college, where they live in the nicest dorms, eat the best food, and enjoy the acclaim of everyone on campus. They can even get an education at the same time. (More professional baseball players are now coming out of college, too, but most of them still spend at least a season or two in the minors.)

Baseball is caught in a squeeze. Not only is domestic talent in short supply, but the demand for players is greater than ever because Major League Baseball added four new franchises during the 1990s: the Florida Marlins, the Colorado Rockies, the Arizona Diamondbacks, and the Tampa Bay Devil Rays.

So baseball is doing what American business has always done when faced with a labor shortage. It’s relying on immigrants. Major league scouts now search the globe for new talent.

And the foreign-born players—most of whom come from Latin America, the Caribbean Basin, and the Pacific Rim—are doing what immigrants to America have always done. They are filling jobs that might otherwise go unfilled, adding new skills to the talent pool, and helping to increase the overall level of prosperity.

B. Brothers Hernandez: Market Economy vs. Command Economy

One of the biggest stories related to the globalization of baseball involves the growing number of players from Cuba. Cubans are among the world’s most ardent baseball fans—according to legend, a young pitching hopeful named Fidel Castro once had a major league tryout. And Cuban national teams have sometimes approached the talent level of the American major leagues.

Washington Post sports columnist Tom Boswell calls Cuba the “Lost Gold Mine” of baseball, and major league executives see it as a talent pool equal to the Dominican Republic. But since the early 1960s, Castro has done his best to prevent the island’s top players from making the 90-mile trip to the American major leagues.

A few began to make their way out of Cuba during the mid-1990s. One of them, Florida Marlins pitcher Livan Hernandez, was voted the 1997 World Series MVP. Then in 1998, Livan’s older half-brother, Orlando “El Duque” Hernandez, fled Cuba in a 19-foot boat and survived to sign a four-year $6.6 million contract with the New York Yankees. (The Yankees! How’s that for irony?)

Shortly before “El Duque” made his escape, Boston Globe reporter Steve Fainaru did a fascinating piece on the Hernandez brothers. The following excerpts highlight the stark contrasts between a market economy and an economic system that relies on central planning by government officials:

HAVANA–Orlando “Duke” Hernandez is a chain smoker these days, a weekend softball player who chugs around the Cuban capital in a friend’s 24-year-old Lada [Russian car]. He earns 200 pesos a month, about $8.75, working as a rehab counselor at a psychiatric hospital near his one-room cinder-block home.

Until recently, the Duke was one of the finest amateur pitchers in the world, but his world has imploded. The Cuban Sports Ministry banned him for life last year for allegedly planning to follow his younger brother, Livan, who defected in 1995 to play professional baseball in the United States.

As Livan, 22, pitched for the National League pennant last week with the Florida Marlins—a millionaire rookie with a Miami Beach apartment, a $75,000 Mercedes, and a walk-in closet full of shoes—he and his brother had become leading actors in an escalating struggle that has turned baseball into political theater.

The conflict pits Cuba’s Communist government, which is desperately trying to protect the “noble character” of its powerhouse sports system, against U.S.-based agents dangling thick wads of cash, political freedom, and an opportunity to play for talent-starved major league teams. . . .

[T]he two brothers exist at the extremes of the economic and political systems that govern their lives. After a leaguewide bidding war four months after his defection, Livan—who in Cuba had earned $5 a month, lived for 15 years in a fifth-floor walk-up, and rode a Chinese-made bicycle or one of the country’s hulking buses to practice—received a four-year, $4.5 million contract from the Marlins.

Hyper-capitalism nearly buried him, according to his friends and handlers. He gained 43 pounds gorging himself at McDonald’s and Wendy’s. His spending sprees were limitless. In the first year after signing his contract, he went through cars every three months, including a $40,000 Dodge Viper, a $130,000 Mercedes convertible, a $65,000 Porsche, and a $100,000 Ferrari. . . .

When asked to define what freedom meant to him, he heaved an impatient sigh. “Freedom is a word that every Latino and every American knows,” he said. “It means the same in Spanish as it does in English. It’s the freedom to do whatever you want to do. This is the point, nothing more and nothing less.” . . .

One Saturday last month, while Livan was tearing up the National League, seven cows looked on from behind the backstop as the Duke lined up at second base for his neighborhood team, Rio Verde, at an overgrown diamond near Lenin Park.

When an aluminum bat the players were using snapped in half, the Duke pulled his team off the field while someone drove off in search of a replacement.

“Game suspended for lack of bats!” shouted the Duke, feigning an announcer’s voice.

“How romantic,” said a teammate sullenly.

“Hope—that’s what I have for breakfast every day,” the Duke said later that day. “It’s what gets me out of bed every morning. I’m not going to die without playing baseball again. There’s no way. You can put that down as my credo.”

Note: On June 3, 1998, Orlando Hernandez stepped onto the mound at Yankee Stadium and pitched the Yankees to a 7-1 win over the Tampa Bay Devil Rays.

C. Comparative Advantage:
Doing What You Do Best

Go to your local sporting goods store, and look for a baseball glove stamped “Made in the U.S.A.” If you find one, it will be beautifully crafted and cost at least three times more than the very good gloves from Korea, Taiwan, or the Philippines. Guess which glove most parents will NOT buy for their Little Leaguer or softball player.

And it isn’t just baseball gloves. Other countries manufacture a wide range of decent quality sporting goods for the American recreational market—everything from backyard volleyball sets to inexpensive swim fins.

Lower labor costs give foreign manufacturers an advantage in the production of low- to moderately-priced sporting goods. Baseball gloves are an excellent example.

Cover of Spalding’s Official Base Ball Guide, Spanish-American Edition, 1903 Photo courtesy of Prints and Photographs Division, Library of Congress. Click on photo for a bigger image.

Most of the baseball gloves in American sporting goods stores eventually end up on the hands of tee-ball toddlers, Little Leaguers, and slow-pitch softball players. Ever notice what happens to a lot of those gloves? Some are lost or stolen; others are exposed to the elements, flung in anger, gnawed by the family dog—and worse. Which is why moms, dads, and recreational players would rather not spend a small fortune for a baseball glove. Most are looking for a decent-quality glove at a price they can afford. In other words, they are looking for the typical glove manufactured in Korea, Taiwan, or the Philippines.

Do U.S. producers have the know-how and the capability to produce baseball gloves? Yes. Can they do it as cheaply and efficiently as manufacturers in Korea, Taiwan, and the Philippines? Generally speaking, no.

Korea, Taiwan, and the Philippines enjoy a comparative advantage in baseball glove production because they can manufacture, ship, and sell the gloves at a lower cost than other countries can—a lower cost compared to or relative to manufacturers in other countries. That’s why it makes more economic sense for the United States to import baseball gloves and concentrate on producing things it can turn out a lower relative cost—things like top-quality golf clubs and high-performance sleeping bags that can withstand the rigors of Mt. Everest.

When it comes to high-end, high-tech sporting goods, the United States enjoys a comparative advantage. American manufacturers are able to produce top-of-the-line skis, tennis racquets, snowboards, golf clubs, skateboards, surfboards, and bicycles at a lower relative price than their foreign competitors. Some of these items carry a very high price tag, but U. S. manufacturers can still produce and sell them at a lower relative cost than most foreign manufacturers.

Bottom line: The United States enjoys a relative cost advantage in the production of high-end, high-tech sporting goods. Korea, Taiwan, and the Philippines enjoy a relative cost advantage in the production of low- to moderately priced sporting goods. So it makes economic sense for each country to concentrate on what it can produce at a lower relative cost and trade for what another country can produce at a lower relative cost.

A Comparative Advantage in College Hoops

Comparative advantage also applies to regions within the same country. For example, a university town in the Midwest or the South might never be able to support an NBA franchise, but it can certainly support a college basketball team. So instead of wasting resources on trying to attract pro teams, small market areas might be better off specializing in the production of college sports, while big markets specialize in the production of pro sports.

And if you look around, that’s exactly what is happening. Many of the college powerhouse teams—University of Kansas, University of Kentucky, University of North Carolina—are in small market areas, and most of the thriving pro teams are in big market areas. But the small market and big market regions are able to “trade” sports via television, and everyone benefits. The supply of high quality sporting events increases, and fans in every region of the country are able to enjoy (consume) a wider range of topnotch college and professional games.

D. Absolute Advantage:
Nobody Does It Better

International trade isn’t limited to raw materials and finished products. Countries can also trade ideas and symbols.

In fact, when it comes to exporting the symbols of American popular culture, the United States enjoys an absolute advantage. No other country can do it better, or even come close.

Elvis, an American icon, 1956. Photo courtesy of Prints and Photographs Division, Library of Congress. Click on photo for a bigger image.

The trappings of American pop culture—movies, music videos, CDs, TV shows, and fast food—enjoy enormous global popularity. Why? Because they offer a connection to a way of life that, for better or worse, is very attractive to a large segment of the world’s population.

When consumers in Thailand, Mexico, and the Dominican Republic spend their money on American soft drinks or NBA apparel, they aren’t just buying tangible objects. They’re buying symbols and ideas, too. (In fact, many of the objects and items of apparel that feature U.S. trademarks and logos are often manufactured outside the United States.)

Professional sports is a prime example. Teams like the Los Angeles Dodgers and the New York Yankees have a growing international base of fans. The Dodgers and the Yankees have lots of fans in such baseball hotbeds as Japan, Korea, Taiwan, the Dominican Republic, Nicaragua, Mexico, and Cuba. And when Michael Jordan was in a Chicago uniform, the Bulls were a powerful draw on all seven continents.

Dr. James Naismith in Japan. International trade isn’t limited to raw materials and finished products. Countries can also trade ideas, services, and symbols. Photo courtesy of Naismith Memorial Basketball Hall of Fame Library. Click on photo for a bigger image.

But not everyone on the planet who wears an NBA jersey or watches the World Series via satellite is an avid fan. The games, the superstars, and the team apparel enjoy growing worldwide popularity because they are also highly visible symbols of American pop culture—a fact that is not lost on people like media mogul Rupert Murdoch.

Murdoch knows a thing or two about the power of symbols. He paid more than $300 million for the L.A. Dodgers, in part, because the team is a global brand name. The Dodgers provide him a vehicle for capturing a larger share of the international media market, and they offer international fans a connection to the land of backyard barbecues and two-car garages.