Legal Commentary

New York Yankees Co-Owner Hank Steinbrenner Denounces ?Socialism?

By Ilya Somin

New York Yankees co-owner Hank Steinbrenner recently denounced Major League Baseball?s revenue-sharing system, calling it ?socialism?:

Yankees co-chairman Hank Steinbrenner [the other co-owner/co-chairman is Hank?s brother Hal] says baseball?s revenue sharing and luxury tax programs need changes.....

?We?ve got to do a little something about that, and I know Bud wants to correct it in some way,? Steinbrenner said. ?Obviously, we?re very much allies with the Red Sox and the Mets, the Dodgers, the Cubs, whoever in that area.?

?At some point, if you don?t want to worry about teams in minor markets, don?t put teams in minor markets, or don?t leave teams in minor markets if they?re truly minor,? Steinbrenner said. ?Socialism, communism, whatever you want to call it, is never the answer.?

I don?t have a strong view about the revenue-sharing system. As a tool for maintaining competitive balance, it?s much less effective than the salary caps adopted by the NFL, NBA, and NHL. Moreover, the revenue-sharing system suffers from the flaw that the low-payroll teams that receive the money paid in by wealthier franchises can simply put the money into their owners? pockets, as opposed to investing it in improving their teams.

That said, comparing MLB revenue-sharing to socialism is absurd. Socialism is government control of the economy, not a private arrangement to divide up profits from a joint enterprise. You might as well say that a law firm is ?socialistic? if individual partners don?t keep all the profit generated by the clients they bring in, and instead have to transfer some of it to the other partners.

If the Steinbrenners really believe that socialism is ?never the answer,? however, they should return the record $1.2 billion in government subsidies that they recently got for the building of the new Yankee Stadium. Even the USSR never spent so much public money on a sports stadium.

Government subsidies for private sports stadiums fall short of full-blown socialism (under which the state would own all stadiums as well as pay for them). But they come a lot closer to it than MLB revenue-sharing. Since the Steinbrenners clearly want to avoid even the slightest hint of socialism in their business dealings, I expect that their check to the long-suffering taxpayers will be in the mail soon.

Full post as published by The Volokh Conspiracy on February 22, 2011 (boomark / email).