Trading Races

by by Sam Rosen

illustration by by Diane Zhou

This summer, two transactions made history in their respective sports. In the MLB, the Los Angeles Dodgers acquired first baseman Adrian Gonzalez from the Boston Red Sox in unprecedented fashion, agreeing to take on two colossally overpaid, washed-up veterans in order to land the superstar slugger. All told, the deal cost the Dodgers— who sent Boston five young prospects in return— a quarter billion dollars. The Red Sox, mired in their worst season in decades and looking for a fresh start, jumped at the opportunity to unload their most cumbersome contracts, even if it meant losing Gonzalez. For the Dodgers, it was the largest trade in franchise history.

In the NBA, another big name switched teams, albeit in a very different way. After a dazzling season that saw him go from bench-warming Harvard alum to the toast of New York, Jeremy Lin seemed a lock to return to the Knicks. At the start of the off season, Knicks coach Mike Woodson told ESPN that Linsanity would “absolutely” be returning to Madison Square Garden. Five days later, Lin was a member of the Houston Rockets. Houston had offered Lin a sizeable, back-loaded contract that the Knicks felt overestimated Lin’s value, and New York refused to match the offer.

Both transactions will have significant impacts on the performance of all the teams involved, but their importance goes beyond Xs and Os. In trading for Gonzalez, Los Angeles brought the biggest Mexican-American ballplayer to the city with the most Mexican-Americans; by letting Lin walk, New York banished the first-ever Asian-American basketball star from the city with the most Asian-Americans. To understand (partly) why each decision was made, we have to look at the economic structures of the MLB and the NBA.

Major League Baseball is the only major American sports league without a salary cap, which means that there is no limit on how much a team can spend annually on its roster. Instead of a cap, the MLB has a luxury tax system—each year the league sets an amount of money that teams can spend on players without having to pay a tax. If a team’s spending exceeds this number, it’s taxed a percentage of the excess amount. The luxury tax system is completely ineffective when it comes to regulating spending—it’s the economic equivalent of ordering a Diet Coke with your two Baconators because you’re trying to watch your figure. There are a handful of teams who spend outlandishly on the best talent, and the rest of the league is left with the dregs. This year, the Yankees will spend roughly $198 million on player salaries—the three next-best teams in their division will spend $220 million combined. The NBA, on the other hand, has a “soft” salary cap, which means that while there’s a limit on total payroll, there are many exceptions that allow teams to exceed the cap (often these exceptions exist to help small-market teams retain their stars). The wealthiest teams still find ways to spend more than the competition, but pro basketball doesn’t have nearly the economic inequality of America’s pastime.


In baseball, then, every dollar has a heightened value, because every bit of revenue a team takes in—from TV ads to jerseys to soft pretzels— can be used to improve the roster. This is true in the NBA to a much lesser extent. When the Dodgers decided to take Boston’s bad contracts in exchange for Gonzalez, it was widely reported that they did so partly because they predicted that the economic jolt they could get from Mexican and Mexican-American fans would help them recoup the total cost of the deal. Certainly, Los Angeles did not trade for Adrian Gonzalez just because he’s Mexican-American—he’s one of the best hitters in the game and just entering his prime. His ethnicity was, however, considered by the Dodgers to be a plus for reasons that were at least partly economic. In contrast to Gonzalez, Jeremy Lin’s Asian-ness does not directly help the Knicks acquire better players. Regardless of where he plays, Lin’s off-court earning potential is enormous because of what he means to many Asian and Asian-American fans. The Rockets will almost certainly bring in more money with Lin than they did without him—but that won’t do anything to change the salary cap. At the end of last season, Lin was a restricted free agent, meaning that in order to retain him the Knicks simply had to match any contract offer made to Lin by another team. If Jeremy Lin had a baseball equivalent, the $25 million offer from Houston that New York eventually balked at would be a tremendous act of lowballing—with the money he generates, you could overhaul an entire roster. The presence of the salary cap, then, greatly diminishes the importance of an athlete’s off-court value, value that is often tied to ethnicity.1

Situations like those of Gonzalez and Lin are noteworthy, but they aren’t entirely unprecedented. For 12 years the Seattle Mariners benefitted from what was commonly referred to as the “Ichiro Effect,” the sizeable influx of Japanese and Japanese-Americans coming to Seattle to see Ichiro Suzuki, a superstar outfielder from Japan. When Ichiro, now in the twilight of his career, was recently traded to the Yankees, the Seattle Times reported that the city, which receives more tourists from Japan than any other country, could take a sizeable economic hit from his departure. Makoto Ogasawara, who runs a company that organizes tours of Seattle for Japanese visitors, is bracing for a major slump in business “now that his main draw is a Yankee.” The Ichiro trade is evidence that the economic importance of ethnicity has its limits even in the MLB. The Mariners traded Ichiro not because he no longer brings in fans, but because he simply isn’t that good anymore.

As Seattle was saying goodbye to its longtime icon, the Miami Marlins were hoping to add one of their own. The most recent baseball offseason revolved around one free agent: former St. Louis Cardinal Albert Pujols, who, in all likelihood, will end his career as one of the ten best players in the history of the game. Going into the offseason, St. Louis was considered a heavy favorite to re-sign its franchise player, and reaffirmed its commitment to Pujols, who is Dominican-American, by offering him a $200 million contract. Shortly afterwards, the Miami Marlins shocked the baseball world with a gargantuan offer that approached, after incentives, $300 million. In a purely baseball sense, this was considered a very risky move. Despite his undeniable greatness, Pujols is old in baseball years (he’ll turn 33 in January) and may have peaked already. The Marlins, however, were thinking big-picture. As CBS Miami reported, “the Marlins were wiling to go all in on Pujols not only for his baseball value, but for his marketing value to Latin America and Latin American companies based in Miami.” Pujols eventually signed with the LA Angels, but Miami’s massive bid remains a prime example of the interplay between economics and ethnicity in the MLB.

The NBA instituted a salary cap before the 1984-85 season. Only two years later, the new regulations may have contributed to a decision that would affect the league for years to come. The Indiana Pacers had the eleventh overall pick the 1987 NBA draft, and its fans had made it very clear whom they were supposed to select. Steve Alford had been a high school star in nearby New Castle, Indiana and had just led the Indiana University Hoosiers to the NCAA title, becoming the storied program’s all-time leading scorer in the process. He was white, clean-cut, and absolutely adored in the area. When the Pacers selected a lanky, black UCLA guard named Reggie Miller, fans in Indiana were apoplectic. Miller was greeted in his new city with boos and racial slurs. Eventually, though, the city came around: Alford started only three games throughout a disappointing career; Miller became, by far, the greatest Indiana Pacer ever and helped thrust the team into the league’s elite. Just this week he was inducted into the Basketball Hall of Fame. In a recent interview, then-Pacers General Manager Donnie Walsh listed all the reasons he chose Miller over Alford. His account of the decision was full of small basketball details, but featured no mention of off-court value. It’s very possible that had the NBA still been cap-free in 1987, the short-term economic advantages of selecting Alford would have made Miller a less attractive option.

If all of this sounds a little crass and bizarre, it’s because it kind of is. For one, the act of swapping one human being for another would be revolting in any other context. It’s easier to process the uprooted families and the lack of autonomy when we remember that these people get paid seven figures to play sports. Still, though, there’s a sterile quality to the way we talk about trades. The stories following a big deal are always about how the players will fit with their new teams or the trade’s impact on the playoff forecast. No one cares that Adrian Gonzalez’s kids had to change schools in the middle of August. Things get even messier when ethnicity is a factor. Is the Dodgers ownership’s excitement over its new Mexican-American star a creepy commodification of nationality, or just a situation where everyone—the team, Gonzalez, the fans—is better off?

The answer is probably a little of both. On one hand, these ethnicity-based economic calculations are a bit exploitative (and made more cringe-worthy by the fact that team owners are almost all white men). On the other hand, crafting teams with demographics in mind has produced franchises imbued with local flavor.2 During Ichiro’s stint with the Mariners, sushi was sold at the park, and the team played annual exhibition games in Japan. The Miami Marlins sell Cuban food at their home games. In contrast, teams in the NBA, while usually embraced by locals, rarely reflect the cultures of their cities. This perhaps, is why it’s so exciting when an NBA team’s character aligns closely with that of the city it plays in. Yes, the Larry Bird/Magic Johnson rivalry was compelling because the two legends brought out the best in each other, but the appeal goes deeper than that. Bird and his scrappy, haggard Celtics teammates gave blue-collar Boston a team it could relate to. Ditto for the “Showtime” Lakers, who, led by Johnson and a cast of suave, flashy players, had charisma and panache that LA adored. When such alignment happens in the NBA, it’s generally by chance. In baseball, it happens by design.


Sam Rosen B’14 would gladly move to Houston for $25 million.