The sports law world is abuzz with the revelation that baseball super-agent Scott Boras provided very large loans to young baseball players in the Dominican Republic.
It turns out other groups of American investors, allied with other player agents, are also making a business out of investing in young Dominican players. Although it appears that this practice does not violate any restrictions imposed by Major League Baseball or the MLB Players Association, many commentators have termed this funding practice of dubious ethical merit and at bottom exploitative.
It's the assertion that lending money to a young athlete is exploitative that seems a bit hasty to me.
Lending money to a young athlete is not exploitation. It's empowerment. Why do these commentators, whom I assume would profess to love sports, want to keep money out of sports? Sports aren't free. What exactly is wrong with wealthy Americans issuing "micro-loans" to fund the hopes and dreams of young, impoverished Dominicans?
1.This is baseball, friends. Not football or basketball. Baseball requires a lot of athleticism, of course, but also involves a great deal of skill, attention to detail, and training over a long period of time. I'm not saying other sports are easy or don't require just as much skill. But in the U.S., serious young baseball players nowadays play year round. They attend baseball camps and academies, play on private travel teams, and enter themselves in expensive "showcase" events to expose their skills to scouts at the next level, be it special regional all-star teams at the youth level, special off-season high-school age travel squads, college programs and of course the pro level. It takes a lot of commitment and naturally a lot of money for a young baseball player to make it to the next level, whatever that level may be. Notice nowadays how few inner-city minorities make it to baseball's highest levels? Baseball is no longer the inexpensive, easy-access sport that basketball is and football (the latter thanks to school programs) remains. Baseball requires a long apprenticeship and a lot of money.
2. Golf requires a lot of money too. Young golfers need money for course access, practice expenses, specialized instruction, and tournament fees. Baseball is not quite golf in terms of expense, but today it is a lot closer to golf than it is to basketball. So how do young American golfers make it? How do they play in state-wide and national junior tournaments, on elite junior golf tours, on college teams and eventually even on one of the many pro tours? How can they afford this expensive sport, with its protracted, specialized apprenticeship and extensive travel requirements? They are sponsored. Their efforts are funded. At the amateur level, well-off parents (or those who angle to get themselves golf industry insider jobs) provide access and pay for instruction. Yet parents can only take the player so far. Making it on the professional level requires a very deep pocket: even on the minor tours, players need money for large travel expenses, high tournament fees, equipment, and continued instruction. For an aspirant to the highest level, the PGA or LPGA Tour, the requisite stakes are multiplied.
3. So once past the amateur stage, where do these young, hopeful professional golfers get the needed money to start their careers? Most of them borrow it, but not from a bank or wealthy relative. Tool around on your favorite internet search engine. It won't take long to find opportunities to invest in aspiring professional golfers in exchange for a share of the winnings. That's right: young American golfers raise money through a self-created capital market. American investors looking to promote young golfers, and take a chance on getting a return on their money, have made possible the launch of the careers of most of today's touring golf professionals. This situation is neither corrupt nor exploitative. It's a benefit to the player.
4. It is undoubtedly true that the advance of money from a lender or investor carries with it certain obligations. The young athlete now carries a debt, and will have to give his best efforts to earn enough to pay it off. Undoubtedly many aspiring professional athletes fail to make the grade, and the lender or investor might go unpaid. Certainly this risk will be factored into the promised return. [In theory the lender stands in a better place than the investor; the latter's security will be nonexistent, while the former could demand repayment whether the professional earnings happen or not. But the difference in the method of financing probably reflects the longer gestation period for success in golf, compared with the large signing bonuses paid to pro-quality non-American baseball players.] But if we allow the young American golfer (or the young American college student, for that matter) to take on very substantial financial obligations, why deny that opportunity to the Dominican athlete?
5. Ironically, if U.S.-born baseball players could borrow against their "sports capital" as do players from outside the country, then we might see a change in baseball's dearth of African-American players. The very restrictions that Major League Baseball imposes on U.S.-born players effectively diminish the supply of minority players. American players cannot become professionals until they are age-eligible and are drafted or signed after the draft. As a result, American-born ballplayers must delay their professional careers, and may only negotiate with one team when they begin it. These rules lower the compensation for novice professionals, and thus raise the cost of entering the occupation. With no outside funding permitted to amateurs, young baseball players must rely on their families or their own wherewithal to undertake the considerable expense of training. Is it any wonder that U.S. minorities are disappearing from the major leagues?
6. The more money we can lure into investments in young athletes the better and more numerous those athletes will be. The fact that Dominican players are receiving direct funding from American interests will only further promote the Dominican player and further disadvantage the American one. Expect to see even fewer American-born players from impoverished backgrounds make it to the major leagues.