Global demand for beef, chicken, and pork continues to rise. So do concerns about environmental and other costs. Will reconciling these two forces be possible — or, even better, Impossible?
Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.
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Let’s begin with a few basic facts. Fact No. 1: a lot of people, all over the world, really like to eat meat — especially beef, pork, and chicken.
Jayson LUSK: If you add them all together, we’re actually higher than we’ve been in recent history.
That’s Jayson Lusk.
LUSK: I’m a professor and head of the agricultural economics department at Purdue University. I study what we eat and why we eat it.
DUBNER: In terms of overall meat consumption per capita in the U.S., how do we rank worldwide?
LUSK: We’re the king of meat eaters. So, compared to almost any other country in the world, we eat more meat per capita.
DUBNER: Even Brazil, Argentina, yes?
LUSK: Yes, and part of that difference is income-based. So, if you took Argentina, Brazil, and adjusted for income, they would probably be consuming more than us, but we happen to be richer, so we eat a little more.
The average American consumes roughly 200 pounds of meat a year. That’s an average. So, let’s say you’re a meat eater and someone in your family is vegetarian: you might be putting away 400 pounds a year. But, in America at least, there aren’t that many vegetarians.
LUSK: I probably have the largest data set of vegetarians of any other researcher that I know.
DUBNER: Really? Why?
LUSK: I’ve been doing a survey of U.S. food consumers every month for about five years, and one of the questions I ask is, “Are you a vegan or a vegetarian?” So, over five years’ time and about 1,000 people a month, I’ve got about 60,000 observations.
DUBNER: Wow. And is this a nationwide data survey?
LUSK: It is. Representative in terms of age and income and education. I’d say on average, you’re looking at about three to five percent of people say “yes” to that question. I’d say there’s a very slight uptick over the last five years.
So, again, a lot of meat-eating in America. What are some other countries that consume a lot of meat? Australia and New Zealand, Israel, Canada, Russia, most European countries. And, increasingly, China.
LUSK: One of the things we know is that when consumers get a little more income in their pocket, one of the first things they do is want to add high-value proteins to their diets.
DUBNER: What is the relationship generally between G.D.P. and meat consumption?
LUSK: Positive, although sort of diminishing returns, so as you get to really high income levels, it might even tail off a little bit. But certainly at the lower end of that spectrum, as a country grows and adds more G.D.P., you start to see some pretty rapid increases in meat consumption.
Meat consumption is of course driven by social and religious factors as well; by health concerns, and animal welfare: not everyone agrees that humans should be eating animals at all. That said, we should probably assume that the demand for meat will continue to rise as more of the world keeps getting richer. How’s the supply side doing with this increased demand? Quite well. The meat industry is massive and complicated — and often heavily subsidized. But, long story short, if you go by the availability of meat and especially what consumers pay, this is an economic success story.
LUSK: So prices of almost all of our meat products have declined pretty considerably over the last 60 to 100 years. And the reason is that we have become so much more productive at producing meat. If you look at most of the statistics, like the amount of pork produced per sow. And we’ve taken out a lot of the seasonal variation that we used to see, as these animals have been brought indoors. And you look at poultry production, broiler production: the amount of meat that’s produced per broiler has risen dramatically — almost doubled, say — over the last 50 to 100 years, while also consuming slightly less feed.
That’s due largely to selective breeding and other technologies. The same goes for beef production.
LUSK: We get a lot more meat per animal, for example, on a smaller amount of land.
As you can imagine, people concerned with animal welfare may not celebrate these efficiency improvements. And then there’s the argument that, despite these efficiency improvements, turning animals into food is wildly inefficient.
Pat BROWN: Because the cow didn’t evolve to be meat. That’s the thing.
Pat Brown is a long-time Stanford biomedical researcher who’s done groundbreaking work in genetics.
BROWN: The cow evolved to be a cow and make more cows and not to be eaten by humans. And it’s not very good at making meat.
Meaning: it takes an enormous amount of food and water and other resources to turn a cow or a pig into dinner — much more than plant-based foods. And as Pat Brown sees it, that is not even the worst of it.
BROWN: The most environmentally destructive technology on earth: using animals in food production. Nothing else even comes close.
Not everyone agrees that meat production is the environment’s biggest enemy. What’s not in dispute is that global demand for meat is high and rising. And that the production of meat is resource-intensive and, at the very least, an environmental challenge, with implications for climate change. Pat Brown thinks he has a solution to these problems. He’s started a company—
BROWN: —a company whose mission is to completely replace animals as a food production technology by 2035.
The meat industry, as you can imagine, has other ideas:
Kelly FOGARTY: We want to keep the term “meat” to what is traditionally harvested and raised in the traditional manner.
Today on Freakonomics Radio: everything you always wanted to know about meat, about meatless meat, and where meat meets the future.
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What determines which food you put in your mouth every day? There are plainly a lot of factors: personal preference, tradition, geography, on and on.
LUSK: So, take something like horse consumption. It’s almost unheard of to even think about consuming a horse in the United States.
Jayson Lusk again, the agricultural economist.
LUSK: Whereas, you go to Belgium or France, it would be a commonly consumed dish.
But there’s another big factor that determines who eats what: technology. Technology related to how food is grown, preserved, transported. But also: technology that isn’t even related to the food itself. Consider the case of mutton. Mutton is the meat of an adult sheep. The meat of a young sheep is called lamb. I am willing to bet that you have not eaten mutton in the last six months, probably the last six years. Maybe never. But if we were talking 100 years ago? Different story.
LUSK: It’s certainly the case that back in the 1920’s and 30’s that mutton was a much more commonly consumed product.
Mutton was a staple of the American diet; one of the standard items shipped to soldiers during World War II was canned mutton. But shortly after the war, mutton started to disappear. What happened?
LUSK: A sheep is not just meat. These are multi-product species and they’re valuable not just for their meat but for their wool.
Oh yeah, wool. And unlike leather, which can be harvested only once from an animal, you can shear wool from one sheep many times, over many years.
LUSK: So anything that affects the demand for wool is also going to affect the underlying market for the rest of the underlying animal.
And what might affect the demand for wool? How about synthetic substitutes? Nylon, for instance, was created by DuPont in 1935, and became available to the public in 1940. A year later, polyester was invented.
LUSK: So, you know, any time you had new clothing technologies come along, that’s going to affect the underlying demand for sheep and make them less valuable than they would have been otherwise.
So an increase in synthetic fabrics led to a shrinking demand for wool — which meant that all those sheep that had been kept around for shearing no longer needed to be kept around. Also, wool subsidies were repealed. And America’s sheep flock drastically shrank: from a high of 56 million in 1942 to barely 5 million today.
LUSK: It is amazing. I’ve worked at several agricultural universities across the U.S. now, and often the largest sheep herds in those states are at the university research farms.
And fewer sheep meant less mutton for dinner. Is it possible Americans would have stopped eating mutton without the rise of synthetic fabrics? Absolutely: if you ask a room full of meat-eaters to name their favorite meat, I doubt one of them will say “mutton.” Still, this is just one example of how technology can have a big effect on the meat we eat. And if you talk to certain people, it’s easy to believe that we’re on the verge of a similar but much larger technological shift.
BROWN: My name is Pat Brown. I’m currently the CEO and founder of Impossible Foods, whose mission is to completely replace animals as a food production technology.
Brown grew up in the suburbs of Washington, D.C., as well as Paris and Taipei — his father worked for the C.I.A. He studied to be a pediatrician and in fact completed his medical residency, but he switched to biochemistry research.
BROWN: I had the best job in the world at Stanford. My job was basically to discover and invent things and follow my curiosity.
Brown did this for many years and was considered a world-class researcher. One of his breakthroughs was a new tool for genetic mapping; it’s called the D.N.A. microarray—
BROWN: —that lets you read all the words that the cell is using and effectively kind of start to learn the vocabulary, learn how the genome writes the life story of a cell, or something like that. It also has practical applications, because — what it’s doing, in a sort of a deterministic way, specifies the potential of that cell, or if it’s a cancer cell.
Some people think the DNA microarray will win Pat Brown a Nobel Prize. When I bring this up, he just shakes his head and smiles. It’s clear that his research was a deep passion.
BROWN: For me, this was the dream job, it was like in the Renaissance, having the Medicis as patrons or something like that.
But after many years, Brown wanted a change. He was in his mid-50’s; he took a sabbatical to figure out his next move.
BROWN: It started out with stepping back from the work I was doing and asking myself, “What’s the most important thing I could do? What could I do that would have the biggest positive impact on the world?” And looking at what are the biggest unsolved problems in the world? I came relatively quickly to the conclusion that the use of animals as a food-production technology, is by far. And I could give you endless reasons why that’s true, but it is absolutely true. By far the most environmentally destructive thing that humans do.
There is indeed a great deal of evidence for this argument across the entire environmental spectrum. The agricultural historian James McWilliams, in a book called Just Food, argues that “every environmental problem related to contemporary agriculture … ends up having its deepest roots in meat production: monocropping, excessive applications of nitrogen fertilizer, addiction to insecticides, rain-forest depletion, land degradation, topsoil runoff, declining water supplies, even global warming — all these problems would be considerably less severe” if people ate meat “rarely, if ever.”
LUSK: You know, there’s no doubt that meat production has environmental consequences. To suggest that it’s the most damaging environmental thing we do is, I think, a pretty extreme overstatement.
But what about the greenhouse-gas emissions associated with raising meat — especially in the U.S., which is the world’s largest beef producer?
LUSK: Our own E.P.A. — Environmental Protection Agency — suggests that all of livestock contributes about 3 percent of our total greenhouse-gas emissions. So, I mean, 3 percent is not nothing, but it’s not the major contributor that we see. That number, I should say, is much higher in many other parts of the world. So the carbon impacts per pound produced are so much smaller here than a lot of the world that when you tell people, “the way to reduce carbon emissions is to intensify animal production,” that’s not a story a lot of people like to hear.
DUBNER: Because why not, it sounds like it’s against animal welfare?
LUSK: Well, two reasons: Exactly, one is there are concerns about animal welfare, particularly when you’re talking about broiler chickens, or hogs — less so about cattle — and the other one is, there are concerns about when you concentrate a lot of animals in one place you can get all this waste in a location, that you have to think about creative ways to deal with that don’t have some significant environmental problems.
DUBNER: So, the E.P.A. number, livestock contributing three percent, does that include the entire production chain, though? Because, some of the numbers that I see from environmental activists is much, much higher than that.
LUSK: The U.N. estimate that you often hear from — originally was created in this report called “Livestock’s Long Shadow,” is something around 19 percent. But that 19 percent, roughly, number, is a global number. Actually, there was a study that came out pointing out some flaws in that, so they reduced it somewhat.
In any case, there is a growing concern in many quarters over the externalities of meat production.
LUSK: Over the last 5–10 years, there’s been a lot of negative publicity — stories about environmental impacts, about carbon emissions, about animal welfare. And if you just look at the news stories, you would think, “Boy, people must be really cutting back, given the sort of frightful stories that you see on the front pages of the newspapers.” But if you look at the data itself, demand looks fairly stable. And that suggests to me it’s hard to change people’s preference on this.
There’s something about meat consumption. Some people would argue that we’re evolved to like meat, that it’s a protein-, vitamin-packed, tasty punch that we’ve grown to enjoy as a species. There are some people that even argue that it’s one of the reasons we became as smart as we did, the vitamins and nutrients that were in that meat allowed our brains to develop in certain ways that it might have not otherwise.
Pat Brown saw that same strong preference for meat when he decided that the number-one scientific problem to solve was replacing animals as food.
BROWN: And it’s a problem that nobody was working on in any serious way. Because everybody recognized that most people in the world, including most environmental scientists and people who care about this stuff, love the foods we get from animals so much that they can’t imagine giving those up.
Brown himself was a longtime vegan.
BROWN: I haven’t eaten meat for decades, and that’s just a personal choice that I made long before I realized the destructive impact of that industry. That was a choice I made for other reasons. And it wasn’t something that I felt like I was in a position to tell other people to do. And I still don’t feel like there’s any value in doing that.
Brown makes an interesting point here. Many of us, when we feel strongly about something — an environmental issue or a social or economic issue — we’re inclined to put forth a moral argument. A moral argument would appear to be persuasive evidence of the highest order: you should do this thing because it’s the right thing to do. But there’s a ton of research showing that moral arguments are generally ineffective; people may smile at you, and nod; but they won’t change their behavior. That’s what Brown realized about meat.
BROWN: The basic problem is that people are not going to stop wanting these foods. And the only way we’re going to solve it is not by asking them to meet you halfway and give them a substandard product that doesn’t deliver what they know they want from meat or fish or anything like that. The only way to do it is, you have to say, “We’re going to do the much harder thing,” which is we’re going to figure out how to make meat that’s not just as delicious as the meat we get from animals, it’s more delicious and better nutritionally and more affordable and so forth.
In other words: a marginal improvement on the standard veggie burger would not do.
BROWN: It’s been tried. It just doesn’t work. It’s a waste of effort.
So Brown start fooling around in his lab.
BROWN: Doing some kind of micro experiments just to convince myself in a way that this was doable.
Those early experiments were fairly encouraging.
BROWN: I felt like, okay, there’s a bunch of things I thought could be useful, and then I felt like I could just go in with a little bit more confidence to talk to the investors.
“The investors” meaning venture capitalists. Remember, Brown’s at Stanford, which is next door to the biggest pile of venture capital in the history of the world.
BROWN: And basically my pitch them was very naive from a fundraising standpoint, in the sense that basically I mostly just told them about how there’s this absolutely critical environmental disaster that needs to be solved and—
DUBNER: And they’re probably expecting to hear something now about carbon capture, or—
BROWN: Yeah, that’s the thing. And most people still are. So I just told these guys, “Look, this is an environmental disaster. No one’s doing anything about it. I’m going to solve it for you.”
So how does the almost-pediatrician-who-became-a-freewheeling-biochemist build a better meat from the ground up? That amazing story after the break:
BROWN: Okay, bingo, this is how we’re going to do it.
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It’s estimated that more than half of the greenhouse gas emissions associated with all animal agriculture comes from cows.
LUSK: And that is due to the fact that beef are ruminant animals.
The Purdue economist Jayson Lusk again.
LUSK: Their stomachs produce methane. It comes out the front end, not the back, as a lot of people think. And as a consequence — we look at carbon consequences — it’s mainly beef that people focus on, not pork or chicken, because they don’t have the same kind of digestive systems.
There has been progress in this area. For instance, it turns out that adding seaweed to cattle feed drastically reduces their methane output. But the scientist Pat Brown is looking for a much bigger change to the animal-agriculture industry.
BROWN: If I could snap my fingers and make that industry disappear right now — which I would do, if I could, and it would be a great thing for the world.
It is very unlikely to disappear any time soon; it is a trillion-dollar global industry, supported in many places by government subsidies, selling a product that billions of people consume once, twice, even three times a day. Pat Brown’s desire would seem to be an impossible one; the company he founded is called Impossible Foods. It’s essentially a tech startup, and it’s raised nearly $400 million to date in venture capital.
BROWN: So, we’ve only been in existence for about seven years and we have about 300 people. We started by basically building a team of some of the best scientists in the world to study how meat works, basically. And by that, I mean to really understand at a basic level the way, in my previous life, when I was a biomedical scientist, we might be studying how, you know, a normal cell of this particular kind becomes a cancer cell, understanding the basic biochemical mechanisms.
In this case, what we wanted to understand was: what are the basic biochemical mechanisms that account for the unique flavor chemistry and the flavor behavior and aromas and textures and juiciness and all those qualities that consumers value in meat? And we spent about 2.5 years just doing basic research, trying to answer that question, before we really started working on a product. And then decided for strategic reasons that our first product would be raw ground beef made entirely from plants.
DUBNER: Because burger is what people want?
BROWN: Well, there’s a lot of reasons why I think it was a good strategic choice: the largest single category of meat in the U.S., it’s probably the most iconic kind of meat in the U.S., it seemed like the ideal vehicle for communicating to consumers that delicious meat doesn’t have to come from animals, because it’s sort of the uber-meat for a lot of people.
DUBNER: Uber, lower-case “u.”
BROWN: With a lower-case, yes.
DUBNER: People are not hailing burgers, riding them around?
BROWN: No, thank God. And beef production is the most environmentally destructive segment of the animal agriculture industry. So, from an impact standpoint, it made sense as a choice.
So Pat Brown set about repurposing the scientific wisdom he’d accrued over a long, fruitful career in biomedicine. A career that may improve the health and well-being of countless millions. And now he got to work on a truly earth-shaking project: building a better burger. A burger that doesn’t come from a cow. An Impossible burger. So how did that work? What ingredients do you put in an Impossible burger?
BROWN: That’s an interesting aspect about the science, which is that we didn’t look for, “What are the precisely specific choices of ingredients that would work?” We studied, “What are the biochemical properties we need from the set of ingredients?” And then we did a survey of things available from the plant world that matched those biophysical properties of which there were choices.
So what are the main components of this burger?
BROWN: I can tell you what it’s made of right now. What it’s made of right now is different from how it was made two years ago, and that was different from how it was made two and half years ago and the next version we’re going to launch is a quite different set of ingredients.
We first interviewed Brown several months ago. The main ingredients at the time included:
BROWN: A protein from wheat; a protein from potatoes — not a starch from potatoes, but a protein from potatoes, it’s a byproduct of starch production. Coconut oil is the major fat source. And then we have a bunch of other small molecules, but they’re all familiar things: amino acids, vitamins, sugars. Nutrients.
But all these ingredients did not make Pat Brown’s plant-based hamburger meat taste or act or look like hamburger meat. It was still missing a critical component. A component called heme.
BROWN: Heme is found in essentially every living thing and heme in plants and human animals is the exact same molecule, okay? It’s just one of the most ubiquitous and fundamental molecules in life on Earth, period. The system that burns calories to produce energy uses heme as an essential component, and it’s what carries oxygen in your blood. And it’s what makes your blood red.
And none of this we discovered — this has been known for a long time and — so animals have a lot more heme than plants. And it’s that very high concentration of heme that accounts for the unique flavors of meat that you would recognize something as meat. It’s the overwhelmingly dominant factor in making the unique taste of meat and fish.
DUBNER: Is it involved in texture and mouthfeel and all that as well, or just taste?
BROWN: Just taste. Texture and mouthfeel are really important and there’s a whole other set of research around that. Super important — it kind of gets short shrift, because people think of the flavor as sort of the most dramatic thing about meat. But you have to get that other stuff right, too.
Brown and his team of scientists, after a couple years of research and experimentation, were getting a lot of that stuff right. But without heme — a lot of heme — their meatless meat would never resemble meat.
BROWN: So there is one component of a certain kind of plant that has a high concentration of heme, and that is in plants that fix nitrogen, that take nitrogen from the air and turn it into fertilizer. They have a structure called the root nodule, where the nitrogen fixation takes place and for reasons that are too complicated to explain right now they, that has a high concentration of heme and I just happened to know this from way back.
And if you slice open the root nodules of one of these plants:
BROWN: They have such a high concentration of heme that they look like a freshly cut steak, okay? And I did a calculation about the concentration of that stuff — soy leghemoglobin is the protein, which is virtually identical to the heme protein in muscle tissue, which is called myoglobin — that there was enough leghemoglobin in the root nodules of the U.S. soybean crop to replace all the heme in all the meat consumed in the U.S. Okay? So, I thought, “Genius, okay. We’ll just go out and harvest all these root nodules from the U.S. soybean crop and we’ll get this stuff practically for free.” Well, so I raised money for the company and we spent half the money trying to figure out how to harvest these root nodules from soybean plants, only basically to finally convince ourselves it was a terrible idea.
But if you’re a veteran scientist like Brown, a little failure is not so off-putting.
BROWN: You know you’re going to be doing things that are pushing the limits and trying entirely new things and a lot of them are going to fail. And if you don’t have a high tolerance for that and realize that basically, the way you do really really important, cool stuff is by trying a lot of things and not punishing yourself for the failures, but just celebrating the successes, you know, you’re not going to accomplish as much.
And the idea of buying up all the root nodules of the U.S. soybean crop wasn’t a complete failure.
BROWN: I mean, we got enough that we could do experiments to prove that it really was a magic ingredient for flavor. But then we had to start all over, and then what we did was: we said, ”Okay, we’re going to have to engineer a microorganism to produce gobs of this heme protein. Okay”? And since now we weren’t bound by any natural source, we looked at three dozen different heme proteins, everything from, you know, paramecium to barley to Hell’s Gate bacteria, which is like this —
DUBNER: That’s a plant? Hell’s Gate?
BROWN: It’s a bacteria that lives in deep sea vents near New Zealand that survive with temperatures above the boiling point of water that we mostly just looked at for fun, but funny thing about that, the reason we rejected it is that it’s so heat-stable that you can cook a burger to cooking temperature and it still stays bright red, because it doesn’t unfold. But anyway — and then we pick the best one, which turned out to be, just coincidentally, soy leghemoglobin, which is the one we were going after—
DUBNER: So your terrible idea was actually pretty good.
BROWN: It wasn’t really a brilliant idea, it accidentally turned out to be the right choice.
Through the magic of modern plant engineering, Pat Brown’s team began creating massive stocks of heme. And that heme would help catapult the Impossible burger well beyond the realm of the standard veggie burger — the mostly unloved veggie burger, we should say. The Impossible Burger looks like hamburger meat — when it’s raw and when it’s cooked. It behaves like hamburger meat. Most important, it tastes like hamburger meat.
Alison CRAIGLOW: I would like the American with an Impossible Burger.
WAITER: And how would you like that cooked?
CRAIGLOW: Oh, I didn’t realize — I’ll have it medium … medium. Is it pink in the middle when it’s … it is?
The Freakonomics Radio team recently ate some Impossible burgers in a restaurant near Times Square.
Zack LAPINSKI: I mean, I actually can’t taste the diff —
CRAIGLOW: It tastes like a burger.
Ryan KELLY: Good day for the Impossible Burger.
Greg RIPPIN: Yeah, approved by Freakonomics.
Their meal happened to coincide with the release of Impossible Burger 2.0 — an updated recipe that uses a soy protein instead of a wheat protein and has a few more tweaks: less salt, sunflower oil to cut the coconut oil, and no more xanthan gum and konjac gum. In my own tasting experience: Impossible Burger 1.0 was really good but a little slushy; 2.0 was burger-tastic.
These are of course our subjective observations. Here’s some actual evidence: Impossible Burgers are already being served in roughly 5,000 locations, primarily in the U.S. but also Hong Kong and Macau. These include very high-end restaurants in New York and California as well as fast-food chains like Umami Burger and even White Castle. This year, Impossible plans to start selling its burger meat in grocery stores.
BROWN: We’ve grown in terms of our sales and revenue about 30-fold in the past year. And our goal is to completely replace animal as a food technology by 2035. That means we have to approximately double in size and impact every year for the next 18 years.
DUBNER: Are we to understand that you are taking aim at pigs and chickens and fish as well?
BROWN: Yes, of course. So when we first started out, we were working on a technology platform and sort of the know-how about how meat works in general; we were working on understanding dairy products and cheeses and stuff like that. And then we decided, okay, we have to pick one product to launch with, and then we have to, from a commercialization standpoint, just go all in on it for a while.
DUBNER: As the scientist, or as a scientist, were you reluctant to kind of narrow yourself for that commercial interest, or did you appreciate that this is the way in this world things actually happen?
BROWN: Both. I mean, let’s put it this way: I would like to be able to pursue all these things in parallel, and if I had the resources I would. But if we launched another product right now, we’d just be competing against ourselves for resources for commercialization, so just doesn’t make any sense.
We put out an episode not long ago called “Two (Totally Opposite) Ways to Save the Planet.” It featured the science journalist Charles Mann.
MANN: How are we going to deal with climate change? There have been two ways that have been suggested, overarching ways, that represent, if you like, poles on a continuum. And they’ve been fighting with each other for decades.
The two poles are represented by what Mann calls, in his latest book, The Wizard and the Prophet. The prophet sees environmental destruction as a problem best addressed by restoring nature to its natural state. The wizard, meanwhile, believes that technology can address environmental dangers. This is, of course, a typology, a shorthand; a prophet doesn’t necessarily fear technology any more than a wizard fears nature. That said: if there were ever an embodiment of the wizard-prophet hybrid, a person driven by idealism and pragmatism in equal measure, I’d say it’s Pat Brown. Which means his invention has the capacity to upset people all across the spectrum.
The consumers and activists who might cheer a meatless meat are often the same sort of people who are anti-G.M.O. — genetically modified organisms. And the Impossible Burger would not have been possible without its genetically modified heme — which, by the way, the F.D.A. recently declared safe, after challenges from environmental groups like Friends of the Earth. Another group that might object to Impossible Foods? The meat industry. You know, the ones who use actual animals to raise food.
FOGARTY: My name is Kelly Fogarty and I serve as the executive vice president for the United States Cattlemen’s Association. And I am a fifth- generation beef cattle rancher here in Oakdale, California.
DUBNER: I’m just curious, as a woman, do you find yourself ever wishing the U.S. Cattlemen’s Association would change their name or are you okay with it?
FOGARTY: You know, it’s funny you mention that. There’s always a little bit of a notion there in the back of my mind of, you know, of course being in the industry for so long. I take it as representing all of the livestock industry. But you know, definitely having a special nod to all the female ranchers out there would be nice to have as well.
DUBNER: And what is the primary difference between the U.S. Cattlemen’s Association and the National Cattlemen’s Beef Association?
FOGARTY: As the United States Cattlemen’s Association, we are made up primarily of cattle producers. So your family ranches. You know, cow-calf operations run by producers and kind of for producers is what U.S.C.A. was built on. Whereas National Cattlemen’s Beef Association does include some more of packer influences as well as you know some of the processing facilities as well.
DUBNER: Can you just talk generally for a moment: how big of a threat does the beef industry see from alternative, “meat”?
FOGARTY: So from our end you know, in looking at the “meat” — and I appreciate you using those quotes around that term — from our end, we’re not so much seeing it as a threat to our product. What we are really looking at is not a limit on consumer choice or trying to back one product out of the market. It’s really to make sure that we’re keeping the information out there accurate and that what is available to consumers and what is being shown to consumers on labels is accurate to what the product actually is.
In 2018, Fogarty’s organization filed a petition with the U.S.D.A. to prevent products from being labeled as “beef” or “meat” unless they come from a cow.
DUBNER: Does that mean that your organization thinks that consumers are confused by labeling? Is that the primary objection?
FOGARTY: So the primary objection from the United Cattlemen’s Association is that we want to keep the term “meat” to what is traditionally harvested and raised in the traditional manner. And so when we see the term “meat” being put on these products that is not derived from that definition, what our producers came to us and really wanted us to act on was what we saw happened in other industries, specifically when you look at the dairy industry and where the term “milk” has now been used.
“Almond milk,” for instance. Which comes from almonds, not animals. Which led the National Milk Producers Federation to argue that it should not be sold as “almond milk.” The FDA agreed; its commissioner pointed out that “an almond doesn’t lactate.” There are important differences between so-called “milk” that doesn’t come from animals and so-called “meat” that doesn’t come from animals. Almond milk has very different nutritional content than cow’s milk; the Impossible Burger, meanwhile, has a similar nutritional profile to hamburger — including the iron content, which vegans can have trouble getting enough of. That’s another reason why Kelly Fogarty and the U.S. Cattlemen’s Association might not want the Impossible Burger to be labeled “meat.”
DUBNER: I am just curious about the mental state of your industry because I was looking at your Facebook page and one post the other day led with the following: “Eat or be eaten. Be at the table or on the menu. Fight or be forgotten.” So that sounds — it would make me believe that the future of meat is one in which cattle ranchers feel a little bit like an endangered species or at least under assault.
FOGARTY: I think that speaks to a lot of misconceptions that are out there regarding the U.S. beef industry. Whether it be in terms of you know nutrition, environment, animal welfare. We’ve really been hit from a lot of different angles over the years.
DUBNER: Okay, well, according to some scientific research, meat production and/or cattle ranching are among the most environmentally damaging activities on earth, between the resource-intensiveness, land but especially water, and the externalities, the runoff of manure and chemicals into groundwater.
FOGARTY: I think one of the first points to make is that cattle are defined as what is termed as upcyclers, and cattle today, they’re turning plants that have little to no nutritional value just as-is into a high-quality and a high density protein. And so when you look at where cattle are grazing in the U.S., and then also across the world, a lot of the land that they are grazing on are land that is not suitable for crops or it would be you know kind of looking as a highly marginal type of land. And the ability of livestock to turn what is there into something that can feed the world is pretty remarkable.
Fogarty believes her industry has been unfairly maligned; that it’s come to be seen as a target for environmentalist groups and causes.
FOGARTY: I would absolutely say, the livestock industry and to that matter, the agriculture industry as a whole I think has really been at the brunt of a lot of disinformation campaigns.
Fogarty points to that U.N. report claiming that the global livestock industry’s greenhouse-gas emissions were shockingly high. A report that was found to be built on faulty calculations.
FOGARTY: So, it was really an inequitable and grossly inflated percentage that really turned a conversation.
The inflated percentage of around 18 percent was really around 14.5 percent — so, “grossly” inflated may be in the eye of the aggrieved. Fogarty says that even though the error was acknowledged, and a revised report was issued.
FOGARTY: Folks have not forgotten it as much as we wish. It’s still something that it’s hard to have folks kind of un-read or un-know something that they initially saw.
The fact is that the agricultural industry is massive and massively complex. Without question, it exacts costs on the environment; it also provides benefits that are literally the stuff of life: delicious, abundant, affordable food. As with any industry, there are tradeoffs and there is friction: activists tend to overstate their claims in order to encourage reform; industry defenders tend to paper over legitimate concerns.
But in the food industry especially, it’s clear that a revolution is underway — a revolution to have our food be not just delicious and abundant and affordable but sustainable too, with fewer negative externalities. Some startups, like Impossible Foods, focus on cleverly engineering plant matter to taste like the animal flesh so many people love. Other startups are working on what’s called lab-grown meat, using animal stem cells to grow food without animals. This is still quite young technology, but it’s very well-funded. I was curious to hear Kelly Fogarty’s view of this.
DUBNER: One of the investors in the lab “meat” company Memphis Meats is Cargill, which is a major constituent of the big meat industry. I mean, another investor, for what it’s worth, is Bill Gates. But I’m curious what’s your position on that. Because the way I think about this long-term, presumably a firm like Cargill can win the future with alternative “meat” in a way that a cattle rancher can’t. So I’m curious what the position is of ranchers on this kind of investment from a firm like Cargill or other firms that are sort of hedging their bets on the future of meat.
FOGARTY: You know it’s a really interesting point, and it’s been a bit of a tough pill for producers to swallow, the fact that some of the big three, some of these big processing plants that have been so obviously heavily focused and have been livestock-dominant are now kind of going into this alternative and sometimes the cell-cultured lab meats, alternative proteins. And it really has been a point of contention among a lot of producers who are kind of confused, unsure, feel a little bit — I don’t want to say betrayed by the industry, but a little bit so…
Others may soon feel betrayed as well. A company called Modern Meadows is using similar technology to grow leather in the lab, without the need for cattle. The Israeli company SuperMeat is focused on growing chicken. And then there’s a company called Finless Foods.
Mike SELDEN: Finless Foods is taking the seafood back to basics and creating real fish meat entirely without mercury, plastic, without the need for antibiotics or growth hormones, and also without the need for fishing or the killing of animals because we grow the fish directly from stem cells.
That’s Mike Selden, the co-founder and C.E.O. of Finless. He’s 27 years old; he started out as a cancer researcher. Like Pat Brown, you could call him a wizard-prophet hybrid. He does take issue with the idea of “lab-grown” food.
SELDEN: The reality is, labs are by definition experimental and are not scalable. So this won’t be grown in a lab at all. It’s prototyped in a lab in the same way that snacks are prototyped in a lab. Doritos are prototyped in a lab by material scientists looking at different dimensions of like crunch and torsion and all these other sort of mechanical properties. So what our facility will look like when we’re actually at production scale is something really a lot closer to a brewery. Big steel tanks that are sort of allowing these cells space in order to divide and grow into large quantities of themselves, while accessing all of the nutrients that we put inside of this nutritional broth.
The fishing industry, like the meat industry, exacts its share of environmental costs. But like Pat Brown, Mike Selden does not want his company to win on goodwill points.
SELDEN: So, the goal of Finless Foods is not to create something that competes on ethics or morals or environmental goals. It’s something that will compete on taste, price, and nutrition — the things that people actually care about.
Right now, everybody really loves whales and people hate when whales are killed. What changed? Because we used to kill whales for their blubber in order to light lamps. It wasn’t an ethical movement, it wasn’t that people woke up one day and decided, “Oh, killing whales is wrong.” It was that we ended up using kerosene instead. We found another technological solution, a supply-side change that didn’t play on people’s morals in order to win. We see ourselves as something like that. You know, why work with an animal at all if you don’t need to?
Indeed: you could imagine in the not-so-distant future a scenario in which you could instantly summon any food imaginable — new foods, new combinations, but also foods that long ago fell out of favor. How much fun would that be? I asked the agricultural economist Jayson Lusk about this.
DUBNER: If we had a 3D printer, and it, let’s say, had, just, we’ll be conservative, 100 buttons of different foods that it could make me. Does anyone press the mutton button?
LUSK: Well, you know, one of the great things about our food system is that it’s a food system that, yes, makes food affordable, but also has a whole awful lot of choice for people who are willing to pay it. And I bet there’s probably at least one or two people out there that will push that will mutton button.
I also asked Lusk for his economic views on the future of meat, especially the sort of projects that inventors like Mike Selden and Pat Brown are working on.
LUSK: I have no problems with what Dr. Brown is trying to do there, and indeed I think it’s very exciting, this technology. And I think ultimately it’ll come down to whether this lab-grown meat can compete on the merits. So, there’s no free lunch here. In fact, the Impossible Burger — I’ve seen it on menus — it’s almost always higher-priced than the traditional beef burger. Now as an economist, I look at that and say, “Those prices, to me, should be signaling something about resource use.” Maybe it’s imperfect; maybe there’s some externalities. But they should reflect all the resources that were used to go in to produce that product. It’s one of the reasons that beef is more expensive than, say, chicken — it takes more time, more inputs, to produce a pound of beef than a pound of chicken.
So, why is it that the Impossible Burger is more expensive than the regular burger? Now, it could be that this is just a startup, and they’re not working at scale; and once they really scale this thing up, it’ll really bring the price down. It could be they’re also marketing to a particular higher-income consumer who is willing to pay a little more. But I think if the claims about the Impossible Burger are true over time, one would expect these products to come down significantly in price and be much less expensive than beef production. You know, this is not going to make my beef friends happy, but if they can do that, good for them; and consumers want to pay for, this product, they like the way it tastes and it saves some money, which means it’s saving some resources; I think in that sense, it’s a great technology.
Whether or not you eat meat; whether or not you’re interested in eating these alternative meats, from plant matter or animal stem cells — it’s hard not to admire the creativity that someone like Pat Brown has exercised: the deep curiosity, the ability to come back from failure, the sheer cleverness of putting together disparate ideas into a coherent scientific plan.
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Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Zack Lapinski. Our staff also includes Alison Craiglow, Greg Rippin, and Harry Huggins; we had help this week from Nellie Osborne. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.
Here’s where you can learn more about the people and ideas in this episode:
In 2005, Raghuram Rajan said the financial system was at risk “of a catastrophic meltdown.” After stints at the I.M.F. and India’s central bank, he sees another potential crisis — and he offers a solution. Is it stronger governments? Freer markets? Rajan’s answer: neither.
Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.
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Stephen DUBNER: In 2005, you attended the U.S. Federal Reserve’s annual symposium in Jackson Hole, Wyoming. And it was essentially a celebratory send-off for Alan Greenspan, the outgoing Fed chairman. But you, going quite against the grain, gave a talk based on a paper you’d written that was called “Has Financial Development Made the World Riskier?” And your answer was a firm “yes.” You argued that financial engineering and skewed incentives in banking and elsewhere could create “a greater, albeit still small, probability of a catastrophic meltdown.” Again, this is 2005.
Raghu RAJAN: Yeah, well let me put it this way: it was clear there was a reason for concern, but what was comforting was that we hadn’t had a crisis in major economies for 70 years.
DUBNER: What lessons are we to draw, we non-economists, from that severe miscalculation — or mischaracterization, at least — by most economists?
RAJAN: I think there was a sense of complacency. Put differently, we were living in well-run houses where the plumbing was not a problem. And the reality was the plumbing was actually getting corroded by poor incentives in that system, and we didn’t realize it until it backed up in a really big way, and we said, “What is that smell?”
I’d like you to meet today’s guest.
RAJAN: My name is Raghu Rajan. I am a professor at the University of Chicago’s Booth School.
Sat, 02 Feb 2019 13:00:13 +0000
This Economist Predicted the Last Crisis. What’s the Next One? (Ep. 366)
Stephen Dubner’s conversation with the former N.F.L. player, union official, and all-around sports thinker, recorded for our “Hidden Side of Sports” series.
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This a Freakonomics Radio extra, our full interview with Domonique Foxworth, who appeared in bits and pieces in our “Hidden Side of Sports” series. I’ve known Foxworth for a while now; he’s one of the most thoughtful athletes I’ve ever encountered. But this conversation surpassed my already high expectations — not just his thoughtfulness but his willingness to wrestle with contradiction, and his hardcore candor. As you’ll hear in this episode, he was an N.F.L. player for several years, then served as president of the N.F.L. players’ union and, after getting an M.B.A. from Harvard, was the C.O.O. of the N.B.A. players’ union. It turns out he didn’t like that job too much; you’ll hear why. As the conversation begins, Foxworth is talking about his belief that the professional sports players’ unions should be dissolved. I asked why …
FOXWORTH: Yeah, where we are at, with professional athletes and how big a business it’s gotten, and how well they are compensated, I think it’s a product of sacrifices made by players coming up. And many players lost long seasons, were black-balled out of the league and had their careers really torn apart by their ambitions of free agency and pensions, and all those things. And they never really got to fully reap the benefits from that. And back in those days, the unions — the player unions were a lot like what we think of as traditional labor unions. But we’ve got to a point now where it’s not like that. And with the length of a player’s career, and how much money they could stand to make in a season, it’s really not in their best interest. Mathematically, logically, if you go through the numbers, it’s not in their best interest to actually withstand a lockout or to initiate a strike. They will not make that money back. It’s just physically impossible.
The reason why they would do it is to further the cause, I guess, for players in the future. But since you can’t hand your position down to your son or daughter, then it really doesn’t seem to make sense. So for me, I can use me as an example, I sacrificed from the time I was — I don’t know — probably in high school, is when I started to forgo other opportunities or other decisions to focus more on football. Then I’m in college and I wanted to be a computer — I did computer graphics and some computer science in high school, and then in college I wanted to be a computer science major, at University of Maryland. And my academic adviser was like, “That course load is going to make it very difficult for you to make our practices, there are labs, and blah, blah, blah, blah.” So I was like, “No, not going to do that.” During the summers, when there was —
DUBNER: So instead, you did — was it American Studies?
FOXWORTH: Yeah, I did American Studies.
DUBNER: And journalism, right? Which just shows how easy what I do is, that you could do it and another major while playing football. But anyway, go ahead.
FOXWORTH: No, I enjoyed those. And it was good, but it wasn’t what I wanted to do. And in the summers when people were getting internships or whatever, I was working out and getting ready for football. And I say all that to say, once I got to the league, then I got drafted and I was in the third round, so that’s — it’s money, it’s good money, but it’s not life-changing money. It doesn’t makeup for all the things that you have given up through the course of your life. And then I come up on free agency, and that’s when I got a pretty nice deal. I can’t imagine if somebody was like, “No, you’ve got to sit out right now.”
And then when you think about it, it’s competition obviously, because you are competing in this lockout or strike with the owners, whereas it does make sense for them to withstand a lockout, because they own their teams into perpetuity so if they win a lockout for a tenth of a percentage point or even a whole percentage point of revenue split, that is something that will maybe $3 million a franchise, for this season. And it will go up as things grow, and it goes on and on and on. So if you are in the old fashioned mindset of labor strikes is the only way to get anything, you are — players in all sports are severely mismatched.
DUBNER: It’s interesting to hear you say, though, that that would be the reason to maybe not have players unions, because a lockout or strike I guess — the lockout is what the owners do, a strike what the players can do — even a strike threat is rarely — is pretty rare. Once every whatever, five to 10 years, depending on when a given union’s collective bargaining agreement is up, right? so you I know — you were playing football in the N.F.L. when the lockout happened. It was 2011, right? And I know that the N.F.L. Players Association was basically telling you guys, “Put away as much money as you can, and maybe you might want to switch to regular gas from unleaded,” all this stuff. Can you talk about that experience and how you were thinking that might happen?
FOXWORTH: Yeah, I was heavily involved in the negotiations, so I remember that. I remember trying to get all the players ready. But the fact of the matter is, the players are severely outmatched if you’re going to try to match up with money, with owners. We’re not going to be able to outlast how long they can go without making money. As far as influence on the media, they have that also. And trying to fight them in that traditional way — you’re destined for failure. It would seem. The point of decertification is, as long as we have a union, we have to agree over collective bargaining. Once you dissolve the union, then you expose the league to anti-trust law, which frankly, the N.F.L. existed for several years very lucratively for the players without a union. And the league was exposed to antitrust law. That’s what precipitated free agency in football.
And the only reason why the N.F.L. Players Association was reconstituted was because the N.F.L. made it a stipulation of the settlement. You must reform a union to allow us to operate as a legal cartel/monopoly. That’s only reason why we exist, frankly and I was the president of the union. I was the C.O.O. of the N.B.A. Players for a time. And I recognize the union provides a great deal of value. But I think frankly that protection is more value to the leagues than it is to the players. In whatever job anyone has, in your job, they can’t institute a salary cap. They can’t do a draft and say like, “Hey, all the doctors that graduate this year, we’re going to draft you and tell you where you go.” You have some say in those things, because they are forced to abide by the regular laws that everyone else abides by.
DUBNER: Regular labor laws, not union provisions. Wow. So how would you have the scenario look? Every league’s different. But obviously, college football is this weird, unpaid, high risk — that’s a whole other financial ecosystem. Why don’t we just start with talking about how N.C.A.A. football works as a feeder system for the N.F.L., and what that does for or to the athletes.
FOXWORTH: I think we’re at a point now where most people kind of understand that college sports is professional sports. In select cases. So obviously, the vast majority of college sports are not professional sports. But the two kinds of big money sports, in the power five conferences, they generate a substantial amount of revenue, and that revenue goes to lots of people who are not the labor. So it goes to supporting other sports, it goes to building bigger and better facilities, it goes to paying college presidents and coaches and funding the N.C.A.A. It goes a lot of different places, but it doesn’t go to the people who are the labor on the field.
And another thing that complicates that — it would be a problem if that was the end of the story and every player then went on to have N.F.L. careers. It would be unfair, but whatever, you’re not going to lose any sleep for those guys. But the vast majority of the guys — and I have several teammates who, because it is not considered work, they’re not privy to workers compensation. They’re not privy to extended health care. So I have a few teammates who have torn A.C.L.s, separated shoulders, torn labrums and hips and shoulders, lots of injuries that — one of my best friends in college, I think it was a few years ago, his doctor told him that he was going to have to have both of his knees replaced by the time he was 50. And he didn’t play professional sports. He had three knee surgeries while in college. And there’s nothing that any college football team or governing body is going to do for him in that case. And that to me is tragic that a lot of people benefited from that.
And again, he had aspirations to play professional football. So while he was in college, he made all the decisions that people who have those aspirations do, where you don’t necessarily go after the major that you’re most interested in, or the major that’s going to lead to a career. You have the major that’s going to allow you to focus on what’s most important, which is sports, unfortunately. And I know many people would say that maybe that shouldn’t be so important, but it’s hard when that carrot’s out there, it’s hard to convince somebody to try to balance and try to do both things well, when it’s like, “No, I need to do as well as I can at this, because this is a life-changing opportunity, not just your life, but a generational shifting opportunity.” And you have a chance at it, and someone is going to tell you no? “How about you don’t go do that summer workout that’s going to get you closer to — how about you take an internship or something. How about you do take that tougher major.” You’re going to miss a few practices. The coaches may not start you. And it will stunt your development. That just doesn’t make sense.
DUBNER: So, the old fashioned argument for why this was okay and why it was acceptable was that, well, this is like what economists call a tournament model, whenever you got a lot of people competing for the top of the pyramid, whether it’s show-business or sports or, whatever, the bottom of the pyramid, there’s lots and lots and lots and lots of people there willing to do whatever it takes for practically no money. It’s this weird, unpaid apprenticeship. And I guess some people accept that as okay. Others don’t. But what strikes me that’s especially noteworthy about sports is the degree and magnitude of sacrifice, physical and otherwise, is larger, I would argue, than trying to become an actor, trying to become a writer, and whatnot. So can you just talk about that component of it a little bit more, and what you think would be a better solution?
FOXWORTH: Bringing up the tournament model is interesting, because I can understand how some people would look at that and say that it fits here and that’s why this is fair. But as a country, we’ve decided that that wasn’t fair a long time ago. That’s not — there are plenty of jobs where that’s true, just about every job. The barista at Starbucks. There are plenty of people out there who are capable of being baristas, and you could probably allow Starbucks to pit them against each other and negotiate down, down, down, down, down. But that’s not the case. We’ve instituted minimum wages and instituted lots of other laws to protect American people or American workers from these type of capitalistic urges run amok.
And the thing that’s frustrating to me is, we’ve instituted rules in professional sports, that happen to take place on college campuses. We instituted rules that are to the advantages of the institutions. But we are not interested in instituting any rules that are — that are things that we accept as just facts and fair. You’ll be hard pressed to find anyone in our society that’s like, “No, let’s eliminate the minimum wage and allow this tournament model to run amok for low wage workers.”
DUBNER: Well the other argument though, in colleges, is — again this may be a purely specious argument from your perspective, maybe partially specious. But the other argument is, wait a minute. Free education, four years of college. What’s that worth?
FOXWORTH: So there’s two major issues that jump out for me from the education. The players are brought to the school because of their athletic prowess. There are many players who I’ve been around and I know that were not prepared to benefit. So, what they’re receiving is, steps 10, 11, and 12 when what they’re building on is steps 1, 2, and 3, if that makes any sense. So that education, frankly, is worthless to them. They’re in there trying to get eligible. And then there is the other people who show up who are prepared like me and like other people that then make all these decisions.
Because you’re not even getting the same education as the people around you, because you have to travel on Thursdays and Fridays, and you are not allowed to do certain majors because they conflict with your schedule. And three times a week, during the winter session or the spring session, you have to go to 5:00 a.m. workouts and that changes your academic experience. There are all these things that are mandatory because your scholarship is year to year, and you don’t have any power to negotiate with your coach and say things like, “I want to take this so I’m not going to able to go there.” That’s just not a thing that is available. So the education that they’re receiving is not the education that people think it is.
DUBNER: This is a gigantic question and it’s such a big industry already that there’s obviously no easy, quick solution that would satisfy even close to everybody, but what solution or solutions do you think are most viable that would, let’s say, keep big-time college sports intact in a way that the market would need them to be intact — in other words, there’s massive audiences out there that really like it — but all those dollars, as you’ve noted, don’t flow to the people who actually produce the labor. So what would be a way to equilibrate that a little bit, or make more people less unhappy at least?
FOXWORTH: The thing that frustrates me about that conversation is you’re always asked to add something, to change a rule to fix it. Whereas I feel we should blow it up altogether and follow, frankly, the model that this country has followed up until now, is that you strive for a free market and then you institute rules to make it fairer. So that’s where we should go. Let’s not try to add a rule or provide a stipend for players. No, let the schools go after these players the same way anyone else would go after any other employee. And then if we notice that there are issues along the way, then we can add rules to fix those. I think trying to inch our way back is not the way to get to the fairest possible system.
DUBNER: If you were going to blow up the system, would you even connect that pre-professional sports league, meaning college, would you even connect that to universities at all, or is that an accident of history that is the root of the problem, essentially?
FOXWORTH: I think it’s definitely an accident of history. I know you and your son are big soccer or footy fans —
DUBNER: You can call it soccer. That’s all right. That’s okay.
FOXWORTH: That’s not the model that they follow. This is a purely American model. This college athletics being a feeder system to professional athletics. And it’s probably — not probably, it is more unnatural, I would think, than these other systems. So I understand that it is the way that our country developed, and I understand the allure of being connected to a college that you went to, or a college you grew up around. And I’m not saying that you — you have to dissolve that altogether. You can allow them to — many of them, obviously they are nonprofit organizations, but they understand how to exist in a for-profit environment, they do go after different professors and they negotiate over those terms, this is something that they are accustomed to.
They negotiate with coaches, they don’t have to go that far — With their coaches and assistant coaches, they understand how the free market works. So Jimbo Fisher is a good example of it. He was the coach at Florida State. He brought them a national championship, and then Texas A&M offered him a better situation and he up and left, and then Florida State went and got Willie Taggart from Oregon. This is not something — while they want to pretend that it is a completely pure system, they know how this works, and every other year Alabama has to pay Nick Saban a little bit more to keep him at the top of the list. This is not something that that is brand new to them. I don’t see why it’s any different from going into a kid’s living room and saying, well, we want you to come here. We can offer you X, Y, and Z. But it just — it makes people feel uncomfortable, but there’s nothing wrong with it.
DUBNER: So it’s interesting — correct me if I’m wrong. I probably am, but it seems like there’s a weird paradox here. You’re calling for the decertification or the blowing up of professional sports’ players unions, because you feel they don’t really work well — work in the interest of the athletes who need to make their money now, careers being so short. But it sounds like college athletes have zero collective representation, and a union for them might actually do some good. Or do you think that’s not a solution?
FOXWORTH: No, I think that they’ve tried and failed. Ramogi Huma at one point was leading that effort, and it hasn’t worked. But I do think that them having a seat at the table with some leverage would be helpful, because any time you have — and this is what’s happened in college sports for a long time now, is you have a bunch of people in a room setting up the parameters of the game. But there’s one group — there’s only one group that’s not allowed in that room. And of course that — it’s just human nature. That group is going to be the group that is perpetually slighted. So I think that college athletes are in a different space than professional athletes. So having a union — if the college athletes could organize to the point where they would just stop showing up to games, and that’s an impossible thing to ask them, because again, it goes back to this is my one chance. But if they were able to at least threaten that, that’s how they could get some significant change.
DUBNER: So given the history and the dollars and the emotions that are attached to college sports overall, how likely do you see any kind of substantial evolution or change, even in the next 10 or 20 years?
FOXWORTH: Yeah, it’s clear that the opinion in public is shifting towards wanting athletes to be fairly compensated. But I don’t know that they’re going to stop watching. So I don’t know where the pressure comes from, honestly. We’re already at a majority of society. I think it’s different across age and in racial demographics, but there will come a point, particularly as some young people get older, where all adults believe and accept that college athletes should be paid. But this ties into the union conversation. What is going to force them to act?
In the same way that a lockout or a strike is not necessarily going to force owners to act, in the same way that antitrusts or antitrust exposure would force them to act. This is true here too. I do think if collegiate athletes just stop showing up to big time games and tournaments, that would force them to act. But I don’t see them doing it because they only have four years of eligibility, which means they only have four years to show professional teams that they’re good enough to play. So it’s, again, not in their interest to do that. The only other thing is if the public stopped watching because of it, and I don’t necessarily see that happening, so I’m not sure how we get to this point.
DUBNER: The other thing that’s tricky is that the guys with the least incentive to change it are the ones for whom the system works, which is to say the stars in the system, right? If you really think that being a college athlete, whether in basketball for one year or football for three or four years, that you are going to have a professional career, you don’t want to rock the boat because you’re there now. So I don’t see how they would have an incentive to even pretend to want a change. Do you?
FOXWORTH: Yeah, I think you linking these two is very important, because it’s pretty accurate — it isn’t in their best interests. Those guys who are on the doorsteps of having professional careers, it’s not really in their best interest to stop this now. And you also bring into account the people who are benefiting most from it who are not on the field, there’s really no benefit to the coaches who — because coaches salaries are inflated because they have extra money, because they are not sending it to the players. And the rest of the teams who are funded by money generated by football and basketball. There’s no incentive there — there’s just the athletes who don’t have much power.
DUBNER: It is interesting that in the N.F.L., a coach might make a quarter or maybe even a tenth of what his top star player is making, right? But in college you make infinitely more because they’re all getting zero. If I were to think of someone who could try to get in there and navigate diplomatically and also bust skulls and who knows what they’re talking about, you’re the guy actually, because first of all, you’ve been a professional football player. You were also president of the Players Union in the N.F.L. But then, you’re the only person I know of at all — correct me if I’m wrong — the only person I know of who’s ever been associated with the N.F.L. and the N.B.A. as this chief operating officer for the N.B.A. Players Union, correct?
DUBNER: So you’ve got the two major college sports — you’ve got those credentials, right? You also happen to have an M.B.A. from Harvard. Yes?
FOXWORTH: That’s a thing.
DUBNER: That’s a thing. Am I wrong to think that you sometimes do think about being the person to try to go downstream from pro sports and into college and say, “Hey, if you actually want to treat people properly, the place to do it is here. And yes, we do need to blow up the system.”
FOXWORTH: I don’t, honestly. And maybe that’s yelling about unfairness from the sidelines and not necessarily getting involved, maybe that’s the wrong way to go about it. But I don’t know. I agree with you, it’s not complicated, but I do think it’s complex, and that can be intimidating, and I don’t know the way. You brought up business school. One of the things we, in the entrepreneurship classes that I took there, talked a lot about how little people know about what their business is going to become, and how many times it pivots and changes and how not knowing what you’re going to do is okay. It’s like you bet on the person more so than the idea. You bet that the person will figure it out.
I don’t have any clue, honestly, where to start with this, and that’s more intimidating. I feel pretty close to 85 percent confident about the idea that unions should decertify in professional sports, because I fully understand that. I’ve been through this and I know that if they operate as trade associations, they can still provide a lot of the services to players that players get from the union, and it doesn’t really hurt them. The scary part is, maybe you no longer have a league minimum for players, and that creates a tournament thing that you’re talking about. I understand the ins and outs, I understand that in a way that I don’t understand the landscape of college sports. I don’t know.
DUBNER: I guess I just look at it as a thought experiment. If you could take someone that doesn’t know anything about sports at all and say, “Hey, what if we have this system where workers are going to perform a set of tasks. Let’s say 50 hours a week, for four years, at this place, and then they’re going to perform essentially the same set of tasks in a different place. And in each case, 80,000 people come and watch them and millions more watch them on T.V. But in one case they get paid, let’s say, an average salary of whatever, $2, $3 million a year, and the other they get paid zero. And they’re the same people.” How — in what universe does that make any sense? That’s the thought experiment that I think would lead to a reassessment that —
FOXWORTH: That’s the thing it’s — another thing that I’ve come to learn in professional life is that logic is useless in some cases. The thought experiment that you just took me through is a wonderful one that proves the example, but people don’t act based on thought experiments. They act in reaction to incentives and pressure, and those sorts of things. So a couple of things that we talked about — and I think creating another place, creating real competition, because the fact that they are a monopsony now, meaning that they can — that’s the only place you can go — that exists in part because of the unions, both professional football and basketball. So basketball forces the players to be one year removed from high school, before they can enter the league, which forces them to then find an alternative. Maybe they can go overseas. But if they want to stay in America, they have to play college basketball.
Football is three years removed, and there is no real, viable, professional football leagues elsewhere, so you have to go to college. What the N.B.A. is doing now with the D-League, and they’ve started something called the Junior N.B.A., they’re building that infrastructure, whether intentionally or not. They are certainly building an infrastructure, infrastructure to create an academy system that is an alternative to college athletics and I know they’ve discussed the idea and they probably are going to remove the one and done rule in the next C.B.A. And some players will start going straight into these N.B.A. academies or into these D-League teams rather than going to college. And that might change the system. In football, I don’t think that there is much hope to change that anytime soon. I guess maybe if basketball changes then football has to change.
DUBNER: Well, what’s to stop me? Let’s say I’m an entrepreneur and I say, “The N.F.L. Players Association,” — which is a sworn enemy of the N.F.L. in many cases, in many instances, but they’re also colluding with them to basically get free labor for three or four years from all these athletes. What to stop me from saying, well, why don’t I work up an alternative and I will create some kind of league, that is pre-professional that would satisfy the N.F.L. draft rules, I guess. On the other hand, they can change those rules at will and put me out of business on day one, I guess, right?
FOXWORTH: Right. They could, but I don’t think they would. The major problem is network effects. You need to have a critical mass of the best players for the other best players to come, because the guys need to hone their skills and they need their skills to be matched up against other players, so that you can know. Maybe for basketball it might be a little different, because it seems to be that often they pick out those guys early on, and they turn out to be really good. But with football, if you get the top 50 players, top 50 incoming freshmen, to go build a league with you, which I think is — would be really hard to do. But if you do that, that’s still not even close to enough. You need them — and again, basketball, everyone plays the same position, everyone blocks, shoots, jumps, plays defense. Football it’s like, “Oh, so we’ve got to get —” It just seems like a really hard thing to do to build a real alternative.
DUBNER: Well let me ask you this: so the alternative to this, the purely cutthroat capitalist version, is the Academy model that soccer clubs around the world practice, right? And there, you’ve often got kids, very young kids, sometimes really — eight, nine, 10. But usually, 11, 12, early teens, going into academies and basically becoming sort of unpaid professionals, although not fully unpaid. And that is an alternative. But A, if you don’t make it into the professional level, which the vast majority, just numbers being what they are, won’t, then you have a weird — you’ve been removed from mainstream education and whatnot for a long time.
But also, I look at the flip side — you as an athlete and as a student, you may think it would have been better for you to have had the choice between professional sports and a career that was not sports. But on the other hand, you went to college and played sports. They went together. And then even though you say this system is not optimal for anyone, and certainly not for you, you graduated from Maryland. You played in the N.F.L. You had a union position, then in the N.B.A. as well. And then you got a Harvard M.B.A. So I could look at that and say man, I’m really glad that Domonique Foxworth was not sent to a football academy at age 13 to become a semi-professional. So now, maybe you’re just an outlier, but who knows.
FOXWORTH: So Jay-Z sold drugs, grew up in Marcy Projects to a single mother. Now he is a multi-multi-millionaire married to Beyonce, the most amazing talent we have today. So, why don’t we set it up so that all young men must sell drugs when they’re kids, and have only their mother and grow up in Marcy Projects in Brooklyn, New York? He had a great talent and to be honest, there’s probably a great deal of luck, he’ll speak to that, in that he happened to not be there when one of his friends got arrested, and his friend didn’t snitch on him. That is a lot of luck. And the same thing is true for me. I can go through the course of my life and look at all the things that happened that were just happenstance that led me to these positions, and I’m not going to say that it’s a model that should be followed. Just — I understand that there are occasional outliers, but trying to build around that seems crazy.
DUBNER: Let me ask you a very narrow specific question, but I’m just curious what you can tell me, because again, you’re one of the few people I know and maybe the only person there is who’s been in both the N.F.L. Players Association, had a position in that union, and a position the N.B.A. Players Union. So the two sports — even though we lump them together a lot— pro football and pro basketball — from a labor perspective, they’re pretty different, right? So there’s 53 on a team in the N.F.L. Just 12 in the N.B.A. But then additionally there’s visibility. We see the N.B.A. player — we see their faces. N.F.L. we usually don’t. And also the salary — average salary is much, much higher in the N.B.A., in part because there are so many fewer players for the money to go around. With all those differences between two sports that we tend to lump in together, what are the differences in either what the union tries to accomplish for those labor forces, or any other related differences?
FOXWORTH: Yeah, the power dynamics are obviously very different between the players in the union and the players in the league, and also consequently, the union and the league. LeBron James, he is more powerful than anybody, in the league, any owner, any team, anybody in the union, any player. He has more power and influence over that league than anybody else. There’s no one like that in the N.F.L. So that is — as are all things — it is a gift and a curse. There is a silver lining and a cloud that comes with having such a concentration of power and influence in any one person. So that changes the dynamics.
Fundamentally the things that the players want and that the union want to accomplish, they’re not very different. Honestly, they’re pretty similar in what you want to accomplish. But how you go about doing it is very different. So obviously, I wouldn’t speak about anything directly that I experienced while I was at either place, but this is one thing that I noticed, that, while working at the N.B.A. Players Association, was, the commissioner and LeBron James — the commissioner and Kevin Durant — they are more peers than anybody else. And they have a relationship, and they have conversations. That’s not something you have to concern yourself with. And frankly, when we were in negotiations, that was — it was nice to be able to actually be that liaison, when I was with the N.F.L. Players Association. The commissioner and the owners, they did not know how the players felt or what the players thought, unless they got it from us.
DUBNER: Do you attribute that difference, then, to the leverage that players have in part because basketball is different from football, or do you attribute that to some kind of either history or philosophy or economic leverage that N.F.L. owners have that is really different from N.B.A. owners?
FOXWORTH: Those all play a part in it. But fundamentally, it comes down to value, and I — while you brought up that there are fewer players in the N.B.A., and that’s part of the reason why the players get paid more. Yeah, that’s true. But LeBron James is more valuable to any single team as a talent or even as a marketing vehicle than anybody in the N.F.L. So that matters. You can go back through history and what Michael Jordan was able to create was a model, and player — he built on players before him, where the best basketball player is something that matters. And the best football player doesn’t matter in that way. I’m not sure that —I would also say that the person who is being most taken advantage of, honestly, in all of this, is probably Lebron James.
DUBNER: How do you mean?
FOXWORTH: The existence of the max salary in basketball — and again, we talk about these relationships and we often just talk about groups as if they’re monoliths, all N.B.A. owners feel like this. All commissioners and people in league offices feel like this. All players feel like this. All unions — it’s not true. The rise of the max salary was in part because the N.B.A. owners wanted to — and this was — max salary came before my time. But N.B.A. owners wanted to be able to control the salaries, because that’s who was driving the salaries up, is the best players — best players drive the salaries up. So N.B.A. owners want to be able to control that. And the middle class of players wanted to make more money.
So those guys’ interests were aligned in that case, let’s cap LeBron James, or let’s cap this guy, because that will take more money out of the system and put — allow the owners to put more in their pockets. But in a cap system if you have a floor, that also forced them to give more of it to us middle guys who aren’t really — so what ends up happening is, a lot of those guys get more than they, frankly, are worth. And LeBron James and people like him get a lot less than they deserve.
DUBNER: This happened in the N.F.L., too, didn’t it, right, with the different value attached to draft picks? Right? That year in the C.B.A., right? So all of a sudden the top draft pick was probably worth about a lot — 30 or 40 percent less than the same person had been a year before. Yeah?
FOXWORTH: I would quibble slightly with the word worth, and — paid, because I think the worth and how much they’re paid are two different things. But if you had a true — and the N.B.A. obviously has — the N.F.L. has a salary cap and the N.B.A. has luxury taxes and a cap which creates a de facto cap. And Major League Baseball, while it is uncapped, they still have instituted a number of rules that, last time I checked, the lowest percentage of league revenue goes to baseball players, while they have these enormous contracts, if you put together all the money that’s going to players, they are lowest of all the three major sports.
DUBNER: So let me ask you this. Let’s say someone listening to you says to themself, “I like sports. I played a little bit in high school, whatever, and I think it’s an amazing endeavor. Right? It scratches some itches that nothing else can. But I also like fairness and treating people with respect and also paying them what they’re worth. How do I reconcile that, as a fan of professional sports, and college sports, where you’re saying there’s all kinds of reasons to be frustrated, if not more than that?”
FOXWORTH: Frankly, you don’t. You don’t have to. It’s an interesting irony in that sports is a place that we consider it a very controlled environment and it’s as close to a meritocracy as we have, and we feel like it is fairness. Whoever wins on the game, on the field, is the better team. You aren’t necessarily — and it’s not — obviously it’s not true in life. The people who win in life are disproportionately people who are from wealthy parents and who have certain connections that — but you look at the field and we convince ourselves that once you step out there, it’s all fair, and it feels that way.
That doesn’t extend to the business of sports. And people who are interested in the business of sports, I certainly encourage them to learn more and to get involved in this, but the business of sports is much more business than it is sport. So I understand that there are lots of people who don’t care about this and aren’t interested in this, and I am not asking them to care or be interested. I just hope that they don’t get in with limited information. I love going to movies but I don’t necessarily want to get into the weeds of all the issues that happen in production.
DUBNER: Right. So talk for a minute about you as an athlete, as a kid, and I’m curious to know what the transition was like, when it went from something that you love to do — for whatever reasons you love to do it, whether it was pure fun or competition, or being good, whatever — the transition to when you realized it was something that was going to be a profession and a career, and how getting into the business of sport changed your view of it.
FOXWORTH: I was eight when I decided I wanted to be a professional football player. Actually, I was younger than that. I Remember because we lived — my dad was in the military, so we lived a couple different places. And I remember being in an apartment we lived in in Indianapolis, and I told my father I wanted to be a professional football player, and he told me, I don’t know if he believed me or not, but I suspect that he didn’t, but he told me, “All right, well, you set a goal, you should do something to get you closer to that goal every day.” And I took that to heart. So I did a bunch of pushups and sit ups that night, until I was throwing up, it’s ridiculous. And then my father — I assume — tried to teach me about moderation the next day. Like, “Hey, why don’t you take some smaller steps?” I was in love with the game, in part because of how violent it was.
Honestly, whatever warped sense of masculinity I had at that age, that probably has not fully left me was like, “Basketball is for the soft kids. Football is for the men. And I want to play football.” And to get back to the original question that you asked, I don’t remember not thinking that I was going to go. It’s weird, I was young enough then to be naive enough to think, “Obviously, I’m going to play in the N.F.L.” And as I got to an age to realize not everyone plays N.F.L., I also was one of the few kids who colleges wanted to talk to.
I think around high school, when — I worked from the time when I was old enough to — I was too old to go to summer camp — I started to work. And that was only two summers before colleges started inviting me to football camps. I would go to those football camps and realize, “Oh shit, this is an audition, this isn’t camp.” This isn’t football camp. I was 13 when I went to Art Monk’s full-pad football camp. And I didn’t get an invitation. I just wanted to go. And I still have the report card that they gave me that said that I maybe could play Division II college football. And then the next two —
DUBNER: How did you feel about that?
FOXWORTH: I was heartbroken and defiant at the same time. But everybody has these — those type of stories.
DUBNER: What position where you playing at the time?
FOXWORTH: I was playing running back and safety, which was probably part of the problem because they — they separated us by age at that point and not by weight. I was very small — too small to be a running back. So after that year, then at 14, I was old enough to work, so I worked the next two or then — yeah, I think I worked for — might have the years off, might have been 12 at Art Monk and then 13, 14, I worked. But anyway —
DUBNER: What kind of work did you do those summers?
FOXWORTH: I worked at a camp for disabled, a sleep away camp for disabled children and adults called Camp Green Top, the first year, which was a hell of an eye-opening experience, where you have to feed, bathe, change diapers of adults, chase them when they run off, and whatever. So that’s a whole nother ball of wax. But then next year I worked at Dragon House Express, the Chinese food restaurant in the mall food court. And then the next year I got — started getting invited to football camps. And that’s when it started to become a business. When I showed up and I was like, “Oh, they’re evaluating me, this is how I can get a scholarship or cannot get a scholarship. This is where the dream either continues to go forward or dies.”
DUBNER: And then how did that realization affect your performance?
FOXWORTH: It worked out, so I guess it helped.
DUBNER: Were you intimidated a little bit, or were you more like, “Oh, now I get it. Now this is my business and I’m going to win.”
FOXWORTH: Yeah, I do my best to be honest and not paint this picture of — I feel it’s easy for me to say, “No, then I turned it up another level.” Which can’t actually be true for a 15-year-old kid who knows that his whole life is riding on how well he does at Duke football camp or whatever. So I’m sure I felt some anxiety and some nervousness. But I pushed it down I guess, and I did well enough to get their attention. But it also felt like the pressure that I wanted, you know? I wanted to be a professional football player — I wanted for my play to matter. And obviously it felt like it mattered in my little Pop Warner games, whatever. I’d cry when we lost. But I knew that nobody cared in the world. But then, those were real stakes. And I was like, “Yeah, this is real.”
FOXWORTH: Were there other kids from those camps that you remember who also went on to play in the N.F.L.?
FOXWORTH: Probably. The one person I remember — I went to Penn State’s football camp and I remember Adam Taliaferro, who was older than me. He was the big guy on campus at the time, and he was their big recruit. They really wanted him. And I remember befriending him. He was a few years older to me, befriending him and looking up to him and being like, “Oh, this is cool. This big time guy who was on the cover of all these newspapers, we’re friends.” And then he ended up going to Penn State and playing safety, I believe, and was paralyzed. And yeah, that’s a whole nother avenue to go down.
DUBNER: Yeah. Well, let’s go down that avenue for a minute. You were relatively injury-free during high school and college. And when you would see other guys getting hurt or in an extreme case like Adam, getting paralyzed, what’s your response to that? How do you react?
FOXWORTH: It goes back to my warped ideas of masculinity, as much as I’ve gotten older and try to suppress them. At that point, it was still there. And probably — not probably, it still is in me at some point. Hopefully I’ve stifled some of it now. But it was like, “Yeah, I play this game, and yeah, people get paralyzed —” I’ve been on the field a couple of times when people have been paralyzed. I played in a preseason game in the N.F.L. where a guy died in a locker room afterwards. I was on the field when Kevin Everett was paralyzed. We had practice at Maryland where a helicopter came to take one player off the field and the coach said, move it down, and we kept doing the drills as a helicopter was taking one of our teammates who couldn’t move to the hospital. He ended up being okay. But these are all things that happened.
And I do remember — I think I was 11 years old. Pop Warner, we were playing against this other team that had a really good running back. We were tackling the running back. I hit him in his leg and it was so many people on him. He hit the ground and it popped, and he screamed, and we all got up and the bone was sticking through his skin, and it was broken, obviously. And we all went to the sideline and we’re broken up and we’re crying and stuff. And it took awhile to get him off the field and the coach was like, “We got to finish the game.” And that always stands out in my mind as a turning point, where I was like, “This is what you’re into, and this is what you’re going to be confronted with. And from that point forward, I don’t think I was aware of those things, but it never really bothered me — if anything it was a badge of honor. Yeah, I know this crazy stuff happens, and I go out there and do it anyway because I’m a man, or something like that.
DUBNER: You go out there and do it and you don’t get hurt doing it. But then you did start to get injured as a pro. Can you talk about your first significant injury there?
FOXWORTH: Yeah, it was tough. From a professional standpoint more than anything. I was fortunate that it didn’t happen a year sooner, or or two years sooner.
DUBNER: Well, this is tied to the money, right?
DUBNER: So let’s walk people through this, because a lot of people don’t understand how money works in the N.F.L. You were drafted I believe 2005, third round. Right? So what I’m looking at here, you were paid for that year, including a signing bonus, which was a lot of it, about $660,000 — that sound about right for year one?
DUBNER: Okay. And then I guess back then, it was a three-year rookie contract. Is that right?
FOXWORTH: Yeah, it was a three-year rookie contract, with the fourth year option, I believe.
DUBNER: Gotcha. Okay, so looks like your first three years paid you a total of about $1.5 million. Most places in the world, that’s amazing. And those first few years were in Denver.
FOXWORTH: Yeah. So I went through the first three years, and then I was coming up on a contract year and I played pretty well in Denver, and I knew that I needed to play well in this year because if you don’t, then the salary minimum goes up for guys after that point. So then they just go get a younger one, and you — and you go on with the rest of your life. So during week one, we’re getting ready for the first week of a season in Denver. They traded me to Atlanta. Atlanta was a terrible football team at that point. It was a year after Vick was gone and they just drafted a rookie quarterback who no one thought was going to be very good. That was the first time when I considered going to business school. My girlfriend at the time, who is my wife now, I remember talking to her then like, “Yeah, this don’t look like it’s going to work out,” and I’m having to think about business school because I got traded on week one. You normally earned your position during training camp. I skipped training camp. This team is going to be terrible. I’m not going to play. And then I’ll be out of the league. But —
DUBNER: That year you got paid a little over $900,000, but you must have a pretty good year, because the next year you signed a contract with Baltimore that paid you in year one, $8 million, year two, $9.2, and year three, $4.4 — does that sound about right?
FOXWORTH: Yeah, it was a four-year, 27, I think. In Baltimore. And then the first year, I struggled at the beginning of the season but I was playing really well towards the end of the season. And Baltimore is the city I grew up in. So it was cool. And then when we have Super Bowl aspirations, and I’m playing well coming into the next season, and I tore my A.C.L. on the first day of training camp, and I was never the same. So that was — it felt like my career, with all the uncertainty and the, frankly, fear that I felt going into year four in Atlanta, I was the most confident that I’d ever been. And I was like, “Oh, this is perfect, I am a Baltimore guy. Back in Baltimore. Playing well. Super Bowl contender. We’re going to win the Super Bowl. I’m going to have a great season. I’m going to go to the Pro Bowl, this is — I’m playing as well as I ever have.” People are starting to recognize that I’m good and everything is starting to fall into place — and then the A.C.L. pops.
Frankly, that’s what led me to take on more leadership in the players association and led me to be involved in the negotiations, which then is what I used, frankly, it was the big piece that got me into business school, because I didn’t have the grades or the background to get into business school. But no one has experience like that, who’s going to business school. So that’s what, frankly, got me into Harvard Business School. So it still turned out to be a good story. But at the time it was — I don’t know. Obviously I would not say that it was a depression by any stretch, but I do remember my wife — and I think she was still my girlfriend then — telling me like, “Go get a haircut,” because I was just sitting around the house, going to rehab twice a day, and coming home and sitting in front of the T.V., just no shave, and no nothing.
DUBNER: What got you out of that?
FOXWORTH: I think it’s the opportunity to do — to be involved in the C.B.A. stuff — it gave me a purpose.
DUBNER: Right. It’s lucky you were near D.C. — did that matter?
FOXWORTH: Oh yeah. That absolutely helped and lucky that I already had relationships there and I was involved, and I was already in a leadership role. But I was given so much more time because of it.
DUBNER: So that four year contract you signed with Baltimore in 2009, it was a four-year, $27.2 million contract. How much of that did you actually collect?
FOXWORTH: All of it.
DUBNER: You did. Did you have it guaranteed even though you didn’t end up playing out the whole contract?
FOXWORTH: So I was on the team for three years, so I got those three years, and then the fourth year I got — I had taken out an insurance policy. So I got the rest of it there. That’s why I said earlier, I was fortunate that the knee injury happened after I signed that deal, because if it would have happened when I was in college, or happened a year earlier, I would have been on an entirely different path, which may have turned out to be great, but I really like where I’m at now.
DUBNER: Let me ask you this: generally, how did the reality as an N.F.L. player match your expectations? You’re a kid who, as you told us, from the age of eight or earlier, was seeing yourself playing in the N.F.L. And then you get there. Now it really, really, really is business. So I’m curious to know about that.
FOXWORTH: My freshman year in college, I started towards the end of the season, we played well, we won the A.C.C. championship. We went to the Orange Bowl and lost, and then immediately after, my head coach got a $10 million extension, and that was when I was like, “Oh, we aren’t a team, we’re a business.” And that was when the light went on for me. I don’t know that I would wish it any different. But that’s the thing that sucks the most, is that when you feel like you’re a part of a team and you still have that camaraderie and love for your teammates, but you also in the back of your mind, you are also thinking like, “Hey, I’m out for myself.”
I remember when — Denver, I had a really good rookie season and then my second year was okay, then I was scheduled to be the starter opposite Champ Bailey, the other corner, the next season. And they went and traded for Dre Bly, and I love Dre. He and I became good friends. But it was not lost on me that Dre was messing with my money, and my opportunity, and that sucks. It’s not fun to be in that situation. It’s not fun to feel that. I didn’t consider that, because I used to watch every Saturday and Sunday morning, they would do these N.F.L. yearbooks on E.S.P.N. and they would run them back to back to back, and I would get up and watch them all the time. And those do such a great job of telling the story of football. And I believed it, which is not to say that it’s not true, but it is incomplete.
DUBNER: Is part of that story when the new kid comes to camp or somebody is traded, that everybody tries to help them fit in, even though there is competition for the job, is that part of the story you’re saying?
FOXWORTH: That’s definitely part of the story, and it’s not untrue, because we do help each other, we do care about each other and we are a fraternity, look out for each other. But we’re also aware that it’s a business. There’s only a certain amount of money on the salary cap — and you recognize as you get — you recognize, “All right, if this doesn’t work out, what am I going to do?” If it didn’t work out in Atlanta, and I was out of the league after a year, I’d have been a 26-year-old with no real experience.
Being a football player does not qualify you to do anything, short of being a bouncer, I guess. And — no real experience, and I’m so far removed from college that it’s like, “What am I going to do?” And I have a bank account that is much larger than most of the other 26-year-olds, but still got a whole lot of life left to live, and it’s not a great situation to be in. It’s not awful, obviously, but you do feel that pressure. You’re thinking about that and you’re thinking about if you have kids at the time, or if you have family members that are depending on you, you’re like, “Oh, well as much as I love this guy, as much as I want him to do well. I need this.”
DUBNER: And what was Ashley — your then-girlfriend, now wife, what was she — what was her position now? Because I know Ashley a little bit, and I know that she’s not one to let things happen as as they’re going to, right? She’s like, “Have a plan. Make it work.” What was her advice to you?
FOXWORTH: I don’t think she gave me much advice at the time. She was in law school at the time. And she’s much smarter than me. I know a lot of people say that because it seems like the nice thing to say.
DUBNER: No offense, I’ll say, it’s pretty obviously true. She’s obviously very smart.
FOXWORTH: She went to — we met at Maryland and she went to the law school at Harvard, well before I went to the business school up there. But she — I was more stressed than she was.
DUBNER: Do you think in the back of her mind, she’s thinking, “It’s okay, because I’m going to be a lawyer and I can carry him if I need to.” Do you think that was part of it?
FOXWORTH: I don’t think so. Honestly. I don’t — as she tells it now, is she knew that I was going to be successful, and that was one of the things that was attractive.
DUBNER: You mean beyond football, or in football?
FOXWORTH: No, just in general. I don’t think she knew that I was going to be successful at football. I don’t think she knew what I would do professionally. But the way that she tells it is, she knew that I would be successful. So that was why she was not concerned. But I didn’t know that.
DUBNER: Does that say more about her or about you? In other words, does it say more about her like, “The kind of man I’m going to pick, I’m not going to pick someone who’s not going to be successful.” You think it was more —
FOXWORTH: You’ve been hanging out with her, because that’s the story that she tells. I think that she — those are things that I think she found most attractive about me, I was mature and focused and the idea that — the example of it is, I was already looking at business schools because I had already — I was obviously going to be all-in on this season. I’m going to make the season work. But I know that there’s a possibility it’s not going to work, and I’m not going to — I’m not going to wake up tomorrow and be like, “Oh, now what?”
DUBNER: Yeah, yeah. What about — did you ever think about politics?
FOXWORTH: I’ve been told that a lot. And I guess I’ve given it some thought. No more than a couple of hours. And I hate it.
DUBNER: Because why?
FOXWORTH: It seems terrible, because it seems you — well, the money in politics is one thing. You’re constantly fundraising. You’re not actually getting to affect any change — and I guess it depends on what level of politics you’re going to, or whatever, but it often feels like a trophy head, and to be a good politician, you are always looking for the next angle, the next office, or the next person who’s going to give you some money. I don’t know, that does not interest me at all.
DUBNER: So you’re a little ways into your athletic afterlife. Now, you’re about 35 years old, is that right Domonique?
DUBNER: So you’ve been out of football for several years now, Where do you feel you are in your athletic afterlife, are you still at the beginning? And I’m curious to know what you see — how you see it playing out.
FOXWORTH: So I was president of the players association of the N.F.L. while I was playing, and after business school, I went to the N.B.A. Players Association, and I — I am in a weird state, frankly. I don’t know how to — it feels like a state of transition, which — but it feels like I shouldn’t be in a state of transition, if that makes any sense. So my whole life since I was a kid was very — I had a very clear goal and I worked towards that goal. And I made lots of decisions that would get me closer to that goal, but get me further away from other important and interesting things, including friends, including family. And then I was like, “I’m done playing.” So I will be in this state of transition, business school was like, “All right, this is my transition state, and then I’ll take this job at the N.B.A. Players Association and then I’ll be back to a steady state.” But I didn’t like it, and I left.
DUBNER: Because why? The N.B.A. position?
FOXWORTH: Yeah. I was the chief operating officer there, and there was a lot of things going on at the time, a lot of transition there. But being a chief operating officer was something that sounded good and paid well and I was very proud of. But it’s a lot of operating, frankly, which is — I remember living in New York, and my wife was pregnant with our third child, and she was not feeling good, and I was getting up at 6:30 a.m. to ride the subway to work with a bunch of other people who weren’t happy about where they were going to work. And I’d be there until 7:00 p.m. at night working, working, working, working. And I remember being on the subway thinking, “Am I happy? I have enough money that I don’t have to be unhappy. All these people who are on here with me, they have to go to work. And I don’t have to go to work.” So then I quit.
And I started writing for fun, and that’s what landed me at E.S.P.N. But to be completely frank with you, there’s some focus and clarity that scarcity brings to your life, and I don’t say this because I want to go back to a state when I was not sure, financially. I like being in a comfortable financial state. But there’s something to be said for the focus and clarity of, “Oh no, I’ve got to do this, because I got to feed my family.” And when you don’t have that focus and clarity, there’s something a bit frightening, honestly, about always feeling like, “What should I be doing with this gift, frankly, that I have? This gift of of flexibility and independence?” And sometimes in the job that I have now, I went to business school in part because I fancy myself as a smart person who is more than an athlete. And I wanted to get away from this, so there’s parts of me that’s embarrassed that I write about sports. Talk about sports.
But then there’s parts of me that’s like, “This awesome. It’s kind of flexible. I get to do fun things. I get to be — pick up my kids from school and take them to school.” And so it just depends on the day, where sometimes I’m like, “I should be chasing some big professional glory, and I’m wasting time. Or some days I’m doing just exactly what I should be doing, or well, I should be spending more time with my kids and my wife because I have this flexibility.” So when you have that scarcity to focus your thought, it’s very clear what you should be doing. And it’s an interesting thing to happen to somebody at this age. It feels more of a midlife thing. And for athletes it’s a unique thing. Successful athletes, it’s a unique thing, that in your 20s or 30s. You’re like, “Now what?”
DUBNER: Now, everything you said just makes sense to me, but I’m also curious if there’s one more element that plays into that, which is that sports is maybe singularly thrilling to do. And I say maybe — if you play music at a high level — it’s probably silly to say that sports are the only one — but because of the nature of what it is and the competition, it’s thrilling. Look how thrilled people are to watch it. And you guys are the ones who are doing it. And I just wonder if part of what’s contributing to your sort of malaise is just the possibility that that thrill is irreplaceable.
FOXWORTH: I think that’s a reasonable thing to think. But it doesn’t feel like that to me. I don’t feel like I’m missing that thrill, it’s not something that I feel I want. The feeling of uncertainty is the feeling that I have more than anything. It’s not like, “Oh, my life is boring.” It’s like, “Am I doing the right thing? Am I doing the best thing I can with this fortune and situation that I’m in?” And where it is connected to sports in some way, what also exacerbates it, I think, is a feeling of loneliness, honestly, which — I have three kids and my wife, and I’m not alone, obviously. And I love them and have fun with them.
But throughout my life, I have been almost myopically focused on a goal, which — being focused on that goal gave me purpose and I’m sure I’m going to butcher the Nietzsche quote, but it’s something to the effect of, “When a man has a why, he can bear almost any how.” And I don’t drink now, I never drank in my life. I never smoke weed. I was singularly focused on doing everything. Every decision I made was like, “All right, I’m going to get closer to his goal.” And the people I was close with in high school, those aren’t my friends anymore. People I was close with in college, not really my friends anymore. And then at 35, I’m in D.C. where my wife has a bunch of family and friends, friends that she’s been close with since they were in the second grade, and I’m like, “I don’t really have that.” And I was making these choices, which I thought were choices to get me —
DUBNER: What you wanted.
FOXWORTH: Right. And I wasn’t — there were choices that I was making that I was unaware that I was making. I didn’t realize at the time that I was foregoing long lasting relationships. And I think lots of athletes do the opposite and bring their friends and family along with them, and then they are making a decision. And there are a whole other whole mess of problems that you get from that. So there is no right way to do it. And I am very happy with where I’m in my life. And while you’re a professional athlete, you walk around with this skepticism, frankly, of all new people in your life. So even if there was the potential for some great friendships, I wasn’t open to them.
I’d go to these places, people are like, “Oh, football player,” and I’d pretend and be nice to them because that’s what you do, and they pretend or whatever to be into me, because that’s what you do, and then you move on. And then you’re 35, and you’re like, “Hey, you haven’t talked to your best friend from high school in 10 years, or something like that.” So I certainly don’t feel sad or anything, but these are things that I am becoming more aware of now. I said to my wife a couple of days ago that I feel I’m in a perpetual state of transition, which is interesting and uncomfortable at the same time.
DUBNER: What are some of the other things you’ve tried? You mentioned the N.B.A. Players Association job. What are some other things that you tried that you thought would make you excited or happy, and didn’t?
FOXWORTH: So, it’s not that they didn’t, it’s that they — that they don’t. It’s — so I mentioned, it’s no matter — and I’m starting to understand that — and this goes back to the scarcity point, where if there is something there to make the decision for you it feels somewhat easier. But I imagine that everyone can relate to this, that when you’re at work sometimes, you’re like, “Man, I really wish I was with my kids. I really wish I was partying.” Or when you are with your family, you’re like, “Man —” Particularly if you like your job, you want to be at work, or you might want to go on a guys trip or you might want to go on a romantic vacation with your wife, there’s so many things that you want to do. But there are things for so many people that they have to do.
So when I’m in this position where it’s like, “All right, I want to do this and then I’m doing it, but I want to do some of that.” It even breaks down into professional where it’s like, “All right, I want to just chase professional glory. I want to work my way up to the top of some company.” And I’m capable of doing that, I feel like I have the intelligence or charisma and pedigree, academically, to get in those positions, but that requires you to not be home a lot. And there’s part of me that wants that, but then there’s part of me — I want my kids to look back and be like, “Hey, my dad picked me up from school a couple of days a week.” I don’t know.
DUBNER: So this ambivalence, you never had any of this, though, when you were chasing the N.F.L. dream, did you?
FOXWORTH: No, this is brand new. It was quite clear to me that there were two things: I need to get paid, and we need to win. And anything that was not in line with that was like, “All right, obviously I don’t need to do this.” And maybe I was a more extreme version of it than a lot of people, to the point that I don’t drink and stuff. I don’t have some religious thing against drinking, I just never have, and I didn’t — when I was in high school and probably a lot of people start, because I’m like “No, it’s going to make me a worse football player.” And one of my best friends in high school actually sold drugs, and got a little bit of time for it. And when he was selling and occasionally smoking, I was like “No, I’m a football player.” Even our presidents, over the years, have experimented with marijuana. It feels like for me — and some even cocaine. For me it was like, “No, there’s one thing to do”. And now I’m at this point where I don’t really know how to have fun. I don’t really have super close friends, and I don’t really know what to do with my life. But I’m pretty happy still.
DUBNER: So it sounds to me at least that you built an identity that was focused, really strongly focused on football. But there are a million parts of what identity means, it means who you know and what you do with them, and what you put in your body, and so on. And now, you still have the identity, but you don’t have the thing that you built it for. It’s got to be a little baffling in a way. You are the person you made, to succeed, and then you did succeed, and now it’s like, “What next?”
FOXWORTH: Most people’s journeys are so much longer that when they do succeed, they die a few years after or something.
DUBNER: That’s your problem. Yeah. That’s what’s always attracted me about the idea of the afterlife of an athlete, is it’s unnatural. Most people, they pursue something for their whole life, or it’s not so specific that they basically are told to stop doing it when they’re 35, because they’re too slow. And yet, you can’t ask — you got a lot of money in the bank, you can’t ask people to feel sorry for you on that front.
FOXWORTH: I’m certainly like this — to be clear, this conversation is not at all about me wanting sympathy or feeling sorry.
DUBNER: No, no, I didn’t mean to imply.
FOXWORTH: There’s nobody that I want to trade places with. But I just — that doesn’t mean that there aren’t things —
DUBNER: You have a serious case of “grass is greener”-ism, it sounds like.
FOXWORTH: It feels that way, right? To the point that you made about the — I am the person that I’ve made. One of my classes in business school, one of the — it was surprising. I went to business school before — after I finished playing, I went to business school because I was like, “All right, now I’m going to keep competing. I’ll go to the best business school and I’m going to turn this 27 into 200.” And then I got there. And surprisingly, as I’m sure Harvard has a bad stereotype or a bad reputation for creating money-hungry people with low ethics, I’m sure there are plenty of them coming out. But I was surprised with how many mushy, soft classes that we had. That were about our feelings and integrity and all that stuff.
And I do remember one professor who said that — it wasn’t to me directly, it was just to the class, but it felt like he was talking to me directly. And I didn’t really like this professor necessarily, so I hate to give him credit. But he said something to the effect of, “The operating system that you used to get here may not be the operating system that you need going forward.” And that resonated with me, because I feel that’s definitely true for me. But I don’t know, they don’t just release updates for humans. So like, modifying my operating system is a slower and more challenging process.
DUBNER: Right. What was the professor’s name?
FOXWORTH: I don’t remember. I didn’t like him because on the first day he said to me — obviously, I was the football player there, and that was part of my identity. He sized me up and was like, “Aren’t you kind of small for a football player?” I was like, “I will whoop your ass in this classroom.” But he was actually a pretty good professor.
DUBNER: So let me ask you this. You are a scholar, at least an amateur scholar, of the civil-rights movement. Can you just talk for a second about the relationship between the civil rights movement per se and sports, areas where there’s overlap, maybe where one movement is way ahead or behind of the other. And I’ve certainly got in the back of my mind the anthem protests that are a big piece of this conversation right now. I’m curious to know what you have to say about that.
FOXWORTH: At least in America, there’s something black about professional athleticism. The players are largely black and — particularly in the Big Two sports, a lot of the culture that seeps out of the game into our pop culture comes from black players and there’s a lot of people who want to separate race from sports. And they say they want to go back to how it was when race and sports were separate, but it never was. It always has been intertwined — race is probably the most, particularly in America — the most defining characteristic of our country is how we have dealt with race. And it is always involved in everything.
Obviously, there were the ‘60s. Obviously, no one can say that race and sports weren’t connected. But people point to the periods after that from the ‘70s, ‘80s, to the ‘90s, and they would say that those were times when race and politics and social issues were not in sports. But I still think they were, because the players were still dealing with it. Whether the media was putting attention on it or whether people were willing to address it or talk about it, it was a thing that was always there. So that frustrates me. So I don’t necessarily feel — while I do accept that we’re in a state now as a country where it is unavoidable, the intersection, I don’t feel like it ever went away. It’s not a new intersection, it’s just I happened to be on that corner altogether, at once.
DUBNER: It’s funny you say that because the thing that struck me most about when Colin Kaepernick first decided to protest police violence by sitting and then kneeling during the anthem, the thing that struck me is it felt so mild compared to some past protest moves, like the 1968 Olympics. That was a big deal. And then it also struck me — the response also struck me as so overwrought, that again, it felt pre-’60s in a way. Haven’t we done this, and shouldn’t the conversation be way ahead of this? But maybe that’s because it is at the end of the day, all about just race, and not even race in sports, race in politics, etc. Do you think that’s what it’s really about?
FOXWORTH: Yeah. It’s not about the issues, it’s not about the posture you take when you are — when the national anthem is being played. It’s something that I — As a father, I’ve come to recognize that adults aren’t very different from children. Adults learn how to justify and how to validate their actions and decisions. Whereas if my son does something ridiculous and I ask him why he looks at me like I’m crazy like, “How you ask me why?” Or he’ll just say, “I took a cookie.” And, why? “I wanted a cookie.” Okay. Yeah, that’s fair. And I think that people to a certain degree, even if it is subconscious, they do what feels right, or what makes them happy or what makes them feel good, and then they’re like, “All right, now let me concoct this post-hoc justification whether it’s conscious or unconscious.” And I think that’s what’s happening.
And we see it with the anthem stuff. It’s like, “All right, sitting down during the anthem is a problem. And then you move from there to kneeling — so kneeling is then a problem. Raised fist is a problem and now we see that staying in the locker room is a problem.” Let’s just be honest about it. You don’t like these people making any statement and it makes you uncomfortable and you don’t like it. So you’re not going to like it no matter how they get it across. There’s no — and that’s one of the things that’s been most frustrating about this is they’re like, “No, I understand. But this is the wrong time or this is the wrong way.” No, there is no right time. There is no right way.
“You should be more like Martin Luther King.” Martin Luther King was assassinated and a large majority of white society was not happy with him advocating for advanced rights. I don’t know. It just feels like no matter what, there are people. And it’s a trap that we often get caught in, and not just in this case, but just in general, where it’s like, “All right, we’re going to try to satisfy everybody or we’re going to try to satisfy this group.” Some people don’t want to be satisfied. They want to be angry, let them be angry.
DUBNER: If you were still playing in the N.F.L. and first day of the season happens —
DUBNER: What do you do during the anthem?
FOXWORTH: I think at this point you probably stand up because there’s not much. It’s easy to say now. I don’t know. So I’d like to say that I would be in solidarity with those guys and I would have the courage to expose myself to the hate that they’re receiving. But I don’t know. It’s easy to say now. From the sidelines.
DUBNER: I’m just going to ask one last question if I can. Two part question. No. 1, you played professional and college and high school football. So you can’t not think about long-term brain damage, since that’s a big piece of all conversations about football these days. So I’m curious to know whether you feel a little bit like you’re living with a time bomb in your head. And related to that, I’m curious to know what happens if and when your son wants to play football.
FOXWORTH: So I’ll take the second one first. Slightly easier. He’s only five now and I say no. It’s not a problem that we’re actually facing at this point, but I would say no.
DUBNER: So if he comes to you and says, “Hey Dad, I know before I was born, you were an amazing N.F.L. player, great career, etc. What do you mean, no? What are you talking about?”
FOXWORTH: I think the research wasn’t there. I suspect my parents would not have let me play when I was that age, if there was information available. And it’s not even clear information. But what is clear is that it does put you at a higher risk. Like, my son doesn’t need those things. The best case scenario is that you play professional football and you make a lot of money. I wasn’t — I was far from poor growing up, like middle class, but I went to Baltimore County public schools. That’s not my son’s experience. I didn’t have access to the things that he’ll have access to. So I frankly think that he is starting in a much better place than I am, so he should do much better than banging his head into other people’s heads for money. It seems like a step back to me, honestly.
DUBNER: On a macro scale, does that mean that as football goes forward, and I guess if football goes forward, which obviously in the short term it will, but in long term it’s a question, does that mean that the only people that play it are going to be the people who need to play it to try to make the money that they can’t make otherwise?
FOXWORTH: Feels like outside of the quarterback position, it’s already gravitated to that, both prior to now.
DUBNER: But you’ve got guys, the San Francisco 49ers for instance, they have a few guys who’ve had a lot, there have been a lot in the league, who went to Stanford. So these are football players that go to Stanford to get a Stanford degree. There’s a lot of ways they can now make a living. So there’s obviously more about the appeal of playing at that level than just making the money, yeah?
FOXWORTH: Football players, athletes are still heroes in our society. And it’s something that people, particularly young boys, will aspire to. I understand that. But I do think that the danger is something that’s going to push people away from it in a way that it drew people to it in the past, so it’s not — football is not by any stretch dead, and there is still hope that they could find ways to modify the game or improve equipment or whatever and make it safer, but until they do, I don’t see why my son needs to play. But I don’t judge anybody else. Your son can do what you want your son to do. That’s just not for my son.
DUBNER: And then what about you? Do you worry about your brain? Does your wife worry about your brain?
FOXWORTH: Absolutely. I do. It’s something that I think lots of players talk about and think about. And every time there is — It could just be general aging, you don’t know where your keys are. It’s like you’re living a horror movie honestly, where it’s this thing lurking in the background, that you hear noises but you don’t necessarily know if that’s just a regular noise or if that is a monster. And that’s what I analogize it to, where it’s like all right, I can’t find my keys. That to me feels like “Oh, is this a signal? Or is this just something, whatever?” It’s scary. And what is most frightening is, right now, I would do it all over, because of what it’s done for me and my family.
And I think most players would agree with that, except for the ones who killed themselves. I have been sad before, obviously, but I don’t know that darkness, I don’t know. I’ve never ever in my life gave any realistic consideration to ending my own life and trying to — And I invite you or anybody else to try to wrap your head around how sad, depressed, how dark you must feel to see death as relief, as a way out. And I imagine if I were ever to feel that way, or for people who do feel that way, they don’t say like, “I would go back and do it all over again.” I would imagine in that moment they would give up all the fame, all the money, all the success, all the women, or whatever else, all the trappings of this, to not be in a place where you feel like the only exit is to end your life. So that’s very dark and very difficult to deal with, but I’ve never been there. I hope never to get there. But until then, I feel like I’m happy with the decisions that I’ve made and I will continue to live as happy and productive a life as I can.
DUBNER: Well on that note, let me just thank you for a really great conversation and wish you and your family all the best, and I hope you find the greenest pasture possible.
FOXWORTH: And then find a greener one.
That was Domonique Foxworth; on Twitter, he’s @Foxworth24. Hope you enjoyed this full conversation; he appears throughout our “Hidden Side of Sports” series, including episode numbers 349, 351, and 365. Thanks again to him, and thanks to you for listening.
Freakonomics Radio is produced by Stitcher and Dubner Productions. Our “Hidden Side of Sports” series was produced by Anders Kelto and Derek John, with lots of help from Harry Huggins, Alison Craiglow, and Alvin Melathe; we also had help from Rebecca Douglas and Nellie Osborne, and our staff includes also Greg Rippin, and Zack Lapinski. The music you hear throughout our episodes was composed by Luis Guerra. Our show can also be heard on NPR stations across the country — check your local station for the schedule — as well as on SiriusXM, Spotify, and even your better airlines!
If you think talent and hard work give top athletes all the leverage to succeed, think again. As employees in the Sports-Industrial Complex, they’ve got a tight earnings window, a high injury rate, little choice in where they work — and a very early forced retirement. (Ep. 6 of “The Hidden Side of Sports” series.)
Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.
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Kerri WALSH JENNINGS: If you make it to the finals, you feel like a rock star. You feel like you own the world.
Domonique FOXWORTH: I was in love with the game, in part because of how violent it was.
Kim NG:If you want something, you have to be aggressive.
Lauren MURPHY: It was over in 17 seconds. I got a T.K.O. victory. And I remember thinking, “Oh my god, I have to do this again.”
Toby MOSKOWITZ: The fact of the matter is: superstars do win championships.
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The Super Bowl is by far the biggest sports event in the United States. It draws the most viewers, the most attention, and of course the most money. As we’ve been discussing in this “Hidden Side of Sports” series, the sports-industrial complex has grown tremendously over the past few decades; it generates roughly $70 billion a year. But once you strip away the massive TV revenues, the increasingly sophisticated arenas and stadiums, all the merchandise — what most people care about is watching the players play. How much do we care about the players themselves? That is a different question.
Most of us do profess to care about the livelihood and well-being of employees in various industries. Does this apply to athletes? Or is sports too unlike other industries to think of its employees as just another labor force? Let’s find out; let’s find out what it’s like to be on the labor side of the equation in a business that often seems — and never more than on Super Bowl Sunday — to be nothing but superstars and fat paychecks and game-day glory.
DeMaurice SMITH: Yes, the National Football League generates billions of dollars. But the reality of the facts of our business are rather stark.
That’s DeMaurice Smith, executive director of the the N.F.L. Players Association, the union that represents the athletes.
SMITH: Our players play for approximately three-and-a-half years.
On average, that is; some careers are obviously longer. And every career, at some point, is derailed by pain.
SMITH: The injury rate is 100 percent. Owners tend to own teams for decades, if not generations. What the players have tried to do throughout history is just to make sure that they get what they believe is their fair share.
According to a lot of the athletes we’ve been speaking with, in a variety of sports, a fair share is hard to come by. Many feel they don’t have much control over their destinies — financial and otherwise.
FOXWORTH: It’s an interesting kind of irony in that sports is a place that we consider as close to a meritocracy as we have, and you look at the field and we convince ourselves that once you step out there, it’s all fair, and it feels that way. That doesn’t extend to the business of sports.
This is true of the biggest sports, like football.
SMITH: The owners are people who are used to getting their way.
And the sports that draw smaller crowds.
WALSH JENNINGS: The athletes have no leverage. It’s almost like the abuser-abusee relationship, where the abusee gives excuses for being abused. That’s exactly what’s happening with regard to domestic volleyball here in the U.S.
This can happen early in an athlete’s career.
FOXWORTH: Most people understand that college sports is professional sports. They generate a substantial amount of revenue, and that revenue goes to lots of people who are not the labor.
It can happen to athletes at their peak.
Shawn JOHNSON: The way these contracts are structured is these athletes aren’t paid any money upfront. The only way they earn money is by winning medals.
And it extends into retirement — which, for athletes, is an inherently early retirement.
J.J. REDICK: I think about what I’m going to do after basketball on a daily basis. And there’s a level of fear of the other side.]
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The seeds of a sports career are typically planted quite early.
FOXWORTH: I was eight when I decided I wanted to be a professional football player.
That’s Domonique Foxworth. He played in the N.F.L. from 2005 to 2011.
FOXWORTH: It’s weird, I was young enough then to be naive enough to think, obviously, “I’m going to play in the N.F.L.” I started getting invited to football camps. And that’s when it started to become a business. When I showed up and it was like, “Oh, they’re evaluating me.” This is where the dream either continues to go forward or dies.
WALSH JENNINGS: The very first moment I played volleyball, I fell in love with it.
That’s the three-time Olympic gold medalist Kerri Walsh Jennings.
WALSH JENNINGS: And people talk about their “aha moments” and these pivotal times in their lives where things are different. I had that moment when I was 10, in the fifth grade, and I literally just fell in love with the dance of the game and the learning everything that had to do with volleyball. I loved it. I was a geek for it.
Mark TEIXEIRA: I was a sophomore in high school and pro scouts started showing up to my games.
And that’s Mark Teixeira.
TEIXEIRA: And that’s when I was talking to my coaches and talking to my dad and talking to some of these scouts, saying “Wow, I could actually play professional baseball. How cool is that?”
Teixeira wound up playing 14 seasons in the major leagues. He was a three-time All-Star, a World Series champion. But back in 1998, he was just a teenager with a lot of potential.
TEIXEIRA: I was the 12th-rated prospect in the draft that year, my senior year.
He could have played college baseball first or gone straight to the pros through Major League Baseball’s amateur draft. The draft is how teams in the big American sports pick their young players. Unlike other industries, where an employee can choose the city where they want to live and the company they want to work for, in a sports draft the employee can only work for the company that chooses them. Still, for a player like Teixeira, the future was bright.
TEIXEIRA: For all intents and purposes, I should have been a top-15 pick, right? The Red Sox that year had the ninth pick.
The Red Sox actually had the 12th overall pick, not the ninth; Teixeira’s recollection seems a bit off. Anyway:
TEIXEIRA: They called me up before the draft and said, “Hey, we want you to take this signing bonus, it was $1.5 million, we’re going to take you, this signing bonus, agree to this pre-draft deal, we’ll draft you and you’ll get started.” Well you’re not allowed to, at least in those days, you weren’t allowed to pre-negotiate a deal when you’re an amateur. And I said “Okay, you know what? I’ll roll the dice. If the Red Sox don’t draft me, some other team will draft me and I’ll be fine.” Well, draft day comes. It was going to be the coolest day of my life, the most exciting day of my life. Not only was I not the ninth pick. I dropped to the ninth round.
DUBNER: Wow. So that’s like 270 spots or something, right?
TEIXEIRA: And who drafts me?
DUBNER: Boston Red Sox?
TEIXEIRA: The Boston Red Sox.
Teixeira wound up going the college route, and played baseball at Georgia Tech.
TEIXEIRA: Best three years of my life.
DUBNER: Met your wife there, I understand?
TEIXEIRA: Met my wife there, had a blast, became a better baseball player.
When Teixeira entered the draft this time, he was picked fifth overall, by the Texas Rangers. So what had happened in that first draft? According to Teixeira, here’s what the Red Sox did:
TEIXEIRA: They called every single team in baseball and said, “Teixeira is not signing and he’s going to Georgia Tech. Don’t draft him.”
The Red Sox, we should say, have disputed Teixeira’s account, and claim they did nothing wrong. In any case, here’s what Teixeira took away from that incident.
TEIXEIRA: This was the moment that I realized that baseball is a business.
For Domonique Foxworth, the business side of sports became fully manifest during college, at the University of Maryland.
FOXWORTH: My freshman year in college, we won the A.C.C. championship. We went to the Orange Bowl and lost, and then immediately after, my head coach got a $10-million extension. That was when I was like, “Oh, we aren’t a team, we’re a business.” And that was when the light went on for me.
There is perhaps no more confounding labor market in sports than the one whose organizers insist on saying it is not a labor market. I’m talking about big-time American college sports, run by the National Collegiate Athletic Association, or N.C.A.A. College sports — especially basketball and football — have also grown massively over the past few decades; they generate about $13 billion a year — nearly as much as the N.F.L But the labor is essentially free. Aside from room and board and some academic scholarships, college athletes receive no compensation. So where is that $13 billion going?
FOXWORTH: It goes to supporting other sports, it goes to building bigger and better facilities, it goes to paying college presidents and coaches and funding the N.C.A.A. It goes a lot of different places, but it doesn’t go to the people who are the labor on the field.
Just how much is going to the coaches? The Duke economist Charles Clotfelter looked at compensation data for various personnel from 44 public universities that have big football programs. Over the past 30 years, he found that full professors got a salary increase of 43 percent, adjusted for inflation. Not bad. College presidents got an 89 percent increase over that time. Even better. How’d the football coaches do? Over those 30 years, football coaches’ compensation increased more than 1,100 percent, from an average of around $300,000 to more than $3.6 million a year. Back in 1985, football coaches were earning slightly less on average than the college presidents; now they earn about six times as much. Their athletes, meanwhile, are still playing for free. And if you want a career in the N.B.A. or N.F.L., you pretty much have to play at least some college ball, since both leagues have eligibility requirements that forbid athletes from going pro straight out of high school. Domonique Foxworth again:
FOXWORTH: If that was the end of the story, and every player then went on to have N.F.L. careers, it would be unfair, but whatever, you’re not going to lose any sleep for those guys. But the vast majority of the guys — and I have several teammates who, because it is not considered work, they’re not privy to workers’ compensation. They’re not privy to extended health care.
So one of my best friends in college, he had aspirations to play professional football. He had three knee surgeries while in college. A few years ago, his doctor told him that he was going to have to have both of his knees replaced by the time he was 50. And he didn’t play professional sports. And there’s nothing that any college football team or governing body is going to do for him in that case. And that to me is tragic, that a lot of people benefited from that.
DUBNER: So, the old-fashioned argument for why this was acceptable was that this is like what economists call a tournament model, right? Whenever you’ve got a lot of people competing for the top of the pyramid, whether it’s show business or sports or whatever, the bottom of the pyramid, there’s lots and lots and lots and lots of people there willing to do whatever it takes for practically no money. It’s this kind of weird unpaid apprenticeship. Some people accept that as okay. Others don’t.
But what strikes me that’s especially noteworthy about sports is the degree and magnitude of sacrifice, physical and otherwise, is larger, I would argue, than trying to become an actor, trying to become a writer, and whatnot. So can you just talk about that component and what you think would be a better solution?
FOXWORTH: I think bringing up the tournament model is interesting, because I can understand how some people would look at that and say that it fits here, and that’s why this is fair. But I think as a country, we’ve decided that that wasn’t fair a long time ago. There are plenty of jobs where that’s true, just about every job.
It’s like the barista at Starbucks. There are plenty of people out there who are capable of being baristas, and you could probably allow Starbucks to pit them against each other and negotiate down, down, down, down, down. But that’s not the case. We’ve instituted minimum wages and instituted lots of other laws to protect American people or American workers from these type of capitalistic urges run amok.
And the thing that’s frustrating to me is, we’ve instituted rules in professional sports — that happen to take place on college campuses — we instituted rules that are to the advantages of the institutions. But we are not interested in instituting any rules that are things that we accept as just kind of, facts and fair. You’ll be hard-pressed to find anyone in our society that’s like, “No, let’s eliminate the minimum wage and allow this tournament model to run amok for low-wage workers.”
DUBNER: Well, the other argument though in colleges is wait a minute: free education, four years of college, what’s that worth?
FOXWORTH: It could be worth a lot, but you’re not even getting the same education as the people around you. Because you have to travel on Thursdays and Fridays, and you are not allowed to do certain majors because they conflict with your schedule. I wanted to be a computer-science major, and my academic adviser was like, “That course load is going to make it very difficult for you to make our practices, there are labs.” And blah, blah, blah, blah. And three times a week, during the winter session or the spring session, you have to go to 5 a.m. workouts, and that changes your academic experience.
There are all these things that are mandatory because your scholarship is year-to-year, and you don’t have any power to negotiate with your coach and say things like, “I want to take this so I’m not going to able to go there.” That’s just not a thing that is available. So the education that they’re receiving is not the education that people think it is.
The Duke economist Charles Clotfelter also looked at graduation rates from 58 universities that have big-time sports programs. For the general population at these schools, the graduation rate was 72 percent. For football players, it was 56 percent; for basketball players, just 42 percent. This is yet another reason that makes some people question the very existence of the N.C.A.A. Here’s the assessment of the entrepreneur Mark Cuban, who owns the N.B.A.’s Dallas Mavericks.
Mark CUBAN: I think it’s worthless.
DUBNER: If you could blow it up entirely what would you do? Would you have football attached to college at all?
CUBAN: I don’t mind having it attached to college, but I would make it an independent entity so that it would operate independently. Let them go get a job, let them practice as much as they need to. If I wanted to create a band I can pay them, and they can stay in school. They can practice together as much as they want. That’s the hypocrisy. If you want to be a professional athlete, you can’t practice your craft as much as you would like. There’s limits to coaching and playing with your teammates. There’s limits on jobs you can take. There’s so many different things that are bound in stone that it just doesn’t make sense.
For years, there’s been talk about reforming the N.C.A.A., but it hasn’t changed much. The Commission on College Basketball, chaired by former Secretary of State Condoleezza Rice, is advocating some reforms that can be seen as pro-athlete. But she also said this: “Our focus has been to strengthen the collegiate model — not to move toward one that brings aspects of professionalism into the game.” Which might make more sense if some aspects of college sports weren’t already at the professional level. Like coaching salaries, and TV audiences, and the expectations of the top-tier athletes. So: how likely is a substantial change? Domonique Foxworth is not optimistic.
FOXWORTH: Those guys who are on the doorsteps of having professional careers, it’s not really in their best interest to stop this now. And the people who are benefiting most from it who are not on the field, there’s really no benefit to the coaches — because coaches’ salaries are inflated because they have extra money, because they are not sending it to the players. And the rest of the teams who are funded by money generated by football and basketball. There’s no incentive there, there’s just the athletes, who don’t have much power.
Foxworth, as you’ve probably figured out by now, has thought through the entire athletic ecosystem more than most people. Besides playing in the N.F.L., he’s been an executive at both the N.F.L. and N.B.A. players’ unions, and he also got an M.B.A. from Harvard. So to understand the incentives he’s been describing, and the transition from college to pro, let’s go back to Foxworth’s own transition.
DUBNER: You were drafted, I believe, 2005, third round. So what I’m looking at here, I have no idea if this is accurate, you were paid for that year, including a signing bonus about $660,000 — that sound about right for year one?
DUBNER: Okay. And it was a three-year rookie contract. Is that right?
FOXWORTH: Yeah, it was a three-year rookie contract, with the fourth-year option, I believe.
DUBNER: Okay, so looks like your first three years paid you a total of about $1.5 million. And then in your fourth year, then you did become a free agent, moved to Atlanta; those first few years were in Denver.
FOXWORTH: They traded me. So I went through the first three years, and then I was coming up on a contract year and I played pretty well in Denver, and I knew that I needed to play well in this year because if you don’t, then the salary minimum goes up for guys after that point, so then they just go get a younger one, and you go on with the rest of your life.
So during week one, we’re getting ready for the first week of the season in Denver, they traded me to Atlanta. Atlanta was a terrible football team at that point. That was the first time when I considered going to business school. I skipped training camp. “This team is going to be terrible. I’m not going to play. And then I’ll be out of the league.”
DUBNER: But you must have a pretty good year, because the next year you signed a contract with Baltimore that paid you in year one, $8 million, year two, $9.2, and year three, $4.4 — does that sound about right?
FOXWORTH: Yeah, it was a four-year, 27, I think. In Baltimore.
DUBNER: It was a four-year, $27.2 million contract. How much of that did you actually collect?
FOXWORTH: All of it.
DUBNER: Did you have it guaranteed even though you didn’t end up playing out the whole contract?
FOXWORTH: I was on the team for three years, and then the fourth year I had taken out an insurance policy. So I got the rest of it there. So I was fortunate that the knee injury happened after I signed that deal, because if it would have happened when I was in college, or happened a year earlier, I would have been on an entirely different path.
So despite an injury that prematurely ended his career, things worked out pretty well for Foxworth. Meaning: he got paid. By the time he was 30, he was set for life — financially, at least. But consider how easily it might have been different. Consider the case of Andre Ingram. Ingram spent 10 seasons in the N.B.A.’s minor leagues — today it’s called the G-League, after its sponsor, Gatorade; it used to be the D-League, for “development.”
Andre INGRAM: So I would tell people that I played in the D League and have been playing for years. They usually notice my gray hair and wonder if I’m a coach or whatnot. At some point, they always ask, “Oh, have you ever made the big time?” And I had to tell them the same thing every time: “Well, not yet.”
That finally changed last year. Ingram, at 32 years of age, was promoted to the Los Angeles Lakers for the season’s last two games. Here’s what happened on the first shot he took in the N.B.A.:
ANNOUNCER: Down it goes! Welcome to the N.B.A., Andre Ingram!
ANNOUNCER: Makes his first try! That is awesome!
Ingram went on to score 19 points that night.
INGRAM: My brother and my niece had called told me — they said, “Hey, you are blowing up on Twitter, you’re blowing up on Instagram, you’re everywhere.”
Ingram made a great impression. But still: he was a 32-year-old rookie. Would the Lakers bring him back the following season? When we spoke with Ingram, this past summer, the Lakers had just made news by signing the much-coveted LeBron James to a four-year, $153-million deal. How would Ingram feel about sharing the court with the best player of his generation?
INGRAM: Count me along with the 100 percent of players who would love to play with LeBron. That’s a no-brainer. You won’t believe how many texts I got when he made the decision. A lot of people are already assuming that I was going to be back with the Lakers, and they were like, “Man, you get to play with LeBron.” In my head I’m like, “Man, I hope so.”
DUBNER: Either that or if he took your roster spot, that’s the the bad way of looking at it.
INGRAM: You know what, some people texted me that as well.
Unfortunately for Ingram, the Los Angeles Lakers did not bring him back. He’s playing for the South Bay Lakers of the G-League this year, his 11th season in the minors. And he’s not doing so well, averaging less than 8 points a game, with a career low in three-point shooting, his specialty. Which means that for Andre Ingram, the end of his professional career is probably pretty close.
INGRAM: I don’t sit around complaining about it, thinking it’s unfair. I just would want for people in general who watch basketball and know the game to just know that there are guys out there in the G-League now, and overseas and elsewhere, who just know how to play the game of basketball and can play it in the highest of level, including the N.B.A.
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It’s easy to see professional athletes as fortunate beyond belief — getting rich for playing the game they love, yada yada. But that, as we’ve been learning today, is a very simplistic view of a complicated economic ecosystem. For one thing, it’s easy to focus on the handful of athletes at the very tippy-top of the pyramid, at the exclusion of the thousands of athletes below them.
Shawn JOHNSON: You don’t make money unless you succeed at the Olympics.
Shawn Johnson won one gold and three silver medals in gymnastics at the 2008 Olympics.
JOHNSON: How the majority of Olympic endorsements work is, you sign an Olympic endorsement, such as a Coca-Cola, a McDonald’s, Nike, Adidas, Under Armour, before the Olympics even start. But the way these contracts are structured is these athletes aren’t paid any money upfront. The only way they earn money is by winning medals. So if you sign a deal with Nike that’s, say, a million dollars, you go to the Olympics and you don’t win a medal, you don’t earn any money. And when you’re talking about thousands and thousands of athletes who have reached the pinnacle of their sport by just qualifying to the Olympics, the fact that they aren’t getting compensated for their journey that’s gotten them to that point I think is pretty extreme.
Extreme, perhaps. But also very similar to another population of amateur athletes — all the college football and basketball players who are very, very good but not quite good enough to have a pro career. And if you are that good, and lucky? Then you’re drafted by a pro team — remember, they choose you; you don’t choose them. And now you’re looking at a rookie contract, with pre-determined wages for your first several years. If you last that long. If not, the team can cut you loose. Which means your downside is unprotected at the same time that your upside is limited.
Victor MATHESON: You’re basically stuck at a way-below-market paycheck for your first three years at a minimum.
Victor Matheson is an economist at College of the Holy Cross and president of the North American Association of Sports Economists.
MATHESON: Is that made up for by the fact that you get to make these huge free-agent contracts later? Yeah, but only if you last long enough to actually make it to free agency.
Russell Wilson, the Seattle Seahawks quarterback, did make it that far — actually, he did so well in his first three seasons that Seattle gave him a contract extension worth nearly $90 million before what would have been his final season under his rookie contract. But during those first three seasons, he averaged under $1 million a year despite leading his team to two Super Bowls and winning one. And what if Wilson instead had played Major League Baseball — which he maybe could have; he was drafted by the Colorado Rockies and played some minor-league ball. In baseball, Wilson would have had to put in six years of major league service to become a free agent. Interestingly, the average career length in Major League Baseball is 5.6 years. Also interesting: rookie N.F.L. contracts are for four years, and the average N.F.L. career length?
MATHESON: The typical player plays about three seasons.
This presents a paradox. A clash of incentives that gives the leagues and teams much more leverage than the athletes. As Victor Matheson sees it, this also helps explain why a players’ strike would be very hard to organize.
MATHESON: If I’m working for Verizon on the lines fixing telephone poles, I might be willing to sit out and lose my salary for an entire year if I can get a 10 percent higher salary for the next 20 years I’m working for them. Those numbers kind of work out.
But if you’re a Major League Baseball player, if you’re an N.F.L. player, you can’t afford to lose even one season because there’s almost no increase in pay that could possibly justify you losing one season of your very, very short career. And the owners have a huge advantage over them.
FOXWORTH: They will not make that money back. It’s just physically impossible.
Domonique Foxworth was on the N.F.L. players’ union executive committee during its last collective bargaining negotiation, in 2011.
FOXWORTH: With the length of a player’s career, and how much money they could stand to make in a season, it’s really not in their best interest. Mathematically, logically, if you go through the numbers, it’s not in their best interest to actually withstand a lockout or to initiate a strike.
MATHESON: And as a matter of fact, teams themselves have stopped striking completely. All of the last major interruptions in pro sports in the United States have not been strikes, although they look like that to a fan. They’ve been lockouts. Yeah, this is the owners actually going on strike and not paying the players rather than the players refusing to work.
That’s what happened in the 2011 N.F.L. negotiations. The N.F.L. locked out the players for 132 days — although it was during the off-season, so it barely affected the run of play. The owners and the players’ union finally agreed on a 10-year deal, which saw the players’ share of revenue fall from essentially 50-50 to somewhere in the high 40’s — although the players did gain some other concessions, like funding for retirement and fewer practices. The most recent N.B.A. and N.H.L. collective bargaining agreements have, similarly, resulted in a smaller share of revenue going to the athletes. That said, those are huge, rich leagues that generate many millions of dollars for even average players. It can be a lot harder to make a living in some other pro sports.
MURPHY: Yeah it’s a pretty typical fighter story to be broke and trying to make it.
Lauren Murphy started fighting in mixed-martial arts matches in 2010; she’s currently a top-ranked flyweight fighter in the U.F.C., or Ultimate Fighting Championship.
MURPHY: There was a time when I was coming up, before I was signed to the U.F.C., where I was traveling a lot to train. I was sleeping on people’s floors. I was sleeping in their guest bedrooms. I would housesit and dog-sit for people at the gym. It’s hard to come up in fighting because you spend all your time training so you don’t have a lot of time to work.
MATHESON: If you’re trying to decide what sport to go into man, stay away from U.F.C. because they’re making a lot of revenues but not much of that is going into the athletes.
In the big team sports, Matheson told us, roughly half of the revenues are designated for the players — although, as we just noted, that share has been shrinking a bit. In the U.F.C., meanwhile, that share is much lower.
MATHESON: The amount going to the athletes there is about 10 or 15 percent of revenues.
The chief operating officer of the U.F.C., Lawrence Epstein, disputes that figure.
EPSTEIN: The 15 percent number, I don’t think that’s accurate. I mean there certainly is some fluctuation in the percentage of revenue that goes to athletes. But the reason for that primarily is that we have a variable-revenue-stream model in our company.
Meaning: the U.F.C. distributes some of its fights via pay-per-view, whereas the big team sports have bigger, more reliable TV contracts. Still, salary data for U.F.C. athletes is hard to come by, since the company is privately held and the athletes are not unionized, which means there’s no collective bargaining agreement.
Lauren MURPHY: The U.F.C. really has all the control. They can cut you on one loss. They can cut you after two losses. They can keep you around for as many fights as they want. They can renegotiate your contract. They have a lot of power.
That said, Lauren Murphy is not much of a critic of the U.F.C. Her career may not be all that lucrative but it is a career. Maybe more important, it’s given shape to her life; sports — in Murphy’s case, fighting — it can have that effect on people. And that’s part of the draw.
MURPHY: I struggled with depression and I struggled with addiction and I just became your typical high-school dropout/teenage mom in a small town. And it’s just changed my life in ways that I never could have even dreamed of back then in a small town in Alaska.
In just her third U.F.C. fight, Murphy earned a $50,000 bonus for taking part in the Fight of the Night — a fairly subjective award bestowed by U.F.C. management to the two fighters who deliver the most impressive performance on a given night’s card.
MURPHY: That bonus changed my life. I paid off a bunch of student loans with that. And I got out of debt and it was really a life-changing experience for me.
Murphy’s bonus was a great stroke of fortune. As for her guaranteed pay in the U.F.C.? That’s a different story. Fighters get paid for two things: making weight and winning. The figures vary but the most Murphy’s ever gotten was 12 and 12— $12,000 for making weight and $12,000 for a win — which, obviously, is also not guaranteed. What is guaranteed is that Murphy will train five to six hours a day for months and that U.F.C. fighters get, on average, just 2.3 matches per year.
MURPHY: I’ve only made about $15,000 in the U.F.C. so far this year. But my dream was to see how far I could take this. And for me, at least, if I wanted to be in a profession to make a shit load of money, I would have been a lawyer or something — a doctor or something like that. I mean yes, I’d like to make more. I think anybody on earth wants to make more. If you ask them, “Do you want to make more money?” everybody’s going to be like, “Yes.” So I would love to make more money. I certainly think I’m worth more money.
MATHESON: It might have more to do with the fact that this is a fairly new sport that may be still trying to find its way.
Victor Matheson again.
MATHESON: But that’s that’s way less than you’re making elsewhere.
DUBNER: Now do you anticipate that changing, if we were to talk in five or 10 years? U.F.C. is making a lot of money and they’ve been growing really fast. Do you think that the athletes will eventually get the leverage to get that share up to 30, 50, 60 percent of revenues?
MATHESON: Well, we did not see that happen in any of the other individual sports until we had those athletes joined together in some sort of important way.
The athletes’ unions — or players’ associations, as they’re often called — negotiate not only pay scales but also work conditions, schedules, health and safety, and various benefits. In other words, they do what labor unions have always done. The N.F.L. Players Association is, in fact, a member of the A.F.L.-C.I.O., the big federation of unions that include the American Federation of Teachers and the American Federation of State, County, and Municipal Employees. Here, again, is DeMaurice Smith, executive director of the N.F.L. Players Association.
SMITH: I think it would be fair to say, and people should understand, that we are labor. And the National Football League and its member teams are our management. And there is no difference in the hostility between us than there would be between management writ large and labor writ large in America. We literally have engaged in hundreds of legal fights with the league and the teams in the 10 years since I’ve been here.
Smith, we should say, is a lawyer who’s worked in private practice as well as at the U.S. Department of Justice.
SMITH: The history of labor and management in the United States has been one for the most part where management has successfully lobbied and changed laws through litigation that have affected a net negative for employees. So we don’t necessarily shy away from making sure that we are aggressive in the way in which we protect our players’ interest. Whether it’s issues of health care, issues of control, issues of free speech, issues of injury care, issues over money, shares of revenue.
The league locked us out in 2011, and that means not only cutting off the players’ right to earn a living but they cut off the health insurance for thousands of players’ wives and dozens of players’ wives who were expecting children during the lockout. They’ve issued and engaged in legislative action to take away our players’ right to medical care and certainly we’ve had our skirmishes over commissioner discipline and revenue.
DUBNER: Now as I understand it, some team owners are supporting legislation in a handful of states that would take away worker’s comp from injured players. Do I have that right?
SMITH: Yeah, we’ve probably had somewhere between 10 and 15 state legislature fights with bills supported by team owners to take workers’ comp away from professional athletes, which is terrible.
DUBNER: And their argument then is what? That it shouldn’t be—
SMITH: Their argument is that they are cheap.
DUBNER: And tell me about some of the other legal challenges you’ve filed whether against the league or legislatures whether it has to do with healthcare, revenue share, or whatnot.
Considering all the issues that N.F.L. players face — and considering that they play in the richest sports league in the history of the world and have a relatively strong union — you might think athletes in lesser sports would like to emulate them. But not necessarily.
MURPHY: I’ve been contacted a couple times now by people that want to unionize and I just have a really hard time getting on board with it.
That again is U.F.C. fighter Lauren Murphy.
MURPHY: I would love to see fighters get signed to the U.F.C. and right off the bat they’re making way more money — enough to live off of for an entire year. I think that would be great, but I don’t know if it’s feasible. I don’t know what the U.F.C.’s finances are or how the budgets work out or how any of that works.
Part of that mystery is intentional — the U.F.C., as we mentioned, is privately owned. An investor group led by the W.M.E.-I.M.G. agency bought it in 2016 for about $4 billion.
MURPHY: If we unionize, and suddenly W.M.E.-I.M.G. says, “Okay, well this isn’t what we anticipated when we bought the U.F.C. so we’re going to have to cut out a bunch of divisions so that we can afford to pay the fighters that we have left.” And they get rid of the less popular divisions, say. And now you’re getting rid of the fringe weight classes and the women’s weight classes and stuff like that. Well, now I’ve gone from maybe making a smaller portion of the pie to making nothing.
Murphy’s situation highlights one of the common problems for any sort of collective action, whether in sports labor or anywhere. The people with the most to gain — the Lauren Murphys of the world — usually don’t have much leverage; they can just be replaced. The superstars, meanwhile, do have leverage but often have little incentive to push for collective action.
One exception was the tennis champion Billie Jean King, who in 1973 threatened to boycott the U.S. Open unless it awarded equal prize money for women and men. The U.S. Tennis Association met her demands. King also helped found the Women’s Tennis Association, which pushed for equal prize money in all the major tournaments, and has helped turn tennis into one of the few sports in which the women’s competition is arguably as high-profile as the men’s.
There’s a movement currently underway in beach volleyball to gain more leverage for the athletes, again with a female superstar leading the charge.
WALSH JENNINGS: For so long, it’s been one top athlete raising their hand saying, “That’s not enough,” and if one top athlete boycotts who cares, and the divide-and-conquer strategy happens all the time.
That, again, is Kerri Walsh Jennings, one of the most decorated and high-profile players in beach volleyball history.
WALSH JENNINGS: The athletes have no leverage because the athletes aren’t unified and we’ve been told for so long about your sport is small, this is what you deserve this is as good as it gets.
In 2017, Walsh Jennings was part of a group of players that tried to negotiate a new deal with the A.V.P., the Association of Volleyball Professionals, which runs the biggest beach-volleyball tour in the country, with eight events a year. It’s not a big money-maker for the athletes.
WALSH JENNINGS: The top player last year made, I think, just under or just over $38,000. We pay for our training, we pay for our coaches, we pay for travel, we pay for hotel. And that was the top player in the country.
Like many sports leagues and tours, the A.V.P. operates in a way that might make you think “monopoly.”
WALSH JENNINGS: So they own you for 365 days for possibly eight days of work that you’re probably not even — you maybe if you lose your first two, you’re maybe making 500 bucks. And it’s just the athletes are being held hostage. Basically a gun was held to the players’ head, saying, “If you don’t sign this, we’re going to fold the tour.” There was no other alternative. We got calls the night before the deadline. Girls crying, saying, “Kerri, we want to sit with you and fight with you but I can’t pay rent unless I play in this tournament next week.”
In the end, Walsh Jennings refused to sign the contract but she’s sympathetic to the players who did sign.
WALSH JENNINGS: Oh, for sure. And I understand they had no other choice. And some people never agreed with us. They’re like “I believe this is it, and we should be grateful that A.V.P. is giving us these limited opportunities.” I was like, “That’s totally fine.” I’m the C.E.O. of my life. I do not want to give the reins to my life and my success to someone else’s hands and I do not want to be kept small.
As one of the stars of her sport, Walsh Jennings had the leverage to walk away. To her, it wasn’t just about the money; she feels the A.V.P. doesn’t have a vision for growing the sport in a way that will benefit the athletes.
WALSH JENNINGS: I went in October or November of 2016 and said “Can you please lay out the next four years? We have this contract coming up. Please give me your plans for growth for all these things.” There were zero plans for growth. They were going to go away from TV. It was going to be an exclusive contract for eight events, maybe up to 10 by 2020. They would not increase the prize money. That wasn’t in their business model, they said.
So she’s started an alternate tour, called p1440 — the “p” is for “platform” and 1440 for the number of minutes in a day; Walsh Jennings wants to push people to use every minute wisely.
WALSH JENNINGS: We knew in creating p1440 that if we were just to be another volleyball property that hosts events, we would not be a sustainable business. And it’s competition, health and wellness, personal development, and entertainment. So we are a festival, we’re not a volleyball tournament; we are a full-blown festival.
One big problem: a lot of the players that Walsh Jennings would like to play in her events are under an exclusive A.V.P. contract.
WALSH JENNINGS: So the A.V.P. has eight events a year. If you want to play anywhere else you have to ask for dispensation and everyone who’s asked for dispensation to play in our events — even though we scheduled around their events, were not conflicting at all, were in their off-season — they’ve been told no.
Walsh Jennings is 40 years old — fairly ancient for a competitive athlete. She’s preparing now for the 2020 Summer Olympics in Tokyo, which will likely be her last. If nothing else, her new startup league is a great project to be involved in when her playing days are finally over. There’s a famous saying: every athlete dies twice — once when they draw their last breath, the other when they hang it up. There’s a point at which they’ll stop doing what they’ve been doing since they were kids, the thing that’s driven them and, often, given shape to their lives. It’s inevitable; and it’s dreaded, a sort of living afterlife.
REDICK: I think about the end, meaning the specific moment that it ends. I think about the moment I tell my wife. I think about the moment I tell my family. I think about those moments.
That’s J.J. Redick, who’s playing in his 13th season in the N.B.A., currently with the Philadelphia 76ers.
REDICK: And it’s anxiety-inducing, sometimes if I’m having a dark moment and I think of that moment, I cry like. I think about what I’m going to do after basketball on a daily basis. And there’s a level of fear of the other side. I hate to say this but so much of my identity and any professional athlete is wrapped up in your sport. Since I was eight or nine years old I’ve been a basketball player, it’s what I’ve done.
MURPHY: I think that’s a question that a lot of fighters really struggle with.
Lauren Murphy of the U.F.C. is 35 years old.
MURPHY: Fighting kind of becomes your whole identity, and because it takes so much of our time it’s our entire lives. It can be hard to move on.
This entwined identity — personal and professional — is something that Sudhir Venkatesh has been studying for years.
Sudhir VENKATESH: I’m a professor of sociology at Columbia University in New York.
Venkatesh tries to understand how individuals operate within groups — in all sorts of settings.
VENKATESH: Yeah, my method is to spend as much time with groups, tribes, people, get to know their world a little bit. I started with street gangs, boy — a long time ago, about 30 years ago. Gun traffickers and prostitutes, people who are doing all sorts of illegal things, And since then I spent a couple of years at the F.B.I. And that’s my chosen profession in life, spend as much time with people and get their story.
He’s had a lot of success getting their stories. But professional athletes are particularly tricky.
VENKATESH: It’s a little difficult for me to just show up on the sideline and put a hoodie on and pretend that I’m a member of the team. So I have to create opportunities to observe.
One such opportunity came via a program he developed to teach athletes, often toward the end of their careers, about business skills or philanthropy. This let him see, up close, how they were adjusting to the afterlife.
VENKATESH: Well, the life of an athlete, from very early in their career is dominated and regimented by people other than themselves.
This kind of all-encompassing, controlled setting has a name in sociology — it’s called a total institution.
VENKATESH: An example of a total institution would be prison. So your day is structured from the moment you get up, they tell you where to go, what to eat, when to eat, when to shower, and so on.
Venkatesh was interested to see how athletes, having spent so much time in a total institution, could adjust to a more fluid setting like an office. He found there were some surprising advantages.
VENKATESH: A lot of professional athletes, I find, handle interpersonal conflict very well, and they are used to it. They are used to being told that they didn’t perform well, they need to perform better, they need to work better in a team, they need to listen better. All the sorts of things that many of us, including me, are very fearful of in an office setting — we’re going to get reviewed, we’re going to get assessed, it’s often done by email late at night. And these folks are really, really good just having someone walk up to them or going up to somebody and not having it out, but just getting past whatever’s in-between and blocking them.
But this upside, Venkatesh discovered, has a downside: most of us non-former athletes aren’t accustomed to having someone get in our face like that! Venkatesh recalls one former football player — he calls him Derrick — who was working in sales at an investment firm.
VENKATESH: He noticed that on the floor, there were no open spaces. He was used to locker rooms — he was used to not having a lot of privacy. And it was difficult for him to work in a team setting when what he was supposed to do was to use telecommunications or e-mail to make appointments or to reach out.
And instead he would just be going down, knocking on doors really hard, going to offices, crossing the boundaries. And people just got really scared because here’s this very big guy coming at them. And for Derrick there it was actually the opposite, that when people were closing doors or people were sending him e-mails, he felt like that was impersonal. That was not polite. That was not effective. “Why don’t we just solve the problem immediately and move forward?” So he had to go through a little bit of training. And you can imagine that that’s not part of the normal onboarding that that a company might do.
Transitioning to this living afterlife can present all sorts of challenges. Studies of former N.F.L. and N.B.A. players — even the ones who’ve made a lot of money — show they are grotesquely prone to bankruptcy. And remember: these are the lucky ones who made it. But the demands of their profession can make it really hard to have time to acquire real-world skills.
There’s also the long-term health consequences of playing competitive sports: a recent study of athletes from Indiana University found that, by middle age, they were twice as likely as non-athletes to have health problems, including chronic injuries, that affected their day-to-day activities. But even if you make it into middle age with your health, and with your finances intact — there’s still the risk of a full-blown existential crisis.
FOXWORTH: I mean, most people’s journeys are so much longer that when they do succeed, they die a few years after or something. You know? It’s an interesting thing to happen to somebody at this age. It feels like more of a midlife thing. And for athletes it’s a unique thing. Successful athletes, it’s a unique thing, that in your 20’s or 30’s you’re like, “Now what?”
Part of it is missing the action. Lauren Murphy thinks about the people she trains with.
MURPHY: I was surrounded by a team and I had never experienced anything like that before in my life. We all had this thing in common where we wanted to compete and we all wanted to do well and we supported each other in that. And when you bleed and sweat and cry with somebody every day, you get to be pretty close to them.
There’s also the fear that you’ll never be this good at anything again. Or as relevant. J.J. Redick:
REDICK: Look, the reality is you have a lot more power, a lot more juice, a lot more relevancy when it says your name and it says active N.B.A. player versus your name, retired N.B.A. player. So me as a person, nothing will have changed five years from now. But I won’t have active N.B.A. player next to my name.
The thought that crosses your mind is like, “I’m really good at basketball. I’ve done it at a high level for a long time and I’ve had success and it’s provided me a very nice living.” And then you’re like, “What if I try something else and I’m just awful at it?” I feel like I’m as prepared as anyone for the other side of it and it still scares me.
Domonique Foxworth thought he was pretty prepared too. He and his wife had a couple kids. He didn’t know exactly what he wanted to do — other than keep winning.
FOXWORTH: I went to business school because I was like, “Alright, now I’m going to keep competing.” I’ll go to the best business school and then I got there. And I was surprised with how much mushy, soft classes that we had. That was about our feelings and integrity and all that stuff.
And I do remember one of the professors said that — it wasn’t to me directly, it was just to the class, but it felt like he was talking to me directly. But he said something to the effect of, “The operating system that you used to get here may not be the operating system that you need going forward.” And that resonated with me, because I feel like that’s definitely true for me. But I don’t know, they don’t just like release updates for humans. So modifying my operating system is a slower, more challenging process.
Foxworth thought he’d like being chief operating officer of the N.B.A. players’ union, in New York.
FOXWORTH: My wife was pregnant with our third child, and she was not feeling good, and I was getting up at 6:30 a.m. to ride the subway to work with a bunch of other people who weren’t happy about where they were going to work. And I remember thinking like, “Am I happy? I have enough money that I don’t have to be unhappy.”
For fun, he started writing — about sports. Now he writes and does broadcasting for a variety of ESPN outlets.
FOXWORTH: I went to business school in part because I fancy myself as a smart person who is more than an athlete. And so there’s parts of me that’s embarrassed that I write about sports. Talk about sports. But then there’s parts of me that’s like, “This is awesome.” I get to pick up my kids from school and take them to school. It’s not that like “Oh, my life is boring.” It’s like, “Am I doing the right thing? Am I doing the best thing I can with this fortunate situation that I’m in?” What also exacerbates it, I think, is a feeling of loneliness, honestly, which — and it’s not like — I have three kids and my wife, and I’m not alone, obviously. And I love them and I have fun with them.
But throughout my life, I have been almost myopically focused on a goal, which — being focused on that goal gave me purpose and I’m sure I’m going to butcher the Nietzsche quote, but it’s something to the effect of, “When a man has a why, he can bear almost any how.” And I was — I don’t drink now, I never drank in my life. I never smoke weed. I was singularly focused on doing everything. Every decision I made was like, “Alright, I’m going to get closer to this goal.” The people I was close with in high school, those aren’t my friends anymore. People I was close with in college, not really my friends anymore. And then at 35, I’m in D.C., where my wife has a bunch of family and friends, friends that she’s been close with since they were in the second grade, and I’m like, “I don’t really have that.” So I certainly don’t feel sad or anything, but these are things that I am becoming more aware of now. I feel I’m in a, a perpetual state of transition, which is interesting and uncomfortable at the same time.
Thanks to Domonique Foxworth and all the other athletes we heard from today and throughout our “Hidden Side of Sports” series — also the team and league officials, scholars, and everyone else. If you want to hear my full conversation with Foxworth — it was a long one, and fascinating — we’ll be publishing that soon.
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Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Anders Kelto, Derek John, Alvin Melathe, and Alison Craiglow with help from Matt Stroup and Harry Huggins. Our staff also includes Greg Rippin and Zack Lapinski. We had help this week from Nellie Osborne. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.
Here’s where you can learn more about the people and ideas in this episode:
A conversation with the Shark Tank star, entrepreneur, and Dallas Mavericks owner recorded for the Freakonomics Radio series “The Hidden Side of Sports.”
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Before we get to this bonus episode, a quick offer. If you happen to be a member of 24-Hour Fitness, the national gym chain, and you want to be part of a behavioral-science experiment, go to 24go.co/freak. You can enroll in a program called StepUp, which was created by our friends at Behavior Change for Good, a group of scientists who are running big experiments to help people achieve better outcomes in health, education and personal finance. You’ve heard about their work in a couple previous episodes. One was called “How to Launch a Behavior-Change Revolution”; the other was “Could Solving This One Problem Solve All the Others?” The StepUp deadline is January 31st, so hurry! Now, on with our show.
This is a Freakonomics Radio extra: our full interview with the entrepreneur and Dallas Mavericks owner Mark Cuban, who’s been appearing in our “Hidden Side of Sports” series. Cuban has owned the Mavs since 2000, and he’s one of the investors regularly appearing on the reality TV show Shark Tank. He made his fortune in the late 1990’s, selling the streaming service Broadcast.com to Yahoo for $5.7 billion. Our conversation took place last summer, before the current N.B.A. season had began. LeBron James was still a free agent at the time. The Mavs had already drafted the Slovenian teenager Luka Doncic, who has been having an excellent rookie season, even though the Mavs are doing poorly overall.
The conversation covers a lot of ground — including Cuban’s ambitions to own a baseball team and maybe, just maybe, run for President. You’ll hear a number of names that you may not be familiar with. Byron “Whizzer” White, for instance, was a great collegiate athlete who played three seasons in the N.F.L., twice leading the league in rushing, but left for law school and, ultimately, a seat on the U.S. Supreme Court. The “Rick” that Cuban mentions is Dallas Mavericks coach Rick Carlisle; Tim Donaghy is a former N.B.A. ref who pled guilty to betting on games he was involved in. If there’s anything else you don’t catch — well, that’s what Google is for. Thanks for listening.
CUBAN: My name is Mark Cuban and you’re listening to Freakonomics Radio.
DUBNER: Hey, this is Stephen Dubner. Hey Mark Cuban, how’s it going?
CUBAN: Great, Stephen Dubner, how are you?
DUBNER: Great. Nice to talk to you. Congrats on Luka, do we say Doncic? How are we saying his last —
DUBNER: Doncic, yeah.
CUBAN: Thank you.
DUBNER: Congratulations. Yeah, he looks amazing.
CUBAN: We hope he is.
DUBNER: So let me ask you this. You’re roughly 60 years old, you grew up in Pittsburgh, which is one of the best sports towns. I’m just curious, in a nutshell, how you think pro sports has changed since you were a kid.
CUBAN: Oh my goodness. That’s a big question. It depends on which sport, it depends on what city. Depends on whose perspective. I think in a lot of ways it hasn’t changed but in a lot of ways depending on what city you’re in, your teams have come and gone, are better or worse. And it just depends on perspective.
DUBNER: Okay, let’s pick a team. Let’s pick the Steelers of your childhood and my childhood. Guys like Rocky Bleier and Andy Russell, even Franco — well maybe not quite Franco, but these guys would typically work an off-season job, and they weren’t making money to retire on. And now, obviously, the economics are a lot different, but the economics are a lot different on the business side as well. There’s just been tremendous, tremendous, tremendous growth and I guess I’m curious — as sport has become such a massive and global business — whether you think that’s basically made the product, the games, better, worse, different. How so?
CUBAN: I mean I think it’s made it better because it’s an incentive for more people to become professional athletes. For all the stories of athletes working in the summer there’s the Whizzer Whites of the world and other athletes who chose not to go into professional sports at all. And so now the money creates enough of incentive. But again, that— that’s just part of the equation. Now there’s other issues there’s CTE for hockey and football, there’s — soccer is much more—is a much bigger sport in the U.S. than it used to be when I was growing up. It wasn’t even a varsity sport when I was in high school. And so a lot of things have changed.
DUBNER: You’re best known probably for two things: Shark Tank and owning the Dallas Mavericks. Can you just give us a quick catalog of your other sports business interests?
CUBAN: Oh my goodness. Most of my other sports interests are driven through technology, whether it’s Synergy Sports which does cataloging and video of all things basketball. Sports Radar, which is an information service for sports. Unikrn, which is delivery for e-sports. It allows for tokenized betting for e-sports right now. What else? Axon, which does neural development so that athletes can improve their neurological responses to stimuli and their physical responses as a result. Another company that uses virtual reality and like a Wii-like technology to help kids and athletes and professionals improve their dribbling skills and other basketball skills.
DUBNER: Now, I would say of everything that you just named there if you were to rewind the tape to 40 years ago or 50 years ago when you were a kid, most of those would have been somewhere between unimaginable and not feasible. I mean that— that’s one direction in which sport has just blown up in terms of technology. Again, do you see the technology and we hear all the time about how the data revolution is changing the way the game is played. I’m curious whether it’s really having as big an impact as we’d like to think or imagine.
CUBAN: Oh yeah, absolutely. Analytics obviously has helped in terms of team strategy but that’s actually become a relatively efficient market because all teams are involved and they’re all hiring smart people to do mostly the same things. And then there’s bioanalytics, where we’re becoming smarter about the body, nutrition, sleep, genetics. There’s just so many elements involved with bio analytics that it’s a never ending improvement cycle.
DUBNER: So, in terms of turnarounds, franchise turnarounds, your team, the Mavericks, have been one of the most drastic. When you came in, I guess the nine seasons before you arrived, the Mavs winning percentage is about 40 percent.
CUBAN: Yeah, we were awful.
DUBNER: And since you’ve been there, about 70 percent, so that’s really remarkable. So we could either say I mean if we’re going to try to draw a causal relationship, we could say either Mark Cuban is one of the best owners ever, or he was really lucky to intersect perfectly with Dirk Nowitzki’s career, or five, ten other things. Can you just talk about what you did that you think worked, and what are the other factors that led to that success?
CUBAN: Well, hopefully the two aren’t mutually exclusive. I think sometimes when you’re dealt a good hand, not screwing it up is a talent. But I think what I did was try to change the culture. Because like any work environment, you can have really really talented people but if they don’t like coming to work, or they don’t like working together, then you’re not going to get optimal results. And so what I came in, the previous owner nickeled and dimed everything, didn’t recognize that the players were the key to the organization. We did things like spend more money on computer repair and training than we did on medical issues, and development for our players. And so I just changed that. I just flipped the script and said, look, my job is to provide the resources to put everybody in a position to succeed. And if I do that good things will happen. And so we had Dirk. We had Steve Nash. We had Michael Finley. The same three guys were awful the year before I got there.
The day I bought the team, our record was 9 and 23, and we finished out the season, I think 31 and 19, and won 50 games the next season. So while I certainly didn’t hit any jumpers, I think I recognized that there was an opportunity to invest in some great players and make them better at what they do.
DUBNER: What was the mental state of the organization in the building when you came in with that losing record that year?
CUBAN: Get me out of here everybody — it was a way station if you couldn’t get a job somewhere else you came to the Mavericks. When players were traded here they just couldn’t wait to get out.
DUBNER: Your last couple seasons, though, have been fairly stinky at least by Mavs standards, so much so that you got a high draft pick this year. So what happened?
CUBAN: What happened is guys get older. Guys get injured, and so you play it out as long as you can, as best you can and we try to respond and rebuild as quickly as possible. And hopefully this summer with our draft picks and and anybody we sign in free agency, we’ll be able to do that and start fighting our way back.
DUBNER: You’ve been fined a few times by the N.B.A., most recent one was 600k for talking about that it was essentially in the best interest in the team to lose to get a higher draft pick. I’m just curious. You’re worth about 4 billion from what I’ve seen. Do you care much — I mean is that strategic outspokenness?
CUBAN: In that case it wasn’t. More often than not it was. In that particular case I was being interviewed by Julius Erving and I just fanboyed and said the wrong thing. Seriously. Julius Erving was my boyhood basketball hero. I mean yeah he was the one guy I looked up to, and it was the first time I’d met him. And to give you an idea of how much of a fanboy I am, of Julius Erving, when I was a kid, The Fish That Saved Pittsburgh, an old basketball movie was being filmed at the Civic Arena. And I took a bus down there just to see him just— just to be able to see Julius Erving. Not playing basketball, just to see him. And then when I first bought the Mavs, I was at an N.B.A. All-Star game, I think it was in Philly, and I took a picture with Dr. J. He didn’t know he was in the picture. It was me having someone take a picture with him in it, with me smiling. And then when he asked me to do his podcast it was just like yeah. And so I was trying to be too cool and tried to impress him, and when I start talking about being a player’s owner he said he would have liked to have played for me as an owner. Then I had to show off, and that’s when I said the wrong thing.
DUBNER: What was it about Dr. J as a player that you loved so much?
CUBAN: Oh, just his athleticism, his winning attitude, his uniqueness on the court and off. He had a certain style that he didn’t take any prisoners and he was who he was without regrets. And I always admire those qualities.
DUBNER: And this was also the A.B.A., which was the upstart league. I sense that you’ve kind of identified with upstarts throughout your life?
CUBAN: Yeah, I would I would say underdogs more than upstarts. Maybe they’re one and the same in a lot of instances. But it’s not like I expected all this to happen. And so every step of the way I would try to just keep on grinding and and try to accomplish what I could accomplish and go from there.
DUBNER: I am curious who your favorite Steelers were.
DUBNER: Any dark horses, any — any more obscure guys?
DUBNER: Tunch Ilkin, sure, he’s still broadcasting for them.
CUBAN: Oh is he really? Yeah. So Tunch came from Indiana State and we had a mutual friend and so when he came to the Steelers I would go hang out with him and some of the Steelers and, to tell you a quick story, one time we went out with Jack Lambert, Steve Courson, Tunch Ilkin, Lynn Swann to a place in Green Tree, Pennsylvania. Horrible snowy day. I had a nasty old 1977 Fiat X1-9 which is a tiny car. And they got up, left earlier before I did. I go out to find my car in the snow, and they literally had picked it up between them and carried it up and put it on a hill, so that I had to go and figure out how to get it through the snow down the hill back into the street.
DUBNER: Alright. So you did not become a professional athlete yourself, but you went one better and became a billionaire. And the story for people who don’t know it, it reads like fiction. So can you just briefly tell us that story?
CUBAN: I would tell you we started the streaming industry. There was a point in time in the early ’90s where the Internet was becoming functional, and one of my buddies from college was like we’ve got to be able to use all this new Internet stuff to be able listen to Indiana basketball. And so I was like okay, I’m a tech guy. Let me see if I can figure it out. And I had just sold a few years earlier my first company, which was a networking company, so I was familiar with the technology and had a little bit of money. And so I went to work. Bought a PC — a 90 megahertz Packard Bell, an ISDN line, and just started figuring out, and we created a website called AudioNet. Fast forward a few years we go public, it’s the biggest IPO in the history of the stock market. And what you probably don’t realize is we dominated all things audio and video on the Internet. There was nobody close. As dominant as YouTube is today, we were that dominant then. We had a unique opportunity that when we sold to Yahoo, if they would’ve kept on doing what we were doing, even after the the stock market bubble had burst, there would be no YouTube. There might not even be a Google. I mean they chose the direction, and they chose to de-invest when Google chose the opposite, to invest. And that changed the course of history for streaming.
DUBNER: So that was nearly 20 years ago, that was ‘99, that you sold Broadcast.com to Yahoo.
DUBNER: Can I ask you to speculate a little bit, maybe not looking 20 years forward but maybe five or ten? Big live sport events are in some ways keeping the legacy broadcast networks alive. They are one of the few destination points for watching TV these days. I’m really curious, the streaming companies and companies like Amazon that have streaming as well, they have so much money now that I’m guessing — I mean they could buy the leagues if they wanted to — So I’m really curious to know what you see the future of watching sports looks like. And will it be kind of, gradually changed so that we won’t even notice so much, or you think it will be radically different than now?
CUBAN: I think it’ll be gradual but it’ll be different for a couple of different reasons. One, one of the reasons sports is still so prevalent on traditional television is it’s a destination. If you want to watch the Mavericks, if you want to watch the Pirates, if you want watch the Penguins, the Dallas Stars, whatever, you have to go to traditional TV, and that’s one of the keys to retaining the customers, the subscribers that they have. Particularly for older viewers, which leads to a big question that’ll drive some of this at some level. When people turn 40, 50, 60, do they start consuming more television or will millennials, as they age, stick to traditional digital over-the-top? That’s the unknown question because you still— for over-the-top, you still have to do work. You still have to choose from 20 apps, 30 apps which is more annoying than going through a DirecTV programming guide. And so those things have to improve dramatically, I think, before the older consumers switch from traditional television. All that said, one of the challenges for over-the-top is that there’s an unlimited number of choices. When you go on Charter, Comcast, DirecTV, AT&T, whatever, you’ve got 250, 300 choices maybe. And that might be daunting, but it’s still somewhat manageable. When you go online there’s a zillion choices. There’s no limit to the number of choices. You can spend a day in YouTube, so destination content is much rarer. There aren’t a lot of hits online, and even when you see YouTube stars or Instagram stars, they have to create content every single day, and the same applies to Twitch. Ninja has got to be playing — there’s a thing from Ninja, the guy who’s the Fortnite superstar, that when he didn’t broadcast one day, he lost 40,000 subscribers. So it’s a whole different beast.
And so over-the-top, when it comes to sports, I think that the license value of the N.B.A., college sports et cetera is going to escalate significantly, because it’s harder to draw an audience over-the-top. And for the reason you mentioned, right now the market caps are bigger than the top — the FANGS, the top five— four, five or six different online media companies just dwarfs traditional media. So I think a lot’s going to change. Then you add the impact of 5G. And so 5G smaller cells but much higher bandwidth which means you can broadcast different types of things at higher bit rates and it also may lead to people cutting the broadband cord. So all that money you paid for your Internet subscription, you may be paying 50 bucks, 75, a hundred bucks a month for broadband. That might go away and the same subscription you use for your phone, you might use for your broadband as well, which can in turn change how we consume content as well.
DUBNER: Right. Let me ask you this. Let’s look at individual sports or leagues especially with the future of the way the material’s distributed, and the future of those games or leagues themselves. So let’s pretend that you have the choice of three stocks to buy, and I’m going to make you— I’m going to make you buy one, sell one, and hold one. And the three are going to be N.F.L., U.F.C., and we’ll say a basket of e-sports leagues or games, Overwatch.
CUBAN: I’d take e-sports. Yeah if it’s against those three, I take— I buy e-sports, sell N.F.L.
DUBNER: Right. Okay. And hold U.F.C. for now. Okay. Let’s get into both of those a little bit. First of all why sell N.F.L.?
CUBAN: I just think CTE creates a problem so participation has been dropping the last few years, and will continue to drop more. And I have an 8-year-old son there’s no way I’d let him play tackle football. My brother lets my nephew play high school football but he’s not that good. So it’s not like he’s got a future in football.
DUBNER: Right. What about the political stuff that’s happening, mostly the anthem protests? Do you think that’s legitimately hurting football, or is that more of a sideshow?
CUBAN: No that’s short term. that’s short term.
DUBNER: Okay, so you think CTE is the biggest barrier that’ll —
CUBAN: Yeah because—
DUBNER: That’ll —
CUBAN: A parent if you don’t want your son playing— daughter I guess, I don’t want to be gender-specific. But if you don’t want your child playing contact football, then you diminish the viewing in the house. It’s like, I don’t want my son to get excited about watching football. And in reality, it’s crazy because, “Hey let’s watch a Cowboys game, let’s watch a Steeler game.” When I was growing up, it was a certainty. That’s what you did. Now he’d much rather play Fortnite or do other things than watch football.
DUBNER: So how do we explain, though, the success of U.F.C., especially given the concern over the N.F.L. and the decline of boxing? I mean boxing used to be the biggest sport in America and it went —
DUBNER: It was hurt for a lot of different reasons obviously, but — But what do you think U.F.C., the league, has done or the sport has done that the N.F.L. maybe isn’t doing as well?
CUBAN: I think it’s just different, because it’s individuals and individuals can make their own choices. You don’t need a lot of participants. In any given U.F.C. fight there’s 10 matches, 20 guys, and so you don’t need the number of participants that you do obviously for football, where there’s 53 guys on a team, and 32 teams and then college football, high school football, et cetera.
DUBNER: Right. OK. And you’re buying e-sports. So say why and especially explain to people who can’t get their mind around it at all. What is the appeal of watching— I mean especially Dallas where you are has become really a hotbed.
CUBAN: It’s become a hub. Yeah.
DUBNER: Yeah, I mean there’s arenas, stadiums being built and so on. So why do 20, 50,000 people want to go to a stadium to watch other people play video games?
CUBAN: Because once you understand the game it’s like— once you play, you understand the nuances of the game and it’s aspirational and educational. And so if you like to play League of Legends, it’s hard. But one of the ways to get better at League of Legends is to watch other people play. And to learn the nuances and to learn the strategies, particularly given that they change the rules every 90 or 120 days. And so because of that, the e-sports teams have got to practice hours and hours and hours a day. So it takes a real skill, it’s a real sport, and if you like it, watching it is entertaining, educational, aspirational. And you also have to realize that anybody in front of a PS2, Xbox, PC watching these kids that play, in their mind — just like maybe we watched sports growing up — it’s like hey if they can do it I can do it. And so that’s the aspirational part of it as well. There’s no physical hurdles. You can be 4-foot-1 or 7-foot-1, and if you’ve got the hand eye coordination and the the brain processing speed, anything’s possible. You could do it too.
DUBNER: One of the investments you mentioned, Unikrn, is a company that facilitates betting on e-sports. Can you just tell us a little bit about how that’ll work and whether gambling on e-sports is maybe a little bit more susceptible to match fixing than other sports, or not necessarily.
CUBAN: Yeah I don’t — First let me start there. I don’t think it’s more susceptible at all because it’s much more difficult. Most e-sports are multi-dimensional chess where there’s so many pieces involved that it’d be nearly impossible. There’s two billion different chess moves and there’s probably exponentially more in League of Legends. And why Unikrn? Just because—
DUBNER: Yeah and how does it work? I mean what kind of access will we have to what kind of bets?
CUBAN: Well you realize, gambling is legal in 118 countries. And so right now for e-sports in those countries, you can just go bet on who wins and different prop bets just like you could any other sports.
DUBNER: Let me ask you about American pro sports leagues. So you’re an N.B.A. owner. I don’t know too much about how “the league” works. I know a little bit more about the N.F.L., but in the N.F.L. the owners are essentially “the league.” Is it much different in the N.B.A. or is it pretty similar setup?
CUBAN: No, not really.
CUBAN: No, not really. Yeah, not really at all. I think the biggest difference between the N.F.L. and the N.B.A. is the emphasis put on talent. In the N.F.L., they sell the N.F.L. In the N.B.A., we sell the talent, the players. We promote the players and they promote themselves because it’s mutually beneficial. I think with the exception of just a few stars— this is just my opinion — the N.F.L. appears to look at their players as being more fungible. There’s 53 of them. You’re going to rotate X number through every year, and honestly, if the entire Steelers team was in a mall or the entire Dallas Cowboys team was in a mall, maybe two or three of the players would get recognized and so — it’s a different world.
DUBNER: That’s partly cause they’re helmeted, yeah? But it’s more than that. Right?
CUBAN: It’s not — Yeah, it’s not just cause they’re helmeted.
DUBNER: Okay. So given that the leagues operate — there’s obviously a lot of differences, roster size, number of games, et cetera, et cetera, et cetera. But let’s assume that for the sake of argument that all four major sports leagues in America are pretty similar in that they have — it’s a membership and once you’re in you’re in. And it’s pretty hard to lose money as a professional sports team because of the way revenues are divided.
CUBAN: No, that’s not true at all. No, that is not true at all. Oh, hell no.
DUBNER: Give me an example.
CUBAN: I can’t throw out names, but yeah.
DUBNER: Well how many N.B.A. teams in a given year are going to lose money?
CUBAN: More than you think.
DUBNER: So even with the revenue-sharing, with all the broadcast and other monies distributed evenly, and with a salary cap that guarantees that you don’t have to overspend a certain amount, you’re saying that— How do you lose money? Is it by lacking gate revenue?
CUBAN: Yeah. Lacking revenue period. Just like any business.
DUBNER: Right. But what’s the major variable, is it gate revenue or is it broadcast revenue?
CUBAN: Gate, broadcast, players, all the obvious things.
DUBNER: Right. Okay. So that said, leagues in major American pro sports are more protected than let’s say European soccer, right?
CUBAN: Right, cause there’s no relegation, yeah.
DUBNER: Exactly. Do you think—and it’s always funny because our capitalism is more cutthroat than theirs. They’re a little bit more socialist but we have the slightly more socialist setup. Which do you prefer, I guess I’d like to know.
CUBAN: Well it depends where you are, right? If you already have a significant brand like Real Madrid — you, because you can spend more money than everybody else. And they put some limits on how much money teams can lose and how much debt they can have and that’s impacted things. But if you’re on the bottom and you can buy a team inexpensively and you think you’ve got a secret formula that can get you into the Premier League et cetera. Then that’s the position you want to be in if you’re on the top and there’s nothing that’s going to impact your revenues and you’re a global brand and you generate licensing and other incomes globally. You want to be at the top. The N.B.A., we’re a global brand, but the Dallas Mavericks get one thirtieth of anything sold, whether it’s in China or Germany or San Francisco. We don’t control the generation of revenues for ourselves except in our local markets.
DUBNER: In what league in U.S. sports do you think players, the athletes, have the most leverage and the least leverage?
CUBAN: I’d say the N.B.A. and the N.F.L.
DUBNER: N.B.A. is most and N.F.L. is least?
CUBAN: Yeah. Without question.
DUBNER: And does that have to do with roster size primarily, or does it go beyond that?
CUBAN: Roster size, injury, contact sports. The number of college football teams providing talent. The fact that they go four years so you get to see— or most of them go four years, so it’s easier to evaluate talent.
DUBNER: Right. Speaking of college football, what’s your overall view of the N.C.A.A.?
CUBAN: I think it’s worthless.
DUBNER: Yeah. Obviously there’s a lot of incentive to keep it as it is. A lot of people are benefiting, although you could easily argue that the one set of people who should be benefiting, the people who are actually providing the physical labor are are not benefiting very much. If you could blow it up entirely, what would you do? Would you have football attached to college at all, would you make it some sort of a D-league instead?
CUBAN: Yeah, I don’t mind having it attached to college, but I would make it an independent entity, so that it would operate independently. Look, if I wanted to create a League of Legends team, that’s not N.C.A.A. bound, so I can pay players if I choose or incent them. I can let them have a job, right? Let them go get a job, let them practice as much as they need to. Much as I could if I wanted to create a band and I went to Indiana University, my alma mater, and found— which has a great music school — and found the best musicians for the band I want to put together, I can pay them and they can stay in school. They can practice together as much as they want. That’s the hypocrisy. If you want to be a professional athlete, you can’t practice your craft as much as you would like. There’s limits to coaching and playing with your teammates. There’s limits on jobs you can take. There’s there’s so many different things that are bound in stone that it just doesn’t make sense. And so there’s reasons why they evolved to where they are, but it’s time to take a whole different look.
DUBNER: Yeah. Do you know Domonique Foxworth?
CUBAN: No, I do not.
DUBNER: He was the number two of the N.B.A. Players Association for a while. He was the president of the N.F.L. Players Association. He was a player, he was a cornerback, played for I guess Denver, Atlanta, then Baltimore. So he’s an interesting guy. A career cut short by injury, but he cashed out because he had insurance. And now he’s kind of mid-life, early 30s, and he’s looking back and trying to figure out how to help the next generation of athlete do better. He told us that he thinks it would be in the best interest of players to dissolve the unions, the N.F.L.P.A., the N.B.A. Players Association, because that would put the leagues in violation of labor laws, and it would give players the power to negotiate better deals and to make more money.
CUBAN: Every time there’s a lock — Look I’m not a C.B.A. expert, I can’t get into details. The N.F.L., there’s a long history of labor unrest and the first thing they do is dissolve the union.
DUBNER: Well, let’s say that for a minute you’re not on the ownership side at all and that you’re either with your— let’s say you run the biggest sports agency in the country, or maybe are associated with players in some way.
CUBAN: Let me slow you down right there because if I do anything relative to the C.B.A., I’ll get fined again. And while I like you, it’s not strategic right now.
DUBNER: Basically you like me fine but not as much as Dr. J is what you’re saying, but that’s alright, I can —
DUBNER: I can accept that.
CUBAN: Appreciate that.
DUBNER: Let me ask you this: big development from the Supreme Court not so long ago about sports gambling. I would assume that really changes the valuation of every professional or even semi-professional sports franchise. Can you talk about how that’s going to affect you?
CUBAN: Yeah I think it’ll lead to our franchise valuations doubling, literally, because there’s a lot more reasons for people to pay attention, a lot more reasons for people to watch. And that’s good for our bottom line. People will attend more and watch more hours of N.B.A. basketball. And same for all professional sports.
DUBNER: All right, I got a quiz for you, or a riddle. I know you’re a very smart guy, I won’t be surprised if you get this right. Home field advantage exists in every sport all over the world. What would you say is the primary driver of home-field advantage according to academics who’ve studied this?
CUBAN: My guess would — and it’s not home-court, home-ice advantage doesn’t necessarily hold true. Like in hockey, it doesn’t hold true. So, I would tell you probably the energy and — so there’s a couple of things. One, I know there are studies that say that the officials give benefit to home teams across all sports. People have tried to argue that that’s not the case. Whatever it is, it is. And then there’s the energy of a crowd. I mean, crowds do make players play harder. And then I’d also say there’s just the comfort of playing in a place that you’re used to shooting and playing in, hitting in, fielding in, et cetera.
DUBNER: So what the academics argue is that it’s basically unconscious ref bias. That they’re not rooting for the home team, obviously, but that basically the crowd’s sentiment puts the refs unconsciously in that moment.
CUBAN: I think Justin Wolfers wrote that.
DUBNER: Justin wrote about race actually. Most of the studies about home field advantage come from soccer where there are some nice little instrumental variables that you can use to determine.
CUBAN: And plus, depending on the level of soccer, where you’re playing — Yeah there’s concern for their lives.
DUBNER: Yeah, exactly. Exactly. Yeah like one of the best pieces of evidence came from measuring soccer played in stadiums where there was a running track around the field. So the refs are literally 20 yards further from the crowd, and there the home field advantage is much less so. But that said, you are probably most famous, as an owner, for — I don’t know if you want to call it working the refs, but communicating with the refs. Just talk about that, how it evolved and how successful you think it is.
CUBAN: It’s funny. Everybody’s wired differently and when I play basketball — and by the way I just got done playing basketball and I’ve just had a Diet Coke up against my Achilles. So, I’ve been a basketball junkie my entire life. Everybody’s got something and for whatever reason when I got to the Mavs, I just looked at the officiating, and it just drove me nuts because my attitude has always been that the three officials in basketball, no matter what the level, have more impact than 80 percent of the players on the court. And that’s why it’s always driven me crazy. And when I first got in and started doing my homework, one of the things that was conventional wisdom is that games weren’t officiated the same in the first minute as they were in the last minute, and that just drove me nuts. And the more I got to know, the more I got to learn. Then I started to understand how officials at all levels manage games and deal with certain issues. And it wasn’t always about making the right call throughout the game. And so that just ticked me off. And that just led to everything else. And so was it worth it? Yeah, I think it has been, because I can tell you that things have changed dramatically. At various times they’ve changed dramatically for the better. At various times personnel changed and it got worse. So we’ll see what happens this season.
DUBNER: Do you think that your input on that has changed the way N.B.A. games are refereed now? At least more consistency?
CUBAN: I don’t know if there’s more consistency, but yeah.
DUBNER: What are the channels by which it’s worked? Have there been actual committees where you sit down and say, listen this is plainly going on and it’s not right, not fair, not transparent?
CUBAN: No, it’s not even like that. It’s not like I come in and say this ref is biased or this guy’s got a problem. Couple of times I’ve done that, and it’s been investigated and it’s been fixed. And it’s not like Tim Donaghy, it’s just little marginal things. But in any event, what has changed in my— The thing that I have always harped on the most is from all my experience in business, you always want to get the best possible manager. And where I’ve seen a lot of companies make mistakes is they’ll take their best salesperson and make them a sales manager. Well, just cause you’re a good salesperson doesn’t make you a good sales manager. And so using that analogy, just because you were a good referee or just cause you were good in management somewhere in the N.B.A., doesn’t mean you’re the best person to be in charge of the officiating group. And that’s been my biggest battle, that they promote people not because they were the best for the job but because they were there. Or they promoted refs into positions of authority, not because they were great managers or not because they could get great results, but because they used to be good refs, and those guys wanted to keep on working. And so that’s where I had the greatest amount of problem and that’s where I think I’ve had the greatest impact.
DUBNER: Gotcha. There’s another piece of research that argues that a lot of N.B.A. coaches are bad strategically when it comes to sitting players in foul trouble. That if a player is good enough to sit because you’re worried about losing him then is his value is actually greater by playing. I’m curious if you have any thoughts on that and if you’ve ever talked to your coaches about that.
CUBAN: No, I agree. Because — going back to the refs — even the refs know how many fouls a guy has. And so they understand that if it’s a toss-up call and it’s a gray area call, they’re probably not going to call it. And players are smart enough to adjust. Now on the flip side when you know a great player has three fouls in the first quarter, you’re going to go at him and try to get that fourth foul, because there is a point of diminishing returns. And so typically if it’s two fouls, I’m fine if Rick keeps them in, and Rick’s gotten to that point. If it’s again a qualified depending on the opponent, right? Because the value of that player is relative to the time, the score, and the opponent. And so if the numbers say keep him in, I’m fine with keeping him in.
DUBNER: When are you finally going to buy a Major League Baseball team?
DUBNER: What happened?
CUBAN: Never. Oh, well two things happened. One, they didn’t want me in. And two I had — my kids got older and they’re too much fun. 162 games, my wife would divorce me.
DUBNER: Why didn’t baseball want you in?
CUBAN: Because they knew I’d try to change things. I just did an interview with C.C. Sabathia and he was like “What would you do differently?” One I would teach all our guys to bat flip, every time they hit a home run, because you got to just change things up. These unwritten rules are ridiculous and the fans pay the bills, you gotta give them a reason to come. Two, I’d push for the designated hitter in both leagues so that pitchers in between innings can go right to the bullpen and warm up or do whatever they needed to. And that way when you come back on the field, you don’t throw any warmup pitches, you go right into pitching and there’s no throwing the ball around the infield and the outfield. You just go right in. The breaks aren’t the breaks, and you go right up to bat and you reduce an hour off the game.
DUBNER: It is pretty weird. It would be like in the N.B.A. between every dead ball there’s like lay up practice again.
CUBAN: Yeah, exactly you get to get shots up and everything to get your rhythm. And so there’s so many ways you can speed up the game. And I would have been pushing for them and talking about them and they didn’t want to see that.
DUBNER: Yeah. What would you say have been your most significant changes to the way basketball is played since you’ve owned the team?
CUBAN: Oh, little things. Things like the Clear Path Rule. I changed it because I showed them the math was wrong. That it used to be one shot and the ball, I changed it to two shots and the ball. Different replay things. Now, with the latest collective bargaining agreement, there’s a thing called the cap-room exception. So it used to be when a team had cap room you just had your cap room. Now there’s a $4.4 million exception that I pushed to get through in our collective bargaining agreement in 2011. And so that’s been a big change, and I’m sure there’s other things that’s just what comes to the top of my head.
DUBNER: The effect of that exception is what then?
CUBAN: So, if the Mavericks have $25 million in cap room this year and we use that cap room to sign three players and fully use it, we still have one exception where we can sign one or more players for up to $4.4 million dollars. And the logic was you want to incent teams to have cap room and to try to improve their teams, and one way to improve the incentive was to create this cap room exception.
DUBNER: Right. All right, last question. Where is LeBron going?
CUBAN: I don’t know and I can’t comment on other teams’ players.
DUBNER: Dallas is not a team I’ve heard mentioned at all. Should they be?
CUBAN: Who knows. Who knows. Like I said, you’re— I’m not ready to get fined again.
DUBNER: Basically I’m no Dr. J. I’ve learned my lesson I stand down.
CUBAN: I would never say that.
DUBNER: That said, I very much enjoyed it and I really appreciate your time and I wish you the best of luck this season.
CUBAN: I appreciate it.
DUBNER: Hey, you going to run for some office at some point?
CUBAN: Yeah, I’m going to run to the bathroom right now. So I don’t know, we’ll see what happens in the midterms.
DUBNER: But would you enjoy, do you think, the presidency would that be a job that — I mean just in the abstract, is it a job that you think —
CUBAN: Could I do the job? Yeah. Would I enjoy it, that’s hard to say. The challenge isn’t doing the job, it’s the process to get there. The definition of poor parenting is having kids eight, 11, and 14 and running for the presidency.
DUBNER: Yeah but just think how cute they’d be on the posters. I mean that’s a real — I mean if you want to just talk pure strategic exploitation of your family that would be pretty —
CUBAN: No, I’m not a pimp. When it comes to my kids, no. It would be the exact opposite.
DUBNER: All right, well whatever you do, I wish you continued huge success and I thank you very much for the time.
CUBAN: Thanks I enjoyed the interview.
Thanks to Mark Cuban for the conversation. You can hear Cuban and many others in our “Hidden Side of Sports” series.
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Freakonomics Radio is produced by Stitcher and Dubner Productions. Our “Hidden Side of Sports” series was produced by Anders Kelto and Derek John, with help from Alvin Melathe, Matt Stroup, and Harry Huggins. Our staff includes Alison Craiglow, Greg Rippin, and Zack Lapinski. The music you hear throughout our episodes was composed by Luis Guerra. Our show can also be heard on NPR stations across the country — check your local station for the schedule — as well as on SiriusXM, Spotify, and even your better airlines![ + ]
For most of us, the athletes are what make sports interesting. But if you own the team or run the league, your players are essentially very expensive migrant workers who eat into your profits. We talk to N.F.L., N.B.A., and U.F.C. executives about labor costs, viewership numbers, legalized gambling, and the rise of e-sports. (Ep. 5 of “The Hidden Side of Sports” series.)
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Lauren MURPHY: When you bleed and sweat and cry with somebody every day, you get to be pretty close to them.
JJ REDICK: For me, shooting a basketball and seeing it go through the net became just an obsession.
Kim NG: If you want something, you have to be aggressive.
Mark CUBAN: Yeah we were awful. When players were traded here, they just couldn’t wait to get out.
Daryl MOREY: Oh, I care so deeply, and it’s stupid. I have no idea why I care, but I like winning.
MURPHY: And I distinctly remember thinking, “I’m going to get better at this and I’m going to come back and I’m going to kick your ass someday.”
CUBAN: I’ll take e-sports. Yeah, buy e-sports, sell N.F.L.
Mark Cuban is an entrepreneur, and also a star of Shark Tank and owner of the N.B.A.’s Dallas Mavericks. When he said he’d sell the N.F.L. and take e-sports — I’d asked him to play a game of buy, sell, or hold with three stocks: the National Football League, the Ultimate Fighting Championship or U.F.C., and a basket of e-sports. So why is Cuban selling the N.F.L., which is the most profitable sports league in the world?
CUBAN: I just think C.T.E. creates a problem.
C.T.E. being chronic traumatic encephalopathy, or the brain damage associated with contact sports like football.
CUBAN: So participation has been dropping the last few years and will continue to drop more. I have an 8-year-old son; there’s no way I’d let him play tackle football. If you don’t want your child playing contact football then you diminish the viewing in the house. Now he’d much rather play Fortnite than watch football.
DUBNER: Okay, and you’re buying e-sports. So say why, and especially explain to people who can’t get their mind around it at all: what is the appeal of watching — I mean there’s stadiums being built. So why do twenty, fifty thousand people want to go to a stadium to watch other people play video games?
CUBAN: Because once you play, you understand the nuances of the game, and it’s aspirational and educational. So if you like to play League of Legends — it’s hard. But one of the ways to get better is to watch other people play. And to learn the nuances and to learn the strategies, particularly given that they change the rules every 90 or 120 days. The e-sports teams have got to practice hours and hours and hours a day. So, it takes a real skill, it’s a real sport, and you also have to realize that anybody in front of a PS2, Xbox, or PC watching these kids that play, in their mind just like we watched sports growing up and say, “Hey if they can do it I can do it.” That’s the aspirational part of it as well. There’s no physical hurdles — you can be 4 feet 1 inch or 7 feet 1 inch, and if you’ve got the hand-eye coordination and the brain-processing speed and anything’s possible, you could do it too.
Is e-sports really the future juggernaut Cuban describes? At the very least, he’s putting his money where his mouth is: among his many sports-technology investments is an e-sports betting platform called Unikrn. In this regard, Cuban is not an outlier. A lot of N.B.A. teams — as well as teams from the National Football League and Major League Baseball and the National Hockey League and Major League Soccer — they’re all investing in e-sports franchises that play games like League of Legends, Fortnite, and Overwatch. A lot of venture capital firms are investing as well. The global e-sports market is said to be approaching $1 billion, up roughly 40 percent from a year earlier — and that doesn’t even include the money flowing to the game companies themselves. Blizzard Activision, which makes Overwatch, reported $4 billion in revenue in 2017 from in-game purchases. If I had told you 10 years ago that e-sports would be a booming industry funded by multi-billion-dollar sports organizations, you probably wouldn’t have believed me. But if I’d told you a hundred years ago that multi-billion-dollar sports organizations would even exist, you wouldn’t have believed that either. Sports, in the very beginning, were a proxy for war. Here’s John Thorn, the official historian of Major League Baseball.
John THORN: The 30 best men of one side against the 30 best men of another, and both sides agreed to abide by the outcome.
Later on, sports became a tool of empire, of colonialism — a civilizing force, or at least that’s what the civilizers said.
THORN: Well, we sublimate our martial instincts by pouring them into sport. We can paint our faces, we can drink ourselves silly, we can yell insulting epithets at the umpire or certain players.
And what has sports become these past few decades?
ANCHOR: Fox striking a five-year rights agreement with the N.F.L. worth about $3 billion.
Yes, sports has become big business. How big?
Victor MATHESON: So, the answer here is actually surprisingly small. Sports has a social impact that is way, way bigger than its economic impact.
That’s Victor Matheson, an economist at Holy Cross and president of the North American Association of Sports Economists.
MATHESON: So the biggest league in the world in terms of revenue generated is the N.F.L., and the N.F.L. generates something like $14, $15 billion a year.
Add in all the other major American leagues, plus the P.G.A., pro tennis, mixed martial arts and so on:
MATHESON: You’ve got maybe $50 billion of pro sports, a few more tens of billions of dollars in college sports. But you’re still only up at $60, $70 billion. That makes spectator sports in the United States roughly the same size as the cardboard-box industry in the United States. Now obviously none of us gather around the water cooler on Monday morning saying, “Hey man, over the weekend, did you see that awesome cardboard box that American Paper just put out?” Of course we don’t. So obviously, culturally, sports is huge.
Okay, so the sports industry punches above its weight in cultural significance, that seems clear. One way to think about this is that consuming sports is really cheap considering how much attention we give it. That said, a $60 or $70 billion industry isn’t nothing. It’s an industry that offers a select few athletes the chance to become multi-millionaires; and it gives billionaires somewhere to park their money that’s a bit more exciting than cardboard boxes.
So, our “Hidden Side of Sports” series continues with a look at how this industry works from the ownership and management side. How does a game become a sport become a business become an industry? We’ll get into the economics of a startup league. We’ll hear how the big leagues are trying to get even bigger. We’ll hear what team executives hate about their own sports. We’ll learn about an exciting legal development. And we’ll get into the unusual fact that in sports, your labor force is also your product.
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DUBNER: So let’s begin. If you would, just say your name and what you do.
Lawrence EPSTEIN: My name is Lawrence Epstein. I’m the chief operating officer at the Ultimate Fighting Championship.
DUBNER: And for those who’ve never seen a U.F.C. fight or maybe who don’t know anything about the U.F.C. or M.M.A., mixed martial arts, just describe it.
EPSTEIN: Mixed martial arts is essentially the sports of boxing, jujitsu, judo, karate, muay thai, taekwondo, and then both freestyle and Greco-Roman wrestling all combined into one sport. And the U.F.C. is a brand name that we operate our promotion under.
DUBNER: Okay, so let’s focus on the U.F.C. then. How often does a fighter typically fight?
EPSTEIN: We’ve got currently about 525 fighters under contract and they fight on average about 2.3 times per year. Over our 25-year history, we’ve done about 9,500 individual bouts.
DUBNER: Okay, what share of U.F.C. fighters are female, and do women ever fight against men?
EPSTEIN: No. Absolutely no women against men. But about 15 percent of our athletes are currently female, and that percentage is growing.
DUBNER: So, I understand that you recently negotiated a new TV deal, this is with ESPN for—
EPSTEIN: $300 million per year, over five years, $1.5 billion in total.
If you’re not a fan of mixed martial arts, you may be wondering how such a league could be so valuable.
EPSTEIN: Dana White, our president, he says, “There’s four corners in any city, anywhere in the world. One corner, you got a soccer game going. On another corner, you got a basketball game going on. On the third corner, you got some guys playing tennis. And on the fourth corner, a fight breaks out. What happens? Everybody runs to the fourth corner to watch the fight. So people understand fighting. They get it. It’s part of our D.N.A. and they like it.
In 2016, the mega-agency W.M.E./I.M.G. and a group of private equity firms bought a majority stake in the U.F.C. for nearly $4 billion. Its ringleaders, Lorenzo and Frank Fertitta, had acquired the U.F.C. just 15 years earlier for $2 million.
EPSTEIN: Lorenzo Fertitta famously says that, “I paid $2 million for three letters, U.F.C.” And that was really essentially all that was purchased. There was literally a box of contracts and there was another box of tapes and there was a wooden octagon that had been used over the years.
Many businesses talk about, “We built this thing from the ground up.” We actually inherited a business that was about 10 stories underground and it took us about three or four years to get up to the ground level before we could actually turn it into a real business.
DUBNER: Now, how do you get that done? Because this was a sport that was nearly driven to extinction before it had the chance to get big. Senator John McCain famously called it “human cockfighting,” led the charge against it. So, how did you turn that around, state by state?
EPSTEIN: We put together a set of assets that included the economic impact our events were having in regulated markets, the truth about health and safety, whether our athletes were sustaining major injuries or not, and of course they weren’t. Third we had — and this was the most compelling thing — we had many of our athletes help us in this process and introducing elected officials to our athletes was key. And the other factor, which was really, really interesting was the staff at all of these offices around the world are generally young people. I mean, you’ve probably been to legislators’ offices, and you’ve got people that are right out of college. Early 20’s, mid-20’s.
DUBNER: And they’re fans.
EPSTEIN: They are fans. They love it. So they’re talking to their boss, saying, “This stuff is awesome. These people are cool. This is something that’s fun to watch,” and the staffers were absolutely key in convincing the elected officials to ultimately vote in favor of regulating the sport. But the whole premise of the original Ultimate Fighting Championship was: there are no rules. It was a no-holds-barred event. And that was just something that we felt didn’t have any sustainability. You had to have regulation. You had to have a regulatory environment that looked a lot like the boxing regulatory environment. And so that’s what we did.
So the U.F.C., in state-by-state petitioning, made itself legal and legitimate. But it still had one big problem.
EPSTEIN: We couldn’t get on television. There was no interest in putting us on any television other than pay-per-view. So we put on these pay-per-view events and we had to produce them ourselves. So we actually developed a core competency in putting on these fairly unique events with, many times, 20–24 different cameras.
This practice, interestingly, continues today.
EPSTEIN: One of the reasons why we are a little bit different than the other sports organizations is that we pay all of the production expenses for our event. As far as I know, we’re the only sort of major sports organization that does it ourselves.
Consider, for instance, the N.F.L.
EPSTEIN: When they do a deal with CBS Sports, they just get a check and CBS Sports, in addition to paying them billions of dollars every year, they also handle all of the production.
Okay, so the U.F.C. early on learned how to produce its own events. But they were still a fringe sport, relegated to pay-per-view. So they did what any sensible start-up sports league would do: they created a reality TV show.
EPSTEIN: You take 16 athletes, you put them in a house, they do a bunch of goofy things like you always see on reality shows, and at the end of each episode there’s a fight. Winner stays, loser goes home.
The show was called The Ultimate Fighter. It went on the air in 2005.
EPSTEIN: We were able to do a deal with Spike television, and they didn’t pay us anything, but they said, “We’ll let you put this on our air. We’ll give you not all, but we’ll give you half of the ad inventory.” And we went out and tried to sell that ad inventory. We were able to sell no ads at all, to any sponsor. So we took that ad inventory and used it to promote our upcoming pay-per-view. And any metric that you look at in the U.F.C., whether it’s profitability, or the number of fans that we have, or ratings, we have the sort of hockey-stick type of a graph and the inflection point is The Ultimate Fighter, Season One.
The U.F.C. has grown exponentially since then, and has the ESPN deal to prove it, but it still relies heavily on pay-per-view as well, distributed via cable and satellite as well as digitally, via Amazon and its own UFC.TV. Their biggest pay-per-view hit to date was actually a boxing match between the undefeated fighter Floyd Mayweather Jr. and U.F.C. champion Conor McGregor. Epstein points to one big downside of the pay-per-view model.
EPSTEIN: I mean, it’s a 100 percent churn business. We sold 3.5, 4 million-plus buys for Mayweather vs. McGregor, and every one of those customers left. We didn’t keep one of them. We got to resell them for the next fight.
DUBNER: So, that is a really interesting conundrum, and I’m kind of surprised that you guys haven’t solved that yet.
EPSTEIN: I mean, our decision’s been frankly strategic. We’ve decided this is the world we want to live in. Because as consumers change the way they’re consuming content, we can simply shift content into different buckets to meet consumer demand. But at the end of the day, pay-per-view is a bet on yourself. And listen, if ESPN was willing to pay us what they’re paying the N.F.L., I think we’d probably get off pay-per-view, but they’re not. And in the meantime, we are willing to bet on ourselves.
Betting on themselves has served the U.F.C. well; they’ve joined the pantheon of prominent American sports leagues. Which, they’ve discovered, presents its own challenges:
EPSTEIN: Well, the challenges are competition. And I’m not talking about just competition from other M.M.A. promoters, but we’re competing against the N.F.L., college football, baseball, video games, movies, YouTube videos, and the list goes on and on. The consumer is getting bombarded with options for lots of entertainment, and of course the consumer only has a certain amount of bandwidth for their time and a certain amount of bandwidth for their wallet.
Welcome to big-time sports. Where even the behemoths are worried about their future.
Jed YORK: We are the dominant sport in America. But if we really want to build our business and become an international sport, that’s going to take some figuring out.
That’s Jed York of the National Football League’s San Francisco 49ers. He’s the team’s C.E.O. and a co-owner.
YORK: I would first say that the biggest blessing and the biggest curse of the N.F.L. are the TV contracts, where it makes you very successful, but it also makes it so you don’t really try new things and try to disrupt.
How big are the N.F.L.’s TV contracts? Roughly $6 billion a year, No. 1 in the world. No. 2, at just under $5 billion, is the FIFA World Cup — which is pretty remarkable for an event whose finals are held only every four years, although they are playing to a global audience. Rounding out the top 10 global TV contracts are the N.B.A. and Major League Baseball; the top soccer leagues in England, Germany, and Spain along with the UEFA Champions League; and the Summer and Winter Olympics. Not cracking the top 10 are the N.H.L, M.L.S., or U.F.C. Which means the N.F.L. has more TV revenue than all the other big American sports leagues combined.
Al GUIDO: Thirty-three of the top 50 shows are still N.F.L. TV games.
That’s Al Guido, president of the San Francisco 49ers.
GUIDO: The eyeballs are still there, they’re just scattered. They’re just in different places. And I think the N.F.L., along with every other league, needs to do the best job they can getting content in a fan’s hands, wherever they are. And that’s changing dramatically.
Cable subscriptions in the U.S. have been dropping fast; 54 percent of viewers between 18 and 29 use streaming services more than cable. That said, live sports are much better-positioned than just about any other kind of content that plays on old-fashioned TV.
MATHESON: We still do watch the Super Bowl live, we watch the World Cup live, we watch the World Series live, and that gives advertisers a chance to put their product in front of a live audience. And it’s one of the last places that that happens. And this is why we still see increasing contracts even though the actual number of eyeballs watching sports contests is not going up particularly quickly.
The N.F.L. has also made big deals to stream its games: Amazon, for instance, recently renewed its N.F.L. deal, paying $65 million a year for the digital right to stream 11 Thursday night games that are already being broadcast on TV. That was a 30 percent bump over the same rights last season. Amazon reportedly beat out rival offers from Twitter and YouTube.
GUIDO: My 9-, 7-, and 5-year-olds don’t even turn on the TV.
The 49ers’ Al Guido again. He’d like the N.F.L. to grow, especially overseas; but that’s complicated.
GUIDO: In the N.F.L., we have what I would deem right now an event-based strategy. We host games overseas. And that is immensely — I mean, it’s successful. However, what is the global strategy and footprint long term? What is it at the league level, what is the team level? And how do we incentivize our clubs to invest more money outside of their footprint? I am frustrated at the inability for us to take our rights and marks across global footprints.
I’ll give you a specific example: Jarryd Hayne was on our team a few years ago, Australian rugby player, they said he was the Michael Jordan of Australian rugby. He comes over here, he plays, he’s an immediate success. Sells more jerseys than any player in the N.F.L. We obviously would love to do a deal over there with Rio Tinto, or we’d love to open up a pop-up retail shop in Australia. We can’t. Well, we can, but if we were to sell our rights and marks and they were to use it in Australia, that revenue is split 32 ways. Doesn’t necessarily come back to the team.
DUBNER: Thirty-two ways because 32 teams in the league?
Okay, let’s take a step back here. Jimmy Garoppolo is a 49ers player; Russell Wilson is not. Al Guido’s point is that the N.F.L., like most American sports leagues, is so devoted to its revenue-sharing model — from TV income all the way down to merchandising — that the incentives can be skewed. With revenue sharing, a team can make a lot of money even if it has a losing record every year; and why invest in new ideas when others don’t have to, and when you get an even cut of the pie regardless? As Jed York said, that’s the downside of the N.F.L.’s fat TV contracts:
YORK: It makes you very successful, but it also makes it so you don’t really try new things and try to disrupt.
This sort of revenue-sharing is a key feature of American sports leagues. It’s less business model than cartel model; it’s a sort of billionaire socialism. And this is not, by the way, how the big soccer leagues work in Europe — where, interestingly, there’s a lot of political socialism. The European soccer leagues do share some revenues but, unlike most American sports leagues, there are essentially no firm salary caps, and every year the weakest teams are relegated out of the league while new ones are promoted.
Stefan SZYMANSKI: Well, I’ve always been very surprised by this.
Stefan Szymanski is a British economist who teaches sports management at the University of Michigan.
SZYMANSKI: So to me, thinking as an economist, I think of this as the difference between equality of opportunity and equality of outcomes. And when I think of Europeans in general, we tend to have strong systems of social services and safety nets, which ensure, really to a large extent, equality of outcomes within the European systems. But traditionally, we have a sense of limited equality of opportunity. We have class systems, we have big social gaps. And America, we always think of as being the reverse — where there’s equality of opportunity, but very limited safety net.
And it seems to me the sports story is completely the opposite. In Europe, we have this incredibly hyper-competitive, capitalist system where the devil take the hindmost, and we have a lot of financial failure in Europe. That’s also one thing that goes with this — an incredible financial distress and failure. And yet, in America, there’s these leagues which are essentially closed societies, which don’t allow any competition, and then share out the resources equally in almost a socialist fashion amongst the top teams. It seems that the mental framework for sports is at odds with the mental framework about competition in society more broadly.
That said, the American sports business model is too entrenched to change much, at least anytime soon. So how, in the face of more and more entertainment competition, are these giant leagues looking to grow?
Kim NG: Right now, one of the Commissioner’s main objectives is to spread the game globally.
Kim Ng is a senior executive with Major League Baseball.
NG: We’ve been very aggressive on that front. We’ve had games in the last couple of years from spring training to regular season games in Puerto Rico, Mexico, next year we’ll be in London. We’re doing a barnstorming tour in Asia as well as playing some regular-season games in Japan.
Major League Baseball, despite declining stadium attendance, is still the world’s second biggest sports league by total revenue. It hopes to maintain that status not just by bringing American baseball to the rest of the world, but by bringing the rest of the world to American baseball.
NG: We have three development centers in China. We have high-performing programs in Puerto Rico, Mexico, Nicaragua, Curacao, South Africa, and these are basically academies in which we train kids on a yearlong basis and they go to school as well. And our goal is to get them into colleges and hopefully some of them into the big leagues as soon as we can.
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Even the most profitable sports league in the world — the National Football League — is concerned about its future. TV revenues are still strong, but viewership is slipping. Some people have been turned off by the sport’s violence, and the risk to players. Others didn’t like how the National Anthem protests turned the game of football into a political football. And the N.F.L.’s most visible attempt to globalize the game — it was called N.F.L. Europe — it failed. So, as in any maturing industry, the league has been searching for new revenues. The U.S. Supreme Court recently did its part to help. In May of 2018, it struck down a federal law that had limited legal sports betting to Nevada. Which should be good news for the NFL and other American sports leagues.
GUIDO: Yes, I mean, from a revenue perspective, there’s no question.
San Francisco 49ers president Al Guido.
GUIDO: If you think about what fantasy football has done, it’s increased the popularity of our sport.
EPSTEIN: Gambling on sport is good for sport in the sense that it creates revenue opportunities and it creates a deeper fan connection to the matches, the games, the events themselves.
Lawrence Epstein is with the U.F.C..
EPSTEIN: So there is no doubt that the proliferation of sports gaming around the United States is going to be good for not just the U.F.C., not just the N.F.L., but all sport.
The U.F.C. happens to be based in Las Vegas. Sports leagues used to stay far away from Vegas, worried about the long-standing, and well-deserved, connection between gambling and match fixing. The most famous fix — alleged fix, at least — was the 1919 World Series. In early 2019, more than two dozen professional tennis players were arrested for participating in a match-fixing ring based in Spain.
That said, even before the Supreme Court ruling, American sports leagues were finally starting to shed their fear of the Vegas connection. In 2017, the National Hockey League finally put a team there, the Las Vegas Golden Knights. Their first season got underway just a few days after the horrible mass shooting in Vegas where 58 people were killed at a music festival, and the Golden Knights turned into one of the biggest feel-good stories in recent memory by making it all the way to the Stanley Cup Final. And next year, the N.F.L.’s Oakland Raiders will become the Las Vegas Raiders.
The embrace between professional sport and professional gambling would seem to be complete. What does this mean for the leagues and their teams? Here’s Dallas Mavericks owner Mark Cuban.
CUBAN: Yeah, I think it’ll lead to our franchise valuations doubling, literally, because there’s a lot more reasons for people to pay attention, a lot more reasons for people to watch. And that’s good for our bottom line.
It’s too early to say whether team valuations really will increase like Cuban suspects, or even to say exactly how gambling fees will be divided. Individual states are already setting up their sports-betting tax rates, and teams and players are angling for their cut as well. One idea that’s been pitched is a so-called “integrity fee” — an incentive to keep the matches clean. I asked the sports economist Victor Matheson who he thinks will be the biggest winners and losers as sports gambling grows in America.
MATHESON: So, I would say the biggest winners are all of the professional leagues. The people simply enjoy the sport more when they have something riding on it. There’s a reason why every March, everyone tunes into all those first- and second-round March Madness games: because everyone has filled out a bracket and it’s hoping their bracket isn’t busted on the first day.
So, we know that gambling makes things exciting, but we also know gambling can lead to corruption. And there’s two really big losers here: I think the N.C.A.A. is a huge loser here, because their athletes are particularly vulnerable to corruption because they’re not being paid. Now mind you, that’s the N.C.A.A.’s own fault for not paying their athletes. But we don’t have to worry about LeBron James or Steph Curry throwing games because they’re not going to risk their $30 million paychecks and their reputations to try to make a little money from a mobster. On the other hand, an unpaid, poor 19-year-old college kid might.
The other big loser might be the gamblers themselves. There are groups of people that this type of gambling will appeal to, in particular it was suggested that young, confident men are — this is exactly the sort of thing that will suck them in. They watch sports 40 hours a week. They’ve got to be good at gambling, they think to themselves, and guess what: there’s people who are a lot better than them still.
If gambling represents one way forward for the business side of sports — that is, a new revenue stream — there is of course another, time-honored way of staying in the black: controlling costs. In most industries, the largest single cost is labor.
MATHESON: For the economy as a whole, the traditional number that economists use is that roughly two-thirds of all gross domestic product goes to labor, and about a third of it goes to capital.
Sports, meanwhile, has had a dramatic trajectory.
MATHESON: If you’re looking back in 1970, you are seeing a world where players are making only a tiny fraction of the total revenues. The rest of that is going into the pockets of the owners. By the mid 1970’s and mid 1980’s we have free agency in every sport except maybe the N.F.L., which had free agency on paper but not in reality until about the mid-90’s. And in Europe, in soccer, you started to have free agency in about 1995-ish. And at that point you have players earning more like 50, 60, 70 percent of team revenue — so a huge increase in what they’re earning.
That’s a huge percentage increase to the athletes at the same time as revenues were also exploding. But, more recently:
MATHESON: More recently, the owners have clawed a bunch of that back, and in the big leagues in the United States, the N.B.A., N.H.L., and National Football League, by agreement between the union and the leagues, they basically split the revenue 50/50. Half of the revenue goes to the players in terms of pay and benefits, and the other half sticks with the owners as profit or to cover costs to run the league.
So, how costly is it to run the league, and how much is left over for profits? That’s very hard to say, since most pro sports teams are privately owned. One notable exception is the N.F.L.’s Green Bay Packers, who are publicly held and therefore publish their financials. The Packers are a venerable team but also a very small-market team: Green Bay has a population of barely 100,000 people. And yet, remember, they get the same share of N.F.L. collective revenues as the New England Patriots or the Los Angeles Rams. The last couple years, the Packers’ annual revenue has been in the neighborhood of $450 million, with profits averaging around 12.5 percent. The current salary cap — the limit a team can spend on player salaries — is about $177 million a year; and a team is required to spend at least 89 percent of that amount. So you might imagine that in a league like the N.F.L. or the N.B.A., with TV revenues locked up well in advance and total labor costs limited by a union agreement, there’s no way for a pro franchise to lose money. That’s what I suggested to N.B.A. owner Mark Cuban.
CUBAN: No, that’s not true at all.
DUBNER: Give me an example.
CUBAN: I can’t throw out names, but yeah.
DUBNER: Well, how many N.B.A. teams in a given year are going to lose money?
CUBAN: More than you think.
DUBNER: So, even with the revenue-sharing, with all the broadcast and other monies distributed evenly and with a salary cap that guarantees that you don’t have to overspend a certain amount, you’re saying that — how do you lose money? Is it by lacking game revenue?
CUBAN: Enough effort. Yeah. Lacking revenue period. Just like any business.
DUBNER: But what’s the major variable? Is it gate revenue or is it broadcast revenue?
CUBAN: Gate, broadcast, players, all the obvious things.
One obvious difference between the cost of labor in sports versus just about any other industry — except maybe the entertainment industry — is that the employees are the product, which makes them much more visible than employees in a typical industry. And potentially much more valuable. Consider a superstar like LeBron James, who this year is earning $35.6 million. Which sounds absurd — until you try to calculate just how valuable he is to the sport.
EPSTEIN: I mean, if LeBron James was getting what he deserves, he’d make $200 million a year, $300 million a year.
That again is Lawrence Epstein of the U.F.C. His biggest star, Conor McGregor, earned a reported $100 million for that pay-per-view fight against Floyd Mayweather Jr.
EPSTEIN: Oh man, I mean if Conor made $100 million last year, which is probably 20 percent of our revenues. LeBron James, he’s got to be worth 10 percent of the revenues of the N.B.A. He’s got to be. So what is that? It’s 400 million or something? It’s a giant number. Maybe he’s not Conor, which is 20 percent of our revenues, but he’s easily 10. He’s easily 10.
For the record, the N.B.A. produced about $7.5 billion in revenues last season, 10 percent of which would be roughly $750 million. Too bad for LeBron James that Lawrence Epstein isn’t setting his salary. And what about U.F.C. salaries? Before interviewing Epstein, I’d asked the economist Victor Matheson to compare athlete salaries in different sports.
MATHESON: If you’re trying to decide what sport to go into, you probably want to go into baseball or football, where at least you’re going to be earning a pretty big chunk of those television revenues. And man, stay away from U.F.C., because they’re making a lot of revenues but not much of that is going into the athletes. The amount going to the athletes there is about 10 or 15 percent of revenues. So, again, much less.
Why do the U.F.C.’s athletes earn so much less? Keep in mind what Lawrence Epstein told us earlier — that the U.F.C., unlike other leagues, pays its own production costs. Still, you might think that compared to the big team sports, U.F.C. athletes would do pretty well, since team sports require so much more labor to produce. We do know that U.F.C. fighters aren’t unionized, which means they don’t have collective bargaining power, like N.F.L. and other team athletes do. In any case, I asked the U.F.C.’s Lawrence Epstein about this disparity.
EPSTEIN: Well I think first of all, the 15 percent number, I don’t think that’s accurate. I mean there certainly is some fluctuation in the percentage of revenue that goes to athletes. But the reason for that primarily is that we have a variable revenue stream model in our company. So, you mentioned the N.F.L. Let’s assume they’re giving 50 percent of the revenues to the athletes. Well, those revenues are contracted revenues with the largest media companies in the earth: ESPN, CBS, NBC, Fox, and others. The significant part of our profitability still comes from pay-per-view events. Which of course are completely variable in revenue.
And so because we just don’t have those contracted revenues like so many of the other sports leagues do, we’re taking a lot of risk every time we put one of these major events on. I mean you can’t just agree to pay certain people a certain amount of money if you don’t know whether or not that money is going to come in. And of course, the N.F.L. and Major League Baseball and the N.B.A. — multi-billion-dollar contracts with great credit on the other side of those deals.
DUBNER: I’ve read that the median U.F.C. salary is roughly $42,000 a year. We interviewed a fighter, Lauren Murphy, who’s the No. 5-ranked female fighter in her weight class. And she told us she gets about $12,000 per fight guaranteed, another $12,000 if she wins, and a $50,000 bonus if she’s the fight of the night. So she said she’s had years where she’s made just $20,000 and one year where she made around $90,000. Again, for a fighter who is No. 5 in the world in her ranking.
I understand there’s an ongoing antitrust lawsuit against U.F.C. which claims that the U.F.C. used an anti-competitive scheme of long-term exclusive fighter contracts, coercion, and acquisitions of rival M.M.A. promoters to establish and maintain dominance, etc., to suppress fighter compensation. I don’t expect you’re going to open up on that case to me right now, but I’d like you to talk generally to this notion of a league that is making a lot of money, that was bought for $4 billion, and yet one where the people who were doing the actual fighting seemed to be generally compensated much less than the average fan at least would assume.
EPSTEIN: Yeah, obviously can’t get into talking anything specific about the litigation. But, as I mentioned previously, Conor McGregor made about $100 million last year. When you compare the percentage of revenues that we deliver to our athletes, it’s very comparable to other sports organizations of our size, and the fact that both we have to produce the content, which adds additional expense to us, in addition to the fact that still a very large portion of our revenue is variable in nature — we’re very proud of what we pay our athletes and we think it’s certainly consistent with other sports organizations of our size.
And to a certain extent, it is a zero-sum game. And if Conor McGregor is going to make $100 million and Jon Jones and these guys are going to make tens of millions, there’s got to be money there to do it. The guys at the top end, the women on top of the food chain, they’re happy with the ecosystem. That’s for sure.
DUBNER: Does the league provide health insurance and other benefits?
EPSTEIN: So, our athletes are independent contractors, so we can’t provide that type of health insurance that you and I might get with our particular employers. But about seven years ago, we began providing what’s called an accident insurance policy which would cover our athletes for any acute injury that they would sustain while they’re under contract with us. In addition to that, most athletic commissions or federations around the world will require that insurance policies be in place for event related injuries. So when you combine the event-related injuries with the accident insurance policies, our athletes are covered while they’re under contract with us for any acute injuries that they would sustain.
We’ll hear more about these labor issues in an upcoming episode, this time from the athletes’ side and the union’s side. For instance, here’s DeMaurice Smith, executive director of the N.F.L. players’ union:
DeMaurice SMITH: The reality is: they are management, and we are labor. And there are going to be core philosophical differences between us. And I think the challenge becomes, there are people who are unwilling to perceive someone’s life in the other shoes. And frankly I think that’s on both sides of the table.
For now, let’s just say that there is a lot of friction between management and labor in sports. In most organizations, there’s one person whose job is to navigate that friction. A person who’s part of management but who’s also the primary liaison between ownership and the athletes. Not the coach — they’re seldom a part of management. This person is usually called the general manager. Like Daryl Morey, general manager of the Houston Rockets.
And the G.M. of an N.B.A. team does … what?
MOREY: So, there’s the bringing in the coaching staff who then obviously direct the players. There’s the medical performance side, where you’re keeping players performing at the highest level. There’s the scouting side, and then there’s the data-and-information side.
Morey is particularly well-regarded on the data-and-information side. He was a pioneer in N.B.A. analytics, and he recently won the league’s Executive of the Year Award. Unlike most general managers, Morey neither played nor coached basketball at a high level; he took the nerd route to the N.B.A., having studied computer science and statistics.
MOREY: Yeah, I think “the nerd route” is fair.
Morey also enjoys musical theater; he recently commissioned a basketball musical called Small Ball.
MOREY: That is accurate. Yeah.
One character sings the following line: “Your cold calculations. You are ripping the heart from this beautiful game.”
MOREY: Correct. Yes, he sings that multiple times.
As for his day job: Morey admits the N.B.A. has had a tremendous growth spurt.
MOREY: Basketball in the late 40’s and early 50’s was thought of as the red-headed stepchild of sports. No one cared about basketball until maybe even the early 80’s.
MOREY: The N.B.A. is going to be the dominant sport in the future — along with soccer and e-sports. For me, the top sports are going to be global. The bottom line, just follow where people are spending their time. Especially under the age of 25. It’s all dynamic games on their phones or P.C.’s or consoles. And the fastest growing content that’s watched by far is people watching people playing video games. Both competitive and non-competitive. And it really is just overwhelmingly logical that e-sports is going to be one of the top sports.
Daryl Morey, like the people we’ve been hearing from in other sports, recognizes that the modern consumer has a lot of entertainment options. Just because a sport is dominant today doesn’t mean it’ll even be relevant in 20 or 50 years.
MOREY: I do think the N.B.A. does have a real challenge. We have a golden goose that’s laying eggs. The league would have to take a risk while the goose is laying golden eggs. We’ve done actually more changes to our game than any of these other professional sports, by far. But the reality is it’s sometimes hard to change.
There are a lot of things Morey would like to see changed in the N.B.A. For starters, he thinks they play too many games.
MOREY: Here’s a really simple way the N.B.A. has too many games: when you ask someone, “Should the N.B.A. have more games or less games?,” there’s not a single person alive who says there should be more games.
This is what Morey means when he talks about the golden goose — cutting back on games would cut back on revenues. At least that’s the conventional wisdom. Morey disagrees:
MOREY: Appointment viewing is what drives drives major advertising spend, drives everything, so I absolutely think there should be fewer games in the N.B.A.
His evidence for this argument?
MOREY: The N.C.A.A. tournament is 63 games. They make more TV money than we make in our entire 1,200-game N.B.A. regular season. I would have it be like the Premier League — everyone plays each other twice. Fifty-eight games.
Morey also thinks there are too many playoff games.
MOREY: I would do one-and-done N.B.A. playoffs. I would get byes to the top two teams in each of the conferences, similar to the N.F.L. I would then have a play-in tournament to be the other four teams that then play the two teams with the byes. All the games will be one-and-done.
One big reason he’d want fewer games, including the playoffs, is that N.B.A. games are too predictable.
MOREY: There needs to be more variance. Every good sport, game, board game needs to have a real healthy mix of skill and luck. I’ve seen many papers on this. It’s like 70-30, something like that. One big problem is we are the most deterministic on a single-game level. We know better than any other sport this team is going to beat that team. If we play one of the bottom-feeder teams — I don’t want to mention — we’ll have 90, 95 percent win odds on a home game. That often will create very, very low reason to tune in.
And the worst part of games for Morey is what should be the best part:
MOREY: The ends of N.B.A. games is one of my bugaboos. I just can’t stand the fouls and timeouts and it’s just not a good viewing experience.
There is a proposed solution for that.
MOREY: Yeah, you stop using the clock. So, let’s say you’re winning 85-82 with five minutes to go, now the clock turns off and you play to 92 and you just play regular pickup basketball from that point, and it’s a fantastic way to end games.
This idea — of turning off the clock toward the end of a basketball game and playing instead to a point total — it’s called the Elam Ending, after its inventor, Nick Elam.
MOREY: Yes, I would definitely do the Elam Ending.
It may strike you that Daryl Morey has an awfully long list of things he dislikes about basketball. After all, it’s the game he loves, the game that employs him. It may also strike you that Morey sounds a bit … grouchy. If so, there may be a reason for this: during his tenure as G.M. of the Houston Rockets, they’ve been one of the very best teams in basketball — and yet, so far, they’ve failed to win an N.B.A. championship. And Daryl Morey really likes to win. This goes for everyone we’ve been speaking with today — you aren’t at this level in sport unless you cannot stand to lose. Just how much does Daryl Morey love to win? When we spoke with him, the N.B.A. season hadn’t begun yet yet begun; he was in Las Vegas with the Rockets’ summer-league team — a rough equivalent of baseball’s spring training. In other words, games whose outcomes are meaningless. But not to Morey.
MOREY: Well, our dominant 4-0 summer-league team — we’re trying to hang another summer-league banner. Four-and-0, and our highest pick on our team is 45, I think, or something like that. So we’ve got our motley crew.
DUBNER: But the reason you have such a motley crew is your fault, right? Because you’re giving away all the high draft picks to get the superstars.
MOREY: Yes, exactly. I was about to mention that. Yeah, some G.M. idiot has mortgaged the future to try and put together our hopeful championship team and because of that we haven’t had a first-round pick in several years.
DUBNER: So it sounds like you care. It’s not just—
MOREY: Oh, I care so deeply and I’m not — and it’s stupid. I have no idea why I care, but I like winning.
DUBNER: What you don’t have yet, as you’ve alluded, is a championship. And I’m just curious what what it feels like overall. I’m guessing when you self-assess, you think, “Yeah, I’m doing a pretty decent job.” I’m sure you work hard, and, again, there is a lot of outcome success, but I’m curious how big a gap the not-having-won-the-championship leaves or what it feels like.
MOREY: Becomes Andrew Lloyd Webber. Just the perfect melody. Just a nice resolved power chord, basically.
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Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Anders Kelto, Derek John, and Alvin Melathe with help from Matt Stroup. Our staff also includes Alison Craiglow, Greg Rippin, Harry Huggins, and Zack Lapinski. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.
Here’s where you can learn more about the people and ideas in this episode:
A conversation with former Major League Baseball player and current ESPN analyst Mark Teixeira, recorded for the Freakonomics Radio series “The Hidden Side of Sports.”
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This is a Freakonomics Radio extra: our full interview with Mark Teixeira, the former baseball All-Star who’s been appearing in our “The Hidden Side of Sports” series. Teixeira retired after the 2016 season, having played 14 years in the big leagues. He hit 409 home runs, won lots of offensive and defensive awards, and helped lead the New York Yankees to a World Series title in 2009.
Stephen DUBNER: Mark, if you would just start by literally saying your name and what you do?
Mark TEIXEIRA: Mark Teixeira, currently ESPN analyst and real estate developer in Atlanta, Georgia.
DUBNER: Very good. How old are you now?
TEIXEIRA: I am 38.
DUBNER: You played for 14 seasons?
TEIXEIRA: 14 years. 15 professionally, 14 in the bigs.
DUBNER: Yeah, all right. Let’s go back. So for people who know baseball, Mark Teixeira is a big big big big name. For people who don’t know baseball — and there are people out there — we’ll expose them to you. Let’s start with you as a kid. Talk about growing up, Baltimore, I believe. Talk about growing up as a kid, your family, your dad was a Naval Academy graduate. Just describe you, your family, and especially sports.
TEIXEIRA: Yes, so I had one of those really cool childhoods where both my parents were around. I had an older sister, my dad being a Navy guy — graduated from the academy — was tough on me, but fair. He really gave me a blueprint of how to act and treating people with respect and keeping my hair short and making sure I said ‘yes sir’ and ‘yes ma’am’ and those type of things — things that he learned at the Naval Academy. I was really lucky to have a family around me that gave me every opportunity to succeed. I played every sport as a kid. We didn’t have the cell phones and all the cool technology back in the day when I grew up in Severna Park, Maryland. So, I went outside and played.
DUBNER: Was baseball your best sport from the outset?
TEIXEIRA: It always was. And I actually enjoyed playing basketball more. I played backyard football. I played soccer, tennis, but I was always good at baseball. So I knew baseball was going to be a sport for my future.
DUBNER: Can you pinpoint the moment, or day, month, year, when you said to yourself, “Oh, I’m way better than everybody else.”
TEIXEIRA: Yes. And most kids grow up being — if you’re an elite athlete you’re going to be the best kid on your team. But you never really think you’re going to make it until you get that first call or letter from a pro scout. And I was a sophomore in high school and pro scouts started showing up to my games. And that’s when I was talking to my coaches and talking to my dad and talking to some of the scouts, saying, “Wow, I could actually play professional baseball. How cool is that?”
DUBNER: Your role model as I understand, it was Don Mattingly. Yes? Was he the one?
TEIXEIRA: My favorite player. My role model was my dad. My favorite player growing up was Don Mattingly. He was a guy — I loved the way he played the game. I loved his sweet swing, so smooth at first base. And growing up in Baltimore — I loved Cal Ripken, loved Eddie Murray, but Mattingly — there was something about Donnie Baseball that just really grabbed me as a young kid.
DUBNER: He was a longtime and beloved and very, very good first baseman for the Yankees, also very good defensive first baseman. You became exactly that many years later. I’m just curious, more of a character issue: you said your dad was your role model and one can see how that worked for you. Mattingly was your favorite player. It strikes me that his character was not that different from your dad’s — keep your head down, right? I’m just curious, what if your favorite player had been Reggie Jackson? Would you have become a different kind of player and person?
TEIXEIRA: That’s a great question. I think I chose somebody like Don Mattingly because of his character. While some of these players today have lots of flash and flair — I like the grinders. I wasn’t blessed with amazing speed and just athletic ability that oozed out of my pores, but I felt like I had a gift to hit a baseball, and I grinded with everything else. Everything else in my career I had to work for.
DUBNER: When you say a gift, there’s this huge debate in everything in life. Anything that involves what we call “talent.” So it could be sports, but it could be medicine, you name it, about the difference between (a) nurture and nature and (b) talent versus work and what’s called deliberate practice, the 10,000 hour rule. Tell me where you come down on that. Obviously, you have yourself as an example, and we know that you were physically talented from an early age. But talk about what it was that got you to be a professional at the highest level.
TEIXEIRA: I think the gift is No. 1. Because without the gift, you can’t take a kid that has zero athletic ability and just happens to be a hard worker and he goes to the big leagues. At any given time there’s a thousand big leaguers out there. But there’s probably 10,000 players, whether in college or amateur baseball or low professional ranks, that are good enough to someday make it.
DUBNER: Talent wise you’re saying.
TEIXEIRA: Yes, there’s 10,000 talented players with a gift. Of those 10,000 players, which are the ones that work hard enough? Which are the ones that figure it out? Which are the ones that get it? That make the right decisions and train the right way, and eat the right way and do preparation for games. Those are the ones that make it. So the gift is first. But then you have to put the time in.
DUBNER: Can you think of a particular player or a group of players who, when you were either in high school or college, obviously we know you were very good but maybe you saw some guys who looked to be on the surface more talented than you and didn’t make it.
TEIXEIRA: Yeah. The most talented player that I ever saw as an amateur was Corey Patterson. And guys that know baseball — he was the fourth or fifth overall pick from the Chicago Cubs. My draft year. And he had a decent big league career. But talent-wise, I would kill for his talent. And he had some injuries and just couldn’t quite make it over the top, but talent-wise there were a ton of guys that I thought had more talent than me, but I thought I figured it out, at a young age.
DUBNER: What do you mean by that?
TEIXEIRA: Figured it out means — in high school, by the time I was a sophomore, and I knew I had a chance, I started preparing. So I started working out, and I actually called the Florida State baseball coach because they were the No. 1 team in the country that time, and said, “Can you please just send me your workout regimen?” I started doing the Florida State baseball workout regimen. I didn’t go to my high school homecoming for three straight years because I was playing fall baseball. I didn’t do a lot of stuff in the summertime. I played 70 games every summer. My friends are going to concerts, my friends are having a good time at the beach and all these things. And I just figured out young how to make it. And that helped me as I went along in the big leagues because you don’t have your ‘A’ stuff every day, or every year even, you gotta figure it out as you go.
DUBNER: So you were a phenomenally talented and bettable, let’s say, high school prospect. TEIXEIRA: Yeah, I became a really top prospect before my senior year. So, in my junior summer, before my senior year, I went to a wood bat tournament, which all the top prospects in high school baseball went to this tournament. And I was the only guy to hit a home run. So all the scouts, “Oh my goodness, look at this kid from Maryland, we’ve heard about him but he hit a home run in this tournament. And now he jumps to the top of the list of high school players.” And Scott Boras’ office called me that summer and said, “We’d love to talk to you.” Met with Scott and his group, and they were far and above anybody else in the business.
DUBNER: In terms of professionalism?
TEIXEIRA: Professionalism, their preparation, their knowledge of the market, their knowledge of amateur baseball. They gave you a really good sense of, “Okay, this is the landscape of baseball. This is what your career is going to look like. And this is how you should make decisions based on that.”
DUBNER: So you signed with Boras — we’ll jump ahead now, we’ll come back — you signed with Boras and he was your agent for many years. And he helped you sign, or helped you get, or you got with him, your ultimate deal which was in 2009 coming to the New York Yankees, correct?
DUBNER: Eight year, $180 million deal, correct?
DUBNER: All guaranteed?
TEIXEIRA: All guaranteed in baseball.
DUBNER: Now interestingly however, you split with Boras a few years into that, and I guess, on the one hand I understand why do you need an agent anymore once you’re signing what’s going to be the last deal in your career? But why did you split? And talk to me about the relationship of an athlete like you and an agent like him.
TEIXEIRA: Yeah, when I split with Boras it was more practical reasons than anything else. It wasn’t — we didn’t have a falling out. There was none of that. But I was in New York and he’s in L.A. And when you play for the New York Yankees and you’re the starting first baseman and there’s all these things that are put on your plate, you need your agent closer. No pun intended, I hired Casey Close who happens to be a New York guy. He’d worked with Derek Jeter and the Yankees for years and years, and so really understood the landscape of the Yankees, and New York, and charity, and marketing, and all these things that happened. It just made me a little bit more comfortable being with an agent — again, I didn’t really need an agent, but just someone that could help me in New York and be closer.
DUBNER: So I guess that gets to the question of what does an agent actually do for an athlete like you at that level? And also maybe help people understand the difference between — in some industries — in entertainment, a lot of entertainers have an agent and a manager and they may have 18 other advisors. When we think of an agent, we usually only hear of an agent with an athlete when they’re negotiating or signing the deal or when something goes wrong. But you’re talking about all the different elements that come with being a major league athlete. So (a) what does an agent do, or should they do? And then (b) what did you get Casey Close involved in?
TEIXEIRA: What an agent does is, he really helps support you from the time you sign your first contract, even before your first contract, and navigate you through the business waters, the professional waters, and all of the things that can happen to you until you’re a free agent. In baseball, you don’t make your living, your career, until you’re a free agent. What Scott Boras did for me — at 18 years old we started our relationship and he taught me so much about the game. Him and some of his associates — Bob Brower was my right-hand man, Mike Fiore — he has a great group of guys around him that said, “Okay, Tex you’re 18 right now. When you’re 26 or 28, you’re going to be a free agent. And these are the things that you have to accomplish in your life and your baseball career to get you to free agency.” That’s where agents in baseball provide the most value.
Once you sign your eight-year deal, you don’t really need them that much. But what Casey did for me when I hired him in 2011, I believe, was, the Yankees — there’s a lot of charity stuff that you are involved in. There’s a lot of off-the-field distractions. I started getting hurt a little bit. And you deal with second opinions, and you deal with general managers questioning, “Hey what’s going on with Tex? And does he need surgery?” That’s where an agent later in your career can really help — is helping you take some of that pressure off your shoulders when problems happen.
DUBNER: And what about business opportunities. Is that their job to help bring some to you or maybe filter out the bad from the good?
TEIXEIRA: Yeah. Marketing opportunities, yes. But, honestly, baseball players don’t have a lot of marketing opportunities, unless you’re Derek Jeter or Mike Trout. I did a handful of deals a year. So I knew I was going to do my Nike deal. I knew I was going to do my deal with Steiner Sports for my autographs. And then a handful of other print or local media type stuff, local appearances. So it wasn’t overwhelming.
DUBNER: What about non-sports related investment though? Where did those — so I know you’re involved in a number of things, some of them predate your retirement a couple years ago — Where do those typically come from? Are are they a la carte, ad hoc, or do you have a way for soliciting and sorting?
TEIXEIRA: Most agents don’t do that for you. What they will do is they will hire somebody or point you in the right direction for financial literacy and for financial help and estate planning. I’m with a group called Winpoint. Joe Geier and his group out of Baltimore — Joe went to my high school at Mount St. Joe, years before me, but had a really great relationship with a lot of ex-Orioles, and current players, and Major League Baseball, and so he’s my business manager. He’s the one that handles all of my estate planning and all of my investments. And I like keeping them separate. If you have all of your eggs in one basket as an athlete, sometimes you’ll make wrong decisions, or sometimes your decision making will get clouded. So I like having that separation of power when it comes to business deals or investment opportunities.
DUBNER: Now Scott Boras encourages people to put a lot of eggs in one basket, yes? In terms of investment and mental guidance?
TEIXEIRA: Yeah. Scott has so many things that you can take advantage of under his umbrella. And investment advice is one of them. But the mental conditioning that he has — Harvey Dorfman was his right-hand man for mental conditioning, literally wrote the book The ABC’s of Pitching, The Mental Game of Baseball. Harvey Dorfman was one of those guys that when I was young, when I was learning how to become a great major leaguer, I leaned on him immensely. And one of the great relationships of my young career was Harvey Dorfman.
DUBNER: Okay, well one more thing about agents before we move on to your playing career. There are those who argue that an inevitable conflict is — especially a very successful agent, Boras maybe being the most, you end up having a roster of a lot of players in your stable. And then you’re dealing with a market where you’re only dealing with a limited number of buyers. There are only 30 teams and for any given player there might be a very limited pool of let’s say two, three, four teams that have the money and the need and so on. So there are those who argue that if you’re with an agent — there may be an inherent conflict of interest in that they may gain leverage by dealing you low, by making a suboptimal deal.
TEIXEIRA: You’re exactly right, and this is where every player needs to take control of his career. If I’m a first baseman and I want to go to a team that is also looking at another player that my agent has in his roster, there might be some horse trading there. “Okay well — take him, but then I gotta find a place for Tex,” and there’s back and forth. Ultimately the player has to take control. And I tell every young player, “Hire a great agent, but also know what he’s doing.”
TEIXEIRA: And the best agents are good at that horse trading. They’re good at getting their clients the best deal no matter what. But you have to pay attention.
DUBNER: So walk me through the deal that you signed with the Yankees, again, and that was your final deal. That was a massive free agent deal that set you and your family up for life, for generations. So that’s amazing, and congratulations because it’s a great accomplishment. Going into that, you were coming most directly from the Braves?
TEIXEIRA: Braves and Angels.
DUBNER: Braves and Angels. Right. Walk me through that deal. What were the possibilities? And then talk about the negotiation of that deal and how you made the decision to come the Yankees.
TEIXEIRA: Well, first of all, free agency is not a fun process. As a major leaguer, I’m glad I only did it once. You feel completely helpless, on one hand, because there’s 30 teams out there. But really there’s probably only five or six that are really interested and really want you. And I had a family. I had two young kids and a wife that I wanted to make sure they were happy as well. So the process for me was not a lot of fun. Ultimately, it came down to the Yankees, Red Sox, Nationals, Angels and Orioles. Those were the five teams that I had face-to-face meetings with.
I wanted to go to a place that had a chance to win every single year. And one of the things that Scott Boras always told me is, “Don’t look at the Yankees current roster, don’t look at their minor league system. This team does what it takes every year to be competitive.” And, playing in New York, putting those pinstripes on, just had too much allure, and it helped that they matched the offer of some of the other teams.
DUBNER: You come to New York. New York loves you even though you’re not a typical — New York has gotten behind a lot of guys who are a lot more aggressive than you, a lot cockier than you, and you were the nice, good, hard-working guy who also happened to be a phenomenal baseball player. Very good hitter and a great defensive first baseman. And then you get here and first season out you go and win the World Series. Talk about setting expectations. Talk about the high and then the inability to win another one after that. What that was like?
TEIXEIRA: My first year in New York in 2009 was a complete whirlwind. I’m getting lost on the way to the ballpark because the new Yankee Stadium was literally, brand new. They opened the doors three days before the season started. So, all the navigation systems — back in 2009, Waze and Google Maps weren’t around, or weren’t as good at least. So I’m getting lost getting into the ballpark in the Bronx. And then you have to worry about hitting 98 mph fastballs at night. So it was a complete whirlwind.
We win the World Series. And before I knew it spring training was around the corner. And when you get to the top of the mountain you want to stay there, the pressure’s always there. But the rosters just weren’t as good. I mean we can look at ourselves and say 2010 was the best chance we had to win again. Thought we had a pretty good team in 2010. By 2011, 2012 we just ran out of gas at the end of the season. We didn’t have the team that could make it that far.
DUBNER: How much of that is age?
TEIXEIRA: A lot of it’s age. We had a team that in 2009 were called old. At 28 years old I was one of the kids on the team. You get here and you win, but then you look at the best players, you look around that that locker room and go, “Man, we have a short window here,” and that window closed in four years. But listen, in those four years we made three A.L.C.S.’s, we won a whole lot of games, and yeah, we didn’t win another one, but not a lot of regrets there.
DUBNER: Your ultimate I guess decline as a player, it’s what happens. Players get older, they don’t keep getting better, except in rare cases like Barry Bonds. And those are usually a little bit chemically aided as it turns out. I’m curious about one thing. So you were a relatively rare power hitting switch hitter. There aren’t a whole lot of them. During your career, more and more teams started using more and more analytics. Some managers used to put a defensive shift on some players who pulled the ball a lot, but it became a lot more common. Now defenses were putting a shift on you from the left side and the right side. And your numbers were going down. Now you were also getting older and declining as a player, no offense, that’s what happens. I’m curious, in retrospect, the degree to which you think that rise in analytics and the use of the shift, and so on, was a contributing factor to your decline and how much of it was just the natural cycle of an aging baseball player.
TEIXEIRA: Yeah it’s probably 70/30, just the natural age. Without analytics I still would be retired. Analytics doesn’t make your wrist blow out. Analytics doesn’t make you tear up your knee. The things that I had to deal with. But I would say that analytics took numbers that should have been better and decreased them. I mean studies show that left handed hitters hit 20 points lower just across the board because of analytics and because of the shift.
But for me, I was lucky enough to have a really great career for the first 10 years. I had a really great 10-year run. I blew out my wrist in year 11, and it just became very tough. I felt like I was playing catch up. I had one more All-Star season that I felt really good about. But for me, it was much more the physical decline, and the analytic side of it — listen if you’re walking, if you’re hitting doubles and home runs, the shift doesn’t matter. And the one year that I did make it back to the All-Star Game, it’s because I was really locked in, physically I felt good and I was hitting doubles and a home runs again.
DUBNER: What are some ways that you benefited from analytics? Did you — I don’t know if you were a tape rat. If you watched a lot of tape. And I’m curious whether you studied pitchers and so on for their tendencies?
TEIXEIRA: I didn’t benefit at all. I was not a tape rat. I was one of those guys — because I was a switch hitter, I had too many things to think about anyway. I had two full swings. One swing is hard to keep up in Major League Baseball. I had two of them. So early on in my career I basically told myself, “I’m not adding more junk to my head and complicating things. I’m going to see the ball, and hit the ball.”
Now, did I watch tape? Absolutely. Did I have positive reinforcement? It’s called our hit tape. So you look back at when you’re good. What are the pitches you’re swinging at, where are you hitting them, where are your hands, and your feet, and your legs, and what do you look like when you’re hitting those balls? So, I used positive reinforcement. But I wasn’t the guy that went up there and said, “Okay it’s two to one. This guy has a 73 percent chance to throw a backdoor slider here, I’m going to look—” No, I never did that. And there’s a whole bunch of players that still don’t look at tape.
DUBNER: Talk about that for a minute. You don’t do that in part, I guess, because you don’t think it’s going to be productive. But I’m curious when you talk about sports where there’s live action, as the batter, you’re reacting to someone else throwing. As a pitcher, it’s a little bit different. You’re generating the action. As a golfer it’s different, you’re generating the action from the ball at stop. And in those cases, we know that the mind can really get in the way, right? When you’re reacting, theoretically to some benefit, because you don’t have the time to quote ‘think.’ But on the other hand, when you’re in the batter’s box and you’re dug in, and waiting for the pitcher — talk for a moment about that thought process and maybe when your mind does get in the way.
TEIXEIRA: I had two different swing thoughts that, depending on the pitcher, was my plan. Everyone says, when you go up to the plate you need to have a plan. And a guy that threw hard, say 95 and above, my plan was get the head of the bat on the ball. Put the barrel of the bat, square the ball up, wherever it goes is a positive. If a guy threw soft, a Greg Maddux-type guy, I looked for a location. I said, “Okay I’m going to look for the ball away here. I’m going to stay on it. I’m going to stay square. I’m going to hit the ball the other way.” Or, say a guy threw a lot of curveballs. Okay, I’m going to wait for a curveball. I’m just going to sit, sit, sit. So that was my plan on fast guys or guys that threw softer.
Where you get into problems was when your first swing against that guy who is fast and it was a bad swing, you go, “Oh wait a second, I’m going to change my plan here. And I think he’s going to throw me a curveball, and I’m going to sit on a curveball,” and he throws another fastball and you break your bat, because you’re late. That’s where your mind gets in the way. When you should be keeping it very simple and reacting, you complicate things and then are slow to react or late to react and then you’re done in baseball.
DUBNER: Did you see great hitters, however, who did think a lot at the plate in a way that you’re describing was not productive for you?
TEIXEIRA: Yes some guys joked, “He’s so dumb, he’s a great hitter.” See it, hit it, react. And there are a lot of great hitters that did that. Then there’s Chipper Jones, just went into the Hall of Fame yesterday. Chipper Jones knew exactly what he was going to do on every single pitch. He looked at the tape — and he was a switch hitter too, so don’t tell me how that worked — but he really looked at pitchers. He set pitchers up. He sat on pitches and it helps that he was so talented. Eye-hand contact. His coordination was just amazing. But he was one of those guys that thought through every at-bat.
* * *
DUBNER: I’ve heard you talk in the past about spring training. So, I’d love you to describe this for people, again, who don’t know baseball but even who do: you’ve talked about every year you’d show up, and it’s relearning — both from a confidence and a physical level — relearning to swing. I find it hard to believe that, but I’d love to hear you talk about it.
TEIXEIRA: When I say that it’s true. Every year I showed up to spring training, I had to learn how to hit major-league pitching again. Because timing is so important, right? If I got into a cage today, I’d still probably look like a big leaguer. Put me on a tee or throw 60 mph softballs to me, I could probably still hit some balls and look like a big leaguer. If you put me in a 95 mph fastball situation with a guy that’s got a slider and a changeup, I would look like I never played the game, because I have no reference point. I haven’t had one in a year and a half — since I retired, almost two years now. I have no reference point to the timing of when I need to start my swing and where that ball’s going to be at the plate. That’s what I mean when I say you have to figure out, you have to re-learn how to hit major league hitting. It’s all about that timing. It’s not like riding a bike. Some guys it is, but for me it wasn’t. Every year my timing — from both sides of the plate — had to get right. And that’s one of the reasons most of the time I had a slow April.
DUBNER: And then for both sides of the plate — you’ve also referred to how your right-hand swing and your left-hand swings were really different. So I’d like you to talk about that. Also, again, for people who don’t know baseball, it’d be a little bit like watching a great basketball player with a jump shot, start to shoot left handed sometimes, when the situation called for it. It doesn’t happen in other sports.
DUBNER: In baseball it does, for a variety of reasons, and it’s an advantage obviously, but can you talk about — I would imagine that one swing is a mirror image of the other. I gather however that is not, correct?
TEIXEIRA: It’s not, because of right hand domination. So I throw right-handed. I write right-handed. I do everything right-handed. So as a right-handed hitter my top hand, my right hand, is the steering mechanism for the bat. And because of that, I was a better contact hitter right-handed, because that dominant hand, your top hand steering it, I could steer the bat where I wanted. Left-handed, that right hand, dominant hand, is the bottom hand. And that is my pull, trigger — the bat gets through the zone quick. I hit longer home runs left handed, I hit more home runs left handed. I was a much more power hitter, much more pull hitter left handed.
DUBNER: More strikeouts lefty?
TEIXEIRA: Probably, I’m sure. I’m sure I had more strikeouts lefty. I also hit the inside pitch way better left-handed. Right-handed, you could bust me in all the time. I was not a good inside hitter right-handed because I just didn’t have the bat speed right-handed. That’s why I had two different swings. It’s not by design, I picked up a bat left-handed and I just had a different swing.
DUBNER: What about dominant eye though? I always wondered about this. When I played baseball growing up I was a right-handed batter. But then when I played Wiffle ball I could hit great lefty. And I thought, why was this? Obviously it’s a different ball, everything’s different, and I was an okay switch hitter as a kid but not good enough to actually do it in games. And then I started to wonder, maybe I’m just seeing it better. Or it’s different. I’m curious about that.
TEIXEIRA: You were. You were seeing it better. I am right eye dominant.
DUBNER: How can you tell? I see you holding up your hands here.
TEIXEIRA: So you put your hands in front of you in a triangle, keep both eyes open and point to a spot, get it the microphone or something here. And then close one eye and close the other one whatever you see it with that’s your dominant eye.
DUBNER: Oh yeah.
TEIXEIRA: So I’m right-eye dominant. That being said, I could stay closed left-handed. Right-handed I had to open up my stance and actually point my face towards the pitcher more, so my right eye could see the ball better. But I’m naturally right handed I was able to always have better plate discipline, right-handed. But because I’m right-eye dominant, I was able to become a switch hitter. I’d like to see a statistic on switch hitters that are naturally right-handed that are right-eye dominant. I would probably guess most of them are right-eye dominant.
DUBNER: Now, considering that you figured that out, did you think about training your left eye?
TEIXEIRA: I tried. It’s one of those — when you work out and you feel sore the next day, you know that it worked. What I did in the gym, worked. I don’t know if it works, but I did eye exercises for two months, messing around with it, and I don’t know if it worked. I just I ended up letting it go. Again, I try to keep things simple. Baseball, when you break it down, is a very simple game. They throw a ball at you and you gotta hit it. And I didn’t want to complicate things. I’m not a quarterback in the N.F.L. with 15 different plays or 50 different options of that play. I’m see the ball, hit the ball.
DUBNER: Describe briefly your game day routine. Let’s say it was a home game playing for the New York Yankees. You’ve got your family living in Connecticut. Describe from morning to night what the day was like.
TEIXEIRA: Yeah, so I slept in, because your games are over at 10:30/11:00. You’re not getting home until 12:30 or 1:00. So I slept in until probably 10 or 11, every day. Just hung out at the house. Did nothing usually. Try to spend some time with my kids. When I was on the road, I’d sit in the hotel room or maybe take a little stroll and have breakfast or lunch, but I really tried to conserve as much energy as possible before the games. Leave for the ballpark around 2.
DUBNER: No golf on game days.
TEIXEIRA: No never. I would probably golf once or twice during the entire season. And I love golf, but I just didn’t have the energy to swing a golf club or be outside for four hours and then go play a game. Some guys do it. I could never do that. So, leave for about — leave at about 2. Get to the ballpark no later than 3, and then start the process. Start the process, which is you maybe grab a quick bite to eat because you have a long day ahead of you.
DUBNER: Is this the peanut butter and jelly sandwich, or is that right before the game?
TEIXEIRA: So, yeah, before I became gluten free it was always peanut butter and jelly sandwich before the game.
TEIXEIRA: But usually at 3 it was a grilled chicken sandwich or something semi-healthy. But it gets you to that pregame meal. And so, I would do my stretching and get ready for my batting practice session. Take batting practice in the cage. Get loosened up in the cage, which is tee a drill. Do that tee drill for 15 or 20 minutes. Go back. Do all my interviews. Get that out of the way before batting practice. You go out to the batting practice and stretch run, throw, take your ground balls, take your round of BP.
And then it’s an hour of chill time before the game. That’s when you let everything sink in. If you do need to get treatment, on injuries whatever, you do that. If you need to get extra stretching, if you need to watch video, whatever it might be. You do that in between batting practice and the game. Then at about 6 or 6:15, I grab that peanut butter and jelly sandwich — again, before I became gluten free — and then a cup of coffee because it’s a long day and you need a little jolt before the game. And I was on the field by 6:40.
DUBNER: Did you — was there any mental concentration, meditation, prayer or anything like that?
TEIXEIRA: The routine got me locked in. I knew while I was doing my routine, the closer I got to game time — I looked at the clock. And you always knew, there was clocks all over big league clubhouses, right? No one wants to be late for for a stretch, or a meeting, or a game. So there’s clocks everywhere. And as the clock got closer to 7:05, I just slowly got locked in. I didn’t talk to a lot of people before the game. I wasn’t very chatty. I was focused, and I knew every single night that the fans of New York expected me to go out there and make my plays at first, and hopefully get a hit or drive in a run. So, I took that very seriously.
DUBNER: Were you an anthem singer or an anthem hummer?
TEIXEIRA: I prayed during the anthem. That was my time, my Christian faith is very important to me. And if not for the God-given ability that I have, I wouldn’t be playing Major League Baseball. So, always gave thanks to God during the national anthem and said some prayers for my family and friends or people that were struggling or whatever was happening. And that also helped too, because that was a minute or two where I could lock in and get burdens maybe that are on my heart or on my mind get them off my chest and then go out and play the game.
DUBNER: The anthem protests that have become a big deal in football have not hit baseball. And there might be a million different reasons why. I’m just curious your thoughts on that. You’re not only a longtime athlete, now retired athlete, sports commentator, but a bright guy who’s involved in the real world. I’m curious what you make of those protests and especially how it’s affecting professional sports and the perspective that the public has on professional athletes.
TEIXEIRA: Yeah, first of all, I definitely think that players, in leagues all over the world, should speak out, either for or against things that they feel strongly about. The problem is, the Yankees pay me to play first base. They pay me to get hits. They don’t pay me while I am on the field to be a distraction. And whether you agree or you disagree with whatever I’m standing up for, during the game, during the national anthem especially, when we’re honoring the country and we’re honoring those who have fought for our freedom, I just don’t think that’s the right platform. Now after the game, in the offseason, when you’re home or you’re in your own community, in which there’s issues going on, absolutely speak up, because athletes and celebrities have a very strong platform. But whether it’s the Dallas Cowboys or New York Yankees or Golden State Warriors, we are paid to play a sport, and we’re paid to, while we’re on the field, while we’re in the uniform, to respect the rules of that league or that team. And I just don’t think that the national anthem is a time to make that stand.
DUBNER: So I hear that argument. Here’s a counter: some people would say that a pro athlete — it’s a little bit like Cinderella. When you’re in the zone, when you’re wearing the dress, before midnight, you’re a different person. Everyone’s paying attention. When you’re in uniform during a game, that’s when you have the most leverage. And then, no matter how prominent an athlete you may be if you’re doing an interview, even immediately after the game, or during the off-season with your local media or whatnot, and you say, “Hey listen, this is a big problem that I see.” It might be domestic violence, income inequality, police brutality. We know those stories get coverage. But compared to the leverage that you have during the game, it’s one one-thousandth, one ten-thous— taking the devil’s advocate position, I could see why, man, if I’m an athlete I know that the only way I have a chance to really raise hell is to do it right now. And you’re saying that’s inappropriate because you’re essentially there to do one job and—
TEIXEIRA: Well you’re also an employee. I have a really cool job at ESPN. If I took Baseball Tonight tomorrow during the trade deadline show and said, “Hey guys, just stop for five minutes, because I have something I want to talk about.” I’d probably be fired. Because I’m an employee and I have to do what I’m told when it comes to certain rules and regulations — now if the league league says, “Hey, you guys do whatever you want,” then hey, that’s great. Do whatever you want. But the N.F.L. has seen the the protests be a double-edged sword. While they’re proud of their players standing up for certain things or whatever it might be, they also have to understand that there’s a whole lot of people that don’t appreciate it and it’s probably not the best time to be taking a stand right before a game, when they know it’s going to be a distraction.
DUBNER: There’s also obviously a lot of class and ethnic, racial considerations here, and I want to ask you about that on a baseball team. There are scholars who argue that sports teams are among the best institutions — along with the military, by the way — at building what they call social trust. Meaning, you feel someone’s got your back, even if you don’t know them. And they say that sports teams in particular, and again, the military, where people from very different backgrounds come together — you emerge from that as if you’re you’ve got a lot in common. And I’d love you to talk about that for a moment, (a) if you experienced it, and (b) if you think there’s any way to port that over into the real world without making everyone join the Yankees.
TEIXEIRA: I agree completely. During my career I played with black, white, Asian, people from the Dominican Republic, Venezuela, wherever it might be. And we all got along. I mean 99.9 percent of athlete teammates get along. Now they don’t have to be best friends, but get along on the field, why? Because there’s a common goal. In the military, why do people in the military get along? Because there’s a common goal.
And where we can use that in society is: let’s not always harp on our differences. Me and you could spend an hour talking about what we disagree on. That would not be a productive hour, time together. We would rather talk about interesting things in economics, and sports, and life, and things that we we enjoy about life. Happy things in life. Things that are positive. If we continue to harp on negative things in society or the mainstream media, you’re going to have these issues.
But sports and the military, as you said, were always focused on how do we win this game? How do we become a closer team, to win this game for our fans, and for our front office, and our ownership, or whatever it might be? Because let’s not talk about — I’m sure we have differences. I’m sure we don’t agree on every single thing. That’s human nature. But what we can agree on is working hard together and showing up on time and being accountable to each other and working towards that common goal.
DUBNER: Let me ask you this about something you just mentioned about how we focus on the negative. It does seem to be a human trait. It does, however, also seem to be magnified by the current — meaning contemporary landscape — meaning communication media and so on. There are people who will do a comparison. If you look at a European King, in the 17th century, versus the middle billion of the world right now — the life of the middle billion today is better than the king on every ground, except housing, because palaces and castles are hard to beat. But in terms of just about everything else, life has gotten so much better. And yet we don’t talk about that too much and acknowledge it. We do tend to focus on these differences often. And I’m curious: look, you’re you’re an athlete, you’re not a philosopher, a psychologist or whatever. But I’m curious to know if you have a perspective on that.
TEIXEIRA: Yes. It’s a great perspective. One of the things I do when I pray is I thank God for being born the United States. I won the lottery just by being born in the United States. The freedoms that we have, the opportunities that we have. There’s no guarantee. Obviously there’s a lot of pain, and suffering, and poverty, that we’re all trying to to help and fix. But you have the opportunity because of the freedoms that we have in our country. We can sit here and focus on all the negative things in our country, and there’s plenty of them. We could fill a hundred of these podcasts with all the negative things that are happening in our country.
DUBNER: Well we do that most weeks. Just so you know.
TEIXEIRA: But let’s wake up a little bit and be thankful for what we have. Because there’s a lot of places in this world that, if I was born into, I would not be even close to the person I am today or even have close to the opportunity, because you start life with two strikes against you in third-world countries or countries where you have no freedom. I’m lucky to be born here and to live here.
DUBNER: Scholars say another way in which athletes and sports teams produce a social cohesion is that conflict resolution is handled really differently on sports teams. They say that outside of sports and the military, there’s a lot of passive-aggressive. So in an office world, you might send someone an e-mail with some snarky wording as opposed to going up and saying, “Hey listen, you did this, I did that, blah blah blah.” Tell me about a case, or maybe a general scenario, maybe it’s a teammate, maybe it was something — Jeter was famous for being a good captain on a number of dimensions. Talk about a way that you saw a problem get resolved on a team that you think is very different from the real world.
TEIXEIRA: That’s a great point, because I love it when guys bark at each other, real loud for 20 seconds, and it’s over. Because that is way more effective at conflict resolution than a guy for three weeks, or the whole season, being passive-aggressive and then creating this really weird situation around both these players. And then it permeates to the rest of the team. Then you start having cliques. I would much rather — and I’ve done it, with coaches, with players — where we’ve had it out, almost fist fight, and then 20 minutes later you’re fine.
DUBNER: Give me a for instance. What’s the scenario, what do you say?
TEIXEIRA: In 2015, my third base coach Joe Espada, who I love, told me to hold up at third base because I was going to score easily. I ended up getting thrown out. And he just missed — just totally, just botched the situation. And he knew he botched it. And I almost got hurt. I had to half slide, and it looked terrible, and we needed the run and all these things. I went into the dugout and I just started throwing stuff. I just went nuts. I had this rage.
DUBNER: That doesn’t sound very Tex to me.
TEIXEIRA: No, I had this rage inside of me, because I was so mad at the situation. The situation lasted 15 minutes. I told Joe after the game, “We’re all good. Hey, I know you’re trying your best.” And it was done. It was over with. And those type of situations — Tom Brady, one of the best of all time, barking at his coaches, barking at his offensive lineman, barking at his receivers. But guess what, people take less, to go play for the Patriots. Coaches take demotions to stay with the Patriots because they want to be a part of the Bill Belichick, Tom Brady atmosphere that they create there.
DUBNER: My Freakonomics co-author Steve Levitt did some research, and he found that pitchers essentially throw too many fastballs. Okay? So part of this is may be mistaken belief, and part of it is that many people are not good at randomizing, which is a useful trick when you’re trying to in any game theory thing. So let me just read you a tiny bit of this. I’m really curious to know what you have to say. When there are two strikes is when the scenario really happens. When there are two strikes, fastballs generate an OPS, that’s on-base plus slugging percentage, that is more than 100 points higher than non fastballs. The authors calculate that if a team’s pitchers reduce their share of fastballs by 10 percentage points, they would allow roughly 15 fewer runs in a season. About 2 percent of their total runs. Make sense?
TEIXEIRA: Yep. And I agree 100 percent. The issue is you have to take the pitcher’s skill and ability to perform that skill with two strikes. So, the pitchers that can throw curveballs, and change ups, and sliders with two strikes, do it. The guys that maybe bounce that pitch or hang that pitch, are going to throw fastballs. They’re going to get hit. So, the best pitchers in baseball, they throw more sliders and curveballs and change ups with two strikes because they can control it better.
And the last thing you want to do is get a guy down 0-2, throw three straight sliders in the dirt because you can’t control that pitch, and then have to come back with a 3-2 fastball, because the hitter knows that you can’t throw a slider for a strike. You don’t have any confidence. Your catcher doesn’t have any confidence, in you throwing an off speed pitch for a strike. And the hitter’s geared up for a fastball and that’s why those numbers get up there.
DUBNER: So what we need to ask Levitt — and I’m sure this is in the paper, and I don’t have it off the top my head — is whether they controlled for the efficacy of the pitcher.
DUBNER: Because you’re saying the good pitchers won’t do it.
TEIXEIRA: I agree. That’s the issue. The best pitchers can execute those pitches. I feasted — my entire career was based on a guy. Not getting me to chase the curveballs and the sliders in the dirt, and having to come with a fastball over the middle of the plate. That was the style of hitter that I was.
DUBNER: So, did you in your mind know, whoever’s on the mound, that they’re the kind a pitcher who doesn’t have the ability to throw the cutting? The off—
TEIXEIRA: Yes. So that was the preparation that I had.
TEIXEIRA: So I would ask the pitching coach, if I didn’t know this guy. Now, once I was in the big leagues for four or five years, I started knowing the players, and then I would only ask the hitting coach, “Hey this guy’s a rookie, what’s his percentage of off-speed strikes?”
TEIXEIRA: And if his percentage of off-speed strikes was really low, I’m just sitting dead red fastball. Why would I take into account a slider or a change up or split finger fastball that he doesn’t throw for strikes? I’m going to bet that the numbers hold up. He’s not going to throw a strike with that off-speed pitch, and he’s going to have to throw me a fastball that I can then hammer.
DUBNER: Who were the pitchers that just plagued you during your career?
DUBNER: Well, join the crowd.
TEIXEIRA: Yeah, and then and then you have weird guys like Aaron Sele, who didn’t throw more — by the time I faced him, didn’t throw more than 86 mph. I just could not hit him. Some really good pitchers had my number. But there are also some guys that weren’t All-Stars every season that had my number as well.
DUBNER: And does it become self-enforcing after a while? A pitcher like Sele, you think, “Man I can’t hit the guy.” And then—
TEIXEIRA: Sometimes it does. Yeah, confidence is huge in baseball. That’s why baseball teams and baseball players are so streaky. You have these guys that hit seven homers in a month and then don’t hit one for six weeks. Or a pitcher that wins 14 straight games and then the last month of the season can’t get out of the third inning, because the confidence to to swing at good pitches, to to get good results, it builds on itself. And you’ve heard, hitting is contagious. Well it’s not physically contagious. But mentally, when I see the three guys in front of me, just got hits, I go up there going, “Hey, this guy can be hit today. He might be an All-Star but this guy is going to get hit because those three guys in front of me just got just got base hits and now I’m next.”
DUBNER: Were you ever totally lost at the plate?
TEIXEIRA: Absolutely. I had stretches, whether it was a week or even a month, where I said, “This might be my last week in baseball. I am so bad right now. There is no way I’m getting another hit in Major League Baseball. I look awful. I feel awful. I can’t get a hit.” But then something just snaps.
And it’s just like in golf when you can’t make a short putt. You go an entire round or maybe an entire week, or you play three rounds, and you don’t make anything within four feet. You just can’t make that putt. Or your driver, you’re snap-hooking everything. And no matter what you do, no matter what you try, you just can’t hit that driver straight.
Happens in baseball all the time because it’s a very hard skill. Hitting a baseball is still the hardest thing to do in sports. And you have guys on the mound that are trying to get you out, and if you’re off a little bit mechanically, mentally, confidence-wise, and he’s on, you can have some bad nights.
DUBNER: So, how do you get back to success? Because I’m sure you’re trying to adjust — you are trying to adjust mechanically, psychically, and so on. What actually works?
TEIXEIRA: Shock the system. So, we talked about tricking the system, shocking the system. So, it’s either taking more batting practice or taking no batting practice. It’s changing your bat. It’s changing the way you stand just a little bit. Altering your stance just a little bit. Maybe just get a hard workout in. Maybe I’m a little too jumpy. I got a little bit too much energy — let me get a hard workout in before the game. I’m going to be a little slower, a little bit tired during this game. Or the opposite. I’m exhausted so I’m going to sleep all day. I’m not going to take batting practice. I’m going to get a massage. And really try to be fresh. It’s just completely changing up your system.
DUBNER: Would you ever change the P.B.J.?
TEIXEIRA: Yeah. I would go honey sometimes. Peanut butter and honey that was m —
DUBNER: Is that your slump food or—
TEIXEIRA: That was the slump breaker.
DUBNER: Yeah, that’s radical.
TEIXEIRA: I’m crazy.
DUBNER: Yeah, you are. For people again who don’t play baseball or know baseball, I’d like you to just describe a scenario — so, you’re a very, very, very good defensive first baseman, which is valuable but not necessarily so appreciated by the casual fan. There’s one aspect to playing in the field that people would love to hear about, which is, what you’re doing in your mind before every pitch.
So I’d love you to describe — pick a scenario. If it’s a real one, all the better. And maybe it’s a tight game. And maybe there’s a runner on first and maybe second. And maybe you’re holding the runner, depending. And then you’re thinking, “Here’s my pitcher. There is the batter. What pitch is going to be thrown. And what do I do if it’s hit to third, to short, to second, to me, on the ground, in the air, and so on.” Just talk about that moment.
TEIXEIRA: Yeah so, when I was at first base, I would actually play the entire scenario in my head. So I would say 2-and-1, one out. Ball hit to me, to my left I’m going to second. Ball hit in front of me, I’m just getting the out — whatever it might be. So I would play the entire scenario ahead of time, and I would actually position myself and then look to my right and left and maybe sometimes even behind me and say, “Okay, well if the ball’s hit this way I’m going to do that, if the ball’s hit like this I’m going to do that.” So I got bored during games, and so I started doing this probably five or six years into my career, where I would actually play the game in my head in between pitches. And it kept me from getting bored, but it also had a really nice result that I actually was prepared for when those different balls were hit to me and it actually worked out.
DUBNER: Now, doesn’t everybody do that? I mean I remember learning that in Little League. I mean that’s—
TEIXEIRA: Well everyone’s supposed to do that but a lot of guys don’t.
TEIXEIRA: A lot of guys completely space out. I mean, listen, when no one’s on it’s pretty easy. But when there’s guys on base, it kills me to see fielders going to the wrong base, not being prepared for different situations, outfielders not hitting the cutoff man. These are little things in baseball that I learned when I was young that I don’t think get taught anymore. You have a lot more players that are worried about analytics and don’t spend the time on the nuances of baseball, and the skills, and the subtleties that make you a great player.
DUBNER: We recently interviewed Lance Armstrong on the show and he argued that he and his team started taking E.P.O. because everybody else was doing it. And that if they didn’t they were, they were goners. That there was just no way to compete. You played in an era that was the end of the big steroid era, in which some of the best home run hitters in history were turned out to have all — many of them, doping. Mark McGwire, Barry Bonds. And then a few of your very prominent teammates, great baseball players, Alex Rodriguez, Robinson Cano, Melky Cabrera also were found to be doping. I’d love to talk — I’d love to hear about — first of all let’s start with this. Did you ever use performance enhancing drugs?
TEIXEIRA: No. Never. And I told myself — I got offered my rookie year. And I told my—
DUBNER: What did you get offered?
TEIXEIRA: I don’t even know what it was — I mean I don’t know what the name — some pill. I don’t know. I’m not sure what it was. And—
DUBNER: Who offered?
TEIXEIRA: A teammate — I’m not going to say who offered—
DUBNER: But I mean was a teammate?
TEIXEIRA: A teammate. Yeah. And he said, he said, “Tex you can’t play this game on milk and cookies.” And I just told him, flippant self at 22 years old. I said, “Well I am going to try.” And I told myself right then and there, if I have to take drugs, illegal steroids, to play this game I’ll retire. It’s — it’s not something—
TEIXEIRA: That’s the way I was I was brought up. It’s wrong. I can’t stand people that make excuses for breaking the rules. Our union has made rules and agreed to rules because it’s for the betterment of our entire union and for the betterment of the game of baseball. We agree to these rules. If you knowingly break those rules you should be punished to the utmost degree. And I don’t think our punishments are hard enough. We should have much stricter enforcement of the rules and much stricter punishments.
One of the the highlights of my career is I can look at kids — I speak to kids all the time. I speak to kids in Harlem and the Bronx and at home in Baltimore or wherever it might be. And one of the things I’m proudest to say to them is, “Yeah, I had a nice career, but I didn’t have to take steroids to make it. And you don’t have to cut corners.”
Because what kind of message am I telling kids or telling my own children. I have a 12-, 10- and 7-year-old. What kind of message am I telling them, “Hey kids it’s okay to break the rules. It’s okay to cheat. It’s okay to lie. It’s okay to steal.” These are just terrible things that we’re teaching our children. That you can go do these things in professional sports and get away with it. And really just get a slap on the wrist.
DUBNER: As I said, you had a very, very good career. Way better than solid. Some people say about different players, career was solid — it was a long and very good career. There was a World Series, there were a lot of individual honors, you hit very, very well. You fielded great. The Hall of Fame — it’s a funny thing — election these days is contentious in part because the baseball writers, who elect the Hall of Fame candidates, they’ve decided they don’t want steroid players in the Hall. Which is controversial. So there are a lot of guys who are not going in. I’m curious to know your feelings about it. Obviously you want to get in. I’m curious to know whether you feel you deserve it. I know you’re a humble guy and you’re probably not going to say yes, but I’d love to know what that thought process is like as you’re in this period right now between the end of your career and when you’re eligible.
TEIXEIRA: Yeah, I think about it. Definitely. But I don’t think I’ll get in. I think that I had a great career under different metrics. I do believe that some of the steroid guys are already in, and there are some guys that have taken P.E.D.’s that are in the Hall of Fame. Everyone knows that. But you’re going to start seeing some of those players get in. And I just think that under those metrics—
DUBNER: And that’ll keep you out, you’re saying.
TEIXEIRA: I’m not a Hall of Famer, yeah. 400 home runs, when guys were hitting 50 a year, my 30 a year didn’t look so good.
DUBNER: Don’t you think they might redo the metrics and a little bit and give extra points for playing clean?
TEIXEIRA: I hope so. If that’s the case I have a much better chance. But it’s not something I think about more than a few times a year, when we have these type of conversation. But it’s not something that I think about all the time.
DUBNER: Did you lead the league in P.B.J.’s or were a lot of guys doing that?
TEIXEIRA: I’m sure I did. And I also — one of the cool stats that I do own is most hit-by-pitch, in my career, by a switch hitter.
DUBNER: Oh nice, yeah.
TEIXEIRA: So I got that. I got that hanging, and one of the things I’m most proud of is hitting 30 homers and driving in a hundred runs for eight straight years. Because the first time I did it, I had to pinch myself. I was a second year player, playing for the Rangers, and I said, “Oh my goodness, I just hit 30 homers and drove in a hundred R.B.I.’s,” and being able to do that eight straight years is the thing I’m most proud of.
DUBNER: Yeah. It was a great career. As a New Yorker, I enjoyed watching you with the Yankees and I especially enjoyed getting to talk to you today. So thank you so much.
TEIXEIRA: Thank you.
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Freakonomics Radio is produced by Stitcher and Dubner Productions. Our “Hidden Side of Sports” series was produced by Anders Kelto and Derek John, with help from Alvin Melathe, Matt Stroup, and Harry Huggins. Our staff includes Alison Craiglow, Greg Rippin, and Zack Lapinski. The music you hear throughout our episodes was composed by Luis Guerra. Our show can also be heard on NPR stations across the country — check your local station for the schedule — as well as on SiriusXM, Spotify, and even your better airlines! Thanks for listening.[ + ]
Great athletes aren’t just great at the physical stuff. They’ve also learned how to handle pressure, overcome fear, and stay focused. Here’s the good news: you don’t have to be an athlete to use what they know. (Ep. 4 of “The Hidden Side of Sports” series.)
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Toby MOSKOWITZ: I would say most things that we think are true do turn out to be true. Not always for the reasons we think.
Toby Moskowitz is an economist who teaches at the Yale School of Management.
MOSKOWITZ: That’s right.
DUBNER: You have won a really prestigious academic award as one of the top finance scholars in the world. Why do you mess around with sports?
MOSKOWITZ: It’s called tenure. They can’t fire me. No, one of the things I tell my students all the time is, “Don’t go into this business unless you really love what you research.” So, sports has always intrigued me, and to be a little bit more serious — a lot of what I study is behavioral economics, and how people make decisions when faced with a lot of uncertainty. Sports is just a really rich field to look at those kinds of things.
This is a true fact. It’s why a lot of economists mess around in sports. It’s why you see a lot of sports-themed academic journals and conferences. Sports may not be nearly as important as education or healthcare or politics. But when you do research in those areas, it can be really hard to establish cause and effect; there are so many inputs of so many different types, and such hard-to-measure outputs. Furthermore, the incentives in education and healthcare and politics are often opaque — or, worse, twisted. In sports, the incentives are usually transparent, the results are clean, and if you like data — as economists do — well, sports provides boatloads of data. Most of which happens to be neatly categorized and extend back for decades.
Toby Moskowitz, along with Jon Wertheim, wrote a book taking advantage of these data. It’s called Scorecasting. In it, they challenge some of the most fundamental beliefs in sports. For instance: does defense really win championships, as N.F.L. pundits like to say, especially around this time of year? (Short answer: no.) What’s the biggest reason for home-field advantage? (Short answer: involuntary referee bias.) And what’s the real story behind one of the most compelling elements of sports: the hot streak?
MOSKOWITZ: There’s a huge academic literature on this. So, as an example, a player in the N.B.A. who’s hit a couple of shots in a row, his teammates will start feeding him the ball more. His coach will give him the ball more and he’ll start taking more shots as a result. There’s this belief that they’re hot.
Is this belief supported by the data? Is the player actually “hot?”
MOSKOWITZ: If you look at the actual evidence, you find either zero or something very close to zero in terms of predictability. It’s just a bad strategy.
Other scholars, we should note, challenge this conclusion. They argue that there is some evidence for the hot-hand theory. Where does Moskowitz land?
MOSKOWITZ: I’ll sum it up in the following way, which is our beliefs in streaks are much stronger than the data actually supports.
DUBNER: But don’t we know that confidence is a big contributor to good performance in any realm, and wouldn’t past success in sport contribute to greater confidence, which would then contribute to greater future success?
MOSKOWITZ: That’s the theory, but the evidence is that it just doesn’t show up. You could say, “Well, it’s hard to measure, right?” Because take my example of the N.B.A. shooter. “If they’re taking more shots or the defense tightens on them, it’s not the same experiment.” I agree. However, there have been experiments run where it’s a perfectly controlled experiment, and what was really interesting is that players who hit a couple of shots in a row did indeed remark that they felt more confident, that their mechanics felt good that day, they felt good. But the predictive value was absolutely zero.
J.J. REDICK: I am familiar with that study. I also did a version of this hot-hand study on my own.
That is not another economist. That’s the Philadelphia 76ers’ J.J. Redick, who’s played in the N.B.A. since 2006. Redick ranks No. 6 among active players in career three-point shooting percentage. The study he did was for a statistics class at Duke, where he played his college ball, and where Redick is still their all-time leading scorer.
REDICK: I went in the gym and I did four or five workouts where I would shoot 100 or 200 shots, and I would get to the point where I was in a rhythm. And I would note if I have a hot hand and I would record the result of the next shot. And I came to the exact same conclusion, that it is a fallacy.
Of course, measuring the hot hand idea in practice, or even an experiment, is different from what happens during a game, with people watching — millions of people if you’re an N.B.A. player.
REDICK: My mindset, and most players’ mindsets, is if you make two in a row, three in a row, your natural inclination is to get what we call a heat check in. And a heat check is — it’s not necessarily a wild shot — but it’s a shot that has a low probability of going in. So you made two threes in a row. Now the crowd is on their feet. The ball comes to you. It’s a fast break. You dribble up. Two guys are guarding you. Sometimes I shoot one-on-four. You shoot an off-balance three, and it’s one of those things in basketball culture, it’s understood, “Well he’s hot. He’s made two or three in a row, he’s allowed to sort of take a heat check.”
N.B.A. ANNOUNCER: It’s good! He’s as hot as a blowtorch! That’s a heat check, you know that was coming. It’s heat-check time.
REDICK: There’s got to be an element of true belief in yourself that every shot you take is going to go in, whether that’s rational or irrational. You just have to believe that. You cannot play a professional sport and be hesitant.
“You cannot play a professional sport and be hesitant.” “You just have to believe.” Whether it’s rational or not. Today on Freakonomics Radio: the latest installment in a series we’re calling “The Hidden Side of Sports.” In the first episode, we looked at how sports have throughout history mirrored society — which may explain why we care so much about an industry that dollar-wise, is actually quite small. In episode two, we looked at the economics of a single N.F.L. franchise, the San Francisco 49ers, who’ve been trying to recover from a debilitating losing streak. The third episode was called “Here’s Why You’re Not an Elite Athlete.” We looked at all the things that have to go right for an aspiring athlete — from talent to coaching to luck.
Today: the mental side of sports. How do athletes prepare for high-stakes situations? How do they recover when things go wrong? How do they develop a winning strategy when they know their opponent is thinking the same thing? We’ll hear from a mental-skills coach, athletes, and, of course, we’ll hear from some of our favorite economists.
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It’s natural enough to see elite athletes as finely tuned machines, like a BMW or a fighter jet. For starters, they’re usually bigger, faster, and stronger than the rest of us. Some of them, like Olympic gymnasts, are competing on a global stage at an age when most people are still struggling with acne. Also, even in sports that require over-the-top physical power — think of a clean-and-jerk in weightlifting or a brutal scrum in rugby — there’s a graceful element that, to the casual observer, can look nearly effortless. All these factors conspire to persuade us that an athletic endeavor is an almost purely physical endeavor; it’s easy to neglect what may be happening in the athlete’s mind. But if you talk to enough athletes and coaches and others, you discover that’s where a massive share of their energy is going.
Bob TEWKSBURY: I think developing a mental game plan is important for consistent success or consistent performance.
That’s Bob Tewksbury.
TEWKSBURY: I am the mental-skills coach for the San Francisco Giants.
DUBNER: And just give me in a nutshell your major league career as a pitcher yourself.
TEWKSBURY: I pitched in the major leagues from 1986 to 1998 with six different teams. I won 110 major league games, lost 102, had two arm surgeries, seven demotions, made an All-Star team, and experienced just about everything.
Tewksbury recently wrote a book called Ninety Percent Mental. He did not have such a long major league career because he threw the ball so hard. His success was rooted in control, and accuracy: Tewksbury had one of the lowest ratios of walks-per-nine-innings in baseball history.
TEWKSBURY: Correct. People know the strikeout people, but they don’t know the guys that don’t walk people.
When he retired, Tewksbury got a master’s degree from Boston University in sports psychology and counseling. He got his first coaching job with the Boston Red Sox; that year, they won the World Series for the first time since 1918.
JOE BUCK: The Boston Red Sox are World Champions!
During Tewksbury’s playing career, there was no such thing as a mental-skills coach; today, the vast majority of baseball teams have them. Here’s one of Tewksbury’s foundational beliefs, which he tries to teach to every player:
TEWKSBURY: Confidence is a choice. A lot of people think it’s a feeling. But if you wait for that feeling, it may never come.
“Confidence is a choice.” That seems intuitive enough, maybe even obvious. But it’s remarkable how easily even an elite athlete can get derailed.
TEWKSBURY: I remember a day in San Francisco, where I was pitching for the Cardinals, and the hecklers — you know, I didn’t know my mother had Army boots under my bed. They would say all these things, and it really distracted me, and my first thought was, “Well, I could always go back to school and become a physical education coach.”
There’s also the voice inside your head.
Shawn JOHNSON: Yes.
Shawn Johnson is a four-time Olympic medalist in gymnastics.
JOHNSON: Gymnastics is terrifying.
Johnson is 26 now; she’s been retired for years.
JOHNSON: I am terrified of gymnastics. I would never get up on a balance beam now and try to flip. I would hurt myself. Anybody in the world can be trained physically for an Olympic event. You can train your body to do it. Now training your mind is the hardest part because learning to overcome fear, learning to push aside thoughts that are negative, and still take that risk of injury, or of failure, or of falling on your face in front of the entire world, is really difficult to do.
Kerri WALSH JENNINGS: I was so afraid of losing.
That’s Kerri Walsh Jennings, one of the best beach volleyball players in history. She has three Olympic gold medals. But it’s a bronze medal, a third-place finish, that haunts her from the 2016 Olympics in Rio.
WALSH JENNINGS: I’m really working on letting go of it. To be very honest with you, getting bronze in Rio threw me for a loop. And it’s not necessarily losing — I’ve lost plenty in my life and I’ve had bad matches plenty. But I believe in the fairytale. Even if I’m having the worst game, I know there’s going be a point where things are going to shift because I’m never going to give up and I have that mindset “It’s coming, it’s coming, I got it.” I had a terrible match in the semifinals, and I just kept talking to myself, “It’s coming, it’s coming, and it never came.”
Because it never came, and because Walsh Jennings went home with bronze instead of gold, she’s preparing for another Olympics.
WALSH JENNINGS: I’m going for my sixth Olympics, and I’m turning 40, and I’m playing against these young kids, and it’s so nutty, but I’m still going through the same process of leveling up, aspiring to go higher, looking in the mirror, “Do you got it, do you want it? Yes? Carry on.”
But since Rio, the insecurities are still there.
WALSH JENNINGS: It’s exhausting. It’s really exhausting. Ever since then, I’m letting go of living in fear of that happening again. It’s been messy and sad and nonsensical, because one match should not define anyone. One bad performance in life — if you’re a doctor, a wife, an athlete, it should not define you. But I allowed it to define me. And I’m still working my way through it. I’m almost there.
That feeling Walsh Jennings experienced in Rio — of desperately waiting for the “real you” to show up, the you who’s practiced for thousands of hours and excelled at every level — that feeling is not rare. Consider the recently retired baseball player Mark Teixeira.
DUBNER: Were you ever totally lost at the plate?
Mark TEIXEIRA: Absolutely. I had stretches, whether it was a week or even a month, where I said, “This might be my last week in baseball. I am so bad right now. There is no way I’m getting another hit in Major League Baseball. I look awful. I feel awful. I can’t get a hit.”
It’s worth mentioning that Teixeira was not a borderline Major League player. He won all sorts of offensive and defensive awards, he won a World Series with the Yankees, and he hit 409 career home runs — No. 54 on the all-time list. But the line between success and failure was always right in front of him.
TEIXEIRA: Hitting a baseball is still the hardest thing to do in sports. You have guys on the mound that are trying to get you out. And if you’re off a little bit mechanically, mentally, confidence-wise, and he’s on — you can have some bad nights.
We were surprised at how often the word “fear” came up in our interviews with athletes. It’s another dimension on which we think athletes are so different from us — that they’re somehow fearless. Plainly, they’re not. But they do try to fake it.
Doug PEDERSON: Having a fearless mentality — I coach that way. I tried to play that way. You can’t live with fear.
Doug Pederson is head coach of the Philadelphia Eagles.
PEDERSON: It just can paralyze you, and you’re not going to have success in life.
Pederson spends a lot of time helping players mute that fear — or, better, crush it.The Eagles last year made the Super Bowl, and faced the New England Patriots. The Patriots, led by coach Bill Belichick and quarterback Tom Brady, had made it to eight Super Bowls since 2001 and they’d won five. So, a fairly intimidating team. But in the days leading up to the game, Pederson made sure his team did not think about that.
PEDERSON: We didn’t focus ourselves on the Patriots and worry about all the mystique because again, it’s fear. It’s going to paralyze you. If that’s what you’re worried about you’re not going to be able to play.
The Eagles, who had won zero Super Bowls, were underdogs. Just before kickoff, Pederson had a quick greeting with the opposing coach.
PEDERSON: I had just briefly met Coach Belichick in the past and that was really our first time to spend a minute together, and we basically just congratulated each other on our seasons and wished each other the best for the game.
Bill BELICHICK: Coach, congratulations. Hell of a year.
PEDERSON: But at the same time, internally, I was just thinking, he just had no idea what’s coming. Not saying they overlooked us, but that feeling can creep in. I was so confident in our guys and our coaches that I just felt that he had no idea.
PEDERSON: Alright everybody’s up, everybody up, everybody up, everybody up. Come on, 7, let’s go baby, let’s go, let’s go, let’s go.
Pederson’s fearlessness was made manifest toward the end of the first half. The Eagles had a small lead and a fourth-and-goal from about one-and-a-half yards out. The safe play, probably the smart play, was to kick a field goal. Pederson decided to go for the touchdown.
Cris COLLINSWORTH: This is an unbelievable call. This could decide the game.
ANNOUNCER: People say you’ve got to be daring to beat the Patriots on this stage, and Doug Pederson certainly showing a lot of confidence in his offense.
On the sideline, quarterback Nick Foles approaches Pederson to suggest a play.
Nick FOLES: You want “Philly Philly”?
You can hear Pederson think about for a second, and then approve:
PEDERSON: Yeah, let’s do it, let’s do it.
“Philly Philly,” or what would come to be known as “Philly Special,” was a trick play, the thing you draw up in your backyard on Thanksgiving. But it turned out alright.
Al MICHAELS: Caught. Foles. Touchdown! How do you figure?!
COLLINSWORTH: Breathtaking. In a Super Bowl, that’s a breathtaking call. You don’t make that, that one’s second-guessed forever.
Doug Pederson today:
PEDERSON: It’s definitely going to go down as one of the greatest Super Bowl memories.
But now it was only halftime. Pederson had another chance to be fearless in the fourth quarter. Now the Eagles were trailing;
… they had the ball near midfield facing another fourth down.
MICHAELS: For the moment they’re going to leave the offense on the field. Do you dare?
PEDERSON: There was just six minutes or so left in the game, and if you remember the Patriots didn’t punt a single time in the football game. We were struggling to stop them and I just knew there’s no way I’m going to punt this football and give Tom Brady the ball back where he could either run the clock out and win the game or go down and score again. So I wanted our team to control our destiny. And in my gut, I said, “This is the right time to do it.” I didn’t flinch. Called the next play on fourth down and we got it by a yard.
MICHAELS: And Foles under pressure, throws, caught, just enough for the first down.
PEDERSON: And we ultimately went down and scored the game-winning touchdown.
Merrill REESE: The Philadelphia Eagles are Super Bowl Champions!
Pederson, of course, was just the coach; he didn’t actually have to run the plays. For the people that do, who have to perform difficult physical feats under massive mental pressure, how do you shed your fear, gather your confidence, and focus on the task at hand? As Bob Tewksbury told us, it generally starts here:
TEWKSBURY: Developing a mental game plan is important for consistent success.
Okay, so the mental game plan starts when?
TEWKSBURY: It starts with the preparation. What time do you get up, what time do you eat lunch, what time do you go to the ballpark? What do you do when you’re at the ballpark? And more specifically as you get closer to game time, what do you do from a mental perspective? Jon Lester uses a concentration grid.
Jon Lester, whom Tewksbury coached with the Red Sox, has been one of the better pitchers in baseball for many years.
TEWKSBURY: He’s channeling his mind to get ready to perform. In the transition away from the day to getting ready to pitch, he needs to make his world a little bit smaller. That leads into using the imagery program of seeing himself perform and doing pregame rehearsal of the lineup that he’s going to face. Imagery happens better when you are relaxed, through the breathing exercises, and then the imagery starts. When he goes out to warm up, he can recall those images of what he wants to do with the baseball.
Now it’s time for what Tewksbury says is one of the most important components of the mental game: self-talk.
TEWKSBURY: I like to have affirmations or mantras, essentially, that players can use in performance when things start to go awry. I call them anchor statements, and those anchors would be: “See it, feel it, trust it.” “Smooth and easy.” “I got all it takes to beat the competition.” “One pitch at a time.” What you say to yourself, how that little man affects performance, how to understand it, change it, correct it, minimize it, and move forward. Without them, your performance could get swept away like a boat in the ocean.
Brandon McCARTHY: I do think there is something to that.
That’s Brandon McCarthy, who just retired after pitching in the major leagues for 13 years.
McCARTHY: Once the ball’s coming back from the catcher, you’re still doing a quick breakdown of what just happened. Then it’s slowing down my breathing, getting myself back to simply focusing on the execution and at times that’s been based on having a little mantra. “Good direction, good angle, quality pitch.” And you just say that a few times and it’s something that calms the mind and enhances some of the delivery things that I’m working on.
REDICK: The mind has incredible power.
J.J. Redick again.
REDICK: The mind is as big of a separator for professional athletes as any physical tools or physical liabilities that a player may have.
He’s been doing some form of self-talk for many, many years.
REDICK: From ages 8 to 12, it was a lot of imagination. It was a lot of playing imaginary games.
And then years later, playing for Duke, in the conference championship …
REDICK: We were down 15 points with 10 minutes to go. I blacked out and just went crazy in the last 10 minutes and had 23 points.
ANNOUNCER: Fires a three, made it! Holy cow he made another! Are you ready to change your M.V.P. vote? J J Redick, putting a show on!
REDICK: And we won the A.C.C. championship, and in the postgame press conference I said, “I’ve played that game in my backyard 100 times.”
Mental preparation and visualization are particularly important for those pressurized moments when the ball is not yet in play, and it’s your job to put it in play. Picture a tennis or volleyball player about to launch a key serve, a golfer standing over a drive on the 72nd hole of a tournament, or an N.F.L. placekicker preparing for a game-winning kick:
Robbie GOULD: When you’re young, you want to kick a bunch of footballs to figure it out.
That’s Robbie Gould of the San Francisco 49ers. He’s one of the best kickers in N.F.L. history.
DUBNER: Last year, you missed one field goal?
GOULD: I missed two.
DUBNER: Two. So 30-for-32 or something?
DUBNER: Sorry, 39-for-41.
GOULD: Who’s counting, though?
Gould says N.F.L. kickers spend most of their time not kicking footballs.
GOULD: You can take mental reps so that way you’re not using your leg, because every kick that you take is a kick off your career. So the more that you visualize, the more that you mentally go through situations, and you talk through situations, it makes those situations easier, and you’re not wasting reps.
This preparation doesn’t just happen during the workday, but also at home.
GOULD: I’ll get home about 5:30, I’ll have dinner with my family, I’ll play with my kids, do bath time, read them a book, and then put them down. Once they go to sleep, then I’ll pull out my iPad, start watching film, going over game plans, going over what we might have to do that week, whether it’s weather, playing in a certain place with crowd noise, or something that happened in practice. You’re just always thinking of ways to make yourself better.
On some dimensions, making yourself better as an athlete has never been easier. Like the rest of the modern world, sports are undergoing a revolution in data analytics — aren’t they?
MOSKOWITZ: Look, to say that data analytics is revolutionary is a bit strong. I view it more as evolutionary.
The Yale economist Toby Moskowitz again.
MOSKOWITZ: What you’re trying to do is make a judgment. That judgment is based on intuition, it’s based on theory, as well as it’s got to be based on data. That’s what science is. Every good science is a combination of both.
So how much do the athletes partake in this data evolution?
WALSH JENNINGS: We have heat maps. There’s two applications that break down where every serve is coming from, how a hitter does when she gets served in the middle or short or wide, and we watch a ton of video. So all of that is happening.
Kerri Walsh Jennings again.
WALSH JENNINGS: I do not do well with all of that sensory input. I want to feel it, and certainly know their tendencies, but that’s where I want to finish it. I don’t need to know the rest.
REDICK: I ration data to myself. I don’t let myself read all of it.
The 76ers’ J.J. Redick again:
REDICK: If you’re obsessing about these numbers on a daily basis in the middle of the season, I’m just going to be honest, I’m a little bit of a head case. I don’t want to be in the middle of a game going to my left and saying, “Wow, this shot is 15 percentage points worse than if I was on the other side.” You just can’t do that.
Maybe it’s just too much to process when you’ve got the ball. On defense, meanwhile:
REDICK: I’ll look at all of that data for the people that I guard.
Redick recalls a defensive assignment he had a few years ago in a playoff game. The data revealed that the player he’d be guarding was a great three-point shooter, but:
REDICK: If you run him off the line and he has to take a pull-up two or a runner, a floater, 5–7 feet from the basket, this guy was shooting low 30’s.
Low 30’s meaning his make percentage. Which is pretty low for a two-point shot in the N.B.A. So whenever this guy got the ball in three-point range, Redick stayed in his face:
REDICK: For the whole series, I didn’t care if he beat me off the dribble at all. And he shot 27 percent from two for the series. So I did my job. That’s an example where you used the data available and it works.
The sport that’s seen the most use of data for the longest time is baseball. That’s partly because some of the early data nerds happened to be baseball fans. But also, the sport lends itself to analysis: every pitch, every at-bat, every ball put in play is an independent action that can be independently measured. Even though there are nine players on a team, they don’t interact with anything like the complexity of players in football or soccer or basketball or hockey.
One obvious change in baseball, facilitated by data, is how a manager will shift his defense in response to the opposing batter’s tendencies. Toward the end of his career, Mark Teixeira suffered from this change: once teams knew exactly where he was most likely to hit the ball, they would shift their defenses; what used to be a ground-ball single up the middle was now an easy out.
DUBNER: I’m curious the degree to which you think that rise in analytics and the use of the shift was a contributing factor to your decline and how much of it was just the natural cycle of an aging baseball player.
Mark TEIXEIRA: It’s probably 70/30, just the natural age. Without analytics I still would be retired. Analytics doesn’t make your wrist blow out. Analytics doesn’t make you tear up your knee. But I would say that analytics took numbers that should have been better and decreased them.
DUBNER: What are some ways that you benefited from analytics? I don’t know if you were a tape rat, if you watched a lot of tape. I’m curious whether you studied pitchers for their tendencies?
TEIXEIRA: I didn’t benefit, I think, at all. I wasn’t the guy that went up there and said, “Okay, it’s 2-1, this guy is a 73 percent chance to throw a backdoor slider.” I never did that. And there’s a whole bunch of players that still don’t look at tape.
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We’ve been talking about the mental side of sports — so far, mostly from an internal perspective: using your mind to drive your body’s performance. But there’s a whole other, external perspective to consider: outhinking your opponent. And this gets us into what economists call game theory.
Steve LEVITT: Game theory is a part of economics which is actually quite different than most of the rest of economics, because most of economics focuses on either cases where there are many, many, many people interacting, and that’s what we call perfect competition, or where there’s exactly one person, like a monopolist, interacting with many people.
That’s my Freakonomics friend and co-author Steve Levitt. He teaches economics at the University of Chicago.
LEVITT: But game theory is economics applied to the interactions of two or three or four or five individuals or firms or actors, and so game theory, it turns out, has very different predictions and kinds of predictions than the rest of economics.
DUBNER: Levitt, would you consider yourself a sports economist?
LEVITT: Absolutely not. I’ve written papers about sports, but I’ve only written about sports as a vehicle to understand bigger economic concepts. Sports happened to be a place where there’s often really good data and really well-defined and simple incentives in place, so that you can match data to incentives to try to answer questions that economists want to answer more generally.
Questions about cheating, for instance. In one paper, Levitt analyzed sumo-wrestling data and found what he believed was widespread match-fixing.
LEVITT: So it really looks like a quid pro quo — there’s a deal worked out where if you let me win when I really need it, the next time we meet, I’m going to throw the match and let you win.
In another paper, Levitt found evidence of racial bias in the TV game show The Weakest Link — not quite a sport, I know, but other economists later did similar research and found racial bias among N.B.A. referees and major-league umpires. Levitt has also studied the details of in-game decision-making in professional sports. In a paper he co-wrote with Ken Kovash — a one-time University of Chicago research assistant, now a Cleveland Browns executive — Levitt looked at how good N.F.L. offenses are at confusing or deceiving the defense.
LEVITT: We looked at whether teams are making the right choices between running plays and passing plays, and our conclusion is that we see that on average teams seem to make a mistake.
The mistake is, essentially, being too predictable.
LEVITT: They seem to not throw enough passes, relative to running plays. And N.F.L. teams in particular have lots of serial correlation.
“Serial correlation” meaning the previous play is too predictive of the next play. Ideally, you want the play-calling to appear nearly random, to maximize the element of surprise.
LEVITT: It turns out the play that you just ran has a very large influence on the next choice. And interestingly, and almost embarrassingly funny to an economist, is that it’s exactly when that play did badly. So if you do a running play and it didn’t do well, you are much less likely to call a running play the next time because of some belief that, “Well if it didn’t work last time, it’s not going to work this time.”
There are, of course, other factors to consider: if a run play fails, you’ve got more yardage to make up, which might argue in favor of a pass play. But in the final analysis, Levitt and Kovash found that teams were leaving points on the table.
LEVITT: We think the stakes are really high. The magnitude of the mistakes that they made were associated with scoring an extra point a game, which doesn’t sound like much, but an extra point a game would turn into about half of a win per season, and that’s worth about $5 million a year. So it looks like roughly a $5-million-a-year mistake. Currently in the N.F.L, the number of pass plays is about 58 percent. And our belief is the optimal looks much more like 70 percent. And so there really should be dramatically more passes in the N.F.L.
Levitt and Kovash also looked at a game-theory question in baseball: how well do pitchers randomize their pitches? The best way to fool a hitter is to throw a fastball when they’re expecting a curveball or a slider, or a curveball or slider when they’re expecting a fastball. Game theory in action. So, how well do major league pitchers do at defying expectations?
LEVITT: It turns out, all major league pitchers, on average, there’s an enormous overabundance of fastballs being thrown. And by that I mean when pitchers throw fastballs — controlling for the situation and controlling for everything imaginable — it turns out that on average, pitchers are doing worse when they throw fastballs than when they throw curveballs or sliders. That suggests that pitchers are not doing what game theory says, which is balancing off the three different kinds of pitches.
TEIXEIRA: I agree 100 percent.
That, again, is former baseball star Mark Teixeira. We’d asked him about Levitt’s research showing that pitchers are too reliant on fastballs. But it’s not so simple as merely randomizing, he said. Imagine you’re the pitcher, you’ve got two strikes on the batter, and maybe also a runner on third.
TEIXEIRA: The issue is you have to take the pitcher’s skill and ability to perform that skill with two strikes into account. So the pitchers that can throw curveballs and change-ups and sliders with two strikes, do it. The guys that maybe bounce that pitch or hang that pitch are going to throw fastballs. And so they’re going to get hit. So the best pitchers in baseball, they throw more sliders and curveballs and change-ups with two strikes because they can control it better.
In their study, Levitt and Kovash actually did factor in pitcher quality. But, even when controlling for pitcher quality: they found too many fastballs. That was good news for a hitter like Teixeira.
TEIXEIRA: My entire career was based on not getting me to chase the curve balls and the sliders in the dirt, and having to come with a fastball over the middle of the plate. That was the style of hitter that I was.
Knowing about this fastball surplus would be especially useful if you are, say, the general manager of a baseball team.
LEVITT: It’s funny. We did get some time with the general manager of a major league club that I will not name to protect the identity of the innocent. The executives looked at the data and said, “This is incredibly convincing and I think you’re absolutely right.” And then the general manager said, “But what am I supposed to do about it?” And I said, “Throw fewer fastballs.” And the guy said, “How in the world am I supposed to get my team to throw fewer fastballs?” And I said, “Well, you’re the general manager, why don’t you tell them to throw fewer fastballs?” He said, “I can’t do that.”
I had anticipated that, so I said, “Here’s my other suggestion. There are eight catchers available on the free-agent market, and I’ve calculated over the last three seasons what share of fastballs have been thrown when each of these eight catchers have been behind the plate. And there’s a big difference, and these two catchers have actually called games with something like 4 or 5 percent fewer fastballs per game. And my suggestion is you go pick up those catchers on the free-agent market.”
Well, they didn’t do that either. Instead, they stuck with their current catcher, who called the highest share of fastballs of any catcher in the league.
This disconnect between the data and behavior suggests a few things. The first is that decision-making in sports, while trending toward the scientific-ish, is often still not that scientific. It also suggests just how strong habit can be, and our belief in intuition. And, maybe more than anything, it suggests that in the heat of competition, the mental state of a given athlete can be fragile. Brandon McCarthy told us there were times when a particular pitch in his arsenal just became unavailable.
McCARTHY: Mentally, you just couldn’t imagine throwing that pitch where you wanted.
In McCarthy’s case, it was his fastball. The problem started when he was pitching for the Los Angeles Dodgers and followed him, off and on, to the Atlanta Braves.
McCARTHY: I mean, your brain just — I couldn’t — I would lay down. You close your eyes and try to picture throwing that. It truly felt like your brain went in a Tilt-a-Wheel and you just couldn’t, you couldn’t picture it. No matter how hard I tried I couldn’t imagine doing it. It just went haywire. So when it would happen in a game, you would try and throw everything else to make something work and keep going as long as you can. But you’re very aware that you’re, you’re now trying to run a race except you’ve lost one of your feet.
I was convinced early on it was a mechanical thing and it feels like it’s something physical that eventually becomes mental and then you just can’t see otherwise. So I really — I don’t know. I just know I’m fortunate that it happened late enough in my career that I could get past it, or at least work around it.
Most of the best athletes in the world are are the ones who can control something in their mind just a little bit better than everybody else can. They can be physically gifted, able to do certain things that others can’t, and that last bit is just how much better they are mentally in some capacity that we haven’t figured out.
I asked McCarthy how much of that mental advantage lies in the ability to self-diagnose in the moment.
McCARTHY: It’s a tremendously large component. Not just the ability to diagnose but the ability to fix instantly. Not just “I’m not doing this well today. This is what I have to work on before my next start.” It’s, “How do I fix this for the next pitch?” And watching Clayton Kershaw in L.A. for the last three years—
Clayton Kershaw, McCarthy’s teammate during that time, is one of the most dominant pitchers in baseball. One thing that McCarthy particularly admired about Kershaw—
McCARTHY: —is how quickly he fixes something where most everybody else spirals, and it turns into an okay outing or a poor outing, his turns into a just a less-great outing, because he fixes the little thing that’s going wrong. And then even if it’s still not great it’s much better and then by the next start he fixes it again. That’s the diagnosing and the ability to fix immediately that the brain and physical ability to do that is very rare.
DUBNER: Did you pick his brain when he was a teammate of yours?
MCCARTHY: As much as you can. But one thing I’ve noticed when you talk to players who are really, really great and they’re historically great, is a lot of them can’t explain the things that they do. That’s why a lot of them make for bad coaches. I’ve had Greg Maddux in different camps with me before and, “How do you throw your changeup?” And it’s, “I grip it like this and I throw it.” Well, thank you. That’s not — it wasn’t of any help to me. But in his mind, it makes complete sense.
Bob Tewksbury, the former pitcher and now mental-skills coach, argues that the ability to self-diagnose, and self-correct, in the moment, is among an athlete’s most important tools.
TEWKSBURY: That’s the ability to have consistent performance. And what I mean by that is, you’re not always going to go out and perform well every game. What happens to athletes is they get to that situation and then they don’t know how to manage themselves out of it. There’s a lot of great “five o’clock hitters” — guys that hit the ball very far during batting practice, but can’t hit in the game. And there’s a lot of pitchers who pitch no-hitters in the bullpen and can’t take it with them across the lines.
I asked Tewksbury to explain how a pitcher like him, in the heat of competition, could get himself back in synch if his mechanics started to go haywire.
TEWKSBURY: So, my mechanics — you step back with your left foot; you rotate your right foot adjacent to the pitching rubber; your hips turn clockwise toward third base; you lift up your left leg; as you do that, simultaneously your hands are together at about the waist, waist to the shoulder height. Then your hands: as your body starts to go forward toward the mound, your hands separate with the ball coming out of your glove. Your body continues to glide toward home plate. Your left shoulder should be in line with your target as your arm takes its arc and path and gets into a position to throw. Now your body is square to home plate, your left leg has hit the ground, your left knee is bent, and the arm continues its arc, and you throw the pitch to your intended target. So, there’s a feeling that happens with that. When that is all in synch, you know that the ball can be located at your intended spot.
And what if the ball doesn’t hit your intended spot?
TEWKSBURY: So, say I throw that pitch, and I bounce it in front of home plate. That tells me that my body was too far in front of my release point, so that the only place the ball would go would be down. Conversely, if my body was lagging, or if my arm was lagging, the ball would be high. Once you know how your body responds, you’re able to make that correction.
Simple, right? And remember, you’re not just throwing the ball into space; you’re throwing to a supremely tuned and muscled opponent gripping a long piece of hardwood, preparing to hit the ball as hard as he can right back in your direction, from just 60 feet, 6 inches away. So what do you do, in that moment, if your mechanics are off; if your confidence abandons you; if the only thought in your mind is that your next pitch is about to be crushed?
TEWKSBURY: What you do is you delete the thought. I’m going to just change the channel. It’s as if I’m watching this bad channel, I’m going to change it to ESPN. Delete the thought, take a breath, and then reframe that thought or use an anchor statement.
Some of Tewksbury’s anchor statements, as you’ll recall:
TEWKSBURY: “See it, feel it, trust it.” “Smooth and easy.” “One pitch at a time.”
And if that doesn’t work, here’s what Tewksbury suggests:
TEWKSBURY: Taking a tongue depressor time out. I tell pitchers to tape two tongue depressors together, put it in your back pocket, and when things get tough on the mound, call a timeout, go back behind the mound, clean your spikes, or make pretend you clean your spikes, and that allows you more time to take your breath to refocus. That’s a lot better than going around the mound, walking around the mound, rubbing up the baseball, because your behavior is really adding to your frustration. You’re not doing anything to slow down.
And slowing down your mind is almost always a good thing. When he coaches athletes, Tewksbury uses a simple, four-step mantra to get their mind right. Step one: slow down. Step two: breathe. Seriously — under pressure, it’s easy to forget to breathe. Breathing is important, and it helps you slow down. Step three: engage in some positive self-talk: “I got this.” Step four: focus on the task at hand. There, now you’ve got it: Bob Tewksbury’s recipe for success in athletic competition under pressure.
There’s just one problem. For every athlete trying to harness their own mental fortitude, there’s an opponent trying to mess with them. Trying to invade their mental space; trying to plant a seed of doubt, or confusion, or fear. That is the premise behind one of the most entertaining mental battles in sport, a practice in American football known as “icing the kicker.”
There’s just a few seconds left on the clock. One team trails by a single point, and they’re lining up for a game-winning field goal. The kicker goes through his mental preparation: he breathes; maybe he invokes a mantra; he focuses on the task at hand. And then just as the ball is snapped, the other team has called a time out. This is how you ice the kicker. The opposing coach wants to freeze the kicker out of his routine; he wants to make him think a bit more about the enormity of the circumstance.
Icing the kicker has become a standard move in these situations and occasionally it yields results: in the Eagles-Bears playoff game a couple weeks ago, the Bears’ kicker was iced and he missed the kick. But overall, statistically, is icing the kicker effective?
MOSKOWITZ: It’s certainly the conventional wisdom.
That, again, is the sports-loving Yale economist Toby Moskowitz, who covered this phenomenon in his book Scorecasting.
MOSKOWITZ: It’s something every fan believes and, in fact, every fan expects a coach to do. But it turns out there is no effect from this. And if you think about it logically, it makes sense. These are kickers — if you make it to this level in the professional football league, they’ve kicked the ball thousands upon thousands of times in many pressure situations. They are selected on that dimension — as one professional kicker said to us when we were writing the book, “If something like that bothers you, you probably shouldn’t be kicking in this league.”
That professional kicker, it turns out, was none other than Robbie Gould, whom we heard from earlier.
GOULD: You’re just always thinking of ways to make yourself better.
Gould prides himself on mental toughness and mental preparation. This includes practicing, alone and with his team, for any game-time possibility — including being the kicker who is getting iced.
GOULD: We’ll actually line up the field goal, snap, hold, but won’t kick it. So, you go through your entire routine, whether it’s the head coach calling a timeout to ice you, whether it’s a bad snap. These are all situations that come up that you have to be aware of.
Part of that awareness is the particularly intense pressure of the position Gould plays. Let’s say you kick the game-winning field goal — you’re the hero. And if you miss it?
GOULD: I don’t get another chance to get that play back. I have to wait for the next week. Some players, like wide receivers, defensive backs, they have 70 plays a game, so if they screw up they can go right back to it. Well, as a kicker, you have to make them count, because the point totals in the National Football League are staggering to the point of how many close games there are.
Gould just finished his 14th N.F.L. season, and his second with the 49ers.
GOULD: Yeah, I played 11 with the Chicago Bears. I played one with the Giants.
The Bears, remember, were eliminated from the playoffs this year when their kicker was iced, and missed the game-winning field goal. Gould, meanwhile, had another excellent season this year for the 49ers: he made 33 field goals and missed just one, though he did miss two extra-point attempts. His team, meanwhile? It was a mostly-dreadful season, marked by injuries and losses. So what happens to Gould next year?
GOULD: You never know. You can be here one day and gone the next. I got cut in Chicago on Labor Day weekend after making the team. It’s just how it is.
DUBNER: Had you missed a couple in the game?
GOULD: I missed a couple in preseason, but it was just a lot of different things. Salary-cap issues. I had a big cap number that year.
DUBNER: What’s the most you’ve ever earned in a year?
GOULD: $4 million. This is a business. This is not a college football scholarship. It just isn’t. It doesn’t matter what round you’re picked in, it doesn’t matter how much you’re making, how old you are in the league, how experienced you are. Every day you have to earn your keep.
Of all the mind games a professional athlete must master, this is perhaps the most difficult: how to sustain your career once you’ve reached the elite level. Once you’ve realized that, as good as you may be, there are 100 people nearly as good — maybe even better — who can’t wait to take your place. The life of a professional athlete is relatively short; if you’re lucky enough to be paid well, you have a relatively small window of time to take advantage. And the people who pay your salary — well, they’d be very happy to pay someone else less.
So, coming up next time on Freakonomics Radio, we get into perhaps the toughest competition in all of sports. We’ll start with the management side. We’ll hear from team owners and league officials from the big team sports, like Major League Baseball, as well as newcomers, like the U.F.C. We’ll hear their dreams of expansion, their excitement over legalized gambling, what they hate about their own sports, what they think is the sport of the future, and where the money goes.
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Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Alvin Melathe, Anders Kelto, and Derek John, with help from Matt Stroup, and Harry Huggins. Our staff also includes Alison Craiglow, Greg Rippin, and Zack Lapinski. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.
Here’s where you can learn more about the people and ideas in this episode:
Jim Yong Kim has an unorthodox background for a World Bank president — and his reign has been just as unorthodox. He has just announced he’s stepping down, well before his term is over; we recorded this interview with him in 2015.
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On Jan. 7 came surprising news out of Washington — as if any news out of Washington isn’t surprising these days. But World Bank president Jim Yong Kim announced his resignation, which was surprising, considering he had a few years left on his term. The news ahead will be about his replacement, and President Trump’s historical antipathy toward organizations like the World Bank. In the meantime, we thought you might like to hear this episode from 2015, when we interviewed Kim for Freakonomics Radio. It’s called “Hacking the World Bank.”
[MUSIC: The Diplomats of Solid Sound, “Soul Slaw” (from Instrumental, Action, Soul)]
Back in 2012, Jim Yong Kim was minding his own business, carrying out his duties as president of Dartmouth College. He was in his third year there. Then his phone rang. And he learned that the president of the United States wanted to hire him away.
Jim Yong KIM: Quite literally on a Monday, a Dartmouth graduate from 1983, Tim Geithner, called me and said, “Jim, would you consider being president of the World Bank?” This is the work that I devoted my entire life to: development and fighting poverty. I called the chair of my board right away and I said, “The president is asking me to consider this. I have to do it.” That was a Monday. I flew down and met with President Obama on a Wednesday …
Stephen J. DUBNER: Did you know him previously?
KIM: I had met him once before. But my first sit-down meeting with him was in the Oval Office to talk about this particular job. Then, on that Friday, we were in the Rose Garden, and he was announcing me as the U.S. candidate.
President Barack OBAMA in the Rose Garden: When a nation goes from poverty to prosperity, it makes the world stronger and more secure for everybody. That’s why the leader of the World Bank should have a deep understanding of both the role that development plays in the world, and the importance of creating conditions where assistance is no longer needed. I believe that nobody is more qualified to carry out that mission than Dr. Jim Kim.
KIM: I still had to campaign. I had to compete for the job. But it all happened in the course of one week. It was really quite a whirlwind.
DUBNER: Now, most previous World Bank presidents were either former bankers, lawyers, or government officials. You, meanwhile, are a physician, anthropology Ph.D., college president, spent most of your life in academia, non-profits, not even … I say ‘not even’ an academic economist as though that were a higher credential, which I don’t mean to imply. But what does it say about the World Bank, President Obama, you, or the shape of the world — especially the shape of development and new ideas in development — that a guy like you wound up in a place like this?
KIM: Well, I remain extremely grateful to President Obama. Now, let me tell you how that conversation went. He put it right on the table as he always does. He said, “Look, Jim, what am I going to tell the people around me who tell me that I should appoint a macroeconomist? What justification can I give them for nominating you?” I started right off by saying, “Well, President Obama, have you read your mother’s dissertation?” He sat back, looked at me and said, “Yeah, I have.” I said, “Well, you’ll remember that your mother argued that the entire world thought that the artisanal industry in Indonesia would be wiped out, especially metal workers, by globalization. But what she should showed was that, in fact, that industry thrived. Globalization actually gave a boost to that industry.” I said, “That’s what I do. I’ve been doing development on the ground for the last 25 years. And so while I’m not a macroeconomist, I do take a look at things like how incentives work and the reality of development efforts on the ground. I will always bring that perspective.” He looked at me and said, “Okay, I get that.” Later, in a more relaxed moment with President Obama, he said, “You know Jim, I have to say, that’s one of the best ploys I’ve ever seen. Reading the President’s mother’s thesis is a good strategy.” And we had a good laugh about it.
DUBNER: Yeah, as you were telling the story, I was thinking, “I know this is meant to illustrate the strengths of economic thinking vis-a-vis development, but really I’m thinking most people out there when they hear this are going to take it more as an interview tip.” Whenever possible, if the boss has a mother who wrote some dissertation, prepare.
KIM: Prepare, and especially if it’s relevant, which it very much was.
DUBNER: You lucked out, you have to admit, that it was relevant.
KIM: I have to.
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[MUSIC: The Juice To Make It Happen “Horny Toad”]
Okay, so here is the best part of the story. It wasn’t just that Jim Yong Kim knew that President Obama’s mother had written a dissertation that was related to his development work — and then went and got it in order to prepare for his meeting with the President. Uh-uh. That’s not the way it happened.
KIM: Well, I was so fascinated by President Obama — dating back to 2004 — that I actually bought her unpublished thesis from the University of Michigan archives and faithfully read the whole thing long before I went in to that interview with President Obama.
But let me say this: the more you hear from Kim, the less surprised you are by anything he’s accomplished. And now he is taking the World Bank in a very different direction, which we’ll hear about. But first, let’s begin at the beginning…
KIM: My name is Jim Yong Kim. I’m the president of the World Bank Group. Our organization last year lent and provided grants of about $65 billion. Our mission is to end extreme poverty in the world and to boost what we call ‘shared prosperity,’ which is a notion that focuses on ensuring that the bottom 40 percent of any developing country shares in whatever economic growth there is.
DUBNER: [The] World Bank is fairly impressive. I understand that your childhood dream — as an immigrant kid in Iowa where your father was a dentistry professor — was to be quarterback for the Minnesota Vikings or the Chicago Bears, so I’m sorry that that didn’t work out. Are you okay with where you wound up?
KIM: I’m very happy with the way it worked out. But in the middle of Iowa, boy, the greatest thing that you could ever become is a professional athlete for one of those teams. I was fully part of that culture and I actually played quarterback for my high school football team. Although some people are impressed with that, I then also have to admit that our high school football team had the longest losing streak in the nation when I was the quarterback.
DUBNER: That’s still a record of some sort that you’re attached to.
KIM: It’s a record. It sure is.
OBAMA in the Rose Garden: Jim was also the chair of the department of global health and social medicine at Harvard Medical School. He has earned a MacArthur ‘Genius’ Fellowship. For the last three years, he has served as the president of Dartmouth College. I should also mention that, after immigrating to this country from Korea at age five, Jim went on to become the president of his high school class, the quarterback of the football team, the point guard of the basketball team. I just found out he is a five handicap in golf. I’m a little resentful about that last item. But he does it all.
Becoming an M.D. and then an anthropologist, was not Kim’s original plan.
KIM: Let me tell you the story, Stephen: my mother is a philosopher. She’s still alive, still working on her writing and very involved in her work on East Asian philosophy. My father was a dentist. Dentists are extremely practical people. So I had these two influences in my life. One day I came home from school, and this was one of my first semesters at Brown, and my father picked me up from the airport, which is about 30 miles from our hometown in Iowa. He said, “So, Jim, what do you want to study?” And I said, “I’d like to study politics and philosophy, and I’d like to become a politician.” He slowly pulled the car over to the side of the road, looked back at me and he said, “Look, Jim, when you finish your internship and residency, you can do anything you want.”
I have had this very practical father, who said, “Look, you’re an Asian in this country, no one’s going to give you anything. If you think you’re going to make it as a politician, you better think again. You can do that, but first and foremost get a skill where you actually can help people.”
DUBNER: Now, let’s go back when you were in nonprofits — or NGOs, or whatever form they were in — where you were trying to bring healthcare, deliver all kinds of different necessary and often very primary health care to especially poor places around the world. You were not a fan of the World Bank. You were active, I’ve read, in the ’50 Years is Enough’ movement, the campaign to shut the Bank as well as the I.M.F., contending that they did more harm than good. That’s the report at least that I’ve read. Tell me a) if that report is true, how true it is, and what led to your evolution in thinking about an institution like the World Bank?
KIM: Well it’s true. There’s actually good evidence that it was true. I was one of the editors on a book that’s entitled Dying for Growth: Global Inequality and the Health of the Poor. It basically was a critique of the approach that many of the international financial institutions had taken to health. At the time, what we were arguing was that an overly narrow focus on growth of G.D.P. was really not the approach that we thought would lead to the results that everyone seemed to want to have. In other words, there were arguments that you should restrict social spending, including on health and education. What we were arguing is that we should focus on more than just G.D.P. growth and we should really try to take a much more nuanced view of what are the factors that are important in lifting people out of poverty.
That’s really the direction that the World Bank has gone in a major way in the last 20 years. I’m very glad we lost the ’50 Years Is Enough’ argument because the institution is very different now than it was before. That’s what made it possible for me to lead the institution. The ideas have changed. This is what you guys have done so beautifully in both Freakonomics and SuperFreakonomics, is you’ve made hypotheses but then you’ve looked at the data. The data now are overwhelming in that investments in health and education, for example, are critical aspects of a growth strategy. Larry Summers published a paper just a year ago showing that in low- and middle-income countries, fully 25 percent of the economic growth experienced between 2000 and 2011 was due to better health outcomes.
We don’t, at this institution — and we have not for a long time — thought about health and education as simply expenditures. We now think of them as fundamental investments in human capital that will lead to growth. This is what’s great about the World Bank Group: the institution itself has really looked at the data, really looked at the evidence carefully, and we’ve shifted a great deal.
DUBNER: The World Bank released a World Development Report titled “Mind, Society, and Behavior,” which I have to admit does not sound, right off the bat, like a World Bank report form the past, for sure. It argues for a new viewpoint or new mindset for attacking poverty. If you could begin, Dr. Kim, just tell me the background. Were you behind this? Who was behind it, and what was the impetus?
KIM: It came out of a pretty straightforward discussion that Kaushik Basu, our chief economist — himself, originally from India, but a celebrated professor of economics, development economics at Cornell for many years. He and I were just sitting down one day. We started talking about behavioral economics and some of the work that I had become fascinated with when I was at Dartmouth about things like willpower and grit and how they had an impact on success in life and development. He suggested one day that we just take this on. That’s how it came to pass. It was a recognition that we really needed a rethink of where we were going with development strategy.
We also wanted to bring into the discourse of the World Bank Group, these thinkers who’ve been so influential in academia but had been much less influential inside the World Bank.
DUBNER: Interesting. As I read the report, it struck me as a best-practices white paper that distills much of the field, if not the entire field of behavioral economics — and highlights the cognitive biases, illusions, and the antidotes, to those problems — that a lot of people have been thinking, talking, and writing about for many years, as you’ve said, primarily within academia, but not exclusively. One point the report makes is that a lot of these insights are, in retrospect, pretty obvious, things like framing and anchoring and social norms, which other people call peer pressure. It struck me that Adam Smith, who we commonly think of as the father of classical economics, was probably a lot more in tune with that human side of the human being than most economists of the mid- and late 20th century.
I’m curious how you think that economics — again, granted, not your field but you certainly know plenty about it — how do you think economics got so far away from considering a human being what to be what a human being really is? Wwhy has it taken so long and so much effort to get back to this new old view?
KIM: Well, it’s a great question. I, as an anthropologist, in grad school we did read Adam Smith, and most of us were very surprised to hear him writing about moral sentiments and the profound moral voice that really is everywhere in his work and his writing. There is a field of economic anthropology that’s been around for a long time. I remember in one of my first early seminars in anthropology graduate school we took on the phenomenon of the potlatch. Now, in the Northwest Coast, Northwest Coast Indians would try to outduel each other in seeing how much of their most valuable possessions they could burn. That was the potlatch. And, of course, from a rational perspective, why on earth would you burn your most valuable things?
Franz Boas, one of the early patriarchs of the field of anthropology, went deeper and deeper into it and showed that, in fact, social status was so important to the Northwest Coast Indians that they were willing to do this. The benefits from doing this were greater, often, than what they would burn. We had been trying to make sense of seemingly irrational behavior in anthropology for a very long time. The assumptions that economists make about rationality have actually led to the rapid development and growth of the field. Economists have — generally speaking, compared to other social sciences — been much more focused on quantification and sophisticated modeling. You have to have a set of assumption[s] in order to make a field that’s trying to do that grow. They started with that.
But we have to remember the Daniel Kahneman won his Nobel Prize on looking at different ways of thinking and questioning the assumptions that economists were making in 2002. His work predates that by quite a bit. We really took his notion that there’s these two kinds of thinking — fast thinking, slow thinking — and try to apply it to development work. The fundamental messages are that 1) people think automatically, quickly, and they don’t think on the basis of ration, reason, looking through the evidence, that people think socially. In other words, other people who have the same thoughts influence them quite a bit. They work on the basis of mental models that are often unconscious.
We looked at those three kinds of thinking and tried to understand if there had been examples of people utilizing that insight to actually get better outcomes. And we found quite a few.
[MUSIC: Donvision; “Indian Summer”]
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[MUSIC: Madrona Music, “Stay With Sly” (from Madrona Music Volume 1)]
We are talking today with Jim Yong Kim, president of the World Bank. He and Kaushik Basu, the Bank’s chief economist, commissioned a report that is meant to translate the best behavioral research from academia into real-world solutions to address poverty.
DUBNER: The most persuasive, to me, part of this World Bank report is a table listing examples of highly cost-effective behavioral interventions. I’d like you to talk about a few of these with me. Your favorites, whether it’s addressing adherence to medical regimen, immunization rates, traffic accidents, aspirations and investment. They really run the whole scope of humankind. Underpinning the success of all of these — to some degree, through your view as a World Bank president — is poverty, and that alleviating poverty would help all these things, which most people might not connect necessarily with poverty.
KIM: Again, this goes back to the brilliance of economists and how they have been focused on measuring, and trying to get real evidence and real data. One of my favorites is that in Jamaica they had an intervention with stunted children. In other words, these are children who had low weight and height for age. At a certain point, stunting means that your brain literally has not been developing as it should. It’s really hard to get that back. It’s hard to catch up. There was a very simple intervention where they had young students go and meet with mothers of stunted children. They tried all kinds of different interventions — income supplements — but one of the interventions was to just have young people come and stress [to] mothers in very poor settings, who had other stunted children, how important it was for them to interact with their children.
Now, this was done once a week for two years. Then 22 years later, they looked at these kids, and so, and they looked at all the different inputs, and the one input that had the biggest difference was that intervention where they went and told mothers to interact with their kids more. That particular group of stunted children had incomes that were equal to the non-stunted children. Those that did not have that intervention had incomes that are 25 to 30 percent lower than the non-stunted children. It’s incredible how these interventions can have that an impact.
DUBNER: Let me just make sure that I understand the mechanism here: it’s basically stimulating vocabulary, language, and thinking. Is that the idea of what’s going on that moves things forward?
KIM: Right. In other words, these were not mothers who were deliberately neglecting their children. But over years, they developed different practices. You wrap up the kids and put them on your back, or whatever, and you don’t have that much interaction. But if you specifically said, “It’s very important for you to interact with your children in this way,” the mothers did it, and it had this incredible impact 22 years later. This is a great lesson for us. We have to, in every culture, be sure that we’re actually giving that advice: if there’s stunting, first of all you try to improve their nutritional status, but this issue of interacting with children is also really critical. By changing these mothers’ mental model, it had this impact that was measurable economically 22 year later. There are others as well.
Another one that I love is one that affected people’s understanding socially of the importance of using less water. This was in Colombia in the late ’90s. They simply published in the newspaper how much water all the different people and companies and groups were using. There was an overall decrease in water consumption that persisted. In other words, knowing that your neighbors are trying to save, or knowing that you’re not saving and they’re going to see it in the newspaper had a huge impact on people’s use of water. Similarly, in trying to reduce the number of accidents on the road, in Kenya, they put messages on buses that said if you see someone driving recklessly, look out the window, scream and yell at them and tell them to stop doing it. Everywhere you, are scream and yell at people who are driving recklessly.
It reduced insurance claims by 50 percent just to have the social pressure build in that particular way. We are going to use this in World Bank Group. We’re going to capture all of these great examples, and we’ve totally reorganized the Bank to do just that. We now have what we call ‘global practices.’ Their charge is to look all over the world and find out how specific countries have had success utilizing these insights that come from psychology. In doing that, we hope that they will then take these examples and then adapt them for the local context. As an anthropologist, of course, you can imagine I’m going to insist that we respect local contexts. But we feel that we can make tremendous progress if we capture these ideas and bring them to poor countries.
But also, we’re looking internally, because our strong assumption is that automatic thinking, socially-influenced thinking, and mental models affect the way we assess projects. We actually did a study of our own staff.
DUBNER: With the skin cream and the…
KIM: Yes! The skin cream and the minimum wage. And asked them to use the same set of data. Of course, we adapted it to talk about the skin cream. We had them assess whether skin cream A or B is better for skin rashes. Then, using exactly the same data, but in a different context, we asked them to assess whether the minimum wage increased or decreased poverty rates. They did much better in getting the right answer, because based on the data there was clearly a right answer for both of these questions; they did much better with the skin cream than they did with minimum wage, because our staff came in with preconceived notions and mental models about the importance of minimum wages.
What we’re going to do specifically inside the Bank is try to figure out ways where we can get them to do what Daniel Kahneman called “slow thinking.” Can we get them to be more deliberative, to be more focused on the mechanics of a particular project or particular intervention, to really consider data first before they jump to a conclusion? Can leaders like me to keep their mouths shut, for example, to not influence, socially, where a group ends up landing on a particular decision?
DUBNER: The report notes that the private sector has already adopted a lot of these behavioral approaches because, and I’ll quote, “When failure affects the profit making bottom line, product designers begin to pay close attention to how humans actually think and decide.” Dr. Kim, why has it taken nonprofits, including the development sector, so long to buy in? Do you think that it’s simply the absence of the market and the needs that exist within the market? Is it the downplaying of R.O.I. within the nonprofit sector? Is it a philosophical point?
KIM: Market forces are critical here. Sometimes people say, “The private sector does everything better.” I don’t know that that’s really the case so much as that the private sector entities that did it poorly no longer exist because they go out of business. Public sector entities can stay in business for a very long time no matter how poor their performance is. And so this is part of what I’ve been obsessed with for about the past 20 years. I’ve been trying to understand — in the absence of market forces — how can you raise the temperature so that people really focus on improving execution? Because in the public sector, not only do we tolerate poor execution, but often, unfortunately, we celebrate poor execution. Poor execution, sometimes, for people is a symbol of the fact that you’re public and not private sector.
Now, I do not at all think that the private sector does it all correctly. But the folks who do it right, and if you were to go to Ogilvy or any of the big public relations companies and give them this, they would laugh at us in the sense that they have been utilizing these insights very aggressively for a very long time. In the public sector there are some really great examples of having used this before. One example comes from an institution that I used to be part of, Harvard School of Public Health. They very consciously tried to get the notion of a designated driver into sitcoms in Hollywood. Once they got it into sitcoms, it became part of the overall mental model that everyone used, and it’s now ubiquitous.
It was, truly, the genius of a group of brilliant public health professionals who realized that they had to shift the mental model on driving while drunk. Cigarette smoking is another one. We’ve done it in bits and pieces. What we’re trying to do now is do it on a much larger scale.
DUBNER: I’m curious, as a trained M.D., whether you [think] this research is slower to be taken up in the areas where it’s really needed, in development in this case, or faster than in medicine?
KIM: When you look at innovations in medicine, it’s not as if you have a new discovery and then immediately everyone in the United States is implementing it. In fact, the lag time from having a really new discovery of something that’s on the market that’s doable right now to a point when the vast majority of doctors are using them is 17 years. I’ve — with a bunch of colleagues, and here now at the World Bank — we talk a lot about the science of delivery. In other words, let’s not just focus on the basic research that tells us about the molecular mechanisms or, for example, economics that might be fundamental theoretical modeling based on mathematical models. Let’s not focus just on the things that we can prove in scientific studies actually work. Let’s now focus on how you deliver those insights. Let’s focus and be as rigorous as we can be about how you take things to scale. One of my good friends in global health used to say to me, “Jim, I am so sick of pilot project-ology. When can we get on to the field of scale up-ology?” Right? That’s got to be our main focus, because if we’re going to end extreme poverty by 2030, every model we have of growth suggests to us that with the pessimistic, with the midway, or the optimistic model of economic growth, we’re not going to get to less than 3 percent extreme poverty by 2030. If our job is to fundamentally change the poverty elasticity of growth, we’ve got to be effective, and we’ve got to take effective solutions, scale them, and scale them more quickly than we ever have.
[MUSIC: Juan Mejia “La Gua Gua” (from 2012 Productions)]
The World Bank has its fans and its detractors. I have to say, it’s hard to imagine that Jim Yong Kim could have too many detractors – he seems to bring so many talents to the job. He’s smart, plainly, experienced, compassionate, he’s a good executive – don’t forget, he’s an M.D. as well. So I know what you’re thinking: that’s disturbing! Isn’t there anything he’s bad at? Well, I am happy to report, that he is not a very good singer.
KIM singing in Dartmough Idols Finals: I had the time of my life and I never felt this way before. And I swear, it’s the truth, and I owe it all to you…
That is from a student talent show at Dartmouth, when Kim was president there. But honestly, even his singing wasn’t that bad. He also danced and rapped. You know what? He wasn’t that bad at any of those either. So what does the talent show really teach us? It teaches us that Jim Yong King has something that very few others in official Washington have: the ability to not take yourself too seriously. And so, even though he is the President of the World Bank, we asked him to go through a blitz version of our FREAK-quently Asked Questions. He agreed, of course.
DUBNER: Dr. Kim, if you would tell us in 60 seconds or less what you actually do in a given day.
KIM: I spend a lot of time going through my briefing books which look like real books. I get one every day. I’m in meetings all the time with all kinds of people, and I try to 1) keep my mouth shut when me saying something could influence a decision we make, and then make a decision when no one else can make a decision.
DUBNER: What’s the best investment you’ve ever made — financial, emotional, educational, any kind of investment — in getting to where you are today?
KIM: It’s rather simplistic, but late in my life, when I was 24, I started learning languages. I only really spoke English until I was 24. When I was 24, I learned to speak Korean, because I went back to Korea to do my dissertation research. Now I speak Korean, which has been great, especially in all of my work with Secretary General Ban Ki Moon of the United Nations. It’s been great to be able to have secret conversations in the middle of chaos. Then later, I learned to speak Spanish. It really was worthwhile for me to do that. I just desperately regret not having done more of that when I was younger.
DUBNER: Who’s been the biggest influence on your life and work and why?
KIM: Fundamentally, it’s been my mother who was a neo-Confucian philosopher. But she’s been so influential — I was reading the speeches and the writings of Martin Luther King when I was nine years old. So Martin Luther King has certainly been a huge influence. People like Martin Luther King, people who have taken an idea fundamentally rooted in moral convictions and then changed the world are the people who inspire me.
DUBNER: Tell us one thing you’ve habitually spent too much on but do not regret.
KIM: Oh gosh. It’s food. It’s eating at restaurants all over the world. In fact, I have a rule: when I travel to a developing country, for every meal, I want native food as opposed to thinking that I need Western food. I’ve spent a lot of money at a lot of different restaurants. Also, with my children. We love to eat.
DUBNER: Do you cook as well?
KIM: Not very well. I used to a lot more, but not much these days.
DUBNER: Tell me one thing you own that you should probably throw out but never will.
KIM: I have a collection of golf putters, that I just can’t seem to throw away. It’s part of golf. Golf allows for a lot of magical thinking, and so I remember the magical putts I made with some of these putters. So I’ve kept them and kept them and kept them despite efforts of everyone around me to throw them out.
DUBNER: The next question was what do you collect and why? Just asked and answered, or answered without being asked. What’s the one story that your family — maybe it’s your kids, maybe it’s your parents — always tells about you?
KIM: My brother likes to tell this story: my brother is a gastroenterologist in Los Angeles. And he always says that if he and I were to come to a wall with three doors, he had would quickly and automatically go through the door that was open, but that I would put my head through the wall just in case that was a better way to approach getting to the other side. Of course, the story is that I’ve always chosen the most difficult path. But it served me very well.
DUBNER: Interesting. That either leads perfectly into or totally obviates my final question, which is I wanted you to tell me about something that you once quit, why and how it worked out. But if you’re willing to put your head through a wall, you may never have quit anything at all. Did you?
KIM: I did. I actually quit my infectious disease fellowship. Now, this was in about the 30th consecutive year of being involved in education from the age of five. So it wasn’t as if I gave up prematurely. But the credential I would get is to be able to treat people with infectious diseases in hospitals in the United States and I just realized I’d never do that. I’ve continued to work on tuberculosis and H.I.V. and now Ebola. But I did quit that.
DUBNER: Dr. Kim, thanks so much, it was a pure pleasure to speak with you. I learned a lot, and I’m sure everyone listening will as well. Thanks so much for making the time.
KIM: Well, thank you for having me, and thank you for doing this.
[MUSIC: The Civil Tones, “The Bailiff” (from Rotisserie Twist)]
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Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Greg Rosalsky. Our staff also includes Alison Craiglow, Alvin Melathe, Greg Rippin, Harry Huggins, and Zack Lapinski. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.
Here’s where you can learn more about the people and ideas in this episode:
In the American Dream sweepstakes, Andrew Yang was a pretty big winner. But for every winner, he came to realize, there are thousands upon thousands of losers — a “war on normal people,” he calls it. Here’s what he plans to do about it.
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Hey there. Hope your new year is off to a good start. Hope you haven’t broken all your resolutions yet. A couple quick announcements. First: next week, we’ll be resuming our “Hidden Side of Sports” series with a look at the mental side of sports. But also: in a couple months, we’ll be participating in the famous M.I.T. Sloan Sports Analytics Conference, which means we’ll have access to some of the sharpest sports analysts, coaches and owners, and athletes in the world. So: we want your questions for them. Send us the sports questions you’ve always wanted answered, on any aspect of sport whatsoever — the weirder the question, the better. Our e-mail is email@example.com. Thanks.
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Andrew Yang is not famous. Not yet, at least — maybe he will be someday. But let me tell you his story. He’s 44 years old; he was born in Schenectady, N.Y., a city long dominated by General Electric, the sort of company that had long dominated the American economy. But which, as you likely know, doesn’t anymore. Yang’s parents had both immigrated from Taiwan, and met in grad school. His mother became a systems administrator and his father did research at I.B.M.; he got his name on 69 patents. Their son Andrew studied economics and political science at Brown, got a law degree at Columbia, and ultimately became a successful entrepreneur, with a focus on widespread job creation. In the American Dream sweepstakes, Andrew Yang was a pretty big winner. But along the way, he came to see that for every winner, there were thousands upon thousands of losers.
The economist Joseph Schumpeter famously described capitalism as an act of “creative destruction” — with new ideas and technologies replacing the old, with nimble startup firms replacing outmoded legacy firms, all in service of a blanket rise in prosperity. The notion of creative destruction has for many decades been part of the economic orthodoxy. And it’s undeniable that global prosperity has risen, and not just a little bit. But Yang — like many others — has stopped believing in the economic orthodoxy of creative destruction. As he sees it, there’s just too much destruction; and the blanket rise in prosperity isn’t covering enough people. We’re living through what Yang calls “a war on normal people” — a war that Yang fears is getting uglier all the time. And that’s why he has taken to saying this:
Andrew YANG: I’m Andrew Yang, and I’m running for president as a Democrat in 2020.
Stephen DUBNER: I can think of a million things that you personally, Andrew Yang — with your resources and abilities and so on — could have done other than running for president of the United States. And yet that’s the one you’ve chosen. So why?
YANG: So imagine if you were the guy getting medals and awards for creating jobs around the country and realizing that the jobs are about to disappear in an historic way. And all of the solutions involve really a much more intelligent, activated government than you currently have. And I went around and talked to various people being like, “Hey guys, anyone going to solve the biggest problem in the history of the world?” And I could not identify anyone who was going to run and take it on.
DUBNER: So you put your hand up and said, “I guess I will?”
YANG: Yeah. I’m a parent like you are. I’ve got kids who are going to grow up in this country, and to me just believing that we’re going to leave them this shit-show that I think is coming and not doing something about it struck me as really pathetic.
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The conversation you’re about to read is in many ways a continuation of conversations we’ve had in multiple episodes over the years. Episodes like “Is the American Dream Really Dead?” and “Is the World Ready for a Guaranteed Basic Income?” Episodes like “Yes, the American Economy Is in a Funk — But Not for the Reasons You Think” and “Did China Eat America’s Jobs?” You may want to give those episodes a listen for a deeper look at the economics involved. But first: who exactly is Andrew Yang? Years ago, he worked as:
YANG: A knife salesman.
DUBNER: A knife salesman?
YANG: Oh yeah, Cutco, I still know the sales patter.
DUBNER: Let’s hear it.
YANG: What’s really dangerous is not a sharp knife. It’s a dull knife, because then you start putting elbow grease into, and that’s when accidents happen.
DUBNER: So here’s how I would thumbnail your story: immigrant kid, smart, got a good education, tried a few things in the labor force, including high-end lawyer, then some entrepreneurship, got involved with a company that was sold. So you cashed out, then took the nonprofit route to try to inspire other people to become entrepreneurs in places where there wasn’t a lot of drive for that already. And then during that process you got exposed to the way the economy was failing in large parts of America. But then instead of just saying, “Wow, that’s tough. But I got mine and I’m going to go back to my coast and lead my comfortable life, and for the people who are not leading this life — I wish them well, but I’m out of here,” you disrupted your life in order to do something about it.
YANG: As an entrepreneur, I feel driven to try and solve problems, and this seems like the greatest problem that we face. And you think, “Hey, if I bust my ass for several years, I have a chance to potentially accelerate the eradication of poverty and helping my country manage through the most difficult transition in decades. And I think if I put my heart and soul into it, I have some chance of making that happen.” And then if you don’t do that, you must be an asshole.
When he was 24, Yang landed a job in New York at Davis Polk, one of the most prestigious law firms in the world.
YANG: I was making $125,000 plus a bonus of maybe another $25,000 or so. And I have Asian parents, so they were quite pleased with this state of affairs. And I thought, “Wow, this is really lousy job.” When I was growing up as a kid playing Dungeons and Dragons, I didn’t dream about being the scribe. I dreamt about going in the woods and killing something, which did not help my parents feel any better about my decision to quit the firm.
So yes, he quit what many people might see as a dream job. He got involved in an internet startup that combined celebrity and charity.
The launch of StarGiving coincided with the bursting of the dot-com bubble; the firm lasted just five months.
YANG: I mean, I was a very sad 26-year-old who still owed $100,000 in law school loans and had parents still telling people I was a lawyer even though I was not. And I joined another startup, and I was very worried that it was also going to go under. So I started throwing parties on the side as a side hustle. And then I also started teaching the GMAT on the side for a friend’s company. So I had three jobs during that time.
The job that stuck was the GMAT teaching — GMAT being the standardized test you take to get into business school. The company was called Manhattan Prep and Yang ended up becoming its C.E.O.
YANG: That’s right. So I personally taught the analyst classes at McKinsey, Goldman Sachs, J.P. Morgan, Morgan Stanley. And so imagine doing that for six, seven years and then seeing the country go to shit during the financial crisis. And then think, Well, I know why that is — because the smart kids have been becoming Wall Street bankers and management consultants while the rest of the country was getting hollowed out.
In 2009, Yang’s company was bought by the testing firm Kaplan, which was owned by the Washington Post Company.
YANG: We were acquired for low tens of millions. So I walked away with some number in the millions.
He soon left the Washington Post Company to start a non-profit called Venture for America, modeled on Teach for America.
YANG: Venture for America takes a recent college graduate, trains them with various business skills, and then sends them to work at a startup or an early-stage growth company in Detroit, New Orleans, Cleveland, Baltimore, a city that could use the talent. Then you work at that startup for two years, helping it grow. And at the end of two years if you want to start your own business, we have an accelerator and a seed fund to help you do so. It’s going to create 100,000 jobs around the country. We’ve helped create over 3,000 jobs to date, and dozens of our alums have started companies, some of which have now raised millions of dollars and generated millions in revenue.
DUBNER: So you said you hoped to create 100,000 jobs, and then you just said you’ve created 3,000 jobs, so that sounds like you’re a little short.
YANG: Well, create 100,000 by a certain date.
DUBNER: What’s the date?
YANG: So we had 2025 as our target date.
YANG: So we would need algorithmic growth.
DUBNER: I gather what you learned about how the world worked outside of the coastal corridors and outside the Ivy League, and so on, was an awakening. Yes?
YANG: Yeah, it was for sure.
DUBNER: What was different in Detroit, in Pittsburgh, and elsewhere that you went, from what you imagined?
YANG: Well, so some of the structural force, and I’ll describe this — a company, it had a couple of very bright founders out of Brown University, and they got started in Providence. And the company starts to do well, hits its strides, doing a couple of million in revenue, and then an investor in Silicon Valley says, “Hey, you guys should come out here, and we’ll invest $10, $20 million in you. But you should really come here.” So then the guys say, “Well I guess we have to take that.” So that company goes from 100 employees in Providence, R.I., to zero employees.
DUBNER: And I can feel the mayor of Providence and the governor of Rhode Island thinking right now, “No, no, no, please don’t go.”
YANG: They were there. I mean the mayor — they were saying, “Please don’t go.” And the guys were like, “Well, you’ve got to do what’s right for your business.” And they went out to Silicon Valley and now the company has 100 employees in San Francisco. It becomes this really unfortunate dynamic that if you are an entrepreneur who’s succeeding in a place like Detroit or Providence or St. Louis, the goal is to get sucked up to the big leagues and wind up in San Francisco or Boston or New York.
DUBNER: But the other part is that what we used to think of as the backbone jobs of this country, the nature of that is changing really, really fast, due to technology and particularly automation. How much of that were you starting to see up close, and how surprising was that to you?
YANG: Yeah, so my thesis was that if you started a tech company in a place like Detroit that it would create additional jobs in that community that were not necessarily skilled jobs. But what I learned was that these companies, in order to be successful, did not need to hire huge numbers of people. That right now, the way businesses grow is that businesses grow lean and mean. They’re not going to hire the thousands of employees that industrial companies used to employ in a place like Detroit or Cleveland or St. Louis.
And it became clear to me that as much as I was excited about and proud of the work I was doing, it felt like I was pouring water into a bathtub that had a giant hole ripped in the bottom. Because we’re blasting away hundreds of thousands of retail jobs, call-center jobs, food-service jobs, eventually truck-driving jobs. And so my army of entrepreneurs, doing incredible work, starting companies that might employ 20, 30, 40 people, was not going to be a difference-maker in the context where that community was going to lose 20, 30, 40,000 retail jobs, call-center jobs, transportation jobs, etc. And I was horrified. I was flying back and forth being like, “What the hell are we doing? We are blasting communities to dust and then pretending like we’re not and pretending like it’s their fault, and pretending that somehow it’s unreasonable to be upset about your way of life getting destroyed.”
I had a wakeup call, a reckoning as you said. But then when Donald Trump became president in 2016 I was convinced that the reason why he won the presidency is that we automated away four million manufacturing jobs in Michigan, Ohio, Pennsylvania, Wisconsin, Iowa, Missouri. And we’re about to triple down on that by blasting away millions of retail jobs, call-center jobs, fast-food jobs, truck-driving jobs.
David AUTOR: I think if we had realized how traumatic the pace of change would have been, we would have at a minimum had much better policies in place to assist workers in communities that suffered these very severe and immediate consequences.
AUTOR: And we might have tried to moderate the pace at which it occurred. And we also had a huge trade deficit and that meant we simply did a lot less manufacturing. So that meant that workers had to make a tougher transition out of manufacturing, into something altogether new. And I think that upped the challenge.
I think the other thing that we have to recognize, and that economists have tended not to emphasize, is that jobs aren’t purely income. They are part of identity. They structure people’s lives. They give them a purpose and a social community and a sense of relevance in the world. And I think that is a lot of the frustration that we see in manufacturing-intensive areas. And I think that that’s costly even beyond the direct financial costs.
It’s been tempting, especially from a political view, to blame all this job loss on global trade, immigrant labor, and offshoring. But Autor and most other economists agree that the much larger driver of job loss is technology and automation in particular.
YANG: So we automated away 4 million manufacturing jobs.
Back to Andrew Yang.
YANG: This is like the auto-manufacturing plants, a lot of the even consumer-goods, like furniture manufacturing in North Carolina, a lot of that stuff has gotten automated away. Now, I studied economics. And according to my economics textbook, those displaced workers would get retrained, re-skilled, move for new opportunities, find higher productivity work, the economy would grow. So everyone wins. The market, invisible hand has done its thing.
So then I said, “Okay, what actually happened to these four million manufacturing workers?” And it turns out that almost half of them left the workforce and never worked again. And then half of those that left the workforce then filed for disability, where there are now more Americans on disability than work in construction, over 20 percent of working-age adults in some parts of the country.
DUBNER: So the former manufacturing workers, a lot of them are on disability a lot of them are also especially if they’re younger men, they’re spending 25–40 hours a week playing video games.
YANG: Yeah so it did not say in my textbook, half of them will leave the workforce never to be heard from again. Half of them will file for disability and then another significant percentage will start drinking themselves to death, start committing suicide at record level, get addicted to opiates to a point where now eight Americans die of opiates every hour.
So when you say, “Am I for automation and artificial intelligence and all these fantastic things?” of course I am. I mean, we might be able to do things like cure cancer or help manage climate change more effectively. But we also have to be real that it is going to displace millions of Americans. People are not infinitely adaptable or resilient or eager to become software engineers, or whatever ridiculous solution is being proposed. And it’s already tearing our country apart by the numbers, where our life expectancy has declined for the last two years because of a surge in suicides and drug overdoses around the country.
None of this was in my textbook. But if you look at it, that’s exactly what’s happening. The fantasists — and they are so lazy and it makes me so angry, because people who are otherwise educated literally wave their hands and are like, “Industrial Revolution, 120 years ago. Been through it before,” and, man, if someone came into your office and pitched you an investment in a company based on a fact pattern from 120 years ago, you’d freakin’ throw them out of your office so fast.
The Industrial Revolution is a textbook example of creative destruction. Old technologies giving way to new; the rising tide lifting all boats. But history doesn’t actually happen that smoothly …
YANG: If you look at the Industrial Revolution, there was massive social change. Labor unions were originated in 1886 to start protesting for rights. There were massive riots that led to dozens of deaths and caused billions of dollars’ worth of damage that led to Labor Day becoming a holiday. Universal high school got implemented in 1911 in response to all of these changes. And it was a tumultuous time. I mean there was a whiff of revolution the whole time. And according to Bain, this labor-force displacement, this time, the fourth Industrial Revolution, is going to be three to four times faster and more vicious than that Industrial Revolution was.
So even for those lazy-ass people who are just like, “We’ve been through this before, Industrial Revolution,” be like, “Well, the Industrial Revolution was hellacious and it’s going to be three to four times worse according to Bain, who presumably you respect because they’re good at figuring this stuff out.” I mean if you look at government-funded retraining programs, the efficacy level, according to independent studies, is between 0 and 15 percent. And only 10 percent of workers would even qualify for these programs anyway. So we’re talking about a solution that will apply to between 1 and 2 percent of displaced workers. And that’s the kind of lazy crap that people are putting out there as a solution.
DUBNER: So if a revolution happens, how does it start, and what’s it look like?
YANG: So to me the rubber hits the road with the truck drivers. I mean there are 3.5 million truck drivers in this country, only 13 percent of them are unionized. The odds of there being a collective negotiation are very low. Eighty-seven percent of them are part of small firms of let’s call it 20 to 30 truckers, and 10 percent of them own their own trucks.
So think about that. If you borrow tens of thousands of dollars to be your own boss and be an entrepreneur and then your truck cannot compete against a robot truck that never stops — the odds then of these truckers showing up at a state capitol saying, “Fuck this, let’s get 30 guys together with our trucks and our guns” and show up and protest the automation of their jobs. So we’re disintegrating by the numbers. You can see it in our political and social dysfunction. Expecting that disintegration process to be gentle would be ignoring history.
DUBNER: Well even though revolutions do happen and armed violent revolutions obviously have happened, most bold predictions turn out to be wildly wrong. And usually there’s a lot less deviance from the past than predictors predict. So what makes you think you’re not wrong on this one?
YANG: I don’t know thousands of truck drivers, but I do know some. And they do not strike me as the sort who will just shrug and say, “Okay, I guess that was a good run. I’m going to go home now and figure out what job is there for someone who’s a 50-year-old former truck driver.”
But you also are going to see call-center workers, fast-food workers, retail workers — I mean there are 8.8 million people working in retail in this country. The average retail worker is a 39-year-old woman with a high-school degree who makes $11 to $12 an hour. When 30 percent of malls close in the next four years, what is their next opportunity going to be? So we have to start being honest about what’s happening where the market does not care about unemployed cashiers or truck drivers or fast-food workers.
And the biggest issue to me is that we’re measuring economic value in a very narrow, archaic way. We invented G.D.P. almost 100 years ago during the Great Depression. The government’s looking around saying, “Things are going really badly, we need a number for this.” And then Simon Kuznets comes up with G.D.P. and says a few things: He says we should not use this as a measurement for national well-being because it’s really bad for that. We should include parenthood and motherhood in the calculation because it adds so much value. And we should not include national defense spending in the calculation because—
DUBNER: If I remember my history, all three of those were ignored then, yes?
YANG: Yes, yes, yes. We’re like, “That’s great, Simon.” And now it’s our end-all, be-all. My wife is at home with our two boys right now, one of whom is on the autism spectrum. And what is her work valued at?
DUBNER: I’m guessing $0.
YANG: Yeah, about $0. And I know that she’s working harder than I am and the work she is doing is more important.
DUBNER: So your wife doesn’t really factor into G.D.P. In fact, she’s probably kind of a drain on it really, right? Because she could be out there where there’s opportunity cost of her not working.
YANG: She might be able to be a management consultant somewhere and that would be a much more valuable use of her—
DUBNER: So management consultants and the finance industry, financial services, banking, real estate. You argue that many of the most remunerative occupations in America are rent-seeking activities. Rent-seeking as economists use it to describe, basically, extracting value from transactions without really adding value. And you argue that many of the most beneficial-for-society jobs — teaching, nurturing, caring, creating, etc. — are the least remunerative jobs. How can you rail against that disparity while also wanting to bask in the benefits of the capitalism that set up those incentives?
YANG: Capitalism is a wonderful, magical, powerful thing. But it optimizes for capital efficiency and capital gains above all else, really. And that worked well for a long time, because in order for capital efficiency, workers needed to benefit, the consumer economy needed to benefit, the middle class needed to benefit. It’s like Henry Ford and his, “How can my workers buy my car?” But we’re now at a point where Ford does not need those humans to build that car and they can have markets all over the place and don’t really care what’s going on in their own backyard.
There are just these big changes afoot, and the question is how we’re going to manage them as a country. And that’s what I’m trying to answer. That’s why I’m running for president.
* * *
Until recently, Andrew Yang was running Venture for America, a non-profit that tries to persuade young, would-be Wall Streeters to launch startups in places like Cleveland, Baltimore, Detroit, and St. Louis. In 2014, he published a book about this effort; it was called Smart People Should Build Things. While the book pointed out the need for a dramatic overhaul of the American economy, it was for the most part an optimistic book. Last year, Yang published another book, called The War on Normal People, and it is not remotely optimistic. He argues that the American economy has failed most Americans, and that the American political class has failed them again by refusing to focus on the underlying fault lines in the economy.
This collapse in Andrew Yang’s optimism is what led him to run for President. He’s already been to Iowa and New Hampshire several times but, let’s be honest: he’s a very long shot in what’s expected to be a very crowded field. Let’s use Twitter followers as a proxy for the viability of some other possible Democratic candidates. Joe Biden has 3 million followers; Cory Booker, 4 million; Elizabeth Warren, 4.7 million; Bernie Sanders, 9 million. Mike Bloomberg has 2 million Twitter followers and over 40 billion dollars. Andrew Yang, meanwhile, has raised about $600,000, and has roughly 27,000 Twitter followers. But he also has ideas that he thinks will compensate. There’s one idea in particular that he’s banking on.
YANG: My first big policy is the freedom dividend, a policy where every American adult between the ages of 18 and 64 gets $1,000 a month, free and clear, no questions asked.
DUBNER: So the freedom dividend is your phrase for what most of us know as a universal basic income, yes?
YANG: It’s a rebrand of “universal basic income” because it tests much better with Americans with the word “freedom” in it.
DUBNER: Right, as nomenclature. The idea is the same.
YANG: So “universal basic income” tests great with about half the country. And then the other half of the country do not like it.
YANG: Because there’s—
DUBNER: It’s got welfare connotations?
YANG: Something along those lines. We tested a bunch of names and then when you had the word “freedom” in it, then all of a sudden testing shot up among self-identified conservatives. They hated “universal basic income,” hated “prosperity dividend,” all of a sudden “freedom dividend” is like “ding ding ding!”
DUBNER: What about progressives, liberals, Democrats?
YANG: Progressives, liberals, Democrats liked it no matter what the name was.
DUBNER: What were some of the other names that didn’t work?
YANG: “Citizens’ dividend,” “future dividend,” “prosperity dividend.” We had a lot of dividends.
DUBNER: I think of a dividend as a payout on an investment. What does it mean in this case?
YANG: Well, it’s a payout to ownership and we are the owners and shareholders of this, the most wealthy and advanced society in the history of the world. So this is a dividend for us. And there’s nothing stopping a majority of shareholders, a majority of citizens, from voting themselves a dividend. It’s been law in Alaska and it’s wildly popular in a deeply conservative state, where a Republican governor said, “Hey, who would you rather get the oil money: the government, who’s just going to screw it up, or you, the people of Alaska?” And the people of Alaska now love it, wildly popular, has created thousands of jobs, has improved children’s health and nutrition, has lowered income inequality, and it’s untouchable through many different regimes.
DUBNER: The Alaska dividend comes from oil revenues from the state, whereas the freedom dividend that would go to every person in the U.S. would be funded how?
YANG: So the headline cost of this is $2.4 trillion, which sounds like an awful lot. For reference, the economy is $19 trillion, up $4 trillion in the last 10 years. And the federal budget is $4 trillion. So $2.4 trillion seems like an awfully big slug of money. But if you break it down, the first big thing is to implement a value-added tax, which would harvest the gains from artificial intelligence and big data from the big tech companies that are going to benefit from it the most.
So we have to look at what’s happening big-picture, where who are going to be the winners from A.I. and big data and self-driving cars and trucks? It’s going to be the trillion-dollar tech companies. Amazon, Apple, Google. So the big trap we’re in right now is that as these technologies take off, the public will see very little in the way of new tax gains from it. Because if you look at these big tech companies — Amazon’s trick is to say, “Didn’t make any money this quarter, no taxes necessary.” Google’s trick is to say, “It all went through Ireland, nothing to see here.” Even as these companies and the new technologies soak up more and more value and more and more work, the public is going to go into increasing distress.
So what we need to do is we need to join every other industrialized country in the world and pass a value-added tax which would give the public a slice, a sliver of every Amazon transaction, every Google search. And because our economy is so vast now at $19 trillion, a value-added tax at even half the European level would generate about $800 billion in value.
Now, the second source of money is that right now we spend almost $800 billion on welfare programs. And many people are receiving more than $1,000 in current benefits. So, we’re going to leave all the programs alone. But if you think $1,000 cash would be better than what you’re currently receiving, then you can opt in and your current benefits disappear. So that reduces the cost of the freedom dividend by between $500 and $600 billion.
The great parts are the third and fourth part. So if you put $1,000 a month into the hands of American adults who — right now, 57 percent of Americans can’t pay an unexpected $500 bill — they’re going to spend that $1,000 in their community on car repairs, tutoring for their kids, the occasional night out. It’s going to go directly into the consumer economy. If you grow the consumer economy by 12 percent, we get $500 billion in new tax revenue.
And then the last $500 billion or so we get through a combination of cost savings on incarceration, homelessness services, health care. Because right now we’re spending about $1 trillion on people showing up in emergency rooms and hitting our institutions. So we have to do what good companies do, which is invest in our people.
DUBNER: So what persuades you that that number, $2.4 trillion, could even be close to justified through the menu of savings that you just described? I guess more broadly, why should someone believe that this Democratic-inspired version of higher taxes — or new taxes, with a V.A.T. — and more income redistribution, why should someone believe that any more than Democrats disbelieve the Republicans’ idea of lower taxes and trickle-down economics?
YANG: Oh man. I mean, if you put $1,000 into the hands of a struggling American, it’s going to make a much bigger difference not just to that person but it’s also going to go back into the economy. If you give a wealthy person $1,000 they wouldn’t even notice. You could just slap it into their account and it would be a non-event. Everyone knows that putting money into the hands of people that would actually use it is going to be much more effective at strengthening our economy and society.
DUBNER: One easy argument against a U.B.I. is that if you give everyone a dividend like you’re proposing, $1,000 a month per person, all that new money in the economy will cause the kind of inflation that will render that $1,000 much less powerful. What’s your argument against that?
YANG: Yeah, so I looked into the causes of inflation that are making Americans miserable right now, and they are not in consumer goods like media or clothing or electronics.
DUBNER: Those are all still getting much cheaper.
YANG: Yeah, and a lot of that is being made more efficient by technology and supply chains and everything else. The three things that are making Americans miserable in terms of inflation are housing, education, and health care. And each of those is being driven by something other than purchasing power.
Housing is being driven by the fact in some markets people feel like they need to live in let’s say New York or Seattle or San Francisco to be able to access certain opportunities and then there’s not much flexibility in terms of their ability to commute like a long distance. Education, it’s because college has very sadly gotten two-and-a-half times more expensive even though it has not gotten two-and-a-half times better. And then the third is health care, which is dysfunctional because of a broken set of incentives and the fact that individuals aren’t really paying in a marketplace.
So if you put $1,000 into the hands of Americans, it’s actually going to help them manage those expenses much better. But it’s not going to cause prices to skyrocket, because you can’t have every vendor colluding with every other vendor to raise prices. And there’s still going to be price sensitivity among every consumer and competition between firms.
AUTOR: I think people should have a guaranteed minimum income.
That, again, is the M.I.T. economist David Autor.
AUTOR: Essentially, our system of income distribution is primarily based on the scarcity of labor, right, the most valuable asset you own is your human capital. And if all of a sudden, there was a machine that could do exactly what you did it wouldn’t be clear what skills would you sell to the market.
The idea of a universal basic income has been around for a long time, and you might be surprised by the political diversity of its supporters. In the 18th century, founding father Thomas Paine argued for a universal payout, representing our collective share of America’s natural resources. In the 20th century, the economist Milton Friedman pushed for a different version, called a negative income tax. Then and now, there is a common objection:
Evelyn FORGET: If you give people money for nothing, why won’t they just quit their jobs?
The economist Evelyn Forget studied the effects of a small Canadian experiment that paid out a universal income. Her finding?
FORGET: The finding was that primary earners really don’t reduce the number of hours they work very much when you offer a guaranteed annual income.
YANG: A neuroscientist in Seattle said something to me that really stuck with me. He said, “The enemy of universal basic income is the human mind.” And what he meant by that is that people are programmed for resource scarcity. They think, “Hey, there is not enough to go around. If you get it, I don’t get it. And then if we all get it, it’s somehow going to harm us.” And that’s what we have to overcome. We have to overcome this knee-jerk sense of scarcity that is baked into, in many ways, the way we’re trained to perceive value in money.
So that’s big policy No. 1.
Alright, and what’s big policy No. 2 for would-be President Yang?
YANG: No. 2 is digital social credits.
Which are what?
YANG: Digital social credits are a new way to reward behaviors that we need more of in society. So right now, the monetary market does not recognize things that we know are crucial to humanity, like caregiving and raising children, volunteering in the community, arts and creativity, journalism, environmental sustainability. We’re getting less and less of those things because the market does not care about them. What I’m proposing is we create a new currency that then maps to various activities that we want to see more of.
DUBNER: Give me a for instance of how it would work. Let’s pretend that I am a 58-year-old laid-off carpenter. Maybe you, President Yang, are already giving me a freedom dividend, which I appreciate. So talk to me about what digital social credits would do for me and how it would actually work.
YANG: Right. So you get a message on your phone saying, “Hey, a neighbor has had a shelf break and they could use some help repairing it.” And then you click on your phone and say, “Yeah, I’ll do that.” Then you drive over, repair the shelf, and then the person thanks you, gives you a hug. Takes a picture of it. And then you then get this digital social credit. Let’s say call it 300 points. So you have these 300 points and you’re like, “Okay that’s good.”
And then you get another ping, it’s saying, “Hey, your neighbor needs a ride and they don’t have a vehicle,” and you do. So you give them a ride and then you get some more points and then at the end of the week you say, “You know what, if I go to Cabela’s, I can trade those points for hunting gear or camping gear. I could use it to go to the local ballgame.”
DUBNER: Okay. And then the vendors who are giving their goods or services to you for those social credits, what did they do with the social credits?
YANG: They can take the social credits and go to the government and then the government can exchange it for money.
DUBNER: And what’s funding the money for the social credits from the vendors?
YANG: So, the U.S. government would be backing it, or foundations or various companies, because if you are a company you respond to this. I mean you’d enjoy the heck out of it and it would drive business to your establishments. But the great thing about this is you could induce hundreds of billions of dollars’ worth of social activity at a small fraction of the cost. Because right now if I have 100,000 American Express points, how much does that cost American Express?
DUBNER: A thousand dollars maybe?
YANG: Zero, because I haven’t done anything with it yet. Before I redeem it, it costs them nothing, but I love my points. I look at them. They seem to have value. I could trade them in whenever I want. What you’d see is you’d end up building up a parallel economy around people doing things for each other. This is based on a practice called time banking that’s in effect in hundreds of communities around the country.
DUBNER: Time banking is one of these ideas that’s been around for a while now, and it’s met with some success in some places, but it’s certainly never been scaled up the way that you’re talking about. What makes you think that it’s attractive enough for enough people to want to use it and that it is ultimately scalable?
YANG: Time banking holds that everyone’s time has intrinsic value and that if I do something for you for an hour, I then get a time credit that I can then give to someone else to do something for me for an hour. And everyone can do something — watch your kids or walk your dog or move some trash or whatever the task happens to be.
So the obstacle to more widespread adoption of time banking has been the administration, because you need a person in each community who is tabulating and keeping track of transactions. And now with technology—
DUBNER: This sounds like a job for the blockchain.
YANG: Yes, you could have a public ledger on the blockchain. You could make this happen much, much more easily, much more cost-effectively. And there are people I’m happy to say who were working on technical solutions for this.
People like this:
BEBERG: He came up with this in 1980, when he was actually given a diagnosis after having a heart attack at 46. And he was only given two years to live and maybe two hours a day to do anything. So what he was thinking about was, Hmm, what can I do in this world to still be useful? So he came up with the idea of time banking, where you give an hour of your time within a community and you’ll receive a credit of that hour, redeemable for something you need. So it’s a give-and-take system rather than a one-way volunteering.
Edgar Cahn obviously lived on, and so has time banking. It exists in a few dozen countries, usually at quite small scale; one of the larger exchanges, similar to what Andrew Yang is proposing, is a British organization called Tempo. It found that nearly 60 percent of its participants had rarely or never volunteered before. Beberg’s time-banking group, meanwhile, Seva Exchange Corporation…
BEBERG: Seva actually means volunteer in Sanskrit or service, to serve.
The Seva app is a spinoff of Timebanks.org.
BEBERG: What we’re doing is trying to create the largest volunteer exchange network.
How would it work?
BEBERG: We offer powerful motivators to retain volunteers.
Motivators like gamification.
BEBERG: It’s a lot more exciting to run up a score and earn badges especially if you’re doing good.
BEBERG: Whatever you’re passionate about or you’re highly skilled at and willing to offer, you get matched to the critical needs of either an organization or a person.
And rewards, via the blockchain.
BEBERG: Our digital social credits is called Seva coins. And they will be redeemable for more time. Or you can donate them. We’re also working with colleges for loan forgiveness and micro-scholarships for students.
Beberg and Seva have gotten some pushback from religious institutions.
BEBERG: They’ve said, “Oh, we volunteer for the sake of volunteering.” And I said, “That’s wonderful. The more people like that, the better, because now they can just donate those to an institution in need or give it back to the church for hours.” So every hour you give, another hour can go to someone else in need.
Those are the micro components of how Seva’s digital social credits would work. But it’s the macro view that makes this idea particularly attractive to a would-be politician like Andrew Yang.
BEBERG: We’re redefining work. So there are some forms of work that money will not easily pay for building strong families, revitalizing neighborhoods, making democracy work, advancing social justice. Time credits were specifically designed to reward, recognize, and honor that work that most people never valued before or felt valued for.
Andrew Yang believes that injecting all that undervalued work into the “real economy,” would solve a couple problems at once: it would give people access to more of the goods and services they need and can’t afford; and it’d boost morale by revaluing skills that the market no longer values.
YANG: Yeah, that’s right.
DUBNER: I don’t mean to be a skeptic or a cynic, but what makes you think that the best overseer of a big scaled-up time banking or digital social currency is the government itself?
YANG: I don’t think so. I mean one thing I’ll say, to quote my friend Andy Stern: the government is terrible at most things but it is excellent at sending large numbers of checks to large numbers of people promptly and reliably. The government would not be administering this at all. The best the government would be doing would be allocating social credits to various communities, who could then have the credits flow through nonprofits and NGOs and organizations that are closer to the ground that could administer it more effectively.
DUBNER: But ultimately, when all those vendors want to take in their DSCs, their digital social currency coins, whatever, and cash them in for real cash, it’s the government they’re coming to, it’s the Treasury they’re coming to, yes?
YANG: Yeah, yeah. So there is a government budget allocation. But the government budget allocation would be essentially proportional to population and then each community would be doing different things with it. Because something that would be effective in Mississippi would not be necessary in Montana or Missouri.
So digital social credits and a universal basic income, these are Andrew Yang’s two most prominent proposals in his Presidential campaign. There are, of course, many others, most of which align with a standard Democratic platform. You can see them all at Yang2020.com. I’d asked him his most outlandish position.
YANG: We should have a psychologist in the White House that’s looking in on the mental health of the executive branch, because it doesn’t make any sense to me to have that much power and responsibility without some sort of mental-health professional monitoring.
DUBNER: Did you have this idea before the current presidency?
YANG: I always thought so. I mean, my brother’s a psychology professor. I think it would also help destigmatize mental-health issues and anxiety and depression around the country, and just say, “Look, we all have struggles.” That includes people at the top of the government.
Another thing I think is really important is that right now we expect people to be sort of martyrs if they enter into government service, and then they turn around and become lobbyists to make a lot of money. We need to take advantage of the fact that the government can pay much, much more, and then just require people to not go back to industry afterwards. Because if you’re a human being and your stint is going to end in two or three years, you don’t want to be too harsh on the companies that could end up paying you and giving you lots of money later.
DUBNER: So you’re arguing for a $4 million salary for the U.S. president.
YANG: Yeah, because it’s true for presidents too. I mean, if you’re going to get paid a quarter of a million by some company after you leave office just to show up and schmooze and give a speech, then human nature is like, “Maybe I shouldn’t be too harsh on this company.” And I’ll say, this raise can go into effect for the president after me. I do not give a shit how much I get paid. But the president after me should get paid enough so that we know that they’re just looking out for us and not going to just speech it up afterwards.
DUBNER: You happen to be the Democratic-entrepreneur-as-would-be-President who happens to be running after the successful campaign of a Republican-entrepreneur-as-President who a lot of people agree, his entrepreneurship and CEO-ship have not contributed to a stable presidency or to a business-like presidency, etc. Does that not strike you as potentially terrible timing?
YANG: Well, the reason why Donald Trump in my mind won — aside from the fact that we’ve blasted away all these manufacturing jobs — is that many Americans are desperate for some kind of change agent. And if you look at it, there has been a thirst for that not just with Donald Trump but with Bernie Sanders’s outsized success, even to some extent with Barack Obama winning in ‘08, where the citizens of the United States have been casting about for some kind of change because they know that our government is failing us.
Donald Trump is a terrible president because he’s a terrible president. He’s not necessarily a terrible president because he was not steeped in our government for decades. And genuine entrepreneurs like myself regard Donald Trump as a bullshit marketing charlatan. So he gives us all a bad name. And the goal is to show what real builders and entrepreneurs would do to solve some problems.
DUBNER: If you were a bookmaker, what are the odds that you’re laying off for Andrew Yang winning the presidency in 2020?
YANG: I think the latest odds I saw were like 200-to-1.
DUBNER: Let’s pretend for just a second that you don’t win the presidency. But that you do impress a lot of people with your energy and ideas and vision. And you are invited to run as V.P. on the Democratic ticket.
YANG: One of the fun things about running for president is you spend time with other candidates on the trail. I have some ideas, but my vision is that there is a set of patriots that are all heading to D.C. to try and save this country. I plan to be in that group. And if it’s as president, fantastic, if it’s as vice president, also fantastic.
I just want to solve problems, man. I don’t really care about the seating chart. And someone said to me, “Hey, what if Joe Biden takes all your ideas?” I would say that’s fan-freaking-tastic. I’m not some freaking crazy person who has been measuring the drapes since I was 16 or any of that jazz. I just want to keep this country together for your kids and mine.
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Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Harry Huggins. Our staff also includes Alison Craiglow, Greg Rippin, Alvin Melathe, and Zack Lapinski. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts, Stitcher, or wherever you get your podcasts.
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