Pete Kendall's Socio Times: A Socionomic Commentary

July 6, 2007
Baseball Prepares to Celebrate, as It Should
Despite lingering steroid issue, game is alive and well ahead of All-Star bash
SAN FRANCISCO -- Steroids, labor disputes, the dilution of talent, a deep divide between the haves and the have-nots: Major League Baseball, despite all its missteps, has proven to be the nuclear cockroach of pro sports -- it just won't die.

In fact, as a business, these might be baseball's headiest of times. In San Francisco, the national pastime will revel in its resilience as it celebrates the 78th All-Star Game at AT&T Park, a relatively new venue that captures all that's right with the game and is also home to its darkest cloud. 

"Baseball continues to financially hit the cover off the ball," said Maury Brown, a sports business analyst who runs the Business of Sports Network. "Revenues are at an all-time high, as are attendance figures. When coupled with two consecutive labor agreements being reached without a work stoppage, MLB is at its rosiest point ever."

In 2006, more than 76 million fans bought tickets, up 1.5% from the prior year. In 2007, attendance is on track to break records for the fourth year in a row.  All this while one of the sports world's most hallowed records is about to fall into the hands of Barry Bonds, who has been caught up in the investigation into steroid use in baseball and implicated as a user himself by some publications.

"The steroid issue isn't going away, but it will be managed and massaged effectively, even if more ugly bits of news come out," said Andrew Zimbalist, economics professor at Smith College and author of "In the Best Interests of Baseball?"

"Fans factored the steroids controversy into this season and they still came out and filled the seats," Zimbalist added. "The predominant gestalt is that Barry hasn't been convicted and even if he was doing it, then so be it -- he's still accomplished remarkable things."

By 1996, attendance was down 15% from the year before the strike and television ratings had plunged. Before the recent resurgence, attendance was still down in 2003 vs. a decade earlier. Baseball was no longer a growth business, to the point where Selig was even considering the unthinkable: Contraction by eliminating teams in Minnesota and Montreal.

Four years and record attendance results later, that forgettable era now seems a distant memory. There are plenty of reasons to tune in this year: Most of all, it could very well mark the final All-Star appearance for baseball's greatest home run hitter. And greatest villain. 

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Barry Bonds Embodies the Rise and Rot of Baseball
Category: NEWS
By: Pete Kendall, July 10, 2007
Sports can provide a background for extreme emotions socially expressed. In the August 1985 Special Report, “Popular Culture and the Stock Market,” baseball was listed as flourishing in bull markets. In the early 1980s, at the end of the 16-year bear market pattern and the low for stocks in constant dollars, baseball bottomed in its slump at a low point that saw players on strike. Since then, baseball has been on a powerful “comeback” trend which has continued right through to this year.
The Elliott Wave Theorist, November 1991

baseball park
Obviously, the coincident upward surge in stocks and baseball continues to this day. The sport took a step back in 1994 when there was another strike (and a correction in stock prices) and it faltered again in the early part of the 2000s when the commissioner actually considered reducing the number of Major League teams (amidst a bear market in stocks), but the last four years reflect the rally in social mood that is captured by the June 1 all-time high in the Dow Jones Industrial Average and what the article at left refers to as the “headiest of times” for baseball.

The article alludes to another remarkable thing about baseball: it’s ability to hold itself together over the last decade against an ever-expanding array of emerging threats. Just as the bull market in stocks rests upon the weakening economic fundamentals depicted in Chapter 1 of Conquer the Crash, baseball faces an wide range of long-term imbalances. These range from runaway player costs to the role of performance enhancing drugs.

Perhaps the most amazing baseball feat of recent years is the sport’s ability to keep the steroid scandal at bay. Today’s All-Star game brings this facet center stage as it is being played in San Francisco where Barry Bonds, the unofficial poster boy for steroids, is still regarded as a hero. In much of the rest of the country, however, Bonds is reviled for climbing to within a five home runs of the all-time record, allegedly under the muscle-building influence of steroids. The focus on the mixed blessing of Bonds' prodigious home run power will continue through the next few weeks as he pursues the all-time home run record held by Hank Aaron. Sports Illustrated notes, for instance, that “baseball's great debate has been whether [baseball commissioner Bud] Selig will attend or blow off Bonds' coronation.” It concludes that he’ll be there because he has no choice.

Baseball today is about where the housing boom was in 2005 and technology was in 2000 – on the cusp of a great change that will finally shine a light on the practices that have carried the sport higher in recent years. The revelatory potential is apparent in a story on Victor Conte in Monday’s USA Today. Conte is the founder of BALCO, the maker of nutritional supplements and illegal performance enhancing drugs that supplied Bonds' personal trainer with steroids. In the story Conte, says he was strictly on the level as a provider of nutritional supplements through 1999. It was in 1999, however, that fateful final year of the great bull market that he finally “realized that athletes had no choice. The use of performance-enhancing drugs was rampant. It was the culture.”

Conte’s character may be questionable, but his statement jives with revelations about Bonds' alleged decision to do steroids at about the same time. Bonds has never admitted to steroid use, but a March 2006 cover story in Sports Illustrated, which was covered in a March 8, 2006 Socio Times entry, says he decided to take part in the late 1990s because two fellow sluggers, Sammy Sosa and Mark McGwire, were capturing the limelight with the help of performance enhancing drugs. From a socionomic perspective, Bonds' decision to give-in and go for the glory seems to fit. Like pension funds and governments that tend to sell their souls to the stock market near final highs, Bonds appears to have given in to the “everyone-else-is-doing” it pressure near the 2000 peak.

Conte makes several other interesting assertions in Monday's USA Today article. For one thing he notes that many players are still taking various performance enhancing drugs. Noting that manufacturers of steroids and other performance enhancing drugs are way ahead of the testing, he says “guys are using human growth hormone, and insulin, which is undetectable.” He also reveals that the effects of steroid use don’t end when players stop taking them. The muscles they produce are real and they can continue to produce for months afterwards. “Players don’t use steroid during the season,” says Conte. “They use steroids during the offseason, when they don’t test.” This year, however, the latent effects of steroid use appear to be  wearing out as another USA Today article reveals that home run totals are now crashing. Socio Times first reported on this trend back in 2005. From a 2000 peak of 2.5 homers per game, the per game average is down to 1.73. That’s the lowest total since 1993, which is about when the steroid-era is alleged to have begun. The home run decline represents another important divergence from the upward trend – in baseball and the larger social mood. 

A new era of recrimination likely awaits the game. As Conte notes in USA Today, “Baseball officials are fooling themselves” when they say they have rigorous testing. So far, their efforts to investigate players’ use of performance enhancing drugs have seemed more like an effort to contain the scandal than expose it. When Jason Giambi, the one player who came closest to admitting steroid use, nearly came clean, the league threatened him with suspension. Conte says people basically want him “climb under a rock and stay there” due to his connection to this seamier side of the game. When the trend, as signaled by a long-term reversal in stock prices occurs, however, the unpleasant side of the game has a way of breaking out. When the Dow starts down, steroids will be just the front edge of a new wave of ugly revelations.

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