Ownership Is Really Just a Vibe
One thing non-socialists love to tell me is that socialism “could never work.” It might sound good in theory but in practice you simply can’t organize an economy that way. Without private ownership of the means of production, you will not get well-run businesses that produce the goods that we all need. You need a private owner driven by the profit motive at the top of an organization to oversee the work of a business and make sure it runs smoothly and efficiently.
I always find this to be a very strange argument, though, because it does not reflect how businesses are really run. It might sound good in theory, but in practice it is not actually how our capitalist economy works.
Look at the deal the Dallas Mavericks announced last week, with Mark Cuban selling the team to the family of the late Sheldon Adelson. Despite the sale, and the exchange of billions of dollars, Cuban will still remain in charge of the team’s basketball operations. According to Marc Stein, who first broke the news, “this deal appears uniquely poised to allow [Cuban] — for the foreseeable future — to function with the same hands-on ownership style that he has employed for nearly 24 years.”
In other words, it doesn’t really matter who “owns” the Mavericks after all.
Of course, this deal is pretty unique — but it’s only unique in the world of sports. Professional sports teams are unlike most of our economy in that they still operate as little fiefdoms of an individual, or a family. They are not public corporations,* and in many leagues there is a rule that an individual has to own at least 51% of the team. So the Buss family owns the Lakers (and has since 1979), the Steinbrenner family owns the Yankees (and has since 1973), and the Rooney family owns the Steelers (and has since the team’s founding in 1933). And in each case, there is one figurehead at the top of each family (like the mafia).
*Although some, like the Atlanta Braves, are a subsidiary of a public corporation.
But this is an increasingly unusual arrangement. Throughout most of the rest of the American economy, ownership is spread over many shareholders. In other words, it’s socialized. The people who run Apple or General Motors or Johnson & Johnson are not really the people who “own” those companies — those companies are all owned by millions of shareholders who have virtually no practical say in how the businesses are run and managed. Even in a privately held corporation, the ownership and the management are largely separate functions.** And yet our economy soldiers on! It turns out you don’t actually need a private owner running things to make sure a company succeeds…
**For example, David Koch reportedly owned 42% of Koch Industries, but spent most of the last four decades of his life pursuing pet political causes and philanthropic interests, with little day-to-day role in the activities of his bloodsucking business empire.
I can already hear you saying: “But John, surely you are not suggesting that Apple/GM/Koch/et al are socialist enterprises?” Of course I’m not saying that. Ownership is only socialized among the ownership class, meaning people who had the ability to buy equity positions, either through their wealth or luck or their social position. This means that most people are completely shut out of the ownership of these companies, and so they are not really accountable to the public, as they would be under socialism. This is what some people mean when they say the economy is actually “socialism for the rich, capitalism for the poor.”***
***Personally, I don’t like this framing because it suggests “capitalism for everyone” as a possible answer. But the whole point is that capitalism always includes some level of social ownership – it’s just a matter of who benefits from it.
But just like Cuban and the Adelsons have worked out a deal to separate the management of the team from the ownership of that team, owners around the economy have figured out how to separate ownership and management more broadly. Not only have they figured out how, but they ALMOST ALWAYS PREFER IT. And any sports fan can tell you why.
In real life, owners almost always get in the way. They cut payroll to the bone, even if that ruins the product; they fire coaches impulsively because they get impatient; they bully and harass their employees because everyone’s afraid to stop them. Or they tell advertisers to “go fuck yourselves” because their feelings get hurt. Private owners, it turns out, do NOT actually run their businesses rationally and efficiently. The best owners are usually the LEAST involved in the running of the team — as this Mavs deal seems to suggest, the best “owners” do not even actually own the team!
It’s enough to make you question what “ownership” even means. As mentioned, sports teams are one of the few areas of the economy left operating on the antiquated, semi-mythological premise that “ownership” of a business involves one person sitting at the head, making all the decisions based on his or her own bottom-line. But as the Cuban/Mavs deal shows, even this might be on its way out. While this particular arrangement seems sui generis, it reflects a growing trend in sports ownership away from the individual owner/operator.
See, part of the problem is that sports franchises are TOO valuable. It used to be the case that, when a team was for sale, you could go and find a local multimillionaire to buy it. That’s how the Buss family came to own the Lakers, how Jerry Jones came to own the Dallas Cowboys, and how Cuban himself came to own the Mavericks originally.
But look at the prices those teams sold for: Jerry Buss bought the Lakers for $67.5 million (he also got the LA Kings, the Forum, and a 13,000-acre ranch in the same deal) in 1979. Jones paid $140 million for the Cowboys ten years later. Then a decade later, Cuban bought the Mavericks for $285 million. All of these were eye-popping sums at the time… but they all pale in comparison to what the teams are worth now. The Lakers are reportedly worth over $6 billion, which is around 30x what Buss paid for the team, even after factoring in inflation. Cuban’s deal now values the Mavericks at around $3.5 billion — or more than ten times what he paid. And the Cowboys are usually listed as the most valuable franchise in North American sports, at around $9 billion, or 40x what Jones paid.
Given the rate at which teams are increasing in value, there just aren’t that many people in the world who can afford to buy them without either taking on serious debt, combining with many partners, or liquidating all their other assets. Hence the rise of “ownership groups,” where a consortium of millionaires or billionaires pools their resources under the control of one “managing partner” who then runs the team — but what is this except a socialization of the ownership?
In other words, sports franchises cannot resist the trend toward collective ownership for much longer (unless owners are willing to slow the rate at which the assets increase in value which… yeah, that’s not happening). Eventually, situations like the Rooneys and the Steinbrenners will feel as quaint in the sports world as the idea of a Mom & Pop multinational conglomerate.
Luckily, though, publicly-traded corporations, while still bad, are at least preferable to privately held ones, and point towards a better, more socialist solution. Not just because they are more efficiently run (although they are), but because they show you don’t have to let the billionaire at the top of your organization run your team like a mad dictator. Publicly-traded corporations have already developed different modes of governance, which can work reasonably well.
The CEO of a public company is accountable to a board of directors. Right now, those boards represent shareholders, but there’s no reason they couldn’t also include representatives from labor or other stakeholders — indeed, German companies are already structured this way. Why couldn’t a team’s GM or President be accountable to a board made up of people with actual experience in the sport, instead of whoever happened to be rich enough to buy the team? Why couldn’t shares be completely held by a public entity? The people of Green Bay and the Kingdom of Saudi Arabia have figured this out, but I’m not sure why it has to be limited to just those two places…
In general, though, it is important to realize the idea of “ownership” that capitalist propagandists like to spread is just a myth. While economists and political observers like to pretend that socializing ownership is impossible or inefficient, the ownership class is already doing it amongst themselves. Even sports teams are doing it now. And once you realize it CAN be done this way, you have to wonder why you’d ever do it any other way.