When I was 11 years old, Walter O’Malley—the owner of the Brooklyn Dodgers—moved the team because New York wouldn’t help him build a new stadium, and Los Angeles would. I was devastated by the heartless decision-making of free market capitalism.
The left criticizes free market capitalism and the right defends it. Ironically, free market capitalism hardly exists anywhere in the world. The wealthy and powerful use their money and influence to get special favors from local, state and federal governments that distort the so-called free market. Politicians provide tax breaks, zoning exceptions, favorable regulations, non-bid contracts, financial subsidies, and even infrastructure projects that favor certain companies or individuals — like support for a new stadium. Corrupt governance corrupts the marketplace.
The free market, after all, is simply a democratic decision-making mechanism in which people vote with their money. Their collective purchases, sales and investments influence what is produced, how much of it, and how much it costs.
Whether it’s a good idea to use public money to support a stadium for a privately owned sports team is a question for another day. Walter O’Malley moved his team because he felt it was to his financial benefit to do so. That’s what capitalists are supposed to do. The disappointed fans have no say…unless they are shareholders of the Green Bay Packers football team, the only professional sports team in America owned by its fans.
On August 18,1923, the Hungry Five—so named because they were always begging for money to keep the Packers alive—persuaded the football league to make an exception to the rule that a team must be owned by an individual or a small group of owners. Over 360,000 shareholders today own more than 5 million shares of non-profit corporate stock. However, during the last stock offering in 2012, a Wall Street Journal headline asked, “Are the Green Bay Packers the Worst Stock in America?”
Despite the fact that a share cost $250, “pays no dividends, benefits from no earnings, isn’t tradeable and has no securities-law protection…buyers can’t get enough.” A purchase of stock doesn’t even allow stockholders a discount on team T-shirts, or move them up the 90,000-strong waiting list for tickets. A tax expert on Wall Street remarked, “I’ve never seen a stock offering where people pay so much and get so little.”
While non-profit corporations must be just as businesslike as their counterparts, they have different motives and behaviors than for-profit corporations. The Packers are the only American major-league sports franchise to release its financial balance sheet every year. The board of directors, except for the elected CEO, all serve without pay. If the team dissolves, all profits and assets go to community programs and charities.
Non-profits are not obligated by law to maximize profits for the benefit of shareholders. I have helped start and run non-profit corporations (also called NGOs) in several countries, for example, to conserve and protect open land, provide services for delinquent and at-risk youth, teach public schools how to reduce violence, and to offer master’s degrees in “restorative practices,” a new social science. An investment group inquired about buying our non-profit graduate school, but quickly backed off when the investors realized that we had spent eleven years getting approved and accredited, and were still building student enrollment to cover all our costs.
That’s what non-profit corporations accomplish: They do things that people want done, but that profit-making corporations would not likely undertake nor sustain. Non-profits are not a replacement for profit-making corporations, but they provide a good way to run a business that is accountable to the local community.
And that is why the Packers are still playing in Green Bay, Wisconsin; a city of only a hundred thousand people, while Brooklyn—with a couple million people—is no longer home to the Dodgers.