How a Barry Bonds Home Run in Baseball Explains Economics and Law
In my previous article for PolicyMic, I discussed how the Supreme Court created an antitrust exemption for professional baseball, and argued that the Court’s reasoning in the baseball cases helps us understand how the Court might rule on the individual mandate. Baseball, as a billion-dollar business, provides myriad examples of how the American legal system operates within the context of a market economy. For instance, a home run into the stands is not just an opportunity for fans to scramble for the ball and a possible brief appearance on television later that night, it also tells us something interesting about property law. Moreover, it also tells us something fundamental about federal income taxation just in time for Tax Day.
Imagine going to game equipped with your baseball mitt, all set to attempt to catch home run ball should one, based on the rules of probability, actually come your way. Then imagine your disappointment should you catch the ball, but were not able to hold onto it. That’s more or less what happened in a quirky 2002 California case, Popov v. Hayashi, in which two men asked a state court to resolve the question of who was the proper owner of an historic home run ball hit by Barry Bonds. Popov, who was the plaintiff in the case, initially caught the ball – sort of. He was never able to completely control the ball and people in the crowd jostled him. The ball escaped his grasp. It ended up in the hands of Hayashi.
Initially, the ball was the property of Major League Baseball. The court employed a particular term to describe the ball when Bonds hit it out of the park; it became “intentionally abandoned property.” The court then rules that Popov never really achieved full possession of the ball. But it isn’t clear whether he would have kept the baseball but for the crowd. Hayashi, on the other hand, ended up with the ball. The court says: “Both men have a superior claim to the ball as against all the world. Each man has a claim of equal dignity as to the other. We are, therefore, left with something of a dilemma.” The end result is that neither man gets to own the ball. The judge decides that the ball is to be sold, with the two men dividing the proceeds equally.
Although the court does not directly address this issue, the question of value is implicit in this case. The mere act of Bonds hitting the ball into the stands increased its value from the average cost of a baseball to what a buyer would be willing to pay for it. Intuitively, of course, we know it’s the same baseball.
A home run ball may have other economic implications. Say you go to a ballgame this summer and luck is on your side. You catch a baseball hit by a major star, but then decide to sell it for cash. Guess what? That’s income. You’ll have to pay taxes on that.