A Comparative Study of Governance of Professional Baseball Systems in Japan and Taiwan

Abstract

This paper has provided a basis to outline some key governance features of professional baseball systems both in Japan and Taiwan. It seeks to highlight and compare with the various forms of interactions between actors in these two systems. Associated with this, the paper undertakes a qualitative content analysis method with reviewing and explaining the dynamics in the interactions among three main actors, namely, state, owners of clubs, and players. Four principal conclusions are as follows: first, this case points to evidence that owners of clubs own dominant power while players’ voices are relatively weak; second, it demonstrates how these two states adopt different attitudes to intervene or non-intervene their domestic professional baseball industry in some respects; third, it identifies the most powerful actors in the two systems are Committee Mediation and Committee Board, which represent the extended power of clubs’ owners; finally, the article suggests that the outcomes of interactions between the above actors have shaped the two sporting contexts for managerial decisions, which have made a contribution to a development of their own operating mechanisms.

Key Words

Governance, Power, Japan, Taiwan, Professional Baseball

Introduction

Baseball, having gained assistance from the Americans, established its foundation in Japan and the future of the game in Asia, in 1903. Americans “were embraced easily in Asian societies where Japan played a crucial role in perpetuating and promoting baseball” (Reaves, 2002: 8). Most academics have agreed that the relationship of (professional) baseball development between Japan, Taiwan, and the USA is evident, and such a type of development has manifested a specific ‘chain of supply’ in the global sporting context (cf. Chiba, 2004; Lee & Lin, 2007; Reaves, 2002; Takahashi & Horne, 2004). This claim of such a tendency, related to the development of globalizing baseball, has reflected on a phenomenon in Chiba’s accounts that “the phenomenon of globalization is becoming increasingly important for the professional baseball leagues in the Pacific region and North America” (Chiba, 2004: 207). Today, players from the East Asian countries such as Japan, South Korea, and Taiwan are common and performing with increasing dominance in the professional baseball industry in the United States, especially after 2001. “[Professional] baseball across Asia seems to appear to be the same as the U.S. version and in many ways, the Great American Game has become the Great Japanese Game- at least across Asia” (Reaves, 2002: 2) in general, and East Asia in particular. The game of professional baseball, which deems an obvious link among them, has built bridges from their development, which has been shaped in various forms in terms of management although having the same American origin.

In 1945 Japanese governance was ended and Taiwan has been took over by Taiwan’s government ever since. Fifty years of dominance by Japanese culture has more or less permeated and influenced the development of Taiwanese baseball culture and civil society. Indeed, generations later, Japan’s influence on the game [baseball] remains significant until now…and “what is special about Taiwan baseball is that we followed the Japanese model” (Wilson, 1996: 73). Therefore, some curious issues around this sport have been raised. Within this context, this paper aims to understand the development of the Japanese and Taiwanese professional baseball systems by explaining/comparing such organizations and management under their specific structural contexts. The researchers thus approach their study informed by the above considerations to identify: Who are the most powerful groups of actors who have shaped the professional baseball systems? What strategic goals have they pursued, and what resources were available to these actors given the historical context? What are the principles which guide particular organizations? Whose interests have been served by the development of the professional baseball systems?

The term ‘governance’ has grown in usage in relation to arguments in political science, public policy, international relations, and other areas in recent years. Before, the concept of governance had almost been seen as synonymous with government and related simultaneously to terms of politics, policies, and polity of political systems. As a rising popularity and an increasing expansion of the governance discourse which depicts various applications and meanings are recognized, the booming adoption of governance theory has also been found both at national and international levels in the field of sport (cf. Forster, 2006;Henry, Amara, Liang, & Uchiumi, 2005; Henry & Lee, 2004; Hoye & Cuskelly, 2007; Hums & MacLean, 2004; Michie & Oughton, 2005; Thoma & Chalip, 2003). In this study, Henry and Lee’s (2004) threefold typology of sport governance concepts has adapted to seek to investigate and explain the development of Japanese and Taiwanese professional baseball systems. According to Henry and Lee (2004), these three key sport governance approaches are systemic governance, corporate governance, and political governance.

The main focus in this article is systemic governance, which is concerned with the competition, cooperation, and mutual adjustment between organizations in business and/or policy systems – academic and policy related interest in governance has grown with the increase in complexity of business and policy environments. Most such environments are characterized by the interaction of organizations and of groups working within and across organizations. Sport is no exception here. If we think about the role of media interests, major sponsors, players’ agents, the major clubs and their share holders in professional sport, we see an ever more complex field of activity. Indeed, in the contemporary setting, it is unlikely to think in terms of a national or international governing body as being the sole author of its own sport’s destiny. Various groups of stakeholders such as government officials, owners of clubs etc. are able to negotiate with others and to apply pressure to have their own interests met. Thus the old, hierarchical model of the government of sport, the top-down system, has given way to a complex web of interrelationships between stakeholders in which different groups exert power in different ways and in different contexts by drawing on alliances with other stakeholders. While thinking about the role of governments, owners, clubs, players, spectators, and the wider community in the system, the complexity of this field is evident. This complicated set of relationships is characterized by interactions of organizations and groups, which are working within and across organizations. Thus, we intend to restrict our comments to three such actors, owners of clubs, governments, and players.

Method

To investigate the nature of the strategic context and the explanations/actions of strategic actors, the authors employed qualitative content analysis of textual materials to document its claim to reflect experiences of the phenomena by reference to the collected data. The study, conducted over one year (2007-08) by the first two of the authors, draws on materials from analysis of data, including key government policy documents, academic papers, and media commentaries etc., both in Japan and Taiwan. A review of the literature provides accounts of the two professional baseball contexts since 1990 (the year which CPBL set up) to 2008. Gathering of data helped to map out a picture of the structural context of the two professional baseball systems. In this study, we reviewed 21 academic materials, 24 media articles and 5 government reports. As a result, our research was conducted by secondary data from the above three main documents. Eighty-three commentaries were identified to conduct this research. Table 1 below provides a summary of the key actors identified and the approaches adopted to obtaining data relating to their own commentaries.

Table 1
The Summary of Commentaries of Stakeholders and other Commentators

Government Reports Media Commentaries Academic papers Total
Japan Taiwan Japan Taiwan Japan Taiwan
Owners 1 3 4 8 6 8 30
Governments 3 4 4 7 4 6 28
Players 3 4 4 9 9 11 40
Total 7 11 12 24 19 25 98

Discussion

Owners of Clubs

Generally, the growth and prosperity of organizations are not considered bonanzas for individual actors, but are valuable ends in themselves (Trompenaars & Hampden-Turner, 1997). Owners tend to put the clubs in the promotion department and recognize that the main purpose of possession of the team is to promote the brand of products, outstanding image of enterprise, and good public relations to the mass etc. In Japan for example, Yomiuri Shimbun and Chunichi Shimbun use teams for sale promotions. The Hanshin Electric Railway Co., Ltd and Seibu Group used teams for the tickets’ revenue and urban development along its railway line, and the ORIX Corporation obtained good reputation and credit from its club. However, it has been seen that except for the Yomiuri Giants, the Hanshin Tigers and Hiroshima Toyo Carp, all clubs are operating through a great support, often as much as three billion Japanese Yen or about US$ 25 million, from their parent companies (Nihon Keizai Shimbun, 2004; 2005). A considerable rise in the salaries of players recently is often criticized, but, from the start of the professional league, parent companies still pay the difference as an advertisement (Kobayashi, 2004). Again, this is because there are ‘extra’ recognized benefits which these parent companies expect to obtain from the baseball clubs, even though they are ‘losing’ money by investing in this industry. This is evident in Taiwanese professional baseball systems as well, where most clubs are in a ‘red’ negative profit condition in terms of financial investment.

Besides their value for the purpose of social promotion, another reason for companies keeping clubs is the tax abatement allowed by the government, including some policies of preferential treatment to reward the companies’ investment. For example, in Japan, the National Tax Administration Agency permits the parent companies to enter the cost for the baseball clubs under losses (Kobayashi, 2004). In Taiwan, though professional baseball business is viewed as a commercial activity, the government provides support in kind for this industry, such as no levying entertainment (around 10%) tax on clubs but clubs paying lower Education tax (around 2.5%) from their financial income, gate revenue in particular.

While obtaining ‘benefits’ from the government, on the one hand, owners still have a specific obligation and responsibility to shareholders in terms of transparency and accountability (Henry & Lee, 2004). On the other hand, they also need to meet the interests of those who are involved in the organization in different forms, such as players, supporters, sponsors, and so on. Nevertheless, in Taiwan’s system, owners of clubs are dominant in ‘steering’ [controlling] the operation of the whole network. A Committee Board, composed of representatives of owners, is authorized powerfully far beyond the leagues and is to be responsible for important agreements, (contracts, for instance) of clubs and players. Ironically, as this ‘institution’ is so dominant, the duties of the leagues are thus only policed through setting the agenda of the seasonal games, promoting images of clubs, players, and negotiating related affairs with the government under the requests of this influential committee board.

Comparing Japanese owners’ power with Taiwan’s case shows no difference between these two. For instance, in Japan, although Hiromitsu Ochiai submitted his wage case to arbitration in the end of the 1990 season, it was deemed mainly controlled, more precisely, nullified by the employers’ ‘dominant power’ (Whiting, 2004). Indeed, “A Mediation Committee is composed of three members, the commissioner and the chairman of the Central League and the Pacific League. No one is selected from a third party” (Suzuki, 2000: 2). The above claims have evidently reflected on the owners’ attitude toward the whole system when the well-known owner of the Yomiuri Giants, Tsuneo Watanabe, has stated that “If any players are accompanied by an agent at a table of salary negotiation, I will absolutely cut the salary of that player…” (Suzuki, 2000: 1).

Governments

In Taiwan’s case, the role of national government is to ‘regulate’ contractual frameworks for the industry and to make the benefits of the whole available to all stakeholders. The role of the Sports Affairs Council acts as a public sector lever in order to achieve positive social and economic benefits in the private sector. The government to develop this sport and the capital spending and infrastructural effects of the merger, for example, were evident (Lin, 2003). The baseball stadia, planned or under construction, are designed not only for baseball tournaments, which include international, domestic, and professional baseball games, but also to develop local prestige (culture). They serve as well to promote economic activities with cooperation between the central and local governments (Sports Affairs Council, 2004). The implementation of these programs sought to be mutually beneficial for both the public and the private sectors. However, the provision of a stimulus for capital spending on new and rejuvenated sporting facilities and improvements raised some questions which were concerned with who really benefited most from such spending. Also, did they really meet the criteria of the government’s initial reasons for promoting such policies? The state, though an actor within the Taiwanese sporting system in terms of having the most resources of income (taxation), personnel, information, and if necessary force of law, sought to ‘influence and steer’ but not to directly ‘control’ the professional sports’ field. For instance, as all the players have signed contracts with the clubs which were fully controlled by the owners, it is likely that the players’ voice has been getting lower in order to secure their jobs (Hsien, 2007). Despite the government being responsible for protecting her citizens’ civil rights, such as work, life, freedom of moving etc. according to the Constitution, nonetheless, the professional baseball business is recognized as a commercial activity by the government, which has been used to keep this industry open and free under the rule of the market mechanism. The existence of commercial contracts agreed by both the clubs’ owners and players simply reflects this concern where the government (public sector) was not seeking to be involved and thus avoiding inviting criticism over government intervention from the private sector.

Interestingly, Taiwan’s government acknowledges that baseball had contributed much, not only to the achievements of its political purposes such as enhancing national prestige, aiding international diplomacy, but also to economic goals such as reducing unemployment and expanding business opportunities (Lin, 2003). Thus, attempts at rejuvenating Taiwan’s baseball community and promoting future development of Taiwanese sports after the 1997 professional baseball gambling scandal were evident and thus brought the state, the sporting governing bodies, and the commercial sector together in coping with this issue. A concern raised here was that the ‘cooperation’ of combating this crisis among actors had invited the government to ‘intervene’ in this sport. Subsequently, the hosting of the 2001 Baseball World Cup (BWC) had further provided this government with a basis to be involved in [professional] baseball matters, and the success of the 2001 BWC had greatly inspired the government to promote and complete the merger between the two Taiwanese professional baseball leagues (CPBL and TML) in the 2001-03 period.

Although having shared ‘similar attitudes’ toward recognizing the behavior of the professional baseball industry as a commercial activity both by Japan’s and Taiwan’s governments, to some extent, these two governments have dealt with matters related to this business in different ways. In Japan, as central government recognizes the importance of promoting sport policies, the Ministry of Education, Culture, Sports, Science and Technology established the Basic Plan for the Promotion of Sports in 1999 (Ministry of Education, Culture, Sports, Science and Technology, 1999). In this plan and other government reports, it is apparent that central government was concerned with Japan’s performance in world competitive sports and emphasized the necessity of launching sports developing programs for citizens from kids to top athletes (Ministry of Education, Culture, Sports, Science and Technology, 2006). Unfortunately, these reports are unable to embrace or consider relevant affairs of particular sports in which the professional baseball industry was also included. Though lacking government ‘full attentiveness’, national tax agency in Japan had promoted the provision of tax abatement for professional baseball since some decades ago (National Tax Agency Japan, 1954). Having an understanding of the government’s attitude toward to professional baseball, in the first strike case of NPB’s players in 2004, it is clear that interactions (negotiation) for tackling this crisis between owners, players, media, and even fans was evident. One could see the Minister of Education, Culture, Sports, Science and Technology merely held a press conference which mentioned the hope to avoid the strike (Kyodo, 2004). Another good example is that, since the 1990s, Japanese companies were struggling with economic recession, which has forced these companies to reform their business structures in which the business of professional baseball was thus influenced and changed. Companies such as Kintetsu Corporation and Daiei disbanded their teams, which led to Softbank Group and Rakuten buying team companies, and Murakami Fund began a merger and acquisition for the owners’ companies. Again, for these issues, the Japanese government ‘totally respected’ the operating mechanism of a free market and didn’t intervene in the professional baseball industry. Governments at local levels are also indecisive whether to invest for the professional baseball teams. For example, Miyagi prefecture and Sendai City rejected subsidizing to rebuild the stadium because of the demands from team companies which have reflected on Kobayashi’s claim that it is improper for the government to subsidize the NPB teams in terms of promoting [professional] baseball (Kobayashi, 2004). Nevertheless Japanese central government introduced a new public management program called Shiteikanrisha-Seido in 2003 because of the administrative reform. It was not for the aid of the professional baseball industry. As a result, in Miyagi prefecture and Chiba prefecture, the right of managing the stadia, which were controlled by local governments, has been transferred from the public sector to the NPB’s teams. By these contracts, clubs of Rakuten Golden Eagles and Chiba Lotte Marines have made it possible to gain revenues by managing commercial activities of the stadia. Thus, the relationship to bridge the local governments and NPB’s teams is significant when managing such a professional baseball business.

Players

Considering players’ rights in these two systems, one major function of their associations is to be able to apply pressure to meet their own interests. In Taiwan, an ‘occasional’ player association appeared shortly in 1994, however, ‘keeping silent’ became the best policy for players because of the recession of the professional sport market later. The Association is now recognized as informal and perhaps only one function—emergency aid—exists. In Japan, the Japanese Professional Baseball Players Association (JPBPA) was established in 1985, nevertheless, “neither antitrust related lawsuits nor labor related lawsuits have been filed against the owners, because the JPBPA is so weak and players know they will be black-listed unless they obey the owners’ decision” (Suzuki, 2000: 1). To some degree, professional baseball players in Japan and Taiwan consider it important to be loyal to the club owners instead of having an emphasis of individual rights. Therefore one can have an unsurprising example when famous pitcher Hideo Nomo decided to undertake a loophole in the tradition Japanese professional baseball rules that enabled him to circumvent free-agent regulations in 1995. He became fed up with the traditional constraints of group loyalty and being greatly criticized by fans, in which Japan’s media termed him a ‘troublemaker’ and even a ‘traitor’ (Whiting, 2001). Therefore, it has been rare for players to attempt to file a lawsuit against their owners in Taiwan as well as in Japan, except in the occurrence of the 2004 striking case in Japan. Nevertheless, the situation has changed as we can see players such as Hideki Matsui and Daisuke Matsuzaka participate in the MLB in recent years while seeking to achieve their personal ‘interests and dreams’. In addition to players’ own considerations, the worsening financial difficulties of clubs’ sponsoring corporations (Seibu for example) also lead the migration (sale) of players to the MLB. The most famous pitcher of NPB, Daisuke Matsuzaka, who joined the MLB in 2007, can serve as an example in which the Seibu Corporation received US$ 51 Million paid by the Boston Red Sox.

In Taiwan’s professional baseball system, another issue that emerged concerned the draft system in which players could only ‘voluntarily’ join their preferred clubs by the system outwardly, which used to be organized by the leagues but was actually controlled by the owners(Chen, Chen & Hsu, 2008). Consequently, it has been seen that negotiations of players’ draft picking proceeded with a lack of considering views from player, supporter, etc. Hence, players and supporters are insufficiently influential to negotiate with other stakeholders. For this issue, the government has sought to urge the leagues to establish a sound and fair system to recruit players (Sports Affairs Council, 2000), which was designed to promote the competency and the uncertainty of outcomes between clubs’ games. Unfortunately, this action met with little success since clubs always have their own considerations. Actually, promotion [improvement] of Taiwan’s specific draft system has been considered by the clubs and the league recently. Nevertheless, in comparison with professional baseball leagues either in the USA or Japan, Taiwan has a long way to go to promote its own system in issues, for example, of arbitration, free agency, unions, and so on. In Japan, despite the fact of having a more ‘advanced and sound’ operating mechanism in the professional baseball system than Taiwan, the NPB players’ rights are still far behind the players in MLB. For instance, in 1993, a free agency system had been promoted; however, there were limitations existing that have hindered players’ mobility, such as the fact that players were unable to be free agents after nine years of service in the first club (Suzuki, 2000). Meanwhile, before the period of obtaining the right of free agency, if players intend to develop [continue] their careers in MLB, they have to get through a termed posting system which disallows a player choosing clubs, even if he has already been awarded offers by other clubs. Therefore, only the clubs have the rights to make decisions for players to select or refuse offers from the MLB clubs (Suzuki, 2000). In this sense, the development of the Japanese professional baseball system has its necessity to improve in general, players’ rights in particular. Having given explanations and analysis of power relationships, interactions of the three actors namely, owners of clubs, governments, and players. Table 2 below helps highlight the key governance features of the two professional baseball systems in terms of roles’ power of various stakeholders.

Table 2
Key Governance Features of the Two Professional Baseball Systems

Japan Taiwan
Role of governments
Weak-Mixed

State non-intervention except the provision of tax abatement.
Strong-Mixed

State defines professional baseball as a ‘corporate business’ within a free market, which should not be interfered with. However, state constructs and maintains stadia, and promotes developing programs through school system.
Role of owners of clubs
Strong

Leagues and clubs are mainly controlled by the employers’ ‘dominant power’.
Strong

A Committee Board, composed of representatives of owners, has authority over the operation of the leagues.
Role of players
Weak-Mixed

Though having a gradually ‘advanced and sound’ operating mechanism, the NPB players’ rights are still behind the players in MLB.
Weak

Players’ voices are weak and tended to be ignored by clubs. Issues such as Regulations of Arbitration, Free Agency, Player Association etc. have being ignored.
Most powerful actors A Mediation Committee is composed of three members. The Committee Board is composed of representatives of clubs.

Conclusion

In this case of identifying governance features of the two professional baseball systems, which have shaped the thrust and pace of the developmental strategies in the Japan’s and Taiwan’s structural contexts, the Japanese and Taiwanese models would seem to imply a two-fold structuring of the contemporary systems. Both of the two professional sport systems, though under the global pressures, have developed their operating mechanism where it has given way to specific management in some ways.

This study illustrates that various actors behaved in order to achieve strategic goals. In Taiwan, the state, though incorporating the most powerful set of actors within its sporting system, with access to financial resources, personnel, information, and if necessary force of law, sought to steer rather than demand its preferred outcome. The state still plays an influential role in the professional baseball system (e.g. the 2003 merger issue between the two leagues) though identifying it as a free commercial activity, in which any kinds of intervention may not be favored. The Japanese case is a different story from Taiwan since its government intends to have non-intervention except for the provision of tax abatement.

Owners of these two systems stand in a stronger bargaining position in most aspects. The current process of governance still represents a buyer’s market in which players’ powers are limited because of their lack of access to strategic resources to affect outcomes. Nevertheless, the Japanese system has gradually been improving to be more ‘open and completed’ and players’ rights are more considered and respected in comparison with Taiwan’s case. Additionally, the Mediation Committee in Japan and the Committee Board in Taiwan were recognized as the two most powerful actors and believed to represent the ‘extended forces’ of professional baseball clubs. Under the ‘guidance’ of these two Committees, the two leagues (NPB, CPBL) have administrative responsibilities, but with no real power. They simply play less important roles in their systems.

Finally, it suggests that various countries have their local environments (conditions), which are consonant with their particular social values. As a result, a successful professional sport management should be able to reflect national characteristics and be consistent with a country’s cultural values in the globalized context. Indeed, [professional] baseball is recognized as a public good, produced and owned by a wider set of publics which include clubs, players, supporters, spectators, and the wider community. Having given a contribution to identifying some key characteristic features of Japan’s and Taiwan’s professional baseball systems, in order to obtain the sustainable development of these two systems, it is suggested that all those possible investing resources and those of the community need to be served.

Ping-Chao Lee (First and Corresponding author)
Department of Physical Education, National Taichung University, Taiwan
Address: 140, Min-Shen Road, Taichung City (403), Taiwan
Phone: +886-4-22183013
Fax: +886-4-22183410
E-mail: p.c.lee@ntcu.edu.tw

Yoshio Takahashi
Institute of Health and Sport Sciences, University of Tsukuba, Japan
Address: 1-1-1 Tennodai, Tsukuba-Shi, Ibaraki-Ken 305-8574, Japan
E-mail: yoshi@taiiku.tsukuba.ac.jp

Chien-Yu Lin
Graduate Institute of Sports and Health Management, National Chung Hsing University, Taiwan
Address: 250, Kuo-Kuang Road, Taichung City (402), Taiwan
E-mail: cylin1349@nchu.edu.tw

Koh Sasaki
The Research Center of Health, Physical fitness and Sports, Nagoya University, Japan
Address: Furo-Cho, Chikusa-Ku, Nagoya City, 464-8601, Japan
E-mail: sasaki@htc.nagoya-u.ac.jp

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