May 11 (Bloomberg) -- In my household in Boston, only a few people are instantly recognizable by their first names. That would include me, my wife Judy and her kids and the big fellow with the flying dreadlocks.

“Did you hear the news about Manny?” Judy e-mailed me Thursday.

For those who live on another planet or don’t know that grass was invented to cover outfields, Manny Ramirez is the Dominican-born left fielder who became a star with the Cleveland Indians and a savior with the Boston Red Sox. He led the latter to a World Series triumph in 2004 and again in 2007, the first ending a victory-less drought of 86 years.

Now playing for the Los Angeles Dodgers, he was suspended for 50 games for testing positive for human chorionic gonadotropin (hCG), a women’s fertility drug. Transplanted New York Yankees fans like me, boiling over the drug-related scandal involving Alex Rodriguez, may be accused of gloating at our rival’s misfortune.

But what I really felt, once I cleared my head of the CDOs I had been writing about, was this: Why did he do it? And the answer is pretty obvious. Money. No one in the current baseball era swung more freely or more fearlessly. And no one delivered better results (533 career homers, lifetime batting average of .315).

Ramirez didn’t have to do it. And had he not played in an era in which stars are paid $20 million plus per season, I don’t think he would have. Not even Ramirez can know whether that is true, although he was eager, at age 36, to bolt to a fourth team for more pay. (Poor little lamb, he had to settle for the Dodgers’ offer of $45 million over two years, adding to the $162 million earned in 15 previous seasons).

Pay Convergence

It’s reasonable to assume that if salaries for stars weren’t in eight figures, many more athletes would play it clean. I have spent much of the last 20 years writing about excessive compensation, usually of corporate executives. Sports I followed only for pleasure. But now, profession and pleasure seem to be converging.

Even before the season started, Ramirez’s scoffing at the Dodgers’ initial $40 million offer ticked me off. If bankers were being made to forgo, at least for a season, bonuses from the institutions they had brought to ruin, why not left fielders? And should the Yankees be recouping player salaries at a taxpayer-supported facility at which “non-premium” seats go for an average of $72, and premium tickets for much more?

In a market system, of course, there are no “shoulds”: People are entitled to earn what the market bears. But gross distortions in pay are often a sign that the market isn’t working. This is true in business and in sports.

Free Distortions

No “free” market would award Aubrey McClendon, chief executive officer of Chesapeake Energy Corp., $100 million for his services in a year in which the Oklahoma City-based company’s stock fell 58 percent and its earnings fell by half. But Chesapeake’s board, which is stuffed with cronies and ex- Oklahoma politicians, did. McClendon had borrowed against his stock and faced margin calls. Rather than let him suffer the just rewards of capitalism, the board bailed him out.

The market disconnect is that shareholders, thanks to a dysfunctional proxy system, have no voice over the directors who control their investment.

In sports, the disconnect is harder to see. It is tempting to think that high salaries drive up ticket prices, but the causality probably works the other way: the Yankees’ high revenue enables them to pay league-leading wages.

Social Value

But it’s not so simple. In a true market system, as Steven Malanga of the Manhattan Institute has pointed out, teams from Minnesota and Kansas City would relocate to New York. Financially speaking, a small share of Gotham is more valuable than a monopoly in Cleveland.

Major League Baseball doesn’t permit this. It recognizes that the Yankees’ value depends on there being teams in other cities (not just Boston and L.A.) to compete against. And the Supreme Court recognized the social value to national sports leagues in 1922 when it declared that baseball was exempt from antitrust laws.

“Labor” was later allowed to opt out from this closed market, meaning players can auction their services to the highest bidder.

But the exemption still shackles the fans, who have no ability to demand a third team in New York, or a fourth -- or however many would be necessary to bring ticket prices down to reasonable levels. The solution is to recognize that since baseball isn’t a market system, it should be fully regulated.

Leveling Off

At present, the Yankees, Dodgers and Red Sox leech off small-market teams. They are worth more because the Royals docilely remain in Kansas City, where they have no hope of retaining high-priced talent. Since MLB doesn’t let the market level off such inequities, the league or Congress should do so. Either truly share revenues among the teams -- at present, MLB has an ineffective luxury tax -- or require that high-market tickets and salaries be, say, no more than 25 percent above the league mean.

Fans in Pittsburgh could again hope for a competitive team. Fans in New York wouldn’t have to go to Pittsburgh to afford a seat. Players might benefit, too.

Aubrey McClendon probably will never realize how the prospect of undeserved fortune corrupted him. But when Ramirez, who once played the game with such youthful abandon, sees what has become of his name, he will.

(Roger Lowenstein, author of “When Genius Failed,” is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the author of this column: Roger Lowenstein at elrogl@hotmail.com

Last Updated: May 11, 2009 00:01 EDT