Means: Baseball’s decision to drop Atlanta shows potential of corporate action

Major League Baseball knows how to exert leverage over local lawmakers.

More than 100 companies, including Atlanta-based Delta Air Lines and Coca-Cola, issued public denunciations of Georgia’s restrictive new voting law. While some executives are discussing doing more — such as halting donations or delaying investments — Major League Baseball is among the few to date venturing beyond mere words. It quickly decided to move its 2021 All-Star Game from Atlanta to Denver.

Both baseball’s decision to relocate the July 13 game and the many corporate press releases issued about the voting law drew a swift rebuke from Republicans, who vowed boycotts of baseball and the products these companies produce. The Senate minority leader even threatened retribution if companies didn’t stay out of politics — with an exception for campaign contributions, of course.

As a corporate governance scholar, I have studied how corporations use their economic power to get what they want from lawmakers. I believe Republicans’ angry reaction signals just how deeply concerned they are that other companies might follow baseball’s lead.

To help understand why, consider this: The MLB decision is expected to cost Georgia as much as $100 million in lost economic activity.

Corporations understand that the jobs and tax revenue they can provide — or withhold — give them power at the negotiating table.

That’s because states are all competing for the same investments. Tesla, for example, agreed to build a factory near Reno, Nevada, in 2014 in exchange for $1.4 billion in state benefits after a bidding war.

National Football League teams have been especially ruthless in their negotiations with cities and states.

They have demanded hefty taxpayer subsidies for new stadiums. By threatening to move to another city, team owners can extract hundreds of millions of dollars in new benefits.

The dynamic is easy to understand. Lawmakers cater to corporations because they want to attract and keep business investment.

When corporations leave, they can cause property values to stagnate and tax revenue to plunge — as happened in Hartford, Connecticut, a few years ago, after several large insurance companies abandoned the city.

How corporations use their leverage is up to them. They can feed their bottom lines or advance social causes.

Traditionally, it’s been the former. For example, many U.S. companies lobbied for a $1 trillion corporate tax cut in 2017.

But increasingly, it’s becoming the latter, as well.

In 2015, the threat of corporate boycotts caused then-Gov. Mike Pence to support changing an Indiana law that would otherwise have allowed anti-gay discrimination in the name of religious freedom.

Something similar happened in 2016 when Georgia’s governor bowed to corporate pressure in vetoing a bill that would have legalized discrimination against same-sex couples on religious grounds.

And again in 2017, North Carolina partially repealed a law targeting transgender people over concern that boycotts by PayPal, the NCAA and former Beatle Ringo Starr would cost the state $3.76 billion over a dozen years. The threat did not end efforts to restrict LGBTQ rights at the state level, but did demonstrate that when corporations band together, they are capable of exerting enormous economic and political pressure to advance social causes.

That possibility is likely on the minds of Georgia lawmakers following the MLB’s All-Star Game decision.

Despite the apparent leverage companies yield, it’s not simple for most companies to just get up and leave.

For example, Delta benefits from a tax break on jet fuel in its home state. And Coca-Cola’s ties to Georgia are deep and long-standing, dating back to a soda fountain in Atlanta in 1886.

Companies don’t sever such ties or give up generous tax breaks easily, and neither Delta nor Coke has ever suggested that it might.

But if the many companies that publicly objected to the law want to have an impact on policy — and see the law changed or repealed — money has to be at stake. As I learned in my own research, North Carolina changed its 2015 law only after companies began boycotting the state.

Delta and Coca-Cola employ thousands of people and generate billions of dollars in economic activity in Georgia. That’s serious leverage they could use if they felt the voting rights issue sufficiently important.

Words and press releases alone usually aren’t enough. Ultimately, this threat of lost business is what makes corporations a formidable adversary.

The question, then, is what it would take for them to leave Georgia.

Without being privy to Major League Baseball’s internal deliberations, I cannot say why the league dropped Atlanta with so little hesitation. But here are some likely possibilities.

First, MLB may have been concerned about holding the All-Star game in the midst of a political controversy, drawing unfavorable attention, especially in light of its own recent commitment to displaying zero tolerance for racial injustice.

It may also have seized an opportunity to show solidarity with its players, given the high-profile advocacy for social causes of many professional athletes. Research suggests employee diversity is an important consideration for corporations on matters of social justice.

Finally, as a practical matter, moving the All-Star game may have offered MLB some public relations benefits at relatively low cost to itself.

Those same reasons are likely why other sports leagues — such as the NCAA in North Carolina and the NFL over the Georgia legislation of 2016 — are often out front on these types of social issues.

And Georgia should not count on any backlash subsiding soon. After all, the NCAA withheld championship games from South Carolina for 15 years, until the state removed the Confederate flag from the statehouse grounds.

For now, MLB’s decision has not prompted the kind of mass corporate revolt that could force change.

On April 12, Will Smith’s production company said it was pulling its upcoming slavery-era drama, “Emancipation,” out of Georgia because of the voting law. But it’s unclear whether any Georgia-based corporations will follow baseball’s lead by moving business operations out of the state.

The voting law that passed is actually less restrictive than earlier versions, suggesting criticism — including that from companies — likely had some impact. Lawmakers may have made some changes precisely to avoid sparking a stronger corporate response.

But if companies like Delta and Coca-Cola really want to make a difference, if they really want to use their leverage on this issue, they will need to go beyond words. Actions would speak much louder.

From The Conversation, an online repository of lay versions of academic research findings found at https://theconversation.com/us. Used with permission.


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