Footballers and the Top 1%
11 November 2011
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Recently I looked at some data on the changes in top division/Premier League footballers (soccer players for Americans) pay between 1985 and 2010 here in the UK. According to figures compiled by the Professional Footballers Association average pay increased from £1000 per week in 1985 to £33,000 per week in 2010 – an increase of 3,300% over this period (see sportingintelligence.com). Needless to say, this means that ‘the gap’ between the wage of the average worker and that of these particular sports-stars has exploded over the last 25 years – much in the same way that ‘the gap’ between CEO pay and that of the average worker has mushroomed. Indeed, increases in CEO pay though far outstripping that of average workers have been lower than those enjoyed by top flight footballers.
These figures clearly put footballers in the ‘top 1%’ – but does anybody seriously believe that football players have achieved these gains at the direct expense of the average worker or that there is some sort of sinister elite conspiring to raise footballers pay? I think not. The reality is that a very large number of people who have seen only moderate increases in their wages/salaries over recent years have been willing to spend a higher proportion of their income watching football. Many average workers have willingly handed over a part of their salary to watch games – and many more have done so indirectly by boosting advertising revenue as TV coverage has expanded rapidly in recent years. The supply of top flight players has not increased significantly over time, but the demand for their ‘services’ has rocketed – and so as a consequence has their pay.
Read the rest of the article on the Pileus blog.
These figures clearly put footballers in the ‘top 1%’ – but does anybody seriously believe that football players have achieved these gains at the direct expense of the average worker or that there is some sort of sinister elite conspiring to raise footballers pay? I think not. The reality is that a very large number of people who have seen only moderate increases in their wages/salaries over recent years have been willing to spend a higher proportion of their income watching football. Many average workers have willingly handed over a part of their salary to watch games – and many more have done so indirectly by boosting advertising revenue as TV coverage has expanded rapidly in recent years. The supply of top flight players has not increased significantly over time, but the demand for their ‘services’ has rocketed – and so as a consequence has their pay.
Read the rest of the article on the Pileus blog.
Dr Mark Pennington is the author of Robust Political Economy: Classical Liberalism and the Future of Public Policy.
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Walter E. Williams has made the compelling argument that one reason why entertainers are not targeted for opprobrium for being among the top 1 per cent is because they do not represent a power base — with the corollary of influencing the people — that the social democrats wish to occupy for themselves: ‘Demonize people whose power you want to usurp. That’s the typical way totalitarians gain power. They give the masses someone to hate.’
Interference sometimes has counter-intuitive results. I remember when Harold Wilson’s government in 1966 legislated to make UK companies publish the amount that their directors were paid. I believe this was intended to ‘name and shame’ people who were ‘overpaid’. But apparently directors were mortified at the publicity given to their low pay (by international standards), so companies actually increased the pay of their directors as a result!
Thomas Sowell writes about this briefly in ‘economic facts and fallacies’ – enjoyable as always. Mark I very much enjoyed your presentation on your new book. I’ve added it to my amazon wishlist and I recommend that other readers look into it! Kindest Regards
@ D.R. Myddelton: Embarrassed by low pay? Apparently they raised their pay, or they did? I would love to see that data. As to the original premise: the issue of Superstar pay has been addressed at length recently. Most players are journeymen – in the real world at least – perhaps not in the Premiere League. But the effects in the US have been real. Owners blackmail cities for stadiums. Players blackmail owners for pay. The working man has difficulty buying a ticket to a Yankee’s baseball game, paying the parking, purchasing a beer and hotdog, much less if he brings his family. There are more and more people discussing this phenomena here, and with an NBA strike imminent, more fans realize the game is rigged, and nobody really cares about them. The Green Bay and Barcelona models where the citizens own the teams has received some attention recently. This could serve to deflate salaries, of owners and players alike. In closing, I find it difficult to justify paying exorbitant sums to lucky sperm club members so that they might play children’s games. Is this entertainment, pablum or distraction? We have more important problems to solve on this globe.
The reason football players make so much or athletes in general make so much lies within a fundamental principle of economics. Basic economics says that people get paid in exchange for the services they provide to their employers. For an average person this is usually an act that one company consumes. That means, only one income can be applied to that service. However for athletes, for them the service they provide is not consumed by one company or franchise, but by sports fans in general. This means millions and millions of units of income can be applied to that service. Therefore money athletes make in the same time as an average worker is often a million times more.