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danieldwilliamI’ve noticed some comment recently on the wages of professional footballers. I think very high wages for successful footballers are the inevitable and natural result of the market structures of the football industry. Further, I think that the current market structure is the only way that a free market for football could be created.
There are two processes at work. How the money available for paying for football is concentrated? How the money, once concentrated, is disbursed?
Football is a non-rivalous (1) product. Televised football. The fact that I am watching the game on TV doesn’t stop you watching the game on TV.
Football is also a near perfectly competitive market. Within Europe there are perhaps half a dozen to a dozen leagues offering a world class standard of play. In addition there a number of league of leagues. Spectators also have the choice of other, not so world class, more local entertainment if they wish. Players, of which there are several thousand in Europe able to hold a place in a top league team, are able to take their labour to any club willing to hire them. Language barriers are slight compared to professional services. Any club is able to hire any willing player. Any willing spectator can arrange to watch a club of their choice. Within each league every combination of clubs play each other twice.
Players have a choice about working for Manchester United or working for Accrington Stanley. I have a choice about watching Manchester United play Barcelona or Accrington Stanley play Crewe Alexandria.
In this situation, as a spectator, why would you not want to watch the best(2) teams play in the most interesting games? Watching by television you are not restricted by the size of a stadium or by its proximity. The whole of Europe could watch the Champions’ League Final on their own TV and your view would not be impeded at all.
Through the magic of a free, perfectly competitive market an aggregate view of the best teams will emerge and they will be given money as a reward and incentive. Spectators are drawn to the better clubs in the better leagues and they take their money with them. With thousands, nay hundreds of thousands willing to pay a small amount of money to watch Manchester United play but not willing to pay to watch Accrington Stanley play it is inevitable that spectators’ money will flow to the Manchester Uniteds of Europe(3). What happens when it gets there?
Some 68% of it goes in players’ wages in the English Premier League. This is a similar proportion to that of American Football’s top competition, the National Football League, which operates a formal salary cap and a more collective system of revenue sharing. A salary cap that recognises the free bargaining position of the players seems to yield about 2/3rds split. A salary cap that didn’t takes money earned by the club and gives it to the club owner.
Hundreds of thousands of people want to watch Manchester United play; concentrating huge amounts of cash in a few clubs. Manchester United can only use some 30 players in any one year but those 30 player can each go to almost any other club in Europe. So long as they are free to move and free to negotiate a contract *and* any potential rival for their place is just as free and just as certain of their skill players will negotiate as much money out of a club as they bring in.
In a free market money tends to go to those who control scarce resources, particularly those that are hard to replicate or hard to substitute. Being very good at football appears to be a rare skill. It takes tens of thousands of hours to become good. To become one of the top thousand or so players in Europe is hard to do. If it were easy to do more excellent players would come forward. Accrington Stanley would take the field with Jean-Marc Bosman in goal, David Beckham in midfield and Jimmy Hill in attack.
But the problem for Accrington Stanley is one of best compared to good. Even if it were possible to increase the objective quality of all players I still want to watch the “best” and because television makes that a non-rivalous game I can.
The relatively scarce resource here as a spectator is not money but time. I don’t have time to watch both Manchester United play Barcelona and Accrington Stanley play Crewe Alexandria. No matter how good the players in each match are I’m still going to watch the one where the players are best. You might be able to broaden the shape of the funnel by narrowing the gap in quality between Manchester United and Accrington but so long as spectators want to watch the best players attention and money will still be focused towards some clubs more than others.
What of the non-playing staff. It doesn’t appear to be that difficult to produce fitness coaches or physios, club accountants, architects of stadia, groundsmen, camera operators, sound technicians, meat pie vendors or television directors or any of the other jobs that contribute. Certainly, in a free market for their labour they don’t appear to be able to negotiate for higher wages. Perhaps because the consequences for a player and a cameraman are different if they miss a last minute penalty in a cup final.
Television naturally focuses the attention of fans onto a small number of clubs.(4) Practical squad sizes and scarcity naturally focuses the remuneration from gaining that attention on a small number of players.
The same logic holds true for other industries where the attention of the fan is limited and they tend to want to consume the best. Music, acting, writing all have salary demographics similar to football.
So long as fans want to watch the best players and they only have a limited amount of time to watch football the money they are prepared to pay to watch football is going to end up in the pockets of football players.
(1) to some extents it is a non-excludable product – you can support Manchester United and enjoy their success without ever having to pay to see them.
(2) best is a broad concept. It could include the team that wins most, the team that plays the most exciting matches, the team with the most illustrious history, or the team that your grandpa took you to watch when you were three. You pays your money, you takes your choice.
(3) and I would argue that if you don’t like this go and pay to watch your local team play and I respect and applaud people like my old boss who used to do just that.
(4) Fans, voting with their wallets don’t seem to me to be generally interested in the community aspects of the game. Supports of smaller teams are also focused on the more illustrious clubs, longing to play and beat them, rise to their level in the league or have a bonanza pay day of a cup tie.
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Date: 2012-02-21 11:53 am (UTC)I think the social argument about the role-modelling that footballers provide is really very important indeed, although it's also not clear to me how regulation could help.
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Date: 2012-02-21 12:11 pm (UTC)There are ways of correcting for re-enforcing success. Income tax, inheritance tax, vigorous anti-trust laws, strong cultural norms on philanthropy, the occasional riot and hanging.
I guess my position when encountering something new is best described as – happy to be talked out of a free market, start talking.
As for footballers role as role models I think they have a social obligation to be better role models but that’s a position that is fraught with moral and political difficulty.
I don’t see how regulation of the market for their labour would particularly help. Unless you are happy that the shareholders of Man U or Sky pick up an additional 60% of the turnover or you happy with a marginal tax rate of 90% footballers are still going to be earning many multiples of the average salary. Given the socio-economic backgrounds many of them come from and their ages this is still going to be a big shock and they are still (some of them) going to wig out. As will musicians and writers or comedians.
I think you can either regulate their behaviour as role models or their presentation. I’m not sure I’m hugely happy with much state involvement in either of those.
What might help is if fans booed players who behaved “badly” or boycotted their appearances on TV. Or we could a few more of them in prison.
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Date: 2012-02-21 12:12 pm (UTC)no subject
Date: 2012-02-21 12:16 pm (UTC)I keep wanting to get in touch with him and add my own "what about transaction costs?"
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Date: 2012-02-21 12:31 pm (UTC)no subject
Date: 2012-02-21 12:45 pm (UTC)I see how someone who has expressed the views he has on Libertarianism might take an interest in consequentialism.
What is the focus of the discussion, may I ask?
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Date: 2012-02-21 12:56 pm (UTC)(Fantastic example: funding for IVF. Two strong and entirely consistent arguments for different conclusions, based on different premises. How to evaluate the premises?)
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Date: 2012-02-21 01:08 pm (UTC)no subject
Date: 2012-02-21 04:07 pm (UTC)Broadly:
(1) IVF is a good use of public funds even in a limited-resource environment (eg because the cost of averting trauma in parents who cannot give birth naturally is worthwhile).
(2) In a limited-resource environment, using the available money to treat and / or prevent illness in people who already exist is a better use of funds than investing trying to create more people.
Each of these have social policy implications (eg importance of parenting, seeing children as a right vs a responsibility, possible social engineering if you want more middle class parents).
There's also a position (3), which is 'it depends upon context', where context in this instance is, I suppose, mainly defined by amount of funding available and map of the population needs.
But - I am not sure that I even think that (3) is an entirely pragmatic heuristic in policy formation. There will still be some underlying beliefs that drive that decision, which will be consequential - what is seen to be the value to the general population of going one way or the other. But that view will not be the same for everyone.
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Date: 2012-02-21 04:31 pm (UTC)I'm not sure 3 is entirely pragmatic either. It's a pragmatic response to the politics which sits on the values and expression of same by the population.
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Date: 2012-02-21 09:56 pm (UTC)no subject
Date: 2012-02-22 08:55 am (UTC)The subjective evaluation of costs and benefits is one of the things underpinning my thinking about indepedence. If I had a lot of money I'd find out what people value about the current and proposed constitutional set ups.
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Date: 2012-02-22 09:19 am (UTC)no subject
Date: 2012-02-22 09:46 am (UTC)What I'd like to do is to do a large opinion poll to find out what aspects of the independence question matter to people. Is it the economy, is social justice*, is it a general feeling of happy nationhood>
Then I'd like to do some more focused work on a smaller sample - perhaps some open space work, certainly something dialogic to build up a better picture of what people are thinking about.
I'd be interested in how different groups weight the various factors.
Then the real work of explore how indepedence might affect those areas would begin.
Interest on billion is going to be a little more than it costs to run the Parliamentary Service each year, and that includes the care and maintenance of iconic** building large enough for the SPS and a few hundred plus others.
*what ever that means
**expensive
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Date: 2012-02-21 01:08 pm (UTC)no subject
Date: 2012-02-21 03:38 pm (UTC)no subject
Date: 2012-02-21 04:29 pm (UTC)As I understand consequentialism it’s looking at the moral value of the outcomes of decisions that I make. So rather than considering if I have the right to peform Act A or Act B I have to consider what the outcome of my decsion will be on people who are affected.
Thus, if I were your landlord I might have the moral rights inherent in property rights to raise your rent significantly but I ought to consider the impact on you and if you were to be made homeless as a result that might be morally bad.
So far, so straightforward a chain of causation.
I’m thinking of situations where the chain of causation is less clear or more probabilistic in nature.
If I were to create a risk in your life of undesired outcome. For example, where I own a newspaper and present my opinion (that all unemployed Maths grads ought to be made to do National Service in one of our Nationalised Banks) as fact and create the risk that my opinion might become generally accepted as fact and the consequential risk that it will be acted upon and then you suffer some harm because you end up with an undesired outcome (being made to work for one of Nationalised Banks.)
What is my moral liability for creating a risk? If I create a 1% chance of something bad happening to you is that an acceptable risk? Does it become acceptable if I a balance a 1% chance of a mildly bad outcome with a 99% of a great outcome?
One might see this in drugs policy when discussing harm reduction and prohibition perhaps.
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Date: 2012-02-21 09:57 pm (UTC)no subject
Date: 2012-02-22 08:56 am (UTC)no subject
Date: 2012-02-22 09:19 am (UTC)no subject
Date: 2012-02-22 10:18 am (UTC)Do we follow the same pattern with benefitsw as we do with risks i.e. over emphasising large rare benefits and not seeing the benefits inherent in the status quo or is the pattern different?
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Date: 2012-02-22 10:22 am (UTC)no subject
Date: 2012-02-22 10:36 am (UTC)Most of them have foundered on budgeting long before we got onto benefits capture.