The buck starts here
24 April 2014 12:05 (South Africa)
Opinionista Ivo Vegter

In defence of overpaid sport stars

  • Ivo Vegter
With sanctimonious regularity, the salaries of the world's top sports stars are held up as evidence of, well, something. Misplaced priorities, or greed, or income inequality. Truth is, they're worth it.

Even the data is staggeringly expensive. For a whopping R3,780, you can buy a report on what sports professionals around the world earn. Clearly, the regular Joe – or the average freelance columnist – is not in the target market for this kind of knowledge.

Data is all over the place, and little seems to be comparable over time, between countries, or among sports. According to Forbes, however, Tiger Woods, despite a $50-million drop in income as a result of his bad form and scandal-ridden personal life, remains the best paid sportsman on the planet with $75-million in earnings.

ESPN did a similar survey, but measured salaries only. It found that baseball star Alex Rodriguez, boxer Manny Pacquiao and racing driver Lewis Hamilton are the richest, with paycheques approaching £20-million each.

Football players in the English Premier League, despite their reputation, earn relatively modest incomes. Wayne Rooney just makes it into the Forbes top 30, well behind what David Beckham earns in the US, or Cristiano Ronaldo, Lionel Messi, and Ronaldinho rack up in Europe.

Overall, the American basketball and baseball leagues are the world's richest sporting codes, followed by Indian Premier League cricket. Tennis players, racing drivers and golfers make up most of the top-earning slots not reserved for those curious American rituals that fill the breaks between TV advertisements.

Whatever the numbers, it is true that eye-popping salaries are paid to a handful of sports stars who all too often seem to be undeserving of this largesse. When they're not involved in actual sex, race, or drug scandals, they splash out on tasteless excess. Mention their pay, and most of us will secretly be certain that it would be better spent on us, while loudly proclaiming that it would be better spent on nurses and teachers.

But is this true?

One might expect that the US, being among the world's richest consumer societies, would be the most profligate, so let's take them as the worst-case scenario. On average, US households spend 5.2% of their incomes on entertainment. Sport makes up a small part of this. Education is under-represented in this survey, because it doesn't count public spending, but well ahead of entertainment you'll find priorities like housing, transportation, food and health. Various sources suggest necessities such as education and healthcare each receive roughly ten times the expenditure devoted to commercial sport.

So the notion about misplaced priorities seems itself to be misplaced. We really do spend much more on the important things in life. Sport gets only a sliver of our disposable incomes.

While top sports pay packets are truly astonishing, only a few players ever reach those stratospheric heights. For example, average salaries in League One (the old third division) are a tenth of what Premier League footballers earn. There are many thousands of professional footballers, golfers and tennis players, only the top few hundred of which strike it rich. And there are hundreds of thousands of would-be professionals who only ever get to fantasise about giving up their day job.

A similar division shows up if you break down pay stats by age: a typical 19 year old English Premier League footballer will earn a tenth of what his 27 year old team-mate in his prime takes home. Another few years later, and his career is over.

Another bit of perspective is provided by the fact that while a nurse can attend to one patient at a time, a teacher can teach perhaps 30 kids at once, and a professor can lecture to a few hundred, every time a top footballer runs onto the pitch, millions – and sometimes even billions – are entertained. There are far more teachers than top-class sports stars, and each benefits comparatively far fewer people. That individual sports stars are paid more than individual teachers tells us little about our overall priorities, just like the price of beef, lamb or wine does not prove they are more important to us than rice, bread or water.

It is also worth conceding that getting to the top of the pile in sport – like in other fields that appeal to discretionary income, such as the arts – takes a great deal of dedication, hard work and luck. Most who try, fail. If you want to be paid like Wayne Rooney, accept that you're going to have to train six or eight hours a day, play against top competition twice a week, and keep it up for at least ten months a year.

On Christmas day, I spotted a tweet from young Manchester United striker Federico Macheda: “There is nothing better than training at christmas...lol #thisisenglishfootball”.

So they work hard. But that's not all there is to it. In a great book, The Logic of Life, Tim Harford hints at another oddity one has to take into account when looking for a rational explanation for what appear to be entirely irrational pay grades. The economist Ed Lazear explained salaries by means of tournament theory. In fields where objective measures are hard to come by, such as sports and corporate management, pay is often determined by means of “tournament theory”. Not only do top earners get paid for nothing more than luck, but, as Harford quotes Lazear: “The salary of the vice presidents acts not so much as motivation for the vice president as it does as motivation for the assistant vice presidents.”

By this logic, the reason Macheda was at football practice on Christmas day instead of being with his family – besides for the Boxing Day match against Wigan – is that he one day hopes to earn as much as Wayne Rooney. And both want to achieve these stellar heights because bad luck could cut their careers short well before they reach the ripe old age of colleague Ryan Giggs, who just turned 38.
Not only do we forget about the Machedas of the world, but we forget about the thousands of lower-level sporting professionals, many of whom find in their sport opportunities that, given their circumstances or education, might not have been open to them in endeavours that might seem more valuable or edifying, such as engineering, academia, or corporate management.

We also forget that these stars support, indirectly, thousands of support staff, from medical specialists who learn many of the tricks they practice on us from working on the battered bodies of rich and famous sports stars, to catering and hospitality, to groundskeepers and maintenance workers, to merchandising and marketing people.

We forget that while some of these players drive hideous Bentleys with boots full of bass, or live in horrible mansions with chocolate fountains in the hallway, they also often support local clubs or philantropic organisations, or motivate school kids to live clean, work hard, and never give up on their dreams.

And even if they didn't, we forget that the reason these players earn what they do is because we, the sport-watching public, have decided that they're worth it.

We, after prioritising our incomes for food, shelter, health and education, find a little utility at the margin – to use the economic jargon – for relaxing while watching sport. We make it worth it for advertisers and sponsors to support our favourite teams. We, the global audience, are the ones who ultimately determine that the entertainment we derive from watching top players at their physical best is enough to net them such astonishing incomes.

Finally, we forget that if we, motivated by high-minded distaste over perceived excesses, left it up to governments to interfere with the pure meritocracy of free-market sport, we'd get the same kind of horrible, lowest-common-denominator gruel that governments produce in every industry where they interfere “for the common good”.

There is, quite likely, a reason why we spend ten times more on education, or healthcare, or energy, but get a much inferior product than a dozen channels of top-class live sport, even on Boxing Day. One week's worth of Wayne Rooney's pay would change most of our lives forever, it is true. But envy is an inappropriate and unattractive response to the pay cheques of sports stars when we are the ones who determine their value.

Now if you'll excuse me, I have a game to catch. I hear young Macheda may be among those lining up to entertain me. Pay the good fellow a Christmas bonus. DM

  • Ivo Vegter
IvoVegterBW

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He approaches issues from the perspective of individual liberty and free markets. He grew up in the deep south of Johannesburg, and learnt his politics reading the Weekly Mail and Vrye Weekblad at Wits University during the early years of the country's transition to democracy. He recently left the city for the lower cost of living of Knysna, where he continues to write about everything under the sun. He is always right.

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