Sports Economics In One Lesson

Monitoring today’s Twitter traffic, I found this tweet from Smart Football editor Chris Brown to ESPN pundit Bomani Jones regarding the NBA lockout interesting: “People think players overpaid w/o thinking of it as dividing a pie RT@bomani_jones amazed owners have so many deciding the players wrong.”

Sports labour disputes are often presented in the media as referenda on whether or not players are “overpaid.” It’s a pointless argument. For many — I daresay most — fans, players are always overpaid regardless of their actual salaries. This is where the commonly heard aphorism, “They’re payed millions to play a game that most of us would play for free” comes from.

It’s obvious bullshit. Few people would actually play professional sports — as a job — for no compensation. In the case of the NBA, we’re talking 82 games a year of intensive, high-level athletics. The training costs alone would drive most diehard fans away the first day.

Still, there’s an important economic truth here. Another common aphorism holds, “Fans pay the players’ salaries.” This is only indirectly true. Fans pay for tickets and related goods — memorabilia, concessions, television packages, et al. — that generate revenues the franchise operators use to pay player salaries. I don’t pay Kobe Bryant $25 million a year. If I’m a Lakers season ticket holder, I might pay $2,000 per year. And that is what the actual value of the players is to me. It’s what I pay rather than what the team pays.

Most fans, of course, aren’t even paying that much. Most sports are consumed on free or basic cable television. That’s the real source of the “we’d play for free” argument. All we’re paying with is time. And so, of course, we’d “play for free,” because in the back of our minds, it’s a one-for-one exchange with the time we currently devote to sports. Why would anyone demand a salary for something we’re paying nothing or just a nominal amount for?

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