KAKA AND £500,000-A-WEEK WAGES

January 16th, 2009 | by: sscouser | Comments(2)

Reports are ubiquitous that a Manchester City delegation made a bid in excess of £100m for the AC Milan’s 26-year-old Brazilian Superstar Kaka. It is reported that if the bid is successful Kaka will be getting £500,000-a-week wages. That brings up the question: is £500,000-a-week wages too much for an athlete?

A common sentiment of the typical sports fan is that athletes are overpaid. That is to say, athletes are paid more than their relative “worth”— as opposed to teachers, lawyers, doctors, etc. Now the question is: Who is supposed to ascribe worth, owners of the teams or the fans? True, higher fan attendance means higher revenue which means more worth, but fans are not the people who write the checks. This responsibility falls on the owners of these professional teams/clubs.

Clubs create significant revenue from the fans that pay to see these highly skilled athletes. Naturally, an athlete’s worth should not be examined based on intrinsic value, but rather monetary value. Whatever the case may be, most economists agree that the common man’s animosity towards athletes’ salaries most likely stems from jealousy and envy rather than economic theory.

Professional sports are a business. We must not judge athletes based on their intrinsic value to a society; rather, we must judge them as products that create revenue. When the product happens to be a human, such as is the case with athletes, that human must be compensated. What is the right compensation? It depends on how much money the athlete creates or is expected to create. A business owner has to decide how much to pay an employee, based on what the employee brings or will bring to the table. Sports Stars are money making machines that’s why they are highly paid. Owners of teams make huge profits off of Sports Stars. In professional sports if a team is in a seemingly unproductive market and then signs a superstar athlete at a high price the team starts to make money because of the financial pull of that athlete. Sports Stars = Greater fan attendance. Due to the basic laws of supply and demand, the more we demand, the higher the price. The players that generate the most revenue are wanted by everyone, therefore if you aren’t willing to pay a higher price, someone else will. Also, if you have stars in your team ticket prices tend to be higher. The higher the price, the more profit team owners make. Now that takes us to another question: What are the owners supposed to do with their huge profits? Why should they underpay the “employees” that generate those profits? When you think about all of the money the Sports Stars help generate through commercials, sportswear, tickets, endorsements, the question then becomes: if not the athletes, who should get this money?

The best software programmers, best lawyers, etc make outrageous amounts of money, so why should athletes be any different?

Yes, athletes make a lot of money but they are less conservative with their money. They buy those expensive houses, cars, “bling-bling”, etc. possibly made by the company you work for. Also, a big chunk of their wages goes to the Government (tax). What does Government do with tax money? As much money as they (sports stars) make, they also put a huge amount of that back into the economy. They stimulate the economy. The athletes’ salary is a little drop in the overflowing bucket of money that professional sports slosh around. In the end, it all evens out.

“We (athletes) might make a lot of money but, we also spend a lot of money” – Patrick Ewing