Which individual sports have a high salary?

Distribution of income in professional sport

Table of Contents

List of overviews

List of abbreviations

1. Introduction

2. The income of professional athletes

3. The neoclassical model of wage theory as a basic model for the
Compensation in professional sport
3.1. The neoclassical model of wage theory
3.2. The job market and wages in professional sport

4. Consideration of income determinants in "professional football"
4.1. Industry determinants of income
4.2. League-specific determinants of income
4.3. Club-specific determinants of income
4.4. Player-specific determinants of income

5. Empirical evaluation of the hypotheses about the income determinants in professional sport

6. Summary

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List of overviews

Ü-1: Comparison of the twelve top earners in the respective individual and team sports

Ü-2: Concentration of player salaries in team and individual sports

O-3: Selected individual sports with an average career duration

Ü-4: Selected team sports with an average career duration

Ü-5: The Random Effect Model (REM)

Ü-6: Average salary of Bundesliga professionals depending on the playing position

Ü-7: Average salary of Bundesliga professionals depending on nationality

List of abbreviations

Figure not included in this excerpt

1. Introduction

In the press there are reports almost every day about the high and apparently constantly rising incomes of football professionals. The more the media report on sport, the more the image of an intrinsically motivated athlete has become obsolete. Eldrik "Tiger" Woods is expected to earn $ 78 million in 2003 and Michael Schumacher $ 75 million.[1] These high incomes, which correspond to the average earnings of a German employee (~ € 32,000)[2] many times over, as well as the income discrepancies within professional sport lead to the discussion of which factors determine the level of income and whether such factors trigger the high income as well as the income differences.

A professional athlete is only active for a very small number of years and therefore has to earn more than a "normal" employee who has been active in his profession for 30-40 years.[3] Since the question of how income depends on the length of a career seems to be very obvious, a comparison of the various sports (team and individual sports, hereinafter also referred to as individual sports) with the level of income and the average active time could be of interest (Chapter 2). Due to the lack of disclosure of income data in German professional sport, some data from official estimates have to be illustrated.

In professional sport, income is formed according to the neoclassical law of wage theory. The high salaries of top athletes and also the high differences to the many "mediocre" earners are the result of incongruent marginal productivity, who, for example, achieve "stars" in contrast to "water carriers" by giving their teams more goals, a better table rank, a qualification for a European competition, a higher popularity and thus to higher income (Chapter 3).

At first glance, an unequal distribution within a sport seems paradoxical. Why does Michael Ballack earn more than other midfielders in the Bundesliga? At first glance, the question seems banal. Some players are more talented than others. They therefore contribute more to team performance and therefore earn more than other players. Therefore, different pay levels in teams and between players can partly be explained by different human capital (Chapters 4 and 5).

2. The income of professional athletes

In the vernacular, professional soccer players are often referred to as "millionaires". The reason for this - from the point of view of classic employees - is the exorbitant salaries of professional athletes. At first glance, the salary of a professional athlete does not seem to be comparable to that of an employee. This is probably due to the fact that one thinks more of the salary of a top player and that a large part of the professionals with lower incomes is often not taken into account.[4] Considering this, the question arises, why do some professional athletes earn more than others !? Research has shown that Eldrik "Tiger" Woods will earn approximately six billion dollars in his active career. American Express pays him $ 27 million just for paying with her card alone. The three-time Formula 1 world champion Michael Schumacher - whose contract with Ferrari expires in 2004 - will probably "bring in" 600 million dollars in his active career.[5] This equates to around 3.5 million euros per race.[6] The media - who themselves form a determinant of income through their reporting - are always happy to take up this discussion without offering any explanations for this phenomenon.[7]

It is reasonable to assume that an individual athlete has a higher average income than a team athlete. The reason for this assumption is the fear of the club management that the team athlete has an incentive to "shirk", so that his performance potential is not fully available to the club and a salary is paid that is higher than the player's productivity.[8] In team sport, a player receives a fixed salary, usually in the form of cash, and a performance-based salary with prize money and other team bonuses. In individual sports, however, the wage distribution looks a little different. The individual athletes live exclusively - with the exception of advertising contracts - from winning prizes. Obviously, withholding your performance without others noticing is almost impossible. Any loss of performance in the game is directly attributable to the player. The individual athlete is therefore due to the so-called tournament pay[9] striving all the more to do his utmost.

In the following figure, the twelve top earners in individual sport (E) and the twelve top earners in team sport (M) are compared chronologically (see appendix Ü-A1 and Ü-A2); i.e. top player 1E is compared to top player 1M, 2E to 2M, etc.

Ü-1: Comparison of the twelve top earners in the respective individual and team sports

Figure not included in this excerpt Source: Own illustration (see footnote 8)

The bar chart shows that the salaries of Tiger Woods and Michael Schumacher (Top 1 and 2) are rather an exception in individual sport. After the "top three" top earners, an almost constant salary of $ 20 million is paid out to the top earners in team sports, whereas a rapid decline can already be seen in the top 12 top earners among individual athletes. It can be assumed that the income discrepancy in individual sport is generally considerably higher than in team sport. This statement can be confirmed by the following overview, in which various analyzes by various authors were used for the presentation.[10]

Ü-2: Concentration of player salaries in team and individual sports

Figure not included in this excerpt

Source: Own illustration (see footnote 10)

The Gini coefficients indicate the income inequality within the industry. The smaller the coefficient, the lower the inequality within the branch. As a result, it can be seen directly in Ü-1 that there is lower income inequality in team sports than in individual sports (e.g. golf) or individual sports that take place in a team context[11] exercised (e.g. baseball).

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[1] See Appendix Ü-A1.

[2] Own calculation. See INSTITUT DER DEUTSCHEN WIRTSCHAFT (2002): Germany

in numbers, p. 55.

[3] Sports such as golf, billiards and snooker excluded.

[4] Cf. LEHMANN, E. (2000): Do football players earn what they earn ?, p. 98.

[5] Cf. BRUNNTHALER, O. (2003): From large and less large animals.

[6] See ZDF (2003): The most expensive employee in the world.

[7] Cf. LEHMANN, E. (2000): Do football players earn what they earn ?, p. 97.

[8] See Chapter 3.

[9] See BACKES-GELLNER, U./LAZEAR, E. P./WOLFF, B. (2001): Personalökonomik, pp. 158f.

[10] There are calculations by SWIETER, D. (2002): An economic analysis of the Bundesliga, p. 121, for the NBA by FRICK, B. (1998), Personnel Controlling and Corporate Success for the Bundesliga and German employees : Theoretical considerations and empirical findings from professional team sports, p. 19, for American football, basketball, baseball, tennis and golf by PORTER, PK / SCULLY, GW (1996): The Distribution of Earnings and the Rules of the Games, pp. 160f.

[11] Individual sports in a team context are sports that are mainly decided by the individual performance of the players.

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