Players Salaries’ And Ticket Prices’ Relationship

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Table of Contents

Introduction
Hypothesis
Testing the hypothesis
Conclusion
Reference List

Introduction

Over the past few decades, sports have undergone a phenomenon of growth (Leeds & Allmen, 2007, p.3). Wo world Cup is increasingly being considered as one of the most popular sporting events in the world.

For example, South Korean team success during the 2002 World Cup made football to become a popular sport in the country (Robinson, Bender & Whyte, 2004, p.110). Other countries which have experienced a rampant growth in football include the United States.

According to Wong (2008, p.126), Major League Soccer (MLS) is the most famous soccer league in the US. Establishment of MLS by FIFA was meant to grow soccer in the country.

Over the years, the league has undergone a series of expansion and contraction — one of the challenges MLS faces include financial constraints which limit its ability to pay the players salaries.

There is a great disparity between the salary for average players in MLS and that of English Premier League players. The average salary for players in MLS is $ 115,000 while that of English Premier League players is $1.93 million.

To promote football, FIFA came to a consensus to increase the salaries for teams which participate in the World Cup (Wong, 2008, p.126). This is achieved by increasing its funding to soccer World Cup players.

For example, in 2003, FIFA’s compensation to teams which participate in the World Cup was approximately $ 16 million. One of the major sources of revenue for teams during the World Cup is the sale of tickets.

During the 2006 World Cup held in Germany, the average price of a ticket was $ 136. This was increased with a margin of $3 to $139 during the 2010 World Cup held in South Africa (Pretswell, 2010, para. 1).

Hypothesis

There is a direct relationship between the salaries of players and the price of tickets in the World Cup. This means that the players’ salary makes the price of tickets to increase or decrease.

Testing the hypothesis

To determine the relationship between players’ salaries and the price of tickets, various types of data can be used. To determine the relationship, data from MLS will be used.

The data which will be used relates to the players’ salaries, the expected attendance, the existing rate of inflation and the global Gross Domestic Product (GDP). By considering these factors, FIFA can determine the expected receipts.

The above hypothesis can be tested through the incorporation of the Fan Cost Index (FCI). Carter and Rovell (2003,p.56) define FCI as an index used to track the cost incurred on attending a particular sport about a family of 4.

The FCI is evaluated by taking into account several elements which include;

Four small soft drinks
Two small beers
Four hot dogs
Two game programs
Parking

The data which will be used relates to that of 2006 and 2010. Also, 40 observations will be made for two years. FCI calculated in the US about the National Football League during the period ranging from 1991 to 2008 indicated that the cost of the ticket has been on an upward trend.

The average price of ticket increased from $ 25 to $ 72. One of the reasons which led to the increase in the price is the need to increase the players’ salaries (Jozsa & Maxymuk, 2010, p. 112).

Considering the growth in prominence of the World Cup, there is a high probability of FCI being higher for teams which participate in the World Cup compared to those which participate in national leagues. This arises from the need to pay the players salaries competitively.

Apart from the players’ salaries, the price of the ticket can also increase as a result of other factors such as the perceived value of the sport amongst the consumers and the spectators’ expectations of the players.

However, these factors are not quantifiable, and hence they will not be considered in the study.

Conclusion

From the analysis above, it is evident that the players’ salary is dependent on the revenue collected. Because the price of tickets is one of the major sources of revenue, it is essential to set the price of the ticket effectively.

FIFA contributes a certain percentage of receipts to the salaries of teams which participate in the world cup. To achieve this, FIFA has constantly been increasing the price of tickets.

Reference List

Carter, D. & Rovell, D. (2003). On the ball: what you can learn about business from America’s sports leaders. New Jersey: FT Press.

Jozsa, F. & Maxymuk, J. (2010). Football fortunes: the business, organization and strategy of the NFL. Wisconsin, USA: McFarland.

Leeds, M. & Allmen, P. (2007). Economics of sports. New York: Addison Wesley. Pretswell, S. (2010). 2010 world cup finals ticket: how to get tickets for FIFA 2010 finals in South Africa. Web.

Robinson, M., Bender, A. & Whyte, R. (2004). Korea. Victoria, Australia: Lonely Planet.

Wong, W., 2008. The comprehensive guide to careers in sports. Sudbury, MA: Jones and Bartlett Learning.

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