Value of Sports Talent

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Table of Contents

Introduction
Theoretical Premise
Critique
Strengths
Weaknesses
Conclusion
References

Introduction

One of the greatest motivators of the sports industry and sometimes the only motivator is identified to be the revenues that players as well as their teams rake in after a particular game or tournament. The need to increase the amount of revenue that a team or a player makes has led researcher to explore the economic as well as the finance aspects of sports.

In the course of these studies it has been identified that there is a lot of disparity between the amounts of revenue that players as well as teams playing in the same sport make (Downward, Dawson & Dejonghe, 2009). In the quest to explain these disparities, researchers have come up with different frameworks that can be applied to increase the overall incomes of the various stakeholders in the sports fraternity without necessarily having to work hard.

This may be identified as an advantage for the players even though it has elicited its fair share of criticism from the lovers of the particular sports. They identify that too much commercialization of the game may end up killing the sport by drawing all the fun out of it (Sanderson & Siegfried, 1997). In the end most people who are in a position to influence the way sports is managed still view it as a business that pays the bills of many people all over the world.

There has also been increased activism in the sports fraternity citing the lack of equality in the payment of salaries. This has introduced a new debate over the standardization of salaries in leagues or tournaments especially where it is identified that the performance of some of the highly paid players may be in question.

The issue of management of sports teams as well as independent athletes is identified as one of the critical aspects of the financial debate in the sports fraternity. The signing of contracts is especially identified as critical in the development of sports as it outlines the particular financial success of the athletes as well as the teams.

This paper seeks to explore the opinions of different authors on the whole issue of sports finance and economics in reference to the particular revenues that individual players as well as sports teams rake in from particular games as well as tournaments.

Theoretical Premise

The authors identify some new applications of knowledge borrowed from other fields that are identified as compatible with the general field of sports. It is identified that most of the authors borrow their content from the economic and finance aspects of sports in their explanation of the particular revenues that players and sports clubs get (Stone & Warren, 1999).

Their explanation of the economics of sports, however, raises new ideas that have not been previously identified by other authors such as the relationship between performance and revenue (Kahn & Shah, 2005). It is identified that most sports have a performance appraisal payment system where players as well as clubs make more money depending on their performance.

On the other hand, there are players and clubs that make more money based on their fan base although they may not be in a position to perform better than other players (McCormick & Tollison, 2001). They also explain the contribution that perception makes on the incomes of players while highlighting race and status issues. It is identified that the application performance appraisal mechanisms in some sports may be partisan in terms of the amount of contribution that each player makes (Ehrenberg & Bognanno, 1990).

The identification of some players as high value does not always stem from their particular performance on the field or court, but rather on their value as sports personalities. The authors apply some economic and finance principles in identifying different mechanisms that players and teams can use to increase their value without necessarily performing better in their respective sports (Kahn & Shah, 2005).

The use of economic principles identifies the particular relationship between market forces in the sports fraternity and the performance of players. The authors identify that the performance of players or rather teams often has a huge impact on the number of fans that frequent their games during tournaments (Downward, Dawson & Dejonghe, 2009).

This increases their revenues from gate fees as well as sponsorships (Noll, 1998). On the other hand, it is identified that there may be some freeloaders who make more money than other without having to perform well. They often make their money through fan loyalty, which the authors identify as a combination of basic economic principles.

The fact that some teams are in a position to increase their income by building fan loyalty even though they may not be the best performing team in a particular league brings in the issue of fan psychology. It is identified that the need to belong often brews a huge amount of loyalty that is unmatched by any type of performance (Sanderson & Siegfried, 1997).

Some of the aspects identified by the authors to be particularly responsible for this kind of loyalty are race and location. It is identified that the location of some teams ensures that they are the only teams that those who love the sport in the area can support (Noll, 1998). With increased demand as a result of a great following, teams are in a position to increase their incomes through hiking stadium gate fees as well as increasing their endorsements and sponsorship values (Whitney, 2005).

The authors use data borrowed from sports statistics made by different teams and league managers. These give a vivid description of the particular revenue flows that the authors seek to explain in their articles. The fact that the numbers are evident, but there has not been any action to rectify the disparities in incomes, may be understood to mean that the success of the sports fraternity does not lie in the particular revenues generated (Kahn & Shah, 2005).

This is contrary to popular opinion of the players, managers as well as fans who identify that the monetary value of the sport has a lot to do with its success. The use of real monetary figures does, however, prove the validity of the arguments advanced by the authors in every sense of the sport from the motivational to the fanatical and financial aspects of the different sports that have been evaluated (Stone & Warren, 1999).

Of particular interest is the data on basketball as well as football where it is identified that some of the best performing athletes may be making less money than their counterparts who perform less especially in cases where they are bound by contracts that are of a lower value (Palomino & Sakovics, 2003). This extends the authors debate on sports management where sports managers have to identify ways of increasing and sustaining sports contracts and endorsements.

Critique

The authors raise a couple of ideas that are quite important in the evaluation of sports revenues with the current disparities in the incomes of different players as well as teams being put into consideration. The identification that the state of the whole sports fraternity is worrying in regard to its sustainability especially after fans have started complaining of more boardroom sports than on the field sports (Whitney, 2005).

The fact that the commercialization of the sports industry may be identified to be one of the contributors of the decline in the growth of the whole industry in terms of sports, it should not be demonized especially considering that the increased value of the game has overtime contributed to more activity in terms of the number of games and tournaments organized (Ehrenberg & Bognanno, 1990).

The authors’ findings as well as conclusions can be identified to have various strengths as well as weaknesses that are based on their application of themes whether new or borrowed from other fields of study (Verbon, 2008).

Strengths

The authors identify that the introduction of salary caps as well as salary floors may serve to improve the quality of sports since players will be more motivated to perform better. The fact that these opinions are based on real values collected from the different teams and sports managers serves to provide a practical evaluation of the economic and financial aspects of sports especially in regard to salaries and endorsements (Verbon, 2008).

The need to introduce some form of equality into the sports fraternity is advised by the fact that some teams as well as individual players have been suffering under irrational decisions made by their managers who identify particular ways of raking in revenues to be preferable than other (Palomino & Sakovics, 2003).

It is identified that the particular aspect of procuring famous athletes who are in the decline stages of their careers and then paying them some hefty amounts of money may not be ethical even though it works to draw in more fans as well as increase endorsements and sponsorships (McCormick & Tollison, 2001).

The need to value sports with reference to the particular performance of a player and not his or her previous reputation serves to ensure that the particular talent that exists in the field is natured to a point where it gives both the stake holders in the sports management and the fans a considerable amount of satisfaction during the games (Stone & Warren, 1999).

The identification by some authors that some of the sports portray quite a substantial amount of disparity between the revenues of players from different races, serves to highlight the plight of minority groups in the sports fraternity. This, they identify is rooted in the particular management techniques of different spots where the value of players is quantified to racial supply rather than their performance (Kahn & Shah, 2005).

They identify that in the basketball leagues white players are paid more than their black counterparts due to the fact that there are less white players in the leagues in general. The application of economic, finance as well as other market research models in identifying the particular value of players and teams in terms of endorsements and the number of fans is credited for this racial disparity (Downward, Dawson & Dejonghe, 2009).

Where it is identified that there is a higher population of white people who frequent the sports venues, the white players are paid more than the other players and vice versa (Ehrenberg & Bognanno, 1990). The authors have also identified the need to invest in nurturing talent in regard to their evaluations based on economic principles.

They identify that the investment of teams in old and experienced sports personalities so as to increase their endorsements and number of fans may not satisfy their long-term objectives and may actually be expensive in the long run (Palomino & Sakovics, 2003).

Weaknesses

While most of the authors identify that the introduction of salary caps may be identified to be a motivator for those who are wrongfully discriminated based on their personality, it may serve to demoralize the high achievers who make a lot of money (Sanderson & Siegfried, 1997). It should not be assumed that some of the highest salaried players do not deserve their salaries as it is identified that some of them actually perform exceptionally for the betterment of their teams as well as the whole sport in general.

The application of economic variables does not serve to solve the direct challenges that are faced by sports personalities today and with the short lifespan of some sports careers it may be worrying to identify that some of the currently talented athletes may never get to be paid their fair dues in the near future (Noll, 1998).

The authors identify that with age the performance of athletes reduces. In as much as teams want to maintain some of the players for endorsement purposes, the particular economic viability of the sports industry has a long-term aspect to it and with the short life cycles of the athletes careers it may not be viable to apply economic principles in a matter that is identified to be of personal importance. It may, however, work to secure the revenues of future generations.

It is identified that what is currently needed is a quick solution to fix the reputation of the sports fraternity before some of the sports start losing their market value due to reduced fan satisfaction (McCormick & Tollison, 2001). The management of sports teams is also misrepresented in terms of financial preference, where it is identified that they are mainly drawn by the particular profits that they can make in the signing of sports contracts (Verbon, 2008).

It is identified that the need to maintain a high number of loyal fans coincides with the particular aspect of endorsement profits as well as gate collection and these are actually some of the main concerns of sports managers.

Conclusion

The authors have presented a very solid case on sports economics by evaluating real data on the particular revenues of teams as well as individual sports personalities. Their arguments on the particular contracts that players as well as teams in general get into prove that there may be more financial matters in the sports fraternity than it is identified by those who identify talent as the main motivator of sports (Whitney, 2005).

This proves that the financial aspect of sports should not be ignored as it may be a bubble that is about to burst considering the recent over-commercialization of some sports. They identify that there may be a need to toughen the rules and regulations surrounding the management of spots to secure its viability and ensure fair play among the different stakeholders (Downward, Dawson & Dejonghe, 2009).

References

Downward, P., Dawson, A., & Dejonghe, T. (2009). Sports economics: theory, evidence and policy. New York: Elsevier/Butterworth-Heinemann.

Ehrenberg, R., G. & Bognanno, M., L. (1990). Do Tournaments have incentive effects? Journal of political economy. 98(6). Pp 1307-1324.

Kahn, L., & Shah, M. (2005). Race, Compensation and Contract Length in the NBA. Journal of industrial relations. 44(3). Pp 444-462.

McCormick, R., E. & Tollison, R,. D. (2001). Why do black basketball players work more for less money? Journal of Economic Behavior & Organisation. 44(1). Pp 201– 219

Noll, R., G. (1998). Economic Perspectives on the Athlete’s Body. Stanford humanities review. 6(2). Pp 78-81.

Palomino, F., & Sakovics, J. (2003). Inter-league competition for talent vs. competitive balance. Edinburgh: University of Edinburgh.

Porter, P., & Scully, G. (1996). The Distribution of Earnings and the Rules of the Game. Southern Economic Journal. 63(1). Pp 149-162.

Sanderson, A., R. & Siegfried, J., J. (1997). The Implications of Athlete Freedom to Contract: Lessons from North America. Oxford: Blackwell.

Stone, E., W. & Warren, R. (1999). Customer discrimination in professional basketball: evidence from the trading-card market. Applied Economics. 31. Pp 679-685.

Verbon, H. (2008). Regulation of Mobile Football Talent. Tilburg: Tilburg University press.

Whitney, J. (2005). The peculiar externalities of professional team sports. Economic Inquiry. 43(2). Pp 330–343.

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