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Extreme Wages, Performance, and Superstars in a Market for Footballers

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  • Rachel Scarfe
  • Carl Singleton
  • Paul Telemo

Abstract

We study the determinants of superstar wage effects, asking whether productivity or popularity‐based explanations are more appropriate. We use longitudinal wage and performance data for workers (players) and firms (teams) from a particular market for sports talent: Major League Soccer (MLS) in the United States. We find evidence that the top earners, whose annual salaries are mostly not accounted for by their past MLS performances, when compared to other footballers, are paid more because they attract significantly higher stadium attendances and thus revenues. There is no evidence that higher residual salary spending by the teams affects their relative performance in football terms, or that the amounts the teams spend on actual talent affect attendances. Taken together, these results suggest that a popularity‐based explanation of superstar wage effects is appropriate among the top earners in this labor market.

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  • Rachel Scarfe & Carl Singleton & Paul Telemo, 2021. "Extreme Wages, Performance, and Superstars in a Market for Footballers," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(1), pages 84-118, January.
    • Handle: RePEc:bla:indres:v:60:y:2021:i:1:p:84-118
    DOI: 10.1111/irel.12270
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    Cited by:

    1. Rachel Scarfe & Carl Singleton & Adesola Sunmoni & Paul Telemo, 2024. "The age‐wage‐productivity puzzle: Evidence from the careers of top earners," Economic Inquiry, Western Economic Association International, vol. 62(2), pages 584-606, April.
    2. Johan Rewilak, 2023. "The Designated Player Policy Rule and Attendance Demand in Major League Soccer," Journal of Sports Economics, , vol. 24(4), pages 475-496, May.
    3. Fabienne Jedelhauser & Raphael Flepp & Egon Franck, 2023. "Overshadowed by Popularity: The Value of Second-Tier Stars in European Football," Journal of Sports Economics, , vol. 24(8), pages 1026-1054, December.
    4. Carl Singleton & Dominik Schreyer, 2023. "Cristiano of Arabia: Did Ronaldo increase Saudi Pro League attendances?," Economics Discussion Papers em-dp2023-14, Department of Economics, University of Reading.
    5. Scott M. Kaplan, 2022. "Putting a price on popularity: Evidence from superstars in the National Basketball Association," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1357-1381, July.
    6. Scott M. Kaplan, 2024. "Leveling the playing field: The distributional impact of maximum‐ and minimum‐level contracts on player compensation," Contemporary Economic Policy, Western Economic Association International, vol. 42(2), pages 375-391, April.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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