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Extreme wages, performance and superstars in a market for footballers

Author

Listed:
  • Rachel Scarfe

    (School of Economics, University of Edinburgh)

  • Carl Singleton

    (Department of Economics, University of Reading)

  • Paul Telemo

    (School of Economics, University of Edinburgh)

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 alongside 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 labour market.

Suggested Citation

  • Rachel Scarfe & Carl Singleton & Paul Telemo, 2020. "Extreme wages, performance and superstars in a market for footballers," Economics Discussion Papers em-dp2020-04, Department of Economics, University of Reading, revised 01 Nov 2020.
    • Handle: RePEc:rdg:emxxdp:em-dp2020-04
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    File URL: http://www.reading.ac.uk/web/FILES/economics/emdp202004.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. Rachel Scarfe & Carl Singleton & Adesola Sunmoni & Paul Telemo, 2022. "The Age-Wage-Productivity Puzzle: Evidence from the Careers of Top Earners," Economics Discussion Papers em-dp2022-07, Department of Economics, University of Reading, revised 30 May 2023.

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    More about this item

    Keywords

    Superstar effects; Top incomes; Major League Soccer;
    All these keywords.

    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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