Arnold Kling  

Athletes and Entertainers

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Hostility Toward Economics... The Science Race...

Allen R. Sanderson writes,


no one complains when Ray Romano ("Raymond") gets $50 million a year—$1.8 million per episode—which takes about the same time to film as a baseball game...But let Alex Rodriguez sign for $25 million a year or let the mean baseball salary hit $2.5 million and commentators and the sports-talk-radio crowd get in a dither

My favorite example of a highly-paid entertainer whose salary I do not understand is Regis Philbin, who someone once described as "famous for being famous." At least with athletes, there seems to be a higher correlation between pay and performance.

For Discussion. Do you suppose people do not complain about overpaid entertainers because it is so much harder to measure the quality of their performances objectively?


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CATEGORIES: Income Distribution



COMMENTS (12 to date)
Erik Sargent writes:

While there might be some basis for the objective measurement idea, the more likely idea is that we pay for tickets to the ball game; we do not pay for TV. When ARod gets his salary, that must somehow add $1 to my ticket price and $.25 to the cost of a hot dog. Regis' salary is based on ad revenue which is not directly paid for by the consumer.

Mike S. writes:

I think the explanation has to do with the main reason we enjoy sports - athletic competition is "us vs. them" entertainment. That's why we enjoy watching our home team more than we enjoy watching athletic competition between teams from other areas of the country or world. When we see an athlete (particularly one playing for our home team) demand an increase in salary, we tend to take it more personally than we would if a similarly-paid actor were to make the same demand.

Miles Doherty writes:

Are you kidding?

The fact that a film worker makes so much money annoys me just as much as the fact that a sport player earns so much.

I think it's the writer's perception (and maybe distortion) of the economic concerns of 'the people' that is problematic here.

My guess is that a film star or television show host has more input or is more capable of brainwashing the public with regards to the distribution of information about what they do and their resultant merits and payments.

That is, the people closer to the centre of distribution are closer to how facts and opinions are represented in today's mass media. Athletes are at least (in most cases) 1 layer away from this control and the information given to the public.

Does that make sense?

I don't think there is much of an argument here, except for ideas involving mass media and the implications it has upon a social inbalance.

cheers,
Miles.
_________________

Xavier writes:

Sports are games. Lots of people play sports for free in their spare time. Acting is seen as a job, not a leisure activity. I think that might explain some of the hostility toward highly paid athletes.

Erik: we directly pay for a lot of entertainment besides sports. We pay for tickets at the movie theater, but highly paid sports stars still seem to attract more criticism than higly paid movie stars.

Bernard Yomtov writes:

I don't agree with Sanderson that people generally react negatively to athletes' incomes. They do, rightly, when public financing of stadiums comes up, but not otherwise.

I think there is much greater revulsion towards exorbitant corporate salaries. In my experience, at least, people regard entertainers' and athletes' incomes as determined by legitimate negotiation, and hence the consequence of voluntary behavior by those paying the tab. CEO salaries are not generally viewed in the same light, by me or others.

Jim Glass writes:

I know of very few people who get upset over athletes or entertainers or newsreaders (and athletes and newsreaders *are* entertainers, of course) getting paid by the millions-in-bunches.

Not even when the money goes to Kevin Costner for making Waterworld or Mo Vaughn for being 70 pounds overweight while hitting on the interstate and being the worst-fielding first-baseman in the league (he'd lose sight of ground balls under his belly) for my team.

Ah, but let a CEO get paid that kind of money after spending 30 years of his life working up to the top job in a business, and some people do get really irate.

Bernard Yomtov writes:

Jim,

Yes, I get irate. Waterworld didn't cost you anything, unless you were foolish enough to go see it. Mo Vaughan's ineptness caused you psychic anguish, no doubt, but would you have felt better if he made less?

CEO salaries are paid by shareholders, but set by boards made up of their cronies. Shareholders have little or no power to control executive compensation. So, unlike the pay of athletes and entertainers, CEO pay is not, in general, set by anything resembling market forces.

That's my opinion. I don't see what the thirty years has to do with it.

Jim Glass writes:

Well, Bernard, it's good for you to admit it's not actual income inequality that bothers you after all, it's just all that cronyism that exists in business -- which *doesn't* exist in Hollywood's business, or in the news/entertainment business, or the sports business. ;-)

BTW, do you really think that all a team's fans pay towards the salaries of the Mo Vaughns of the world is "psychic pain"? Have you looked at how working class people have been priced out of going to games?

I bet you the salaries of Mo and company cost me a lot more cash money than the stock options of Levin at AOL/Time cost you. Those options were paid for by his fellow shareholders, and they were no secret, if you didn't want to pay them you don't own the stock.

Would Time magazine have been worth more to you if he'd had fewer of them? Did Levin's options really cost you much other than "psychic pain"?

Every time I look at MSG ticket prices (even for two god-awful lousy teams of millionaires) *actual* income inequality per se really does bother me -- but as it's not the issue that bothers you, we need not pursue it.

"I don't see what the thirty years has to do with it."

Person A spends 30 years working hard days, long hours, and long weeks learning to run a business that produces a product or service valued enough by its customers for them to pay it enough for it to pay him, say, $6 million a year, when after those decades he emerges as CEO.

Person B has great god-given athletic ability so he gets a free pass through high school, gets recruited with strippers and sex to college (say, Colarado or any of its competing Big 12 schools), where he gets another no-class no-graduate free pass, during which time he hangs out regularly with say with known drug dealers, maybe gets arrested himself for violence and then caught in a drug offense too ... all to be rewarded at age 22 with $6 million a year, becoming a model to all kinds of youth who want to follow his sports-hero star footsteps. Call him, say, Jamal Lewis.

Now, you've said it's not the income inequality per se resulting from the $6 million per year that bothers you.

You've said it's *how* a guy gets his $6 million a year, and what it shows about our institutions and society, that bothers you.

And the guy who really pisses you off is Person A, because he didn't get his job by anything resembling market forces, they way Person B did.

"That's my opinion."

OK, well, we're each entitled to our own.

Bernard Yomtov writes:

"..do you really think that all a team's fans pay towards the salaries of the Mo Vaughns of the world is "psychic pain"? Have you looked at how working class people have been priced out of going to games?"

Jim, are you really suggesting that ticket prices would be less if Vaughan were being paid less? Working class people are being priced out because there are lots of people willing to pay high prices to go to the games.

I bet you the salaries of Mo and company cost me a lot more cash money than the stock options of Levin at AOL/Time cost you. Those options were paid for by his fellow shareholders, and they were no secret, if you didn't want to pay them you don't own the stock.

No bet. I don't own AOL, at least directly. But let's drop the "if you don't like it sell the stock" argument, shall we. First of all, lots of investors don't know what stocks they own. Their money is in mutual funds or managed retirement plans or other types of indirect investments. Second, the problem is widespread enough that it's hard to own stocks without running into it. Finally, what good does it do me to sell the stock after the money's been taken?


Every time I look at MSG ticket prices (even for two god-awful lousy teams of millionaires) *actual* income inequality per se really does bother me -- but as it's not the issue that bothers you, we need not pursue it.

Actually, income inequality does bother me. I think it's a serious problem. I never thought it bothered you a bit. So it's nice to know that some consequences of income inequality do trouble you. Can't afford medical care - too bad. Can't afford baseball tickets - let's do something about those greedy athletes.

Person A spends 30 years working hard days, long hours, and long weeks learning to run a business that produces a product or service valued enough by its customers for them to pay it enough for it to pay him, say, $6 million a year, when after those decades he emerges as CEO.

Lots of people work hard and conscientiously and intelligently for 30 years and don't get $6 million salaries. Besides, you're begging the question. Your argument assumes that your hypothetical CEO's contribution is worth $6 million. That's precisely the point I'm disputing.


Person B has great god-given athletic ability so he gets a free pass through high school, gets recruited with strippers and sex to college (say, Colarado or any of its competing Big 12 schools), where he gets another no-class no-graduate free pass, during which time he hangs out regularly with say with known drug dealers, maybe gets arrested himself for violence and then caught in a drug offense too ... all to be rewarded at age 22 with $6 million a year, becoming a model to all kinds of youth who want to follow his sports-hero star footsteps. Call him, say, Jamal Lewis.


Now, you've said it's not the income inequality per se resulting from the $6 million per year that bothers you.


You've said it's *how* a guy gets his $6 million a year, and what it shows about our institutions and society, that bothers you.

No, Jim, you misunderstand. I was commenting purely on the economic aspects, not on what it says about our society. I am as disgusted with the Jamal Lewis's of the world and the treatment they receive as you are. I think our society vastly overvalues athletic ability, and I think that big-time college sports, in particular, is one of the most corrupt institutions in the country. What I am saying is that in the context of these distorted values the money the athletes get is the consequence, largely, of voluntary transactions. What pisses me off about the Lewis's of the world is their behavior and the willingness of so many people to excuse or overlook it because of their athletic abilities. But just because Lewis ought to be in jail doesn't mean that an equally talented athlete who is guilty of none of Lewis' sins isn't entitled to earn what he can. Put it another way. Would you be happy if Lewis were earning, say, $60,000/year as an athlete, or is your complaint that he's enjoying any success at all?

Market prices, including those of labor, reflect society's values. I agree with you that what the market pays some people suggests unattractive values. But that's a different complaint. My complaint with CEO salaries is that they are too often not market-driven, but determined by a network of insiders - a different form of corruption.


And the guy who really pisses you off is Person A, because he didn't get his job by anything resembling market forces, they way Person B did.

No Jim. They both piss me off, but for different reasons. Or actually, maybe it's the same reason - neither one is really held accountable for their actions.

Mike Presutti writes:

Great column, I especially like the part about the abused collegiate athlete. I’ve often wondered, if you add up all the hours per year a collegiate athlete spends in pursuit of his “career” then weighed it against the total compensation of his scholarship, what would be his per hour “wage.” I am sure that in many State universities his per hour compensation would be under the minimum national wage. For example, Rutgers, a state university, has an in-state tuition of around 5000 dollars per full year, if you add another 5000 for meals books and housing, you arrive at a scholarship worth somewhere around 10,000. You could easily make 10,000 delivering pizzas-part time.

None of this “abuse” includes the intensive toll such sports take on the future health of those who “play” them. I was a scholarship athlete in football at Rutgers, and today I cannot even jog. I have multiple vertebra compressions in my neck, degenerative disk disease and although I am only 42 years old, I have arthritis in all the joints of my body. I am the only one in my extended family who has such ailments and of course the only one who play dividian 1 college football. Other friends who I played college football with have similar ailments.

As to the rest of your column, economically speaking, without going into great detail, I think for the most part whenever you see exuberant salaries no matter where they are, they are intrinsically linked to monopolistic endeavors of various sorts. For example: professional sports leagues are private monopolies, as are the major studios, the stock markets, the national broadcast networks. In addition, we cannot forget all the rent-seeking industries that are created through legislative subsidies and patents.

Ramkumar writes:

http://www.mckinseyquarterly.com/article_page.aspx?ar=1454&L2=16&L3=20

Some more anomalies. Why do some sports are not so popular account for disproportionate income ? I forward a psychological theory. I guess sports have a more "common-place" feel compared to theater and music. Anybody can pick up a basketball and throw an occasional superb shot and fancy himself but you cant do the same with a guitar. So the more easier aand widespread becomes the lesser are the average revenues per spectator.

Navin writes:

Just for the records, ticket revenue does not pay athletes salaries, its the sponsors that pay them. The reason a ticket price may go up when a new highly paid athlete is signed on to a team is because it is assumed that more people will want to come to the games, and so the stadium will charge more for greater profit, knowing that people will still pay the extra buck or two.

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