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Comments on this blog (3) (moderated)
Splash & Go writes:
"Money is Saving Professional Sports"
Posted by Uptight Motorsports Nerd on June 28, 2010
Viewed 272 times

   

To take my blog in a bold new direction, this article is a response to The White Flag article, "Money is Ruining Professional Sports" in which Cooper denounces the salaries of athletes and entertainers. I would like to offer a different perspective on the matter. You can read the original blog here:

http://www.racing-reference.info/showblog?id=382

I don?t think there is such a thing as a professional athlete that competes just for money. The first obstacle is how hard it is to be a professional athlete. It is one thing to be born with natural talent, but you still need parents and coaches who can help to nurture and develop that talent. Your diet and exercise regiments will have to be closely scrutinized for most of the year. You will be away from home for most of the year. It's safe to say that these people haven?t coasted through life; they have worked hard to get where they are.

It is not until you beat the odds and make it to the major leagues that you will actually make good money. AAA baseball players make about $2,150/month in their first season. It's not megabucks, but it?s a 35% raise over AA. Football players are usually ready for the NFL straight out of college, but the only compensation student athletes receive is a free education (unless they go to an Ivy League school).

It may seem a tad silly that athletes (like all entertainers) receive such high compensation. For example: in 2005 Supreme Court Justice Sandra Day O'Connor made about $200,000; in that same year, Judge Judy made about $25,000,000. Professional athletes are fortunate enough to live in a society that thinks throwing a ball is a talent worth paying to see. There are some people in this world whose talents are not considered special in this day and age, but that's okay because they can be the beneficiaries of taxes paid by the highly compensated.

Do not fool yourself into thinking that spending less money on athletes will drive ticket prices down. Sports are entertainment and entertainment is a business. A business exists to make as much money as it can while it can. Less expensive athletes don't make for cheaper tickets, they make for less overhead. Owners will charge as much as they can for tickets before demand for them starts to drop. In economics, this is known as Price Elasticity of Demand.

I can't see how the size of the purse would change the outcome of a race for two reasons. First, drivers know that they are easily replaced and finishing position is the most objective measure of performance. Second, the "winnings" you see listed are not the drivers' money. This money goes to the car owner and a percentage of it may be negotiated into a driver's contract (which includes a regular salary and a percentage of merchandise sales).

There is no reason to blame the entertainment industry for the recession. The recession started because big banks started failing after buying mortgages from smaller banks who sold houses to people without verifying that these people could pay said mortgages. This led to a credit crunch where no bank of any size was lending to any customer for fear that they too would be unable to repay the loan. Businesses that depend on these loans started laying off workers, and then those workers lose their spending power which hurts unrelated businesses that in turn layoff more workers and the whole thing feeds back on itself. I hate to burst the Austrian School bubble, but demand is what drives an economy. When automakers learn that demand is down in a month, they don?t expand production; they cut production. The products made by the entertainment industries may not be the most constructive products, but they make something that people can find a use for in their lives. A healthy economy is one where wealth is freely and frequently redistributed between producers and consumers.


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