Pay For Play

Except for paying for tickets, parking, and concession hotdogs, the casual fan doesn’t spend much time pondering the relationship between sports and economics. But, as Stanford University economics professor Paul Oyer explains, money plays a pivotal role in virtually every aspect of sports. He covers a range of related topics, from why athletes cheat to the reasons your city should never host the Olympic Games, but he begins with little kids who love to play sports.  

Some families invest an extraordinary amount of time and money in the hopes their children will someday strike it rich as professional athletes. Children and teens worldwide fantasize about making big bucks in basketball, football, soccer, baseball, skiing, snowboarding, tennis, and other sports. Following their dreams, they dedicate their youth to athletic training and participation.

In 2019-2020, only 1% of college students in America gained even partial athletic scholarships.Paul Oyer

Oyer wonders if the sports-loving kids who didn’t grow up to be professional star athletes may wish, as adults, that they had focused their youth on preparing for a more conventional work life instead of enduring dawn swimming practice and weekend track meets far from home. But because the few athletes who do succeed gain such extraordinary status and salaries, they fuel the — possibly pointless — hopes and dreams of millions of youngsters.

Performance-Enhancing Drugs 

In 1998, Mark McGwire of the St. Louis Cardinals hit 70 home runs; Sammy Sosa of the Chicago Cubs hit 66. Both broke Major League Baseball records for home runs in a single season. Seven years later, a US congressional committee headed by Senator George Mitchell questioned McGwire and Sosa about the use of performance-enhancing drugs (PEDs) in baseball. Neither admitted to using the substances. However, the 400-page Mitchell Report issued in 2007 stated that, at the time, roughly 80 pro ball players used steroids.

If…your opponents are cheating, and you have no effective way of catching them, you most likely will not win unless you cheat too.
Paul Oyer

The report concluded that the very nature of professional baseball puts pressure on players to use banned substances to maintain their competitiveness. Players reported feeling that if their teammates and rivals were taking PEDs, they had to follow suit to survive in professional baseball. After the report came out, Oyer recounts, home run totals dropped dramatically, indicating decreased steroid use among active players.

In 1964, Major League Baseball players earned a median salary, adjusted for inflation, of $122,000. At the time, this was roughly $18,000 more than the typical male working full-time. By 2019, Major League players made 27 times more than average US employees. The pay scale in all professional sports has increased dramatically while wages for most workers have remained stagnant for 50 years.

The ability to hit 40 home runs per season in Major League Baseball is one of the scarcest resources there is.
Paul Oyer

For example, Oyer points out, California Angels superstar Mike Trout signed a 12-year contract for $430 million. For a single game, Trout earns roughly four times more than the typical American male worker earns in a year.However, typical workers do not generate the monetary value Trout creates. Sports stars make millions because professional athletic leagues – and professional team owners – take in billions from ticket and merchandise sales and from TV, radio, and streaming income.

Banned in Biking

While fans, pundits, and competitors long suspected professional cyclist Lance Armstrong of doping, he won the Tour de France seven times. Armstrong’s image and earnings plummeted when he finally admitted to using illegal substances. After years of training, Armstrong found he could not stay in the sport’s upper echelon without taking performance enhancers. Professional cycling banned drugs in 1965. Since then, competitors have sought new methods of cheating to stay ahead of bike-racing officials and their constantly evolving, state-of-the-art tests.

Black Athletes

The first Black player in Major League Baseball, Hall of Famer Jackie Robinson, endured taunts and mistreatment when he broke baseball’s color barrier and joined the Brooklyn Dodgers. Woody Strode and Kenny Washington, who became the National Football League’s first Black players in 1946, had to stay in separate hotels, apart from their white teammates, when they traveled for away games. Black NBA players Chuck Cooper, Nat Clifton, and Earl Lloyd; Masters golfer Lee Elder; and Wimbledon doubles champion Althea Gibson all made indelible marks on their sports – and all faced discrimination, which remains a problem in the sports world.

Markets often help correct injustice, but they can take a long time to do so. Paul Oyer

During the 2012-2013 season, two-thirds of the National Basketball Association’s (NBA) Minnesota Timberwolves roster featured white players at a time when the NBA was nearly 80% Black. The team’s executives denied favoring white players, though Minnesota is the league’s whitest market, and the state has a distasteful history of racist team owners. Take Calvin Griffith who relocated the Washington Senators baseball team to Minneapolis in 1961. Years later he told a Lions Club gathering, “We came here because you’ve got good, hardworking white people here.”

The NBA offers a microcosm of larger patterns of discrimination in the United States.
Paul Oyer

The NBA embraced integration in 1950. From 1954 to 1970, the percentage of Black players jumped from 4.6% to 54.3%. But a 1985 study by two economists indicated that while Blacks outplayed whites at the same pay level, teams were more likely to cut Black players than to cut white players of equal skill.

Yet, Oyer notes, recent pro basketball salaries suggest that pay discrimination is no longer an issue in the NBA. In keeping with today’s different pay patterns, Nobel economist Gary Becker theorizes that organizations that practice discrimination will eventually lose out to businesses that prioritize and reward talent.

The Economic Olympics

Back in 2013, initial interest in hosting the 2022 Olympic Games was brisk. Six cities formulated detailed plans, but they soon backed out for a variety of political and financial reasons. They made the right decision. Oyer points to statistical evidence suggesting that building Olympic arenas and stadiums leads to economic disaster for host cities after the big circus leaves town. 

Those who champion Olympic bids are trying to stay a step ahead of those who insist on fiscal responsibility.Paul Oyer

London invested nearly $1.7 billion in the 2012 Summer Olympics, but the city eventually had to take the basketball arena apart and raze the field hockey and water polo venues. The British government spent $400 million to convert the Olympic Stadium into a soccer stadium and gave it to West Ham United FC free of charge.Even when cities build arenas for their local professional sports teams, multiple studies demonstrate that sports venues prove to be uniformly terrible investments for taxpayers. 

It is interesting to note that the organizers of the 2024 Paris Olympics have taken great measures to host a more sustainable, economically viable competition, including staging events in existing or reuseable facilities.

Money Talks

Paul Oyer pulls back a curtain many sports fans prefer to ignore. Money drives every decision in sports and, as he reports, the lure of that money warps the lives of millions of young athletes. The author perceptively links professional sports’ current, much-improved perspective on discrimination to the enhanced profiles of those teams that select and remunerate players solely on their abilities. His writing occasionally suffers from a slight academic dryness, but Oyer understands how to present a juicy anecdote, whether it concerns greed, racism, or drugs. His extensive, impressive, and persuasive research gives readers a new and fascinating perspective on sports.