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The podcast discusses the debate surrounding whether high wages for top-tier sports people are justified. The argument in favor of high wages is based on the concept of supply and demand, as there is a limited number of athletes with exceptional talent. The economic impact of sports goes beyond the athletes themselves, as it boosts local economies through increased tourism, job creation, and tax revenue. However, some argue that the wealth generated by sports should be spread more evenly to create more competitiveness and enjoyable content. The physical demands and risks of being a professional athlete, as well as the lack of salary caps in some sports leagues, are also factors to consider. Ultimately, the market dictates the value of a player's skill, and high wages can serve as an incentive for young athletes to pursue their dreams. Before we get into all this, a special thanks to our sponsors today, Dean Grammarly. When the stakes are high at work, your tone matters. Grammarly's advanced tone suggestions can help. Because when you write with just the right confident tone, you can meet any challenge to move your project forward. Welcome to Curtain Conversations, where we pull back the curtains on the world of economics. I'm Curt Tocono, and with me is my esteemed co-host, debatery Dave. How are you doing today, Dave? I'm doing great, Curt. Excited to dive into today's topic. Me too. Today we're going to explore a topic that's been a hot debate for years. Are the high wages for top-tier sports people justified? We often see athletes earning extortionate salaries. But what economic factors come into play? Let's take a closer look. Absolutely, Curt. When we talk about high wages in sports, we're not just talking about the athletes on the field. We're also talking about the revenue generated by sports as an industry, from broadcasting rights to endorsements, ticket sales, merchandise and more. It's a massive economic ecosystem. That's right, Dave. Sports have become a major business with billions of dollars at stake. Teams and leagues generate substantial revenue, and top-tier athletes are often the face of these enterprises. But are their salaries justified? That's the question we're here to explore. One argument in favour of high wages for top-tier sports people is the concept of supply and demand. There are only a limited number of athletes who possess the exceptional talent and skill to compete at the highest level. As a result, their value in the market is incredibly high, and teams and sponsors are willing to pay top dollar to secure their services. That's true, Dave. The law of supply and demand dictates that when supply is low and demand is high, prices rise. Top-tier athletes are in high demand due to their unique abilities, and teams and sponsors are willing to pay a premium for their services. Additionally, there's intense competition among teams to sign the best athletes off implied subsalaries. Absolutely, Kurt. It's not just about the athletes themselves. The economic impact of sport goes beyond the field or court. Sport can boost local economies through increased tourism, job creation, and tax remedies. The success and popularity of sports can also positively impact the branding and image of a city or country, attracting investment and business opportunities. In the 2020-2021 footballing season, the Big Five European Leagues generated $15.6 billion in aggregate revenue. And because of this, the annual salary for footballers is around $3.6 million, which when considered is a small percentage of the total revenue generated. Providing us with our next point is our special guest, Curly Chris. Hey, guys. It's been great listening so far. Great podcast. Thanks for having me. One of the reasons that I think it's really important for football players to actually not get paid as much as they do, and I'm going to get off the other hand of it the other way, is because how much would boost other business and economies if you provided that spare revenue that didn't go towards their wages to them? Now, there's lots of other jobs to do with the whole football scene, such as their trainers, the people who take care of the fields, and all the security. So the average Premier League wage is about $4 million per year, and that is – so you would need to be able to cut each player's wage down by $1 million per year. And seeing from – there's over 100 footballers in the Premier League, so you'd be generating over $100 million per year extra just from that, which can go towards boosting all the other aspects of football. You could even tax these players more for their wages, although it goes towards something more important, such as the NHS. Because as we all know, there's a massive crisis of NHS workers going on strike at the moment, moving to Australia due to not getting paid enough to cover all their debts. So if we paid them, it could boost the economy massively because it would allow people to really get back to their jobs. They'd be taken care of quicker and made better, so they would be able to go back to work, and the unemployment rate would then go down, which would help to boost their consumption and investments, which would overall boost aggregate demand and economic growth. That's a great point, Chris. It's one of the valid points that people say about footballers earning too much, is that they don't really contribute to society by roles like the NHS and education system. These people who work for the NHS and in schools are earning a lot less and are almost contributing to society on a much higher level. So one of the arguments is to almost stop paying the footballers as much and then give it to the more key central workers, which will provide the economy with future generations of fitter but also more educated communities. Well, this is a good point. The physical demands and risks of being a professional athlete, coupled with the short career span, can be a significant factor in justifying high wages. Athletes often push their bodies to the limit and face the risk of career-ending injuries, which may justify higher compensation for the risks they undertake during their relatively short careers. While I can see your side of the argument, there is still the case that in some sports leagues, there are no salary caps or limits on how much teams can spend on players' salaries. This can lead to a situation where the richest teams can attract and retain the best talent, leading to a lack of parity and competitiveness within the league. This can make the sport less enjoyable for fans and may impact overall financial viability of the league. This scenario is similar to what happens in a free market, where we have the major companies making all their monies becoming monopolies, while the other companies in the same market fall below the line and won't be able to make ends meet. This happens in lower league footballs, where they don't have the same money coming in, so they can't pay the players the same and they can't have the same facilities. But if the wealth generated by football was spread evenly across the field, it would create for more competitiveness, which we've learned brings in more money, but we'd also have more enjoyable content for people to watch. However, football is like every other aspect in life, where wages are based on quality of performance. Therefore, the better you are, the more paid you get. So, I believe it is unfair to spread the wealth evenly if the worse of players, the less entertaining players, are getting paid equally to the better, more hard-working players. I completely agree. Football is just like a company. A CEO is obviously going to make more than an intern. Vice versa, a professional footballer playing for a big club is obviously going to get more than someone playing for a low team. Hey, it's Chris again. I've got another point that I was thinking about. So, the money generated towards football and these players' wages is purely from the fans who are paying to go to the matches and are paying for all the goods and services based around it. So, I feel like most people who are saying that these players shouldn't get paid as much as they do, don't have any affiliation with the actual football. So, it's not really their choice as much. If these football fans didn't agree with how much their players are getting paid, they simply wouldn't buy all the products around it. They would drive down that demand. So, I think they're perfectly happy with how much money is going towards their players that they look up to and they watch religiously every weekend. So, I think from that point, they do deserve to get paid as much as they do. I couldn't have said it better myself. Just to add on to your point, the other way that the players make their income is through the massive amount of sponsors. As we can see, the investment is only there because they make the return. The sport is very lucrative and so, the players are getting what they deserve due to the high returns they bring in through fans and merchandise being bought, due to them being role models to young ages and also to people who enjoy the sport. In conclusion, the market dictates the value of the player's skill and performance and the high wages are simply a reflection of this value. In addition, sports teams generate significant revenue and the salaries paid to elite athletes can be seen as a fair share of the revenue they help generate. Furthermore, high salaries can serve as an incentive for young athletes to pursue their dreams and invest in their skills and talents which can contribute to the development of a thriving sports industry. Indeed Dave, well unfortunately that's all the time we have for today's episode of Curtain Conversation. We hope our listeners enjoyed our discussion on the economics behind the justification of high wages for top tier sports people. Yes, thank you for joining us and we encourage you to continue the conversation by sharing your thoughts and perspectives with us. Don't forget to tune in to our next episode where we'll be exploring another fascinating topic in the world of economics. That's right. Until then, I'm Curt Ekono. I'm Drapery Dave. I'm Curly Chris. And thank you.