As shocking as it may sound, sports could not exist without the presence of money. An income or revenue is as important as the sport itself. It’s common to see high paid athletes asking for huge contracts filled with multi-millions of dollars, while at the same time also seeing doctors who don’t get paid near that amount of money. What makes an athlete more important than a doctor. Shouldn’t doctors who treat people and save lives be getting paid the most in our society? In reality that isn’t the case.
There are business corporations buying out sports teams, buying new or used stadiums, and in the end buying everything hat has to do with sports. The question is why they do this, and it’s quite simple, sports are one of the most profitable industries in this world. The individuals or industries that spend a large amount of money, in some cases hundreds of millions of dollars on these sports teams are hoping to make a profit, even if it is indirect. It could be an indirect profit because it can create a profit for the sports club, or possibly be a promotion for another organization.
Basic economics factors in sports deal with the high revenue it brings in. This high revenue comes from sports erchandise, tickets to the games, entertainment value, television providers, gambling, and many other things. It is said that roughly about $400 billion is spent by Americans per year on sports-related gambling. As the revenue of sports has increased over time, it has become more of a business as well. Sports has undergone a whole new renovation. It is no longer only an activity that is played for fun. It is a business in which the owner and the players try to coexist.
It has become a business where TV has heavy influence over the fan’s interest, it has become pure entertainment and an escape for people and ecause of that, a dollar bill can be placed on it. Economics is known to be the study of how to best distribute scarce resources throughout an entire market. Economics is everywhere in the world, whether it be at a grocery store or be a successful business. Because of the strong economic impression of the overall industry, sports have become more of a business entity rather than an entertainment industry.
It is true that the entertainment aspects of sports drive the economic desire of business to be involved with sports but, without an understanding of the economy’s influence, sports are merely ntertainment and no business. There are several cases in which economics can contribute to the effect on the sports industry such as; the success of a sports team, the ticket price, the amount of money an athlete makes and lastly the amount of profit a team makes. The success of any person relies solely on the current economic market situations.
The desire to be involved with a specific sport agency stimulates the demand for such a business. As economics has an impact on sports, sports has an impact on economics as well. This is because all the jobs creates. According to the article Not Just a Game: The Impact f Sports on U. S. Economy. By Gwen Burrow from economicmodeling. com, sports “brings roughly $14. 3 billion in earnings a year”, and that the industry also “contributes 456,000 jobs with an average salary of $39,000 per job”. As shown from the data, sports employs a lot of people. These jobs are under 15 different types of industries.
These industries include: elementary and secondary schools, also known as private schools, colleges universities, and professional schools, fine art schools, sports and recreation instruction, exam preparation and tutoring, all other miscellaneous schools and instruction, ports teams and clubs, other spectator sports, agents and managers for artists, athletes, entertainers and other public figures, independent artists, writers, and performers, golf courses and country clubs, fitness and recreational sports centers, all other amusement and recreation industries, all other personal services, and civic and social organizations.
If sports weren’t used as business tools, the amount of jobs lost from it would be significant. It has been highly disputed whether athletes should be paid for playing. This heavily influences the economics in sports. In most sports, owners give ontracts to professional players to for their team. This is a common sight to most fans, however one sport does not do that. That sport is golf. The professional league for golf, also known as the PGA has a very odd structure of paying athletes.
This structure is based on paying only the competitors that finish towards the tow of every tournament. Critics have said some time ago in the past that this structure could not work and eventually because of it, golf would die out. However, this is the complete opposite. Golf has seen its viewers increase and because of that, its exposure has increased as well, television etworks show more golf events than ever before. Why golf’s audience has increased is a question many economics and sports analysts ask themselves.
Contributing ideas are that golf is more competitive than the other sports. Because only the top players get paid, this forces the idea of playing for survival upon the competitors. To get paid and make an income off of golf, the golfers have to work for it, it is not given to them for participating in the event, this fuels the competitive spirit and brings it out in all the athlete golfers who are playing for their needed income. There are only a miniscule amount of conomic problems in the sports industry. A major one being competitive imbalance.
This is the concept of sports teams being at a disadvantage causing the competition to be imbalanced. In other words it is the idea that not every team has the same amount of cap space to pay their athletes. This is mostly seen in baseball. This plays a huge role in the economics of baseball as well. Because the Yankees for example can afford to have the better players in the league, they can draw larger audiences and larger profits in sports merchandising and in ticket sales, they will also be more competitive. They also have the opportunity to build a bigger stadium to fit in more fans.
Fitting in more fans leads to an increase in revenue, which causes them to get even richer than they were before. It truly is a win-win situation for teams with higher incomes, while teams like the Padres, who have really low salary caps cannot offer star players huge amounts of money to come play for them. They also don’t get the benefit of the doubt when it comes to their own young players that they draft. If a rookie or young player they have do really good, they could lose him in the offseason to teams that ave the luxury of offering that player more money than the padres.
In their case, it is a lose-lose situation because if their players do too well, they risk the chance of losing them in the offseason to other teams who can offer more money and if they do bad, then it is an obvious lost situation for them because that player is not producing and is not helping the team win any games. This is why low salary cap teams rarely win in baseball, due to all the disadvantages that come with having a low salary cap. When a person wants to look at the economy of sports, they cannot forget to overlook an athletes pay. A very controversial topic in sports today is the amount of money athletes get paid.
The best example a person could use is of the basketball player Kobe Bryant. As a basketball legend, Kobe has made an eye opening amount of money in his career. According to Forbes, Kobe “is the only player in NBA history besides Jordan to have a salary that topped $30 million in a given year”. Some debate that Kobe was never worth that kind of money due to the cap space a NBA team is given which is a little over $60 million, and even towards the end of his career, many continued o ridicule him for having a huge contract because he was no longer the Kobe of his best seasons.
Many even blamed the success of his team on his contract because it didn’t allow them to form a better team filled with better players due to the money restrictions they had. However according to the owner, Jim Buss, “Kobe should be paid for all he’s done for the Lakers”. Jim buss’s reasoning being that Kobe has provided the Lakers with multiple championships and countless memories. However, there’s a legitimate reason, Kobe deserves the money regardless of his production level. The reason being, the amount of revenue his name brings in.
According to Fox Sports, Kobe Bryant finished second in 2015-2016 jersey sales and according to Espn. com, Kobe brought in a revenue of $1. 2 million worth of merchandise for the Lakers at the Staples Center. The Lakers had also sold a lot of tickets for fans willing to see him play in his last season. The ticket prices also increased for every game compared to usual prices and when the Lakers were playing a top team or a team with a superstar-caliber player, the ticket prices spiked up.
Kobe’s case in the end that he was deserving of is contract made complete sense from a business standpoint since he was bringing more money to the Lakers it’s understandable that he would want more money to compensate, but from a production standpoint in terms of basketball, it was the opposite because the Lakers were paying a lot of money for a player who isn’t an all-star and is playing below the standards of a great player, in other words he was ruining the team. A major factor to consider in the economy of sports, is the salary increase that has been occurring as time progresses. Athletes in today’s world are being paid more than ever.
A reason being the new television contract that is going to show more games. As the exposure increases, the profit increases as well because exposing the sport and its athletes to more people will draw in more fans and those fans will pay money for merchandise or tickets to a game. The fans are what makes the business side of sports flourish, without them, there would be no revenue which would lead to less jobs because without a revenue, how will the people with the jobs sports opened up get paid. In the end economics plays a huge role in sports and is vital to the success of sports that the world has seen today.