Why Neymar(s) get (USD 263) millions. And WTH.

Neymar

The knee jerk reaction of the not-economically-competent-enough (yes, both ways) and non-football-savvy people, like me, to the record breaking deal of Neymar this week was: WTH!

The star footballer made a move from Barcelona to the Qatari held Paris Saint-Germain football club in a deal which will fetch him $850,000 a week after tax.

Like, there has to be some quid pro quo, right? Something like ‘Price is what you pay; value is what you get’. So what value we get from people highly skilled in maneuvering a ball – through a herd of men obstructing their path – successfully into a net of predefined dimensions? And is it more than the value we get from a doctor, an engineer, a scientist, a school teacher or an accountant (I know this one is a stretch, but you get the idea)?

A Neymar fan would answer that he deserves it, every cent of it, for the entertainment and thrill he provides. Just like the major players of other entertainment segments; tennis, Hollywood, Bollywood, etc. But that doesn’t solve our problem; we are talking about all the Neymars – across all like industries, not just football.

Something about the thrill. This time from the economist’s lens. The thrill draws fans, followers, viewers. This means more sponsors – as companies will realize that bigger audience will be following this team with this player and their products/services labels/adverts will catch more eyeballs which will convert to more sales revenue. Then of course the higher following means more stadium tickets sold, more merchandise (club tees, etc.) sold and enhanced chance to score the prize money by better performance.

So all this ball-kicking leads to more economic activity, higher sales/revenue for football clubs, more revenue for sponsoring companies, more sales of refreshments in stadiums, in turn more TV licensing fee, again sponsorships, high prize money, more paying jobs for people selling refreshments, making tees, manufacturing footballs, and you can add to the list. Wow! Neymars are apparently good for the economy.

To get an idea what numbers we are talking about, have a look at the 2017 slideshare report of Deloitte Football Money League:

 

I guess by now you are fascinated by the economists’ narrative. The answer to our value question – Are Neymars more valuable to society than teachers, doctors, nurses, scientists, engineers? If not, then why do they get paid more? – is simple and baffling at the same time: Neymars make more money for those who pay them these huge amounts.

So price has not got much to do with value (as in value to society, the broader sense, not just money making for sponsors). We are back to the water-diamond paradox. Water is both, more valuable (as in to live) and cheaper, than diamonds.

Moral of the mess: Money may not equal value. Its easy and thrilling to forget.

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