Why the US and Europe Grow Unequal for Differing Reasons: A look at inequality among football teams

In my blog and in my classes, I frequently use sports as a prism to understand larger social trends. Now I have stumbled upon the Global Salary Report Survey 2016 by www.sportingintelligence.com. It contains information about the highest paid sports teams worldwide. Among the best paid teams most are from the US football, basketball and hockey leagues, as well as from the European football/ soccer leagues.

For this blog I have just picked two pictures which seem to me remarkable: one from the US, one from Europe. The first one is the US football league. It shows the differences between average salaries of each team. The spread between the highest paid team, Green Bay Packers, and the lowest, Cleveland Browns, is not even 2:1. This is incredibly low.

nfl

For the US many economists have shown that inter-firm inequality has increased tremendously in the last decades and that it is a significant reason for higher overall levels of inequality and some extreme forms of management pay. Some have called it the winner-takes-it-all markets. So what happens in NFL? It is well-known that the US political economy regulates little with the exception of professional sports. Politicians struggle with pay caps for CEOs, the tax system becomes less and less progressive (especially in effective tax burdens), and overall the population and the political apparatus seem to have developed a leniency for a great deal of inequality.

Not so in football. Apparently the hyper-commercialized breed of football allows itself much lower levels of inequality. In many professional US leagues there is a wage cap for top players, weaker teams sometimes preferential access to new talent, the worst teams are not relegated etc. All these are protectionist ways to guarantee a level playing field. So why do people cheer for ‘communism’ in football, but not in society? I can only think of a very strong and deeply entrenched ideology to be capable of allowing for this level of cognitive dissonance. So Democrats, next time you need an argument for progressive, redistributive forms of policy, look no farther than the capitalist world of high-end sports.

Traditionally speaking the problem has been the reverse in Europe. We don’t tolerate high levels of inequality for anything else but sports. Major sports leagues are much less regulated than in the US. There are no wage ceilings for football players, there is little in terms of guarantee a level playing field, and if you are unsuccessful on the pitch you are out. The neoliberal dream. I just pick one example from La Liga which shows a veritable duopoly of Barcelona and Real Madrid with all others trailing behind. As sportingintelligence reports the difference between the first and the last is a jaw-dropping 21:1, ten times as much as in the US case. And we know that this has real results such as very little competition for the top prize: the two times won almost 60% of all national championships.

laliga

But again, the inequality in football gives reason for concern for the whole of the European society. Unlike the US, in which more progressive forms of policies could be implemented politically if it weren’t for ideology, in politically fragmented Europe it is much harder to implement Europe-wide redistribution. The attempts of the EU at doing so are pitiful, and the workings of economically stronger governments such as Germany make matters worse. Hence, the problem seems to be more of a traditional political economy one: rich countries don’t want to pay poor countries and the institutions don’t make them do so. In this sense football shows which way Europe is heading. Perhaps European Social Democrats should ask their voters in the future if they are really content with having a handful of powerful economic players dominating the European market in the future.

But the real upshot of using the football analogy for excessive economic inequality is following: excessive inequality is not only tremendously unfair and counterproductive, it is also mind-boggling boring.

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