Why It's Insane to Pay $132 Million for a Soccer Player -- And Why It Isn't, by HBS professor Anita Elberse | LinkedIn
Adam Rifkin stashed this in Soccer
Anita Elberse writes:
The news — finally made official — that Spanish soccer club Real Madrid has lured Welsh player Gareth Bale away from English team Tottenham Hotspur for a world-record transfer fee of $132 million (or €100 million) has had the soccer industry on edge for weeks.
Even before the deal was confirmed, insiders rushed to condemn it. Arsenal manager Arsène Wenger referred to the staggering sum as "a joke," while new FC Barcelona coach Gerardo Martino upped the ante by saying the planned transfer showed “a lack of respect to the world in general.”
It does seem crazy to spend such a vast amount of money on one player, especially in a decidedly weak Spanish economy where unemployment is sky high and where many businesses — including Real Madrid, and indeed the majority of Spanish soccer clubs — face high levels of debt. And to offer Bale a salary of hundreds of thousands of dollars a week when so many people struggle to make ends meet seems downright absurd.
The reason it's not insane? Economically the sport is winner-take-all:
In an increasingly global market where only a few clubs compete for the attention of billions of soccer fans, one high-profile star can have a significant positive impact on the bottom line. David Beckham — another of Real Madrid's acquisitions in the past — proved that point convincingly.
There's a reason why Real Madrid is the most valuable sports franchise in the world.
They pay for the most expensive players.
Unless soccer's governing bodies step in, the battle for top talent will only intensify, widening the gap between the "haves" and the "have nots."
This is true not just for soccer but every major sport.