Economics of Superstar

Economists are naturally attracted towards the sports environ, mainy due to the the labour markets which exists in that economy. In service industries such as teaching, medical, banking, etc., it is extremely difficult to measure the productivity of the labour. This industry comes along with plenty of data which can be used to define the productivity of labour.

Economics can be applied to this professionalism. In this, money changes hands in the production, distribution and consumption of sport. It is the mechanism by which assets of a firm (sporting resources, i.e. the players) are bought and sold between the various teams, which are used in the competition against their opponents on the field. These transactional decisions are very vital, as it can either cause benefits or could bring down the performance of the team.

So, how does the firm generate the revenues to pay their player’s salaries? Clubs and organizations, such as leagues and governing bodies, must co ordinate the match schedules, and should inform their potential viewers about the details of the upcoming matches.
Such characters indicate that, professional sport can be viewed as an economic process. Inputs, , or factors of production, such as labour (athletes/manager) are combined with capital (field) to produce, along with another team in the league, a product (fixture) that is sold to the consumers typically in a stadium, or via broadcast media. The model of perfect competition is a convenient benchmark for the economic analysis of sports labour market for two reasons. Firstly, it provides a theoretical basis for deriving a fair wage, i.e., the players deserve their wage according to their performance and productivity. The second reason is that it shows and highlights some uniqueness about the labour market in the sport industry. The standard model states that teams would hire labour up to where the wage was equal to the marginal revenue product of labour (MRLP), which is the revenue