Paying for talent pays off

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2 mins
Paying for talent pays off

Russ Roberts, a research fellow at Stanford University's Hoover Institution, talks to Matthew Futterman, sportswriter for the Wall Street Journal, about his recent book "Players" on the progress, innovation, and excellence in sports driven by the increasing professionalism of athletes.

A clear takeaway from this conversation is that professional sport has disproved two popular management notions that (1) the path to success is conditional on suppressing and paying your workers as little as possible, and (2) stakeholders should seek to discourage competition in both labor and product markets. 

Professional sport has been much derided for its crass commercialization. However, by allowing players to exclusively focus on and hone their craft it offers viewers a better quality product. This results in a better product that attracts more viewers, which increases the size of the market and raises returns for all stakeholders.

Not so long ago, sport took much misplaced pride in "gentleman" athletes who weren't compensated for their efforts on the field, thus, keeping out talent that needed to make a living. Even recently, semi-professional athletes often worked in the off-season, which didn't allow them to focus on nutrition, training, practice, and sleep (much undervalued).

Russ summarizes it well with "The synergy between the attractiveness of the sport, the quality of the play, and the amount of money in it, which feeds back into the incentive to get better and to be able to market a better product."

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Published on: Sep 02, 2016

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