The economics of the labor market rely on supply and demand — the supply of workers and the demand of the organizations who hire them (or don’t). Knowing how many people to employ at what salaries is one thing when you’re dealing with fixed quantities of a tangible product. But what about when you’re dealing with a different kind of business and yield — say, a soccer team producing ticket sales?
Players’ salaries are not necessarily the same as their worth, which has to do with future value and the difference they make to the team. Winning may directly affect the team’s revenue as a whole but determining who earned the win is difficult; one player at a time may make a goal, but a combination of actions by his or her teammates leads to that goal.
Anticipating a player’s value is a tricky business, and it’s the business of team management.
Read more about the economics of soccer in Darden Professor Peter L. Rodriguez and Senior Researcher Gerry Yemen’s article “What’s the Market Retail Price for a Soccer Player?” in the Darden School of Business/Washington Post “Case in Point” series.