Monday, 7 May 2007

Chief execs vs centre forwards

I've always had a problem with one of the defences of high exec pay that gets trotted out. You know, the one that goes "but no-one criticises the salaries that footballers get paid". So I'd thought I'd have a go at seeing how it stacks up in practice. Due to the lack of many academic papers of the subject, these are just my broad generalisations.

1. Actually people do criticise the amount footballers get paid. Look at abuse (rightfully) directed at Ashley Cole because of his comments about Arsenal's 'disrespectful' offer that forced him to move to Chelsea. Also what about the stick players get when they leave for another bigger club on more money, particularly if it's a rival.

2. It's a lot easier to quantify what players contribute to the success of their organisation, comapred to company directors. Not just goals, but assists, tackles, ground covered etc. This is becoming increasingly sophisticated too. In contrast much exec remuneration is linked financial results that don't necessarily have a direct linked to executives' performance.

3. There definitely is a functioning global 'market' for professional footballers. Just look at the number of foreign players at UK clubs compared to foreign directors of UK businesses.

4. Footballers sell merchandise too. I would suggest it might still be a while before you see kids sporting Lord Browne t-shirts. A Panini sticker book of FTSE100 chief execs is probably a way off too (although Jeff Randall probably already has an advance order in). Yet I've seen premiership t-shirts all over world.

So overall I don't think the argument stacks up.

In any case, shouldn't the real comparison be with football managers? In which case I think you might find that the average job tenure is shorter in football than in business.


Giles said...

Hi there - good blog.

I remember writing on this for the university rag of the LSE. You make a good point. Football is a theoretically free market to enter. If you can play like Wayne Rooney, you can get it. Furthermore, unlike in CEO pay, the footballer salary is not decided by a panel of his mates and fellow players.

CEO's are effectively exploiting market power - often there is little choice in filling a job. Have you noticed also how, when the ir enormous salaries are discussed, they say "but, you see it's a global market". But when it is the salaries of the Eastern European builders, it's also, "you see, its a global market". Somehow, we are meant to believe that the 'global' market in labour has increased the DEMAND for CEO's but only the supply for those at th e bottom

Anonymous said...

Good points. It is abuse of power.