Superstar Effects in Sport

TLDR

The popularity of top soccer players creates a “superstar” effect where a player’s marginal revenue product—derived from the extra price spectators are willing to pay and the number of spectators attracted—drives wage differentials. This article investigates wage determination among professional soccer players in the Italian league. The authors estimate human‑capital earnings equations using rare individual earnings data from the 1995‑1996 Italian league season and test for superstar effects by examining the convexity of earnings in performance. They find that earnings are highly convex in two performance measures after controlling for personal characteristics and team fixed effects.

Abstract

This article investigates wage determination among professional soccer players appearing in the Italian league. Given the popularity of “top” soccer players, the relationship between individual productivity and pay can lead to “superstar” effects. In that context, the marginal revenue product of a soccer player is related to the extra price that a spectator is willing to pay to see him play (live or on television) times the number of spectators who are attracted. The authors use rare data on individual earnings and other personal characteristics of a set of soccer players in the 1995-1996 Italian league season to estimate human capital earnings equations and test for superstar effects in wage determination via convexity of earnings in performance. Earnings are found to be highly convex in two performance measures after controlling for a set of personal characteristics and team fixed effects.