Football and the gender pay gap
With the women’s FIFA World Cup now underway and expected to provide global audiences with an opportunity to witness exceptional athletic prowess, strategic brilliance, and the triumph of teamwork, now is a good time to analyse the gender pay gap in football. In this article, we explore the intersection of economics and sport.
Despite the undeniable growth of women's football, the gender pay gap continues to loom large. In the 2019 Women's World Cup the prize money stood at $30 million, a significant increase from previous competitions. However, when compared to the men's tournament in 2018, the prize money for the Women's World Cup pales in comparison to the colossal $400 million awarded to the male teams.
As economists scrutinize these figures, it becomes evident that gender equality on the football field remains a pressing economic concern. Addressing this imbalance not only promotes fairness and inclusivity but also unlocks the immense potential and economic opportunities that lie within the women's game. So what is a gender pay gap?
The gender pay gap is calculated as the difference between average hourly earnings (excluding overtime) of men and women as a proportion of men’s average hourly earnings (excluding overtime). In the UK, it is an aggregate measure of all jobs and it not about differences in pay between men and women for doing the same job. The UK’s Office for National Statistics (ONS) uses data from the Annual Survey of Hours and Earnings (ASHE) to calculate the gender pay gap in the UK.
In an attempt to measure the extent of the gender pay gap, the UK became one of the first countries to make gender pay reporting mandatory (in 2015).
So, what’s wrong with a gender pay gap?
Economists argue that a gender pay gap is a sign of inefficiency in the allocation of scarce resources in the labour market, and across the whole economy. In other words, the pay gap can be seen as an indication that the labour market is not working effectively and represents a drag on economic growth and development.
It is argued that a reduction in the gender pay gap would significantly increase GDP, perhaps up to £150 billion1.
Is the UK’s gender pay gap narrowing?
Analysis by the UK’s Trades Union Congress (TUC)2 of labour market statistics indicates that while progress has been made in some areas, such as in terms of increasing the number of women members on company boards, the salary gap for top earners is still high.
Looking at the top 10% of earners, the gap in annual salaries between full-time men and women rises steadily through each percentile of pay groups, hitting 45.9% for the top 5% of earners, and reaching 54.9% for the top 2%. The top 2% male earners bring in more than £117,352 a year, while women get £75,745, more than £40,000 a year less.
While we would expect to see these differences repeated in professional sports, what we find is that gender differences in pay are even more extreme.
The gender pay gap in the market for professional football (soccer) players
Free markets set prices for products according to relative demand and supply. The same is true in labour markets, including the market for professional footballers, and other sports. In short, the higher the demand relative to supply, the greater the pay. But lets dig deeper.
Classical economic theory takes the position that the demand for labour is the key determinant of pay. But what determines demand?
The demand for labour is ultimately derived from the demand for the good or service produced. Hence, the demand for footballers is derived from the demand by live and TV audiences to watch football. Classical theory goes much further and introduces one of the first economic models to explain how pay is determined.
According to this model, the demand for labour is determined by the marginal revenue product (MRP) of labour – in this case, of football players. MRP is based on the expected monetary value of the ‘output’ that an individual footballer produces. But what exactly is ‘output’ in terms of football?
Output can be measured in several ways – both in terms of individual player ‘productivity’, such as goals per game for a striker, saves/clean sheets for a goalkeeper, and tackles won or other metrics for midfielders, and in terms of the marginal contribution of each player to the team’s success, and to its audiences.
In more simple terms, output may be measured in terms of the number of games played – the productivity of the team. However, productivity in terms of numbers of games played is clearly not an effective way to measure output as it fails to take into account individual or team success.
Whatever the measure of output used, it can then be multiplied by the revenue derived by football clubs from the games played. It is the effect of players on a club’s revenue that gives an important clue to pay differences. For example, a team of highly productive footballers working for clubs that are financially successful will have a higher MRP than for footballers playing for less financially successful clubs with lower gate receipts.
On the supply side, the market supply of professional footballers is determined by the numbers of players willing and able to provide their services to football clubs. Total labour supply is also affected by the length of training, and by barriers to entry, including the role of trade unions (the Professional Footballers' Association, the PFA). In this respect, TU militancy would serve to reduce supply at any given wage rate. It is clear that, with professional sport in general, the labour market is segmented so that young footballers can only enter the ‘male’ game, or the ‘female’ game. This is significant in that any differentials that exist will not be reduced by the movement of players between the male and female games.
For example, high pay in the male game will not be moderated by a flow of females into that sub-market. In basic economic theory, the mobility of labour between different markets is a key feature of how successful labour markets work. Any wage differences that exist between related markets will be slowly eroded as labour moves from the relatively low paid market to the higher paid one. When there are no barriers into and out of a market, prices and wages will converge. Clearly this is not possible in most sports because they are segregated by gender.
Pay, revenue and gender
If we put the two sides of the labour market together (demand and supply) we can arrive at an ‘equilibrium’ wage for footballers in these different submarkets.
On the demand side, it is likely that the MRP of female players is less than for male for one main reason – the revenue per game is likely to be much less for women’s matches. This is the result of fewer spectators and lower ticket prices. So, two identical footballers – one male, one female – with the same ‘physical productivity’ (skills, goals, strength, speed etc) are not likely to receive the same pay because the dominating variable is the ‘revenue to the club’ rather than the ‘physical product’ of the players. Pay differences are then amplified by the inability of labour to move between the two markets. Let’s dig a little deeper with a simple example to illustrate the impact of revenue on pay.
If 50% of a football club’s revenue goes to players, and women’s teams play once a week, to a crowd of 5,000 who pay on average a ticket price of £20, then weekly ticket income to the club is £100,000. If 50% of this goes to the players, and the club has 20 players on its books, then weekly pay for each player would be 50,000/20 = £2,500. Other income from sponsorship could, of course, boost this pay. Contrast this with male pay.
A weekly game with 50,000 spectators, paying £50 a ticket gives revenue of £2.5m. If the players (let’s say, 25) get 50% of ticket revenue then 1,500,000/25 gives a weekly pay of £60,000 (and annual pay of around £3m.) If the players play twice a week and other sponsorship and TV income results in weekly income of £5.0m, then weekly pay would be £120,000 – nearly 50 times the pay for average female professional players. In reality, the best paid female footballer in the UK’s Premier league is Chelsea striker, the Australian Sam Kerr, who reportedly earns around £417,000 annually. This is virtually the same pay that Manchester City’s Kevin De Bruyne earns in just one week. [£425,000 in 2023].
This difference is not determined by the greater physical prowess of De Bruyne, but by the revenue generated by his club – Manchester City – from Premiership (male) matches and sponsorship.
The pay gap does not just exist for players. England’s women’s team head coach Sarina Wiegman is estimated to be earning £400,000 a year whereas Gareth Southgate, manager of the England men’s team, earns around £5m a year.
So, in the Classical approach, it is clear that the variations in marginal revenue product of footballers provides a simple theory of pay differentials. And that the dominant element of MRP is the revenue generated from the matches played. According to Classical economists, the supply of footballers is much less significant than the demand for them.
Demand and supply
Simple demand and supply analysis can show how pay differences arise.
Can the gap be reduced?
So, it is unlikely that the fee market will see a reduction in the pay gap unless the MRP of female players increases significantly. This either means that the women’s game must attract larger audiences or that some form of third party intervention is required, such as collective bargaining by female players representatives, or (far less likely) interference by government may be required to reduce the gap.
Indeed, in the US, following collective bargaining between US Soccer, and the US women and men’s National teams, US players are now paid equally for all national competitions. In addition, the two national teams will pool all their prize money from the World Cups and split the total between both teams. The US is the first country in the world to do this. Since 2020, players of both genders have been paid equally for representing England.
Could clubs increase the pay of female footballers?
An increase in ticket prices might appear to be an option, but the demand for tickets might be relatively elastic, so that ticket revenue will fall. Getting more spectators is, of course, possible, but it may take a very long time to build a loyal supporter base.
The impact of bigger audiences on the demand for female players is clear. We can see this diagrammatically.
Greater audiences shift the demand curve for footballers to the right and results in an increase in wages. Of course, the Classical model is easily criticised, given its simplistic assumptions and the fact that footballers pay is influenced by many factors – none the least being the collective bargaining that has led to equal pay at the international level.
Despite this, MRP theory is an excellent starting point and raises important questions about why pay varies so greatly, and how the pay gap can be reduced.
In conclusion, marketing and promoting the women’s game to increase audiences, sponsorship and club revenue is likely to be the most sustainable way to increase female footballer’s pay and reduce the gender pay gap in football in the long run.
1.[According to research by McKinsey (2016, The Power of Parity: Advancing women’s equality in the United Kingdom), eliminating the gender pay gap in the UK could add as much as £150bn national income by 2025.]
2.(https://www.tuc.org.uk/research-analysis/reports/gender-pay-gap-still-exists-and-gets-worse-better-paid-jobs)