Econ of Arts and Entertainment - Essay Example

The Labor Market Issues in the Sports Industry The importance of arts and entertainment to the economy of a nation can never be ignored. Industries that are arts and entertainment oriented can have many benefits to a country. This can be as a result of the way arts and entertainment in the modern societies has been highly commercialized. As a result of commercialization arts and entertainment industries end up having lots of economic related activities that benefit them economically while at the same time benefiting the whole nation economically. As arts and entertainment continue going through more and more commercialized, the industries involved face almost the same issues that the other industries face. An example of such issues is the labor market issue. Using the sports industry as an example of an art related industry, this paper aims at discussing the labor market issues in the sports industry. One of the main things that attract spectators to sports is the fact that they will be able to experience some aspects of struggles that are common in human lives in a dramatic and stark way. However, economists can be attracted to sports for reasons that are different from those of the spectators. To economists they see sports as an industry with the ability to illustrate the economic principles in an attractive and interesting way. Over the years the labor aspect of the sports industry has gradually grown to become more and more complex (Burk 173). It has gotten to a place when been involved in professional sports without commercializing it is no longer attractive. This trend can be illustrated by the way soccer teams globally have to spend more on their players in order to make sure that they attract more fans which will result to more income. If a team chooses not to spend more in order to hire the best players in the market, they will be competitively disadvantaged making them less attractive. Supply and demand of labor are aspects that should be keenly observed in any industry, especially during these days of economic hardships and uncertainty. This applies to the sports industry. It is important to note that the demand for labor in the sports industry can influence that rate of payment for human labor. The payment can also vary in terms of individual mobility, racial discrimination, personal productivity, and availability of substitutes. Property rights can affect the supply of sports talent. Collective agreements like payroll caps, reverse order drafts, and revenue sharing can be used to control such forces (Rosner and Shropshire 137). Under normal circumstances, the demand for labor is always influenced by the demand for the products and services that are produced using labor. The demand for entertainment in the form of sports has risen over the years. This rise in demand can be proved by the way the public is willing to pay more just to make sure that they get quality entertainment. Given the ease of evaluating personal productivity in sports, investors in the sports industry are forced to invest more on hiring the best talents available. Given the nature of sports, labor and the service provided is always seen as a single entity. This makes labor a very important aspect of the sports industry. As a result of this nature of labor in the sports industry, it is always very hard for investors in this industry to undervalue labor. In sports, the quality of labor is always directly proportional to the economic outcome of the business activity. In sports it is always very hard to find a substitute for human labor. This limitation is attributed to the fact that sports always have aspects of struggles that are common in human lives in a dramatic and stark way. As much as there have been advances in the use of technology in sports, it is clearly evident that technology will never take the place of human beings in sports. For example, in basketball there still remain to be five players playing for a team at a given time. It is almost certain that if the human factor is withdrawn from players the game will be less attractive (Burk 212). Human beings have emotions and such are always seen when they play. Some people are attracted to certain sports because of the passion that the players always show when playing. Another scenario where technology has been used is in soccer. Despite the fact that there are technologies such as goal line technology, the human referees are still entrusted with making decisions. As a result of the minimal substitutes it will be improper to undermine the contribution of labor in sports. Wage regressions can be used to study how an individual’s payment relates to their human capital and skills. In most cases, the data about someone’s wage do not always have information about their performance. In most industries the performance of human resource is always measured through factors such as work experience, education, IQ, and family connections. These factors have an effect on the wages of individuals in typical industries. However, things are different in sports. In sports the performance of a person can be approximated using the set of responsibilities and actual performance (Rosner and Shropshire 89). These factors can be used explains why in sports you can find an individual with less experience earning more than an individual with more experience. It has also been discovered that there is allot of wage discrimination in the sports industry. People are in many cases paid for their wages depending on their race. This has arisen as a dilemma in the recent past. For instance, in the United States of America it was discovered that white baseball players were being paid more wages as compared to the non-white baseball players. However, over the past one decade, there has been a general decrease in the racial discrimination cases of wages in the sports industry. This can be because of the fact that sports have been highly commercialized. With commercialization, investors will do their best to get the best talents available regardless of whether they are white or not. The desirable type of labor in the modern sports industries are individuals with the capacity to perform. The supply of labor in sports industries is always affected by factors such as attitude towards risk, natural talent, potential for improvement, and personal discount rate. In sports it is also important to note that there are various sources of training and supply of labor. Due to the fact that labor in the sports industries starts showing potential at a very early age, development of these talents and skills is always the best way to make sure that there is no shortage of talented labor in sports. However, there is no guarantee that by taking talents through development processes will yield the desired results. Some sportsmen always seem to be very talented in their early ages only to lose it all as they grow up. In sports loss of potential labor is even made easier by the fact that playing period is always limited. In sports the less talented individuals usually quite easily in search for alternative careers. Thus, it can be said that individuals who decide to take careers in sports and other careers with high risks always do that with the hope making it as one of the best in their respective fields. In sports, labor is usually viewed differently. In most cases, labor in sports is usually seen as part of the property of the sports organizations. For instance, if a sports organization spends time and resources developing and nurturing a certain culture, any other organization with an interest in this talent will have to offer some economic compensation for what the organization might have gone through in developing this particular talent. This is always applicable in those sports that involve teams. As a result, there have risen some sports organizations which specialize in the development of talents. After they develop these talents, those organizations in need of these talents then have to incur a certain cost in order to get the services of these individuals. There are also sports organizations which have invested in their own talent recognition and development facilities. A good example would be in soccer where most of the prominent soccer clubs have their own soccer academies so that they can be able to develop their own talents. In the modern sports industries complete dependence on external sources for labor might be on time very disappointing to sports organizations. Although there is a common notion that talents in the modern societies are not as good as those that were seen in the past, it is clearly evident that there has been a general increase in the quality of labor in sports industries. Looking at the Olympics, someone will never fail to notice Olympic records are most often broken. The breaking of records has been always a sign that there is someone who can do better than those who were considered to be the best before. The increase in quality has also seen an increase in the cost of supplying labor in sports industries. This has also acted as a motivation factor to the talented youth who find themselves with the dilemma of whether they should take on professional sports or opt for other careers. The rise in the level of quality of labor in sports industries can also be said to be a motivational factor to irregularities in sports industries. One of the most common qualities related irregularities in sports is the use of performance enhancing drugs. These drugs tend to give those using them an unfair advantage over their competitors. However, the use of technology, highly limits the occurrence of such irregularities. Other common issues in sports labor are collective bargaining, free agency, and unionization. In the 1970s, most sports were characterized by a restriction of movement of players from one team to another. However, lately there has been a significant increase in unionism in sports labor. As opposed to most types of labor unions, player associations do not negotiate the payment of their individual members. The wages are always handled by the players themselves, in most cases through agents. However, these associations to bargain for things like insurance, working conditions, grievance procedures, and pension benefits. Labor agreements usually differ with the type of sport with the range being from a single year for seven years. The associations have also been successful in limiting the owners’ powers in determining the value of their players. As a result, they were able to fight the potential decrease in sports labor salaries in the 1990s. It was not until in the 1950s that the international transfer of professional players took place. The globalization of talent market has really contributed to the rate at which international players are being involved in sports. Spectators in the modern societies are more attracted to quality players. The question in this case will be what owners of sports related business entities will do if in any case quality talents are not available in their localities (Késenne 101). The answer to this question will be simply sourcing these talents from wherever they are available. A good example of such cases is professional football clubs in the United States of America. Initially this sport was dominated by players from the United States of America. As a result of the commercialization of sports they had to succumb to the pressure of seeking talents from all over the world just to make sure that they remain attractive to sports lovers. As long as one team takes the initial step, the other teams will be forced to follow suit as a result of the competitive nature of the sports industry. When players are transferred, there is always an economic implication. There is always transferred fee that ends up benefit various stakeholders in that particular sports industry. The commercialization of sports has also led to the involvement of corporate investors in the form of sponsorships. As earlier discussed in this paper, in sports it is always hard to separate the service being provided from the individual providing it. This nature of labor in sports can explain why in modern sports environments some business organizations can choose to use certain sports personalities to promote their products. Initially such sponsorships were only given to teams. There is always a conflict involved when a team acquires a player whose sponsor is a rival to the team’s sponsors. Such scenarios can at some times lead to the drop out of one of the sponsors. A good example of such a case was that involving Mario Baloteli, a professional soccer player playing for AC Milan. His sponsor was Puma while AC Milan was being sponsored by Nike. This led to controversies which led to Puma suggesting that Mario Baloteli transfer to Arsenal a club that was being sponsored by Puma. Such occurrences are just showing how much commercialization of sports has led to the complexities experienced in the labor market. As much as talent nurturing is good for the young talents, there has always been a debate on exactly where the line between child labor and talent nurturing should be drawn. Some individual always show their ability to be involved in competitive and professional sports, at a very tender age. However, it is sometimes legally unacceptable to employ people who are underage. Stakeholders in the various sports inclined industries always find it challenging to involve such players in their teams especially at the professional level. They will, therefore, have to wait until these individuals get to the age they are legally allowed to sign professional contracts. This is a requirement that has been breached by many players and club owners, especially when the players involved are exceptionally talented. There have been laws that have been put in place to make sure that owners of carious sports related business entities do not violate the age requirement laws. Due to the rate at which labor in sports is internationalized, there have been many cases in which labor is transferred from one part of the world to another. However, there are challenges that such movements. For instance, for an individual to work in a foreign country they must first acquire a work permit. This affected talented and less talented individuals equally. Sometimes business entities have to wait longer before their newly acquired talents can be actually usefully productive for them. In such cases the process of acquiring international talents is always delayed. It is clearly evident that the labor market in sports has highly changed over the past few decades. These changes can be attributed to the demand for more quality in sports entertainment, which led to commercialization of sports. However, the labor market in sports is different from other labor markets. This is because of the way services in these industries are highly personalized and therefore, it is very important for quality. It is undeniable that without talents in sports it will never be that attractive. Therefore sports businesses must strive to make sure that they have the best of talents. Work Cited Burk, Robert F. Much More Than a Game: Players, Owners, & American Baseball Since 1921. Chapel Hill [u.a.: Univ. of North Carolina Press, 2001. Print. Késenne, Stefan. The Economic Theory of Professional Team Sports: An Analytical Treatment. Cheltenham, UK: Edward Elgar, 2007. Internet resource. Rosner, Scott, and Kenneth L. Shropshire.The Business of Sports. Sudbury, MA: Jones & Bartlett Learning, 2011. Print. Read More