Introduction

Since the early 1960s there has been a series of major institutional reforms to the organisation of the players' labour market in English football, starting with the abolition of the maximum wage in 1961, and culminating in the 1995 European Court of Justice ruling in the Jean-Marc Bosman case. Some of the broader consequences of these changes are obvious and widely recognised. Spiralling salaries, especially for superstar players, are a consequence of the progressive shift towards freedom-of-contract that has been underway throughout this period. Although the chronology and detail of institutional reform varies between countries, the same long-term trend has been evident worldwide.

This chapter examines explanations for the exceptionally high salaries earned by the leading stars in modern-day professional football. Above-inflation increases in players' salaries, especially at the highest level, have been a permanent feature of English football since the abolition of the maximum wage in the early 1960s. Section 7.1 reports some recent data on footballers' compensation, and considers to what extent the standard textbook microeconomic theory of wage or salary determination in labour markets is capable of explaining the patterns that are observed. Section 7.2 argues that scarcity in the supply of the highest talent can only form part of the explanation. Before the introduction of pay-TV, football reached large TV audiences but could not appropriate the full economic value of the service provided to individual audience members. Since the late 1980s, however, this situation has been transformed.