Saturday, 3 August 2013

Gareth Bale - is this proof for tournament theory?


First I'm assured that young Gareth hasn't yet signed on the dotted line at Real Madrid but still:

Real Madrid have agreed to pay £105million in a part-exchange deal for Gareth Bale.

The Spanish giants were claiming on Thursday night that a staggering, world-record accord had been sealed with Spurs chairman Daniel Levy.

And yes, there is a theory to explain why so much money is paid for and to these top footballers:

However, there is an alternative explanation that says that in many cases relative differences in performance, not absolute differences, determine earnings. This explanation of wage differences in terms of relative performance is often called tournament theory. One place where this explanation should work is in contests with winners and losers. For example, consider two almost equally able gladiators fighting in the arena of ancient Rome. Small differences in ability (or luck) could result in a huge difference in reward--one could die and the other live.

Given the levels of reward to the club of remaining at the European table, it is imperative that they invest in players who are (they hope) ever so slightly better than the players in the team that doesn't quite make it into the Champions' League (e.g. Tottenham Hotspur).

However, such a system would seem, over time, to reduce the chances of new teams breaking into Europe unless - as we've seen with Chelsea, Manchester City and PSG - there is a sugar daddy in the form of Russian or Arab billionaires.


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