Utopia, you are standing in it!

If women soccer players are discriminated against, their employers must be making a lot of extra profits of their toil. If women soccer players are paid less than their marginal revenue product, the organisers of their tournaments and those that broadcasted them must be doing very well indeed.

The reality is pay in sports these days is determined by revenue from television rights. Players can top that up with sponsorship deals.

Do television commercials for men’s and women’s soccer tournaments sell for the same price? If so, do women receive a smaller percentage of that revenue stream? That is a good test of the hypothesis that they are discriminated against.

Despite the novelty of the US getting into the women’s World Cup, a 30 second commercial was sold for much much less. There may have been a ratings bonanza, but there was no accompanying revenue bonanza that could feed through to the pay of players from more generous television rights for future tournaments.

Women’s soccer is paid less because of the viewing preferences of audiences. Any sport that attracts high ratings will attract generous television rights. The money feeds through to the players.

This is a classic case of customer discrimination. Markets are very good at implementing  customer discrimination, in this case giving viewers the sports they want to see.

A classic early example of that was the introduction of foreign and minority players. Part of sport is that could be me out there kicking the goal. In consequence, viewers had a lot of trouble identifying with people who are not like them. Mankiw explains:

Studies of sports teams suggest that racial discrimination is, in fact, common and that much of the blame lies with customers.

One study, published in the Journal of Labor Economics in 1988, examined the salaries of basketball players. It found that black players earned 20 percent less than white players of comparable ability. The study also found that attendance at basketball games was larger for teams with a greater proportion of white players.

One interpretation of these facts is that, at least at the time of the study, customer discrimination made black players less profitable than white players for team owners. In the presence of such customer discrimination, a discriminatory wage gap can persist, even if team owners care only about profit.

That barrier was quickly overcome when viewers discovered that these foreign players and minorities players were very good and helped the team win more. The preference for their team winning overcame the preference for the team winning with people who look like them.

The current successive US women’s soccer should not be overrated in terms of its implications for higher pay. The Women’s United Soccer Association (WUSA) was formed in 2000 after success in the 1999 FIFA Women’s World Cup. It lasted just three seasons before folding with losses of $100 million.

Women’s soccer in the USA did have one year broadcast deals with Fox sport and ESPN in 2014 and 2013. Although no TV deal is set for the 2015 season, the NWSL recently announced that all games will be broadcast on YouTube Live for free.

The women’s sports that are best paid without exception are the women’s sports with the most valuable television rights. Closing the gap between men’s and women’s sport is exclusively in the hands of viewer.

The sponsors of women’s sports are not hiding bags of money out the back which they could have paid for women out of secret television deals worth as the same as for men’s sports.