• Loading stock data...
Friday, March 29, 2024
2024 Best Venues nominations are open now through April 8! Submit Now

How Should We Think About Jobs in Sports

Working in the industry comes with its fare share of sacrifices.

Are the sacrifices worth it? (Photo via umich.edu)


For a long time, working in sports has meant taking a necessary pay cut. Sports Management Degree Guide writes that students should expect $35,000-$42,000 out of university. This page was written in 2013, when the average salary for any college grad was $45,000 — meaning that even in the best case, students would take a 7% discount for the privilege to work in sports.

What makes this discount seem even more disparate is that new graduates in sports are most commonly hired for management or sales jobs — which, in the open market, pay much more than the research, teaching, or pharmacy positions that are filled by graduates in other fields. This certainly puts downward pressure on the average salary of $45,000.

What’s more is that sports has faced diversity issues for many years — a tide that may only now be turning (or maybe not).

These all sound negative, so why would the average person go into sports, and in addition, what else can we explain about the market?


Working in Sports Provides People Additional Consumption Utility

From the candidate’s perspective, the decision to work in sports — whether it be in the front office or an agency, stems from perceived increased intangible benefits.

When people are faced with options, they will weigh the opportunity costs involved in each decision. When making the decision to work in sports, they will weigh the expected combined utility gained by accepting the average sports job, and the expected combined utility gained by accepting the average non-sports job.

Combined utility is an important concept — any job will provide a person with a bundle of benefits: which includes both income and intangible benefits. In other words, for those who want to work in sports, the marginal utility gained from a sports job surpasses the marginal utility of working in an equal, but non-sports job. People in sports generally take a discount — but the quantity of discount boils down to this: how much am I willing to pay to work in sports?

We also see adoption of niche strategies in sports hiring — where employers target the few with the greatest willingness to pay. That said, if there were a proportionate amount of jobs (to number of applicants), our next point (a low supply of jobs) would not be an issue. The reason it becomes an issue is because people who do not want to work in sports are usually industry agnostic, where their demand remains inelastic for multiple industries. On the other hand, people who want to work in sports will have an inelastic demand for sports jobs — meaning that limited supply becomes a greater issue.


Low and Limited Supply of Jobs

There are few true sports jobs, meaning that employers have a disproportionate amount of leverage over the labour market. And, like many jobs in desirable fields, employers will exert their influence over their employees — whether it be via extra (unpaid) hours, or overall reduced salaries.

A consequence of low supply is an extremely, extremely selective selection process, which often filters out perfectly reasonable candidates for reasons which can seem equally reasonable.

In the hiring process, where there are few objective and quantifiable metrics (the ones that do exist require context, which is rarely provided), it becomes easy for employers to default to familiar tactics. This stands in stark contrast to working in the front office of a sports team, where stats are readily available, and performance is public — resulting in all types of people weighing in to make their own judgments.

To be clear, these are issues that exist in all industries. But the nature of the sports industry, which hires few people, and where network effects are strong, we see more (relative) widespread dispersion.

As a result of the aforementioned subjectivity, main types of hires emerge: “familiars”, and “reputation” hires.

“Familiars” are the practice of employers hiring employees that fall within familiar demographics. To be clear, this is rarely due to conscious decisions — I truly believe that most people have good intentions! However, a large body of evidence, such as this paper, and this paper, implies that hiring managers will subconsciously hire those who are most similar to themselves.

“Reputation” hires are more of a function of traditional interviews providing incomplete information — hiring managers will rely on the opinions of those closer to them, whose social graphs include both the candidates and themselves. This is much less of an issue, and exists in almost all industries. Indeed, reputation hires remain a useful way for hiring managers to obtain more information about candidates.

Labour Markets and Matching Theory

A useful way to think about this problem is from the perspective of matching theory:

Source: Wikimedia

In which candidates would act as “proposers”, and employers would act as “acceptors”. Candidates would have ordered preferences, from which they would determine who to propose to, by round.

Employers would also have ordered preferences, through which they would determine which candidates to accept. Their preferences would be ordered by expected impact. Since almost all candidates will have a large degree of uncertainty, especially at the entry level, reducing uncertainty will, on balance, improve a candidate’s probability of success.

Both familiarity and reputation contribute to the reduction of uncertainty, but also lead to issues that have been rampant in many industries, such as low diversity and a high degree of nepotism. Recent industries that have faced these issues are venture capital, law, fashion, and British film.

Now — a lot of this stems from societal issues which have been covered by many. But since sports admits fewer applicants, there is less of an opportunity for “un-like” candidates to filter through. If one industry has 100 open spots, another has 20 open spots, and there is a 10% chance of “un-like” candidates in any industry to obtain a spot, the first industry will have 10 successful “un-like” candidates, while the second will only have 2.

The good news is that there is a compounding effect to this. Assuming that hiring managers will continue to hire candidates similar to themselves, the penetration rate of “un-like” candidates will continue to grow over time, until they become a part of the “like” group. Of course, this only applies if there is a static rate of “un-like” applicants.

What makes me optimistic about the future of sports is that people with a passion for the industry are more likely to be inelastic in their demand for sports jobs. That is, they are willing to take the sacrifices necessary for a successful career in sports. Conversely, an elastic demand would result in a negative outcome — less and less “un-like” people would want to enter the industry, resulting in a dearth of diversity. Economists almost universally agree that a diverse workforce is more favourable to a homogeneous one, implying that it will be in the interest of the industry for my bear case to come true.

In the short term, for students interested in sports, it becomes increasingly valuable to network and meet industry professionals. For “un-like” candidates, this ensures a greater probability that they become both a “familiar” and a “reputation” hire, increasing their chances of success — an effect that is amplified given the network effects unique to this industry.


My favourite sports career story is Paul DePodesta’s, whose career was chronicled with Robert Elwood in this podcast episode.

I’ll let you listen to the podcast, but after graduating from Harvard with a degree in economics, DePodesta received lucrative offers from several management consulting firms, as well as an unpaid internship with the now-defunct Baltimore Stallions of the CFL.

DePodesta went on to innovate baseball, working with Billy Beane as his assistant general manager — bringing sabermetrics to the mainstream, in the form of Moneyball.


This piece has been presented to you by SMU’s Master of Science in Sport Management.


Front Office Sports is a leading multi-platform publication and industry resource that covers the intersection of business and sports.

Want to learn more, or have a story featured about you or your organization? Contact us today.

https://upscri.be/f32ae1/

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

The Year’s Biggest Headlines in the Business of Sports

The streaming invasion, crypto crash, Taylor Swift, Messi, Coach Prime, and more.
South Florida Bulls quarterback Gerry Bohanon (11) tries to elude Florida Gators in the second half against the Bulls at Steve Spurrier Field at Ben Hill Griffin Stadium in Gainesville, FL on Saturday, September 17, 2022.

USF Nears Green Light For $340M On-Campus Stadium

USF is a step closer to building a football and lacrosse stadium.
Tulane's Dorian Williams breaks a tackle from USC's Jacobe Covington during the 87th Goodyear Cotton Bowl Classic at AT&T Stadium on Monday, January 2, 2023.

NLRB Sets Up Clash Over College Athlete Unionization, Employment

The NLRB is making moves toward classifying college athletes as employees.
Pac-12

Big Ten, Big 12 Could Usher Out Pac-12

A new media deal could mean more schools in the Big Ten.
podcast thumbnail mobile
Front Office Sports Today

Why the Timberwolves Sale was Called Off

0:00
0:00

Featured Today

March 22, 2024, Brooklyn, NY, USA; Northwestern Wildcats guard Brooks Barnhizer (13) and Northwestern Wildcats guard Boo Buie (0) react in overtime against the Florida Atlantic Owls in the first round of the 2024 NCAA Tournament at the Barclays Center.
March 27, 2024

‘An Expensive Game’: March Madness and NIL Collectives Are Intertwined

At schools nationwide, collectives are fueling NCAA tournament runs and vice versa.
Iowa’s Caitlin Clark (22) waits to be announced in the starting lineup against West Virginia in a NCAA Tournament round of 32 game Monday, March 25, 2024 at Carver-Hawkeye Arena in Iowa City, Iowa.
March 26, 2024

The Women’s Trading Card Market Is Overlooked. Can Caitlin Clark Change That?

Traditionally, women’s sports cards have been a marginal part of collectibles.
The Sports Illustrated cover signed by Derek Jeter and Alex Rodriguez, February 27, 2019, at Don & Charlie's, 7501 E. Camelback Road, Scottsdale. Don Charlie S
March 24, 2024

Everything You Need to Know About the Ongoing ‘Sports Illustrated’ Saga

Understanding the strange state of affairs for the nearly 70-year-old publication.

Careers

Powered By

Careers in Sports

Looking for a new job? Check out these featured listings and search for openings all over the world.
Live Nation
Multiple - USA Careers
Adidas
Multiple - USA Careers
Spotify
Multiple - USA Careers
Sponsored

Temple Takes Your Sports Career to the Next Level

If you want to break through to the C-Suite , Temple University’s Executive Master of Science in Sport Business can help you up your game and accelerate your career. 
Sponsored

Networking With Purpose

Investing in the Ohio University PMSA unlocks access to one of the largest sports business alumni networks in the world.
Sponsored

University of San Francisco Is Your Ticket to the Game

Rated the No. 1 Sports Management program in California, USF has been a leader in educating industry professionals for more than 30 years.
Sponsored

How Daily Fantasy Sports Solved NBA Fantasy

The remarkable growth of the #1 Discord sports server in the world.
Sponsored

UMass, McCormack Department of Sport Management Introduce Groundbreaking Women in Business Course

UMass’s Mark H. McCormack Department of Sport Management has announced the addition of a Women in Business course launching Spring 2021.
Sponsored

Sacred Heart University Gives Athletes and Students Hands-On Learning Opportunities

Professor Matthew F. Moran is training the industry’s next generation of exercise scientists at Sacred Heart University.
Sponsored

Ohio University PMSA Prepares Sports Professionals For New Normal

Two alumni of the Ohio University Professional Master of Sports Administration explain how they feel prepared for the future of sports.
Sponsored

Temple’s Sports Business Master’s Program Gives a Sports Media Pro Unique Perspective

Temple’s School of Sport, Tourism & Hospitality Management gave Sean Hanrahan the tools to elevate his career even after 30 years in the business.