Tuesday, 10 July 2012

Worthless rugby players

If a rugby player leaves for Japan, is there a loss to the country? Seamus says no. So long as he's being paid his marginal product.
While rugby fans may decry his loss to the sport, Canterbury University economics lecturer Dr Seamus Hogan told NBR ONLINE there is no loss to the New Zealand economy.

"If he was prepared to play in New Zealand free, obviously that would be of tremendous value to the rugby union because it would get more bums on seats.

"Beyond that, there wouldn't be any spill over benefit economically to the country."

Dr Hogan says that in terms of economic activity, if Williams' presence in a match gets more fans into the stadium those people are just spending money they would have spent elsewhere.

"It is just a transfer. It's not a benefit to the country economically."

Dr Hogan says Williams gets almost the full value of his contract because he has unique talents.
If the Rugby Union is good at getting fans to pay for the value provided, and if Sonny Bill's manager is good at negotiating his pay, then he doesn't provide much value above his pay. Because the rugby union can't perfectly price discriminate, fans might get some surplus from a good player that isn't captured by the rugby union. But, if the player has a good manager, sponsorship and endorsement deals ought to mop up at least some of what's left.

But I would have expected that fans shifting away from rugby into something else because of the departure would have some loss of associated surplus. The other activity also generates surplus, just less of it; that's why it was the second choice prior to the staffing change.
He says somebody who is a very good lock, such as Brodie Retallick from the Chiefs, cannot command a high price because the next-best lock is right behind him.

"If he goes, the cost to the rugby union of losing him is not great because there is somebody waiting to take his place.

"But if Williams goes this year, we have to take a step down in the quality of our second five-eighths."

However, Dr Hogan says it would not be a big slide because there are plenty of other talented second five-eighths around.

Williams' biggest value is probably in terms of the entertainment he provides, such as taking his ripped shirt off during a World Cup match last year, he says.
 Afraid I'd missed that.


  1. An interesting question is "Does the All Blacks' overall performance decrease when a star player departs?" To me the answer to this is not clear. In a world where the best 15 players play every match, the answer would probably be yes. But we don't live in that world. Back up players are often needed due to injury and "rotation". Assuming that players drive substantial utility from becoming the number 1 in their position, having a star player might result in the second or third best players in that position going overseas as they give up on their dream. So you are left with a star player but no decent back-up. I think we are far too risk averse as a rugby nation to be comfortable with that.

    Eric, how long have you been waiting to use that title?

  2. I remain to be convinced that SBW is in fact the best 2nd 5 in the country. Yes he has an imposing physical presence and a very good off-load, but the last few games he has been a little tackle shy, and has always been a bit of a glory hound. I'd much rather see Nonu in the role, he's about as good at breaking tackles and strikes me as being a better all-round player. Mind you my opinions are coloured somewhat by distaste at SBW's apparent narcissism and lack of grey matter.

  3. All I meant was that, as of the Irish tests, SBW was the person playing in that position in the Super 15 who was playing the best (assuming that Dan Carter was required for 1st 5), given that Nonu's form was awful. I did suggest to the reporter that if Kahui were fit, I'd convert him to a 2nd 5 just to get him into the team, but I gave up when it seemed that the reporter didn't know the names of any other rubgy players!