The economic case for free live football on TV
Televising national sporting events like football and cricket is what economists would call a "public good"
This is the year, as ITV’s Julie Etchingham teased Boris Johnson in the first leaders’ debate, that the Tories have discovered the “magic money tree” they always used to taunt Labour about. In doing so, they only prompted Labour to move on—as Johnson put it to Jeremy Corbyn—to the magic money forest.
In some ways, this is to the good. Drawing a line over the austerity years was overdue, and the coming rewrite of the fiscal rules is welcome if it switches the debate away from a lop-sided obsession with debt, and on to a broader evaluation of public net worth.
But with all that said, there are of course risks. First, and most obviously, that unfunded promises will turn out to be unfundable promises, leading to disappointed voters, taxpayers footing bills they weren’t warned about or a loss of control over the public finances which spells inflation or some other form of instability down the road. Second, and more subtly, there is a danger that in the sudden dash to spend, the parties spend money the wrong way. While Labour’s nationalisations don’t in themselves weaken the government’s balance sheet, since the government picks up equity in return for bonds, its proposals to abolish fees for students and dental check-ups while also picking up broadband bills assuredly do. As the party gets ready to publish its manifesto we would hope (if not expect) it to have evaluated whether all such commitments truly are the best possible way to blow all this cash.
The main test should be about overall public benefit, but amid a political campaign it is also reasonable for a political party to add a political test—what does each policy say about the society it wants to build?
For my money, whether you consider popularity, value-for-money or the symbolism stakes, there is something Labour might have considered before any of the pledges we’ve heard about thus far. Namely, putting national sporting occasions back on free terrestrial television.
This might sound frivolous. But I’m serious not only about the self-evident popularity of the move, but also the signal that the move would send. Here’s why. The right and even the centre are often loath to accept “neoliberalism” is anything more than a leftist slogan, but I think it can be usefully (if loosely) defined as the project of driving the price mechanism into every last corner of life. And nowhere has it been driven harder or more perversely than in respect of sporting events which used to be free for all to enjoy.
A broadcast spectacle is what economists call a “public good.” In the jargon of their trade, this does not mean it’s a government-provided service, but rather that “consumption” of it is not “rival.” Unlike in a stadium, which might get too full, there is no adverse effect on me whatsoever if I’m catching the football in one house, and the family next door is also watching—or indeed, if the kids and the parents are sprawled across different rooms, watching it on four different TVs. There is no less “viewing” for anyone else because of more people watching: the marginal cost to society of someone else tuning in is zero.
Now economics teaches that prices should normally be set to marginal cost, so the efficient price of tuning-in should also be zero. As indeed, it always used to be.
Great effort, however, has gone into turning this public good into something called a “club good” instead. This is still, like a public good, non-rival in consumption, but with the twist that it is now “excludable”—people can be denied it. £5bn multi-year deals with the Premier League exclude people without Sky subscriptions from watching live games. Even though the BBC is part of a coming £1bn deal with English Cricket, live Tests will likewise be the preserve of those who can afford to stump up a subscription for the Murdoch-founded business.
This should strike any conventionally trained economist as maddeningly inefficient: extra viewers who would enjoy watching something are denied the chance to do so, even though it would cost society nothing. And also offend non-economists who simply miss the shared national occasion that used to be provided by, say, an Ashes series, or the old assumption that everyone in the office who was interested would have seen (say) the big Liverpool game.
The defence of this deep form of privatisation, which began under the Major government and in some ways intensified in the New Labour years, is that it allows for supposed “investment” in the sports. But a lot of the money is not really “investment” in any sense an accountant would recognise—it goes into the bulging pockets of already-overpaid 23 year olds, to splurge as irresponsibly as they like. But even to the extent that the wider sports enjoy a “dividend” through the rent income achieved by making the good “excludable,” this is a perverse way to raise the cash. It’s not just about being inefficient, but also the very real damage done by disappearing from general view.
England’s 2005 cricket series against Australia was widely hailed as the greatest ever, but immediately afterwards English cricket became an item in a Murdoch subscription offer, and when it re-emerged for a day thanks to this year’s amazing World Cup win, the heroes of the hour were—to most of us—unfamiliar players of an increasingly unfamiliar game. Where an earlier generation of children might have excitedly tuned in to watch Ian Botham, today’s youth were discovering who Jofra Archer was at the same time as they learned the rules of the game.
The damage done to any sport by diminished visibility is not one which any amount of “investment” can easily put right.
Buying out those sporting contracts with public money might be judged indulgent. But the cash would be small beans compared to what Labour wants to splash on, say, student loans. And it would give all sorts of disparate people—young, old, black, white, ambitious metropolitans, left-behind locals—a lot more common pleasure than most policies in a divided society. More than anything, it would signal the end of a “price on everything” society which knows the value of nothing.