By Robbie Butler
Anyone that has ever taken an introductory course in economics will probably have studied competitive markets. Economics textbooks argue that consumers are best served when competition exists amongst sellers. In theory, perfect competition is the best outcome from the consumer, as prices are driven to the point where suppliers are able to cover their average costs and no more.
One way for producers to increase prices is to restricted supply. This is not always possible, but in some markets conditions exists to allow producers to do this. The most extreme example is a monopoly.
The Forbes List of world's highest-paid athletes provides a really nice example of restriction of supply. Various familiar names appear on the list over the past five years such as LeBron James, Tiger Woods, Lionel Messi and Roger Federer. Each moves places over the period. There is one constant throughout - if Floyd Mayweather fights he will be top of the list.
Mayweather has been top in 2012, 2014 and 2015. His absence in 2013 and 2016 was down to inactivity in the ring from May 2012 to May 2013, and retirement. Not only does the boxer top the list, his earnings far exceed the next highest sports star, with the Grand Rapids native earning an estimated $300 last year.
One of the ways the boxer is cashing in is by deliberately restricting the supply of fights to the market. Since Christmas 2007 (almost a decade), Mayweather has fought just ten times. The hype that his infrequent reappearance in the ring generates, results in huge box office and pay-per-view broadcasting demand and generates revenues far above more frequently viewed sports stars.
As David touched on recently, uncertainty of outcome is largely irrelevant in boxing, yet the undefeated Mayweather finds this no impediment to generating interest in his fights.
Anyone that has ever taken an introductory course in economics will probably have studied competitive markets. Economics textbooks argue that consumers are best served when competition exists amongst sellers. In theory, perfect competition is the best outcome from the consumer, as prices are driven to the point where suppliers are able to cover their average costs and no more.
One way for producers to increase prices is to restricted supply. This is not always possible, but in some markets conditions exists to allow producers to do this. The most extreme example is a monopoly.
The Forbes List of world's highest-paid athletes provides a really nice example of restriction of supply. Various familiar names appear on the list over the past five years such as LeBron James, Tiger Woods, Lionel Messi and Roger Federer. Each moves places over the period. There is one constant throughout - if Floyd Mayweather fights he will be top of the list.
Mayweather has been top in 2012, 2014 and 2015. His absence in 2013 and 2016 was down to inactivity in the ring from May 2012 to May 2013, and retirement. Not only does the boxer top the list, his earnings far exceed the next highest sports star, with the Grand Rapids native earning an estimated $300 last year.
One of the ways the boxer is cashing in is by deliberately restricting the supply of fights to the market. Since Christmas 2007 (almost a decade), Mayweather has fought just ten times. The hype that his infrequent reappearance in the ring generates, results in huge box office and pay-per-view broadcasting demand and generates revenues far above more frequently viewed sports stars.
As David touched on recently, uncertainty of outcome is largely irrelevant in boxing, yet the undefeated Mayweather finds this no impediment to generating interest in his fights.
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