In February 2022, the US Women’s National Soccer Team reached an agreement with the US Soccer Federation to settle a lawsuit filed in 2019 over equal pay. Despite having a consistently better record and winning two consecutive World Cups, the women’s team players were paid far less than their male counterparts. Under the terms of the agreement, the women’s team would receive the same compensation for all friendlies and tournament games, as well as $22 million in back pay to the women’s team.
However, one part left unresolved in this deal was the prize money related to the World Cup Championship Tournament, which is determined by FIFA, not the US Soccer Federation. In 2018, the men’s teams competed for $400 million in prize money, while the women’s teams competed for a mere $30 million in prize money. That year, the US Women’s team took home $4 million for winning the championship, whereas the men’s teams who were knocked out in the first round took home $8 million each.
In May 2022, the US Soccer Federation announced a landmark deal to rectify this discrepancy. Going forward, the men’s and women’s teams would pool the World Cup prize money and “equalize” the winnings between the two teams.
Discussion Questions:
- What are the different sources of revenue generated by the men’s and women’s teams? Some of these sources of revenues (e.g. television broadcasting rights) are sold as a bundle. Discuss the challenges associated with calculating Marginal Revenue Product when the “product” is sold as a bundle. In what other industries are products sold this way?
- How does pooling the World Cup prize money change the incentives faced by both the men’s and women’s teams? Is it likely that this will substantially increase the earnings of the women’s team? Does it make a difference if the motivations of professional athletes differ from those of people in other occupations?
Sources| NPR: The U.S. men’s and women’s soccer teams will be paid equally under a new deal, The U.S. national women’s soccer team wins $24 million in equal pay settlement; Statista: Prize Money Distribution at the 2018 Fifa World Cup in Russia; The Sporting News: Women’s World Cup prize money: How much will the winners make in 2019? Purse, payouts for entire field; Photo by Emilio Garcia on Unsplash