Wayne Rooney recently signed a new contract with Manchester United. The agreement guaranteed him £50m over its four-year life, equivalent to £250,000 a week. Mr Rooney is an exceptionally gifted footballer, but has few other evident talents. If he were not employed as a footballer, his earnings would probably be modest. And the life of a professional footballer is an exciting one, which attracts media attention and glamorous women. So it is likely that Mr Rooney would be willing to play professional football even if he were paid much less.
Many think of Sir Stanley Matthews as England’s greatest footballer. His autobiography describes a rather different lifestyle. At the end of his career, in the early 1960s, he was receiving the then maximum wage of £20 a week. One of his greatest matches was a postwar celebration in which Scotland met England in 1948 at Hampden Park before a crowd of 150,000 people (England won). A letter from the Football Association encloses Matthews’s match fee of £14 (about £500 at current prices) and his (second-class) rail fare from Stoke to Glasgow. But his claim for 6d (about £1 today) spent on a cup of tea in the station buffet at Carlisle was rejected: not a reimbursable expense.
The difference between what Rooney is paid and Matthews was paid is economic rent. Economic rent is the difference between actual earnings in an activity and the returns necessary to attract resources to that activity. The name seems misleading. The explanation is that early elaboration of the idea dates back to when agriculture was a principal form of economic activity. The concept is generally attributed to the English economist David Ricardo, but the idea was set out 50 years earlier by a Scottish gentleman farmer and scholar, James Anderson. Scotland won this one.