Starstruck by Elizabeth Currid-Halkett

Author:Elizabeth Currid-Halkett
Language: eng
Format: epub
Publisher: Faber & Faber
Published: 2010-07-14T16:00:00+00:00

The Economics of the Celebrity Residual

We see the economic impact of celebrity everywhere: art, sports, Hollywood, music, even politics. As Koons and Hirst demonstrate, the celebrity residual pays real economic dividends to those able to cultivate it. Celebrity clearly does not imply talentless. Quite the contrary. Most stars possess some measure of talent, but no one of them is necessarily more talented than his or her peers. And, after all, how do we define and put a value on talent in such subjective industries? Is Koons really $15 million better than Richter? Is Hirst over $75 million better than Koons? The stars of an industry may be very good, but they are disproportionately economically rewarded because of their celebrity. Talent, in other words, buys you only a seat at the poker table. Celebrities don’t have to win the most Oscars or make the most touchdowns. In all types of industries where there is an element of ambiguity in how to measure talent there is a chance for money to be made on the celebrity residual.

We pay for the celebrity residual everywhere, but to what extent varies dramatically by industry. In sports, no athlete keeps his day job if he is not really good. Aside from skill, however, some athletes are simply able to capture their audience more than others and they are financially rewarded for their ability to drum up ticket sales and sell merchandise. There are many, many soccer players who have statistics as good as if not better than David Beckham, but those players are not stars. This is not to say Beckham isn’t a truly talented player. Anyone who cares about soccer can remember his famous last-minute free kick in a 2001 game in the run-up to the World Cup, and he is known for being a great sportsman, runner-up to the FIFA World Player of the Year award twice. He was also the highest-paid footballer in the world until 2009, getting paid $28 million for the 2003–2004 season.35 And yet in 2007, past his prime, after a horrible season and in what some might call the sunset of his career as a major soccer player, he signed with the LA Galaxy for $250 million, which included endorsements and advertising fees ($50 million in actual salary).36 At the time, Beckham’s salary was larger than all of the other Major League Soccer salaries combined (trailing far behind in second place was Francisco Palencia, who was playing for MLS to the tune of approximately $1 million). Because his contract had an opt-out clause, Beckham left LA Galaxy and went on loan to AC Milan, and in 2009 earned a total of $46 million.37 These days, Beckham makes two to three times more than any other soccer player in the world, besides Lionel Messi of FC Barcelona and Ronaldinho of AC Milan, who make $37.7 million and $25.5 million, respectively. The only other football star associated with such cash is Cristiano Ronaldo, who in 2009 attained the largest football contract in history.

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