Power & Market

Carl Menger Explains Caitlin Clark’s “Low” Rookie Salary and Her Monetized Popularity


President Joe Biden is outraged. It seems that women’s basketball star Caitlin Clark, who played for the University of Iowa, does not have a rookie Women’s National Basketball Association (WNBA) that a typical NBA (for the men) top draft pick would have. He declared on his official X (formerly Twitter) account:

Women in sports continue to push new boundaries and inspire us all. But right now we’re seeing that even if you’re the best, women are not paid their fair share. It’s time that we give our daughters the same opportunities as our sons and ensure women are paid what they deserve.

As anyone who has read the sports pages lately can attest, Clark’s WNBA rookie salary is $76,000, while the NBA’s top rookie draft choice, Victor Wembanyama was making about $12 million. Thus, Biden’s tweet.

Because Biden has weighed in claiming that these pay disparities are an injustice, one would not be surprised to see his administration attempting to “right this wrong” through one of his ubiquitous executive orders or declaring a change in directives from one of the regulatory agencies. Like every other economic trick Biden tries to pull, any attempt to “balance” pay for male and female professional basketball players would cause other intractable problems that invariably come with government intervention into economic matters.

The salary disparity between the female and male professional basketball players is explained by Carl Menger in his Principles of Economics, written in 1871. The value of what economists call factors of production (what Menger called “higher order goods”) is contingent upon the value that consumers place upon consumption goods (Menger’s “lower-order goods”). Although one doubts Zach Dean of the website Outkick has read Menger, nonetheless, he explains why an NBA player is likely to be paid substantially more than someone from the WNBA:

According to WSN.com, the NBA…brought in $10 billion in revenue in 2022. The WNBA brought in $60 million that same year (which, frankly, seems way too high to me, but you get my point). 

Average attendance for a WNBA game that year? Just over 6k. (Again, too high). 

Average viewership? A shade over 400k. 

The WNBA exists because the NBA subsidizes it. For whatever reasons that consumers of basketball might have, they do not support the WNBA as they do the NBA. As Menger pointed out, the valuation of the “higher-order goods” depends upon the value people place upon the final products, and in this case of the WNBA, if consumers don’t go to the games, watch them on television, and purchase large amounts of WNBA gear, then the players producing this product are not going to be paid well.

Contra Joe Biden and others, this is not about pay “discrimination” or equity or a nefarious plot by team owners to cheat women athletes out of their “fair share.” This is what Ludwig von Mises called consumer sovereignty in action.

However, before declaring that the market has failed to appreciate high-level female athletes, what about that fact that Caitlin Clark, the all-time scoring leader in NCAA basketball, men and women, has sold out basketball arenas and helped raise TV viewership of women’s collegiate basketball games to record levels with her style of play? The market has taken notice. Clark is on the verge of signing a deal with Nike allegedly worth close to $20 million, and there already is heightened media interest in the Indiana Fever, the WNBA team that took Clark with the first choice in the league draft.

Furthermore, Clark appears on State Farm Insurance advertisements and other commercials, so the market highly does value her talents. Contrary to modern progressive thinking, Clark’s success over time can well translate to more exposure for the WNBA – and more revenue for everyone involved.

Unfortunately, women’s sports in the United States are highly politicized (witness the political activism of the US Women’s National Soccer Team), and with Clark being white, it was inevitable that race be put front and center by the sports media. Some sportswriters have warned that Clark will face a lot of resentment in the WNBA because of her race and because she is heterosexual.

While Carl Menger’s path-breaking analysis explains the low salaries of the WNBA, it also explains why Clark has sold game tickets, filled once near-empty arenas, and almost surely will help increase the revenue of the money-starved WNBA. However, Menger also coined the term “imaginary goods,” which, as Anthony P. Mueller explains,

…are causal by valuation, but not in reality. These are things, which derive their quality as a good only from their imagined properties, or from people’s imagined needs. 

Indeed, one can put political activism and the hoped-for (but never attained) outcomes from activism in the “imaginary goods” category. Progressives believe that the way to higher WNBA salaries and endorsements is through activism and direct action by the federal government. When someone that can help raise the profile of the WNBA comes on the scene, both players and journalists complain that she is the wrong race and doesn’t deserve her popularity. While Menger did not direct his description of “imaginary goods” to the anticipated outcomes political activism, it certainly fits in the case of Caitlin Clark and the WNBA.

One hopes that Clark has a good professional career and proves her critics wrong. However, given how progressive politics is firmly entrenched in women’s sports, one cannot be optimistic. As for her $76,000 rookie salary, Carl Menger explains the current numbers, but also points out a way for Clark to financially pull her colleagues forward.

The market picks Menger and political activism goes for President Biden’s conspiracy theories. We only can hope that Biden doesn’t get his way.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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