Economic Myths: Supply and demand - planning permission vs Premiership football players

The usual suspects keep insisting that if we abandoned all planning restrictions, then the value of land would fall. “It’s simple supply and demand, innit?”, they sneer.

Clearly not true, but I can’t be bothered explaining how land prices arise in real-life for the umpteenth time, so let’s use an analogy:

1. ‘Demand’ for footballers (as measured in £££) is mainly all the people who subscribe to Sky Sports, so Sky Sports is prepared to bid a lot of money for Premiership TV rights; it needs that content to get the subscriptions.

2. Premiership clubs can hold out for huge sums of money (or else they sell to the BBC or ITV or whoever).

3. Premiership clubs in turn need the best 200-300 football players they can afford (to stay in the Premiership). There can be – by definition – only 200-300 of such players, so the best 200-300 players can in turn hold out for huge sums of money i.e. all the club’s receipts minus the actual costs of maintaining the stadium, selling tickets and so on.

4. It would be fatuous to say that Premiership player wages are so high because there is a lack of supply of footballers. Tens of thousand of people play football regularly with a reasonable degree of skill and proficiency. Premiership players aren’t actually much better than the average, they just have to be in the top 200-300.

5. It is not the skills of the players (in absolute terms) which dictates their salaries (they are not ten or a hundred times better than First Division players in the 1970s or 1980s), is is the fact that Sky Sports can monetise what you used to be able to watch for ‘free’ on the BBC/ITV.

6. Thought experiment: all Premiership players are in the same aeroplane crash and die. So Premiership clubs quickly go out and recruit the best 200-300 players who are left. By definition, these players aren’t quite as good as the recently deceased but they can still hold out for the same salaries.

In case people don’t get the analogy:

* Contracts with a Premiership team = the best locations
* Contracts with a Championship team = the next best locations
* All the way down playing for your local pub team = zero location value (in £££)
* Premiership players = people who ‘own’ the best locations = rent collectors/landlords (If a landlord dies or sells, the next owner collects the same amount of rent.)
* Increasing supply of footballers/number of teams in lower divisions has no impact on wages further up the chain = liberalising planning laws increases value of the land now unburdened, but has no impact on value of more favourable locations (which were developed first).