Welcome to the first ‘Big Question’ edition of Money Chats!
The following post is an example of the type of question and answer that will be in the new spinoff ‘Big Question’ edition of Money Chats.
These are the questions that I get that need more time to research so that I can get you as much of the relevant information as I can. And they also take more words to answer properly.
Here are some examples of other ‘Big Question’ newsletter questions that are coming soon:
Q: “I got FOMO so I went and spent heaps on Taylor Swift tickets 😭. Should I try sell them to get my money back?”
Q: “I’ve got a part-time job but I don’t think I’m getting paid super. Is that allowed?? How do I check?”
Q. “Is it ok to get a sports betting account? The ads are everywhere so it must fine right?”
Q: “Why is the cost of everything always going up (inflation)?”
Q: “I’ve read that compounding interest is important. But I don’t really get it. Help?”
From 6 October only paid subscribers will get the ‘Big Question’ newsletters and the curated ‘Monthly Best Of’ newsletters. I wrote a longer post explaining all of that here.
You can see the options (and upgrade your sub if you want to) by clicking below.
If you do it by 8 October, there’s a discount on offer (no pressure, totally up to you).
Since it’s an educational resource, you might be able to ask your parents to help share the cost of an upgraded sub 🙂.
Alright. Onto the post.
Like I said, these are longer ones. All the ‘experts’ say that for your age group everything has to be 10 seconds long and be in video format otherwise you won’t pay any attention.
Maybe that’s true for some of you. But I give the people who read this every week way more credit than that.
So grab yourself a snack or a drink and let’s get into it.
Got your own question about money that you want to ask? Nice! You can submit it here.
Your Big Question: ⚽️🏃🏽♀️ Why is Sam Kerr Paid Less?
Q. “I’m loving the World Cup and watching the Matilda’s. But I saw a Reel about how Sam Kerr gets paid way less than male footballers. Why don’t female footballers get paid as much as men?”
-Hayley, 16, Qld
Answer
[Ry’s Note: for those of you who are have been reading Money Chats for a long time, this one might look familiar. It was written during the Matilda’s amazing run during the recent Women’s World Cup. It was a long answer, about a really important couple of topics. So I ended up splitting it across multiple weeks.
So this ended up being the inspiration for the new series of ‘Big Question’ newsletters.
I’ve updated the below with new data. And for the roughly half of you reading who weren’t around when I published this one, I hope you enjoy!]
Hey Hayley. This is a great question.
There’s two parts to this question that I want you to know about:
The football specific part
The bigger pay gap part
⚽️ The Football Specific Part
So, Sam Kerr is the highest-rated player in women’s football at the moment (FIFA 2023 overall rating of 91, which is going to be a handy way to compare).
In the men’s game Leo Messi and Kylian Mbappe are rated as among the best (both also have a FIFA 2023 overall rating of 91).
So what we’re comparing is three athletes that are rated at the top of their respective games.
Here’s where it starts to split. These are 2022 figures converted to Australian Dollars.
🇦🇺 Kerr: made an estimated $3.3 million.
🇦🇷 Messi: made an estimated $183 million.
🇫🇷 Mbappe: made an estimated $195 million.
Some interesting subparts to this.
For Kerr about $600,000 (around 20%) of her total pay was her salary from her club, Chelsea. The remainder (80%) came from sponsorship deals with global brands like Nike. So the majority of Kerr’s earnings were from sponsorships.
For her male counterparts it was the opposite.
For example, for Mbappe, about $168 million of his total earnings (86%) was from his salary and signing bonus. That leaves 14% as sponsorship earnings.
So that’s the ‘what’. How about the ‘why’?
Where Does Salary Money Come From?
Salaries are paid by clubs. And clubs get a lot of their money from the ‘governing body’ of the league they’re in. For example, clubs like Liverpool and Manchester United get a lot of their money from the Premier League.
But then where does the Premier League get its cash from?
Professional sport is funded by four main things:
📺 broadcast revenue,
advertising revenue,
🎟 tickets and,
🧢 merchandise sales.
Broadcast revenue is by far the biggest slice of the pie. This is the money that television stations (and sometimes, online platforms) pay the leagues (like the Premier League) in exchange for the right to exclusively broadcast live sport.
These broadcast contracts are for billions of dollars. Billions. With a ‘B’.
For example, the rights to broadcast the Premier League for just 3 years were recently sold for $20.6 billion (🤯!). That works out to $54 million per game.
So back to why all this matters. This little summary of the money flow helps:
First: Broadcasters pay sporting governing bodies for the right to show games.
Then: Governing bodies take that money and divide most of up between the clubs in their league.
And finally: Clubs pay player salaries.
And here’s the final piece of the puzzle. It’s the one major factor that determines how much broadcasters will pay: how many people are watching.
And there are currently more viewers of male sports leagues than female. So broadcasters pay more for male sport broadcast rights.
The same thing applies to advertising revenue, ticket sales and merchandise. More viewers and fans means more tickets and jerseys sold.
And that filters through to everything, including player salaries.
So the very short answer is that male players earn more (at the moment) because the leagues they play in attract more viewers, which means that all of the sources of money for the league are higher.
This may not always be the case. Evidence from this Women’s World Cup is already showing promising signs. The final data shows some incredible results. Here are some updated average audience figures from the end of the tournament, compared against some landmark sporting events:
⚽️ Australia v England (Semi Final): 7,130,000 😲!
⚽️ Australia v France (Quarter Final): 4,900,000
⚽️ Australia v Denmark (Round of 16): 3,630,000
🏟 AFL Grand Final (2022): 3,186,000
🏉 NRL State of Origin (2023, Game 2): 3,178,000
🏟 NRL Grand Final (2022): 2,756,000
This shows that the Matilda’s consistently got bigger audiences than the showpiece events of the big national sporting codes. Amazing right?
As more people get interested in female sports leagues, new fans will watch. Viewership will grow. And that will mean broadcasters will pay more for the rights to show those leagues and games. Which will mean more pay for the players.
The Bigger Pay Gap Part
Your question touches on something that’s even bigger. Because it’s not just female footballers. Females in other jobs get paid less than males too.
It’s a big topic, and teens (both females and males) need to know that it exists and why it’s there.
So that’s what we’ll look at next.
Before I go on I want to make something super clear. There are times here when I give my opinion on stuff. But there are times when I 100% don’t want to do that. That’s because I think it’s really important to know when you’re not an expert on a topic. This is definitely one of those times.
The pay inequality between males and females is real, and important to learn about.
But very clever people spend a lot of time doing research and trying to figure out why that inequality exists and more importantly, how to fix it.
I am not one of those people!
So what I’m going to do is show you the results of the research I did. I only used data specific to Australia. I’ll also share all the links to the original sources so you can check those out in full if you’d like to. So for the rest of this answer, what you’re going to read is facts, not my opinions.
Pay Gaps: Women and Men
The most recent data from Australia shows that the gender pay gap in Australia is between 13% and 23%.
What does that mean? It means that:
For every $1 earned by a male,
a female earns between 77 and 87 cents.1
If you use the ‘77 cents’ figure, over a year that totals an average pay difference of about $25,600.2
Does that make sense? No. Is it fair? No. Absolutely not.
It's important to understand how these statistics work. They are an average of all of the wages, in all of the jobs in the country. A pay gap doesn’t exist in every job. For example, my wife is a teacher. Male and female teachers doing the same job at her school get paid the same. It’s the same for public servants and nurses and plenty of other jobs.
What that stats tell us is that:
overall, women earn less, because they end up doing more work part-time, and working in jobs that pay less.
And probably worst of all, they also get paid less because they are unfairly treated when it comes to hiring and promotion decisions.
Pay Gaps: The Reasons
So what does the Australian data and research say are the specific reasons for the pay gap?
Bias and discrimination. It’s illegal to pay people doing the same job different amounts. But some employers make decisions about who to hire and promote based on their sex. That’s wrong. But unfortunately, it happens.
Part-time work and care. There are higher rates of part-time work for women. Why is that? It’s partly because women take on a higher percentage of ‘care’ roles in their families. That can be things like looking after children or their own elderly parents. Care roles are clearly important and crucial. Our society wouldn’t function without them. But they are not paid work.3
Industry differences. Female-dominated industries attract lower wages (on average).
Workforce participation. Women, on average, spend a greater time out of the workforce (e.g. because of their caring duties). This impacts promotion opportunities (which affects pay).4
Grim right? I was shocked to learn the gap was so big.
But part of fixing any problem is first making the biggest possible number of people aware of it. Governments, businesses and now, people like you are very aware of this gap. Work is being done to address it. But it seems like that’s been the case for a while. And progress seems slow.
But hopefully now you’re armed with some of the information you need to ask the right questions to the right people when this issue affects your life.
This is a long answer! But it’s also a big issue and a complicated problem. I hope you and everyone else reading found it informative.
Thanks for Reading
You made it to the end! Congrats. I hope you got something useful from the newsletter this week.
Got your own question you want to ask? Can’t wait to hear it! You can submit it here.
See you next week,
-Ry
P.S. You’re one of 3,467(!) people who read this newsletter this week.
From 6 October only paid subs will get future ‘Big Question’ editions of Money Chats like this one.
If you like how Money Chats is written, and it helps you learn, then an upgraded subscription might be a good option for you as an investment to help build your money confidence and financial literacy.
If you want to see what your options are, you can view them here:
https://www.abs.gov.au/statistics/understanding-statistics/guide-labour-statistics/gender-pay-gap-guide#i-m-looking-for-gender-pay-gap-by-
https://www.wgea.gov.au/pay-and-gender/gender-pay-gap-data
https://www.wgea.gov.au/gender-equality-and-caring
https://www.futurewomen.com/hotlists/5-reasons-gender-pay-gap-exists/